As filed with the Securities and Exchange Commission on May 20, 1999
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EL PASO ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0568816
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(713) 420-2131
(Address, including zip code, of Principal Executive Offices)
EL PASO ENERGY CORPORATION 1999 OMNIBUS INCENTIVE COMPENSATION PLAN
El PASO ENERGY CORPORATION OMNIBUS PLAN FOR MANAGEMENT EMPLOYEES
(Full title of the plans)
Britton White Jr., Esq.
Executive Vice President and General Counsel
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(713) 420-2131
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Proposed
Proposed Maximum Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share<F2> Offering Price<F2> Fee<F2>
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock<F1> 10,000,000 shares $35.5625 $355,625,000 $98,863.75
(including associated
preferred stock purchase
rights)
- --------------------------------------------------------------------------------------------------
<FN>
<F1> Representing 6,000,000 shares of the Registrant's common stock, par value $3.00 per
share (the "Common Stock"), to be issued by the Registrant in connection with the El
Paso Energy Corporation 1999 Omnibus Incentive Compensation Plan and 4,000,000
shares of the Registrant's Common Stock to be issued pursuant to the El Paso Energy
Corporation Omnibus Plan for Management Employees. This Registration Statement
also covers such indeterminable number of additional shares as may become issuable
to prevent dilution in the event of stock splits, stock dividends or similar
transactions pursuant to the terms of the Plan.
<F2> Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h), based upon the average of the high and low prices
of a share of the Registrant's Common Stock for May 17, 1999 as reported on
the New York Stock Exchange and in The Wall Street Journal on May 18, 1999.
</FN>
</TABLE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I
of the General Instructions to the Registration Statement on Form
S-8 will be sent or given to employees of the Registrant selected
to participate in the Plan as required by Rule 428(b)(1)
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). These documents and the documents
incorporated herein by reference pursuant to Item 3 of Part II of
this Registration Statement together constitute a prospectus that
meets the requirements of Section 10(a) of the Securities Act
(the "Prospectus").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and
Exchange Commission (the "Commission") by El Paso Energy
Corporation (the "Registrant") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act") are hereby
incorporated by reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for
the year ended December 31, 1998, which contains audited
financial statements for the most recent year for which such
statements have been filed;
(b) All other reports filed by the Registrant pursuant
to Section 13(a) or 15(d) of the Exchange Act, since the end
of the fiscal year covered by the Annual Report referred to
in (a) above; and
(c) The description of the Registrant's common stock,
par value $3.00 per share (the "Common Stock"), contained in
the Registrant's Registration Statement on Form 8-A filed
with the Commission on August 3, 1998, and a description of
the Registrant's preferred stock purchase rights associated
with its Common Stock, contained in Registrant's
Registration Statement on Form 8-A/A filed with the
Commission on January 29, 1999, pursuant to Section 12 of
the Exchange Act, including any amendments or reports filed
for the purposes of updating such descriptions.
All documents filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the
date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing such documents. Any
statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of the Registration
Statement and the prospectus to the extent that a statement
contained herein or in any subsequently filed document which also
is, or is deemed to be, incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or
superseded, to constitute a part of the Registration Statement or
Prospectus.
Item 4. Description of Securities.
The information required by Item 4 is not applicable to this
Registration Statement.
Item 5. Interests of Named Experts and Counsel.
The information required by Item 5 is not applicable to this
Registration Statement.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware provides that a corporation may indemnify directors and
officers as well as other employees and individuals against
expenses (including attorneys' fees), judgements, fines and
amounts paid in settlement in connection with specified actions,
suits or proceedings if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe their
conduct was unlawful. Similar indemnity is authorized for such
persons against expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement
of any such threatened, pending or completed action or suit if
such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and provided further that (unless a court of
competent jurisdiction otherwise provides) such person shall not
have been adjudged liable to the corporation. The statute
provides that it is not exclusive of other indemnification that
may be granted by a corporation's by-laws, disinterested director
vote, stockholder vote, agreement or otherwise.
Article X of the By-laws of the Registrant requires
indemnification to the full extent permitted under Delaware
law as from time to time in effect. Subject to any
restrictions imposed by Delaware law, the By-laws provide an
unconditional right to indemnification for all expense,
liability and loss (including attorneys' fees, judgements,
fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred or suffered by
any person in connection with any actual or threatened
proceeding (including, to the extent permitted by law, any
derivative action) by reason of the fact that such person is
or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
including an employee benefit plan. The By-laws also
provide that the Registrant may, by action of its Board of
Directors, provide indemnification to its agents with the
same scope and effect as the foregoing indemnification of
directors and officers.
Section 102(b)(7) of the General Corporation Law of the
State of Delaware permits a corporation to provide in its
certificate of incorporation that a director of the
corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability
for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) payment of unlawful
dividends or unlawful stock purchases or redemptions, or
(iv) any transaction from which the director derived an
improper personal benefit.
Article 10 of the Registrant's Restated Certificate of
Incorporation, as amended, provides that to the full extent
that the General Corporation Law of the State of Delaware,
as it now exists or may hereafter be amended, permits the
limitation or elimination of the liability of directors, a
director of the Registrant shall not be liable to the
Registrant or its stockholders for monetary damages for
breach of fiduciary duty as a director. Any amendment to or
repeal of such Article 10 shall not adversely affect any
right or protection of a director of the Registrant for or
with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
The Registrant maintains Directors' and Officers' liability
insurance which provides for payment on behalf of the
directors and officers of all losses of such persons (other
than matters uninsurable under the law) arising from claims,
including claims arising under the Securities Act, for acts
or omissions by such persons while acting as directors or
officers.
Item 7. Exemption from Registration Claimed.
The information required by Item 7 is not applicable to this
Registration Statement.
Item 8. Exhibits.
Exhibit
Number Description
5.1 Opinion of Andrews & Kurth L.L.P. regarding the
legality of the securities being registered
hereunder.
10.1 El Paso Energy Corporation 1999 Omnibus Incentive
Compensation Plan, effective as of January 20, 1999.
10.2 El Paso Energy Corporation Omnibus Plan for
Management Employees, Amended and Restated as of
August 1, 1998, as amended.
23.1 Consent of Counsel (included in the opinion filed as
Exhibit 5.1 to this Registration Statement).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (set forth on the signature page
contained in Part II of this Registration
Statement).
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of this
Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
(iii)To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in this Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished to
the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act that is incorporated
by reference in this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Houston, State of Texas, on this 20th day of May
EL PASO ENERGY CORPORATION
By: /s/ William A. Wise
------------------------------
William A. Wise
Chairman of the Board,
President
and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby
authorizes H. Brent Austin and Britton White Jr., and each of
them, as attorneys-in-fact with full power of substitution, to
execute in the name and on behalf of such person, individually
and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all
post-effective amendments.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the
following persons in the capacities and on the dates as
indicated.
----------------------------------------------------------------
Signature Title Date
----------------------------------------------------------------
/s/ William A. Wise Chairman of the Board, May 20, 1999
-------------------- President, Chief
William A. Wise Executive Officer and
Director
/s/ H. Brent Austin Executive Vice May 20, 1999
------------------- President
H. Brent Austin and Chief Financial
Officer
/s/ Jeffrey I. Beason Vice President and May 20, 1999
--------------------- Controller
Jeffrey I. Beason (Chief Accounting
Officer)
/s/ Byron Allumbaugh Director May 20, 1999
----------------------
Byron Allumbaugh
/s/ Juan Carlos Braniff Director May 20, 1999
----------------------
Juan Carlos Braniff
/s/ Peter T. Flawn Director May 20, 1999
----------------------
Peter T. Flawn
/s/ James F. Gibbons Director May 20, 1999
---------------------
James F. Gibbons
/s/ Ben F. Love Director May 20, 1999
---------------------
Ben F. Love
/s/ Kenneth L. Smalley Director May 20, 1999
---------------------
Kenneth L. Smalley
/s/ Malcolm Wallop Director May 20, 1999
---------------------
Malcolm Wallop
EXHIBIT INDEX
Exhibit
Number Description
5.1 Opinion of Andrews & Kurth L.L.P. regarding the
legality of the securities being registered
hereunder.
10.1 El Paso Energy Corporation 1999 Omnibus Incentive
Compensation Plan, effective as of January 20, 1999.
10.2 El Paso Energy Corporation Omnibus Plan for
Management Employees, Amended and Restated as of
August 1, 1998, as amended.
23.1 Consent of Counsel (included in the opinions filed
as Exhibit 5.1 to this Registration Statement).
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (set forth on the signature page
contained in Part II of this Registration
Statement).
EXHIBIT 5
[LETTERHEAD OF ANDREWS & KURTH L.L.P.]
May 20, 1999
Board of Directors
El Paso Energy Corporation
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
Gentlemen:
We have acted as special counsel to El Paso Energy
Corporation, a Delaware corporation (the "Company"), in
connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), of the registration
statement on Form S-8 filed by the Company with the Commission on
May 20, 1999 (the "Registration Statement"), with respect to the
offering and sale by the Company of up to 10,000,000 shares (the
"Shares") of the Company's common stock, par value $3.00 per
share, in connection with the El Paso Energy Corporation 1999
Omnibus Incentive Compensation Plan and the El Paso Energy
Corporation Omnibus Plan for Management Employees (together, the
"Plans").
In arriving at the opinion expressed below, we have
examined the Company's Certificate of Incorporation and By-laws,
each as amended to date, the Registration Statement, and the
originals or copies certified or otherwise identified to our
satisfaction of such other instruments and other certificates of
public officials, officers and representatives of the Company and
such other persons, and we have made such investigations of law,
as we have deemed appropriate as a basis for the opinions
expressed below.
In rendering the opinion expressed below, we have
assumed and have not verified (i) the genuineness of the
signatures on all documents that we have examined, (ii) the
conformity to the originals of all documents supplied to us as
certified or photostatic or faxed copies, (iii) the authenticity
of the originals of such documents and (iv) as to the forms of
all documents in respect of which forms were filed with the
Commission as exhibits to the Registration Statement, the
conformity in all material respects of such documents to the
forms thereof that we have examined.
Based on the foregoing, and subject to the limitations
and exceptions set forth below, it is our opinion that the Shares
will, when issued and paid for in accordance with the terms of
the Plans, be duly authorized, validly issued, fully paid and
nonassessable.
For the purposes of the opinion expressed above, we
have assumed that the Registration Statement, and any amendments
thereto (including post-effective amendments), will have become
effective.
We express no opinion other than as to the federal laws
of the United States of America and the Delaware General
Corporation laws. We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement and to the
reference to this firm under the heading "Legal Matters" in the
prospectus forming part of the Registration Statement without
admitting that we are "experts" under the Act, or the rules and
regulations of the Commission issued thereunder, with respect to
any part of the Registration Statement, including this exhibit.
This opinion is rendered solely for your benefit in connection
with the above matter and may not be relied upon in any manner by
any other person or entity without our express written consent.
Very truly yours,
/s/ Andrews & Kurth L.L.P.
EXHIBIT 10.1
EL PASO ENERGY CORPORATION
1999 OMNIBUS INCENTIVE
COMPENSATION PLAN
Effective as of January 20, 1999
<PAGE>
TABLE OF CONTENTS
SECTION 1 PURPOSES.........................................1
SECTION 2 DEFINITIONS......................................1
2.1 Adjusted Value.............................1
2.2 Beneficiary................................1
2.3 Board of Directors.........................1
2.4 Cause......................................1
2.5 Change in Control..........................2
2.6 Code.......................................3
2.7 Common Stock...............................3
2.8 Exchange Act...............................3
2.9 Fair Market Value..........................3
2.10 Good Reason................................4
2.11 Incentive Award............................5
2.12 Incentive Stock Option.....................5
2.13 Management Committee.......................5
2.14 Maximum Annual Employee Grant..............5
2.15 Nonqualified Option........................5
2.16 Option Price...............................5
2.17 Participant................................5
2.18 Performance Cycle..........................5
2.19 Performance Goals..........................6
2.20 Performance Peer Group.....................6
2.21 Performance Period.........................6
2.22 Performance Ranking Position...............7
2.23 Performance Unit or Units..................7
2.24 Permanent Disability or Permanently
Disabled..................................7
2.25 Plan Administrator.........................7
2.26 Restricted Stock...........................7
2.27 Rule 16b-3.................................7
2.28 Section 16 Insider.........................8
2.29 Section 162(m).............................8
2.30 Subsidiary.................................8
2.31 Total Shareholder Return...................8
2.32 Valuation Date.............................8
SECTION 3 ADMINISTRATION................................................8
SECTION 4 ELIGIBILITY...................................................10
SECTION 5 SHARES AND UNITS AVAILABLE FOR THE PLAN.......................10
SECTION 6 STOCK OPTIONS.................................................11
SECTION 7 STOCK APPRECIATION RIGHTS.....................................18
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS.............................19
SECTION 9 PERFORMANCE UNITS.............................................20
9.1 Grants of Units..............................20
9.2 Notice to Participants.......................20
9.3 Vesting......................................20
9.4 Valuation of Performance Units...............21
9.5 Entitlement to Payment.......................22
9.6 Deferred Payment.............................25
9.7 Acceleration of Payment Due to Change
in Control...................................25
SECTION 10 RESTRICTED STOCK.............................................25
SECTION 11 INCENTIVE AWARDS.............................................28
11.1 Procedures for Incentive Awards..............28
11.2 Performance Goal Certification...............28
11.3 Maximum Incentive Award Payable..............28
11.4 Discretion to Reduce Awards; Participant's
Performance..................................29
11.5 Required Payment of Incentive Awards.........29
11.6 Restricted Stock Election....................30
11.7 Deferred Payment.............................30
11.8 Payment Upon Change in Control...............30
SECTION 12 REGULATORY APPROVALS AND LISTING.............................31
SECTION 13 EFFECTIVE DATE AND TERM OF PLAN..............................32
SECTION 14 GENERAL PROVISIONS...........................................32
SECTION 15 COMPLIANCE WITH RULE 16b-3 AND SECTION
162(m)................................................35
SECTION 16 AMENDMENT, TERMINATION OR DISCONTINUANCE OF THE PLAN.........35
<PAGE>
EL PASO ENERGY CORPORATION
1999 OMNIBUS INCENTIVE COMPENSATION PLAN
SECTION 1 PURPOSES
The purposes of the El Paso Energy Corporation 1999
Omnibus Incentive Compensation Plan (the "Plan")
are to promote the interests of El Paso Energy
Corporation (the "Company") and its stockholders
by strengthening its ability to attract and retain
officers and key management employees ("key
management employees" means those employees who
hold the position of department director) in the
employ of the Company and its Subsidiaries (as
defined below) by furnishing suitable recognition
of their ability and industry which contribute
materially to the success of the Company and to
align the interests and efforts of the Company's
officers and key management employees to the long-
term interests of the Company's stockholders, and
to provide a direct incentive to the Participants
(as defined below) to achieve the Company's
strategic and financial goals. The Plan provides
for the grant of stock options, limited stock
appreciation rights, stock appreciation rights,
restricted stock, incentive awards and performance
units in accordance with the terms and conditions
set forth below.
SECTION 2 DEFINITIONS
Unless otherwise required by the context, the following
terms when used in the Plan shall have the
meanings set forth in this Section 2:
2.1 Adjusted Value
The dollar value of Performance Units determined as of
a Valuation Date.
2.2 Beneficiary
The person or persons designated by the Participant
pursuant to Section 6.4(f) or Section 14.7 of this
Plan to whom payments are to be paid pursuant to
the terms of the Plan in the event of the
Participant's death.
2.3 Board of Directors
The Board of Directors of the Company.
2.4 Cause
The Company may terminate the Participant's employment
for Cause. A termination for Cause is a termination
evidenced by a resolution adopted in good faith by two-
thirds (2/3) of the Board of Directors that the
Participant (i) willfully and continually failed to
substantially perform the Participant's duties with the
Company (other than a failure resulting from the
Participant's incapacity due to physical or mental
illness) which failure continued for a period of at
least thirty (30) days after a written notice of demand
for substantial performance has been delivered to the
Participant specifying the manner in which the
Participant has failed to substantially perform or (ii)
willfully engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or
otherwise; provided, however, that no termination of
the Participant's employment shall be for Cause as set
forth in clause (ii) above until (A) there shall have
been delivered to the Participant a copy of a written
notice setting forth that the Participant was guilty of
the conduct set forth in clause (ii) above and
specifying the particulars thereof in detail and (B)
the Participant shall have been provided an opportunity
to be heard by the Board of Directors (with the
assistance of the Participant's counsel if the
Participant so desires). No act, nor failure to act, on
the Participant's part shall be considered "willful"
unless the Participant has acted, or failed to act,
with an absence of good faith and without a reasonable
belief that the Participant's action or failure to act
was in the best interest of the Company.
Notwithstanding anything contained in the Plan to the
contrary, no failure to perform by the Participant
after notice of termination is given by the Participant
shall constitute Cause.
2.5 Change in Control
As used in the Plan, a Change in Control shall be
deemed to occur (i) if any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act) is
or becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent
(20%) or more of the combined voting power of the
Company's then outstanding securities, (ii) upon the
first purchase of the Common Stock pursuant to a tender
or exchange offer (other than a tender or exchange
offer made by the Company), (iii) upon the approval by
the Company's stockholders of a merger or
consolidation, a sale or disposition of all or
substantially all of the Company's assets or a plan of
liquidation or dissolution of the Company, or (iv) if,
during any period of two (2) consecutive years,
individuals who at the beginning of such period
constitute the Board of Directors cease for any reason
to constitute at least a majority thereof, unless the
election or nomination for the election by the
Company's stockholders of each new director was
approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at
the beginning of the period. Notwithstanding the
foregoing, a Change in Control shall not be deemed to
occur if the Company either merges or consolidates with
or into another company or sells or disposes of all or
substantially all of its assets to another company, if
such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the
stockholders of the Company immediately before such
merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such
merger, consolidation, sale or disposition at least
eighty percent (80%) of the combined voting power of
all outstanding classes of securities of the company
resulting from such merger or consolidation, or to
which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in
the Company immediately before such merger,
consolidation, sale or disposition.
2.6 Code
The Internal Revenue Code of 1986, as amended and in
effect from time to time, and the temporary or final
regulations of the Secretary of the U.S. Treasury
adopted pursuant to the Code.
2.7 Common Stock
The Common Stock of the Company, $3 par value per
share, or such other class of shares or other
securities as may be applicable pursuant to the
provisions of Section 5.
2.8 Exchange Act
The Securities Exchange Act of 1934, as amended.
2.9 Fair Market Value
Unless otherwise provided by the Plan Administrator
prior to the date of a Change in Control as applied to
a specific date, Fair Market Value shall be deemed to
be the mean between the highest and lowest quoted
selling prices at which Common Stock is sold on such
date as reported in the NYSE-Composite Transactions by
The Wall Street Journal for such date, or if no Common
Stock was traded on such date, on the next preceding
day on which Common Stock was so traded.
Notwithstanding the foregoing, upon the exercise,
(a) during the thirty (30) day period following a
Change in Control, of a limited stock appreciation
right or stock appreciation right granted in
connection with a Nonqualified Option more than
six (6) months prior to a Change in Control, or
(b) during the seven (7) month period following a
Change in Control, of a limited stock appreciation
right or of a stock appreciation right granted in
connection with a Nonqualified Option less than
six (6) months prior to a Change in Control,
on or after a Change in Control, Fair Market Value
on the date of exercise shall be deemed to be the
greater of (i) the highest price per share of
Common Stock as reported in the NYSE-Composite
Transactions by The Wall Street Journal during the
sixty (60) day period ending on the day preceding
the date of exercise of the stock appreciation
right or limited stock appreciation right, as the
case may be, and (ii) if the Change in Control is
one described in clause (ii) or (iii) of Section
2.5, the highest price per share paid for Common
Stock in connection with such Change in Control.
2.10 Good Reason
For purposes of the Plan, a Participant's termination
of employment for Good Reason, following a Change in
Control, shall mean the occurrence of any of the following
events or conditions:
(a) a change in the Participant's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Participant's
reasonable judgment, represents a substantial reduction
of the status, title, position or responsibilities as
in effect immediately prior thereto; the assignment to
the Participant of any duties or responsibilities
which, in the Participant's reasonable judgment, are
inconsistent with such status, title, position or
responsibilities; or any removal of the Participant
from or failure to reappoint or reelect the Participant
to any of such positions, except in connection with the
termination of the Participant's employment for Cause,
for Permanent Disability or as a result of his or her
death, or by the Participant other than for Good
Reason;
(b) a reduction in the Participant's annual base
salary;
(c) the Company's requiring the Participant
(without the consent of the Participant) to be
based at any place outside a thirty-five (35) mile
radius of his or her place of employment prior to
a Change in Control, except for reasonably
required travel on the Company's business which is
not materially greater than such travel
requirements prior to the Change in Control;
(d) the failure by the Company to (i) continue in
effect any material compensation or benefit plan
in which the Participant was participating at the
time of the Change in Control, including, but not
limited to, the Plan, the El Paso Energy
Corporation Pension Plan, the El Paso Energy
Corporation Supplemental Benefits Plan, the El
Paso Energy Corporation Deferred Compensation Plan
and the El Paso Energy Corporation Retirement
Savings Plan, with any amendments and restatements
of such plans (or substantially similar successor
plans) made prior to such Change in Control; or
(ii) provide the Participant with compensation and
benefits at least equal (in terms of benefit
levels and/or reward opportunities) to those
provided for under each employee benefit plan,
program and practice as in effect immediately
prior to the Change in Control (or as in effect
following the Change in Control, if greater);
(e) any material breach by the Company of any
provision of the Plan; or
(f) any purported termination of the Participant's
employment for Cause by the Company which does not
otherwise comply with the terms of the Plan.
2.11 Incentive Award
A percentage of base salary, fixed dollar amount or
other measure of compensation for which Participants are
eligible to receive, in cash and/or shares of Restricted
Stock, at the end of a Performance Period if certain
Performance Goals are achieved.
2.12 Incentive Stock Option
An option intended to meet the requirements of an
Incentive Stock Option as defined in Section 422 of the
Code, as in effect at the time of grant of such option, or
any statutory provision that may hereafter replace such
Section.
2.13 Management Committee
A committee consisting of the Chief Executive Officer
and such other senior officers as the Chief Executive
Officer shall designate.
2.14 Maximum Annual Employee Grant
The Maximum Annual Employee Grant set forth in Section
5.4.
2.15 Nonqualified Option
An option which is not intended to meet the
requirements of an Incentive Stock Option as defined in
Section 422 of the Code.
2.16 Option Price
The price per share of Common Stock at which an option
is exercisable.
2.17 Participant
An eligible employee to whom an option, limited stock
appreciation right, stock appreciation right, Restricted
Stock, Incentive Award or Performance Unit is granted under
the Plan as set forth in Section 4.
2.18 Performance Cycle
That period commencing with January 1 of each year in
which the grant of a Performance Unit is made and ending on
December 31 of the third succeeding year, or such other time
period as the Plan Administrator may determine. The Plan
Administrator, it its discretion, may initiate an
overlapping Performance Cycle that begins before an existing
Performance Cycle has ended.
2.19 Performance Goals
The Plan Administrator shall establish one or more
performance goals ("Performance Goals") for each Performance
Period in writing. Such Performance Goals shall be set no
later than the commencement of the applicable Performance
Period, or such later date as may be permitted with respect
to "performance-based" compensation under Section 162(m) of
the Code, and shall establish the amount of any Incentive
award to be granted to each Participant, subject to Section
5.4 below.
Each Performance Goal selected for a particular
Performance Period shall be any one or more of the
following, either individually, alternatively or in any
combination, applied to either the Company as a whole or to
a Subsidiary or business unit, either individually,
alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an
absolute basis or relative to the pre-established target, to
previous years' results or to a designated comparison group,
in each case as specified by the Plan Administrator: Total
Shareholder Return, operating income, pre-tax profit,
earnings per share, cash flow, return on capital, return on
equity, return on net assets, net income, debt reduction,
safety, return on investment, revenues, or Common Stock
price. The foregoing terms shall have the same meaning as
used in the Company's financial statements, or if the terms
are not used in the Company's financial statements, they
shall have the meaning generally applied pursuant to general
accepted accounting principles, or as used in the industry,
as applicable. The Plan Administrator may appropriately
adjust any evaluation of performance under a Performance
Goal to exclude any of the following events that occurs
during a Performance Period: (i) asset write-downs, (ii)
litigation or claim judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other
such laws or provisions affecting reported results, (iv)
accruals for reorganization and restructuring programs, and
(v) extraordinary non-recurring items as described in
Accounting Principles Board Opinion No. 30 and/or in
management's discussion and analysis of financial condition
and results of operations appearing in the Company's annual
report to stockholders for the applicable year.
2.20 Performance Peer Group
Those publicly held companies selected by the Plan
Administrator prior to the commencement of a Performance
Period, or such later date as may be permitted under Section
162(m) of the Code, consistent with maintaining the status
of Performance Units as "performance-based compensation," to
form a comparative performance group in applying Section
9.4.
2.21 Performance Period
That period of time during which Performance Goals are
measured to determine the vesting or granting of options,
limited stock appreciation rights, stock appreciation
rights, Restricted Stock, Performance Units or Incentive
Awards, as the Plan Administrator may determine.
2.22 Performance Ranking Position
The relative placement of the Company's Total
Shareholder Return measured against the Total Shareholder
Return of the other companies in the Performance Peer Group
for which purposes rank shall be determined by quartile,
with a ranking in the first (1st) quartile (e.g., the
Company's Total Shareholder Return is equal to or greater
than the Total Shareholder Return of at least seventy-five
percent (75%) of the Performance Peer Group) corresponding
to the highest quartile of Total Shareholder Return.
2.23 Performance Unit or Units
Units of long-term incentive compensation granted to a
Participant with respect to a particular Performance Cycle.
2.24 Permanent Disability or Permanently Disabled
A Participant shall be deemed to have become
Permanently Disabled for purposes of the Plan if the Chief
Executive Officer of the Company shall find upon the basis
of medical evidence satisfactory to the Chief Executive
Officer that the Participant is totally disabled, whether
due to physical or mental condition, so as to be prevented
from engaging in further employment by the Company or any of
its Subsidiaries, and that such disability will be permanent
and continuous during the remainder of the Participant's
life; provided, that with respect to Section 16 Insiders
such determination shall be made by the Plan Administrator.
2.25 Plan Administrator
The Board of Directors or the committee appointed
and/or authorized pursuant to Section 3 to administer the
Plan.
2.26 Restricted Stock
Common Stock granted under the Plan that is subject to
the requirements of Section 10 and such other restrictions
as the Plan Administrator deems appropriate. References to
Restricted Stock in this Plan shall include Performance
Restricted Stock (as defined in Section 5.2) unless the
context otherwise requires.
2.27 Rule 16b-3
Rule 16b-3 of the General Rules and Regulations under
the Exchange Act.
2.28 Section 16 Insider
Any person who is selected by the Plan Administrator to
receive options, limited stock appreciation rights, stock
appreciation rights, Restricted Stock, Incentive Award
and/or Performance Units pursuant to the Plan and who is
subject to the requirements of Section 16 of the Exchange
Act, and the rules and regulations promulgated thereunder.
2.29 Section 162(m)
Section 162(m) of the Code, and regulations promulgated
thereunder.
2.30 Subsidiary
An entity that is designated by the Plan Administrator
as a subsidiary for purposes of the Plan and that is a
corporation, partnership, joint venture, limited liability
company, limited liability partnership, or other entity, in
which the Company owns directly or indirectly, fifty percent
(50%) or more of the voting power or profit interests, or as
to which the Company or one of its affiliates serve as
general or managing partner or in a similar capacity.
Notwithstanding the foregoing, for purposes of options
intended to qualify as incentive stock options, the term
"Subsidiary" shall mean a corporation (or other entity
treated as a corporation for tax purposes) in which the
Company directly or indirectly holds more than fifty percent
(50%) of the voting power.
2.31 Total Shareholder Return
The sum of (i) the appreciation or depreciation in the
price of a share of a company's common stock, and (ii) the
dividends and other distributions paid during the applicable
Performance Cycle, expressed as a percentage basis of the
Fair Market Value of such share on the first day of the
applicable Performance Cycle, as calculated in a manner
determined by the Plan Administrator.
2.32 Valuation Date
The date for determining the Adjusted Value of vested
Units that will be paid or credited to the Participant or
Beneficiary in accordance with Section 9.5 or 9.6. The
Valuation Date shall occur on the last day of the applicable
Performance Cycle, or such other time as provided in this
Plan, or as the Plan Administrator may select. The
Valuation Date for each Performance Cycle shall be set forth
in the grant of Performance Units and shall be established
no later than the date on which the Performance Goals for a
particular Performance Cycle are selected, except as
otherwise specifically provided herein.
SECTION 3 ADMINISTRATION
3.1 With respect to awards made under the Plan to Section 16
Insiders, the Plan shall be administered by the Board of
Directors or Compensation Committee of the Board of
Directors, which shall be constituted at all times so
as to meet the non-employee director standards of Rule
16b-3 and the outside director requirements of Section
162(m), so long as any of the Company's equity securities
are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act. Subject to the Board of Directors, and
as may be required by the foregoing sentence, the Plan
shall be administered by the Management Committee.
No member of the Board of Directors or the Plan
Administrator shall vote with respect directly to the
granting of options, limited stock appreciation rights,
stock appreciation rights, Restricted Stock, Incentive
Awards and/or Performance Units hereunder to himself or
herself, as the case may be, and, if state corporate law
does not permit a committee to grant options, limited stock
appreciation rights, stock appreciation rights, Restricted
Stock, Incentive Awards and Performance Units to directors,
then any option, limited stock appreciation right, stock
appreciation right, Restricted Stock, Incentive Award or
Performance Unit granted under the Plan to a director for
his or her services as such shall be approved by the full
Board of Directors.
3.2 Except for the terms and conditions explicitly set
forth in the Plan, the Plan Administrator shall have sole
authority to construe and interpret the Plan, to establish,
amend and rescind rules and regulations relating to the
Plan, to select persons eligible to participate in the Plan,
to grant options, limited stock appreciation rights, stock
appreciation rights, Restricted Stock, Incentive Awards and
Performance Units thereunder, to administer the Plan, to
make recommendations to the Board of Directors, and to take
all such steps and make all such determinations in
connection with the Plan and the options, limited stock
appreciation rights, stock appreciation rights, Restricted
Stock, Incentive Awards and Performance Units granted
thereunder as it may deem necessary or advisable, which
determination shall be final and binding upon all
Participants, so long as such interpretation and
construction with respect to Incentive Stock Options
corresponds to any applicable requirements of Section 422 of
the Code. The Plan Administrator shall cause the Company at
its expense to take any action related to the Plan which may
be necessary to comply with the provisions of any federal or
state law or any regulations issued thereunder, which the
Plan Administrator determines are intended to be complied
with.
3.3 Each member of any committee acting as Plan
Administrator, while serving as such, shall be considered to
be acting in his or her capacity as a director of the
Company. Members of the Board of Directors and members of
any committee acting under the Plan shall be fully protected
in relying in good faith upon the advice of counsel and
shall incur no liability except for gross negligence or
willful misconduct in the performance of their duties.
SECTION 4 ELIGIBILITY
To be eligible for selection by the Plan Administrator
to participate in the Plan, an individual must be an officer
or key management employee of the Company, or of any
Subsidiary, as of the date on which the Plan Administrator
grants to such individual an option, limited Stock
appreciation right, stock appreciation right, Restricted
Stock, Incentive Award or Performance Unit or a person who,
in the judgment of the Plan Administrator, holds a position
of responsibility and is able to contribute substantially to
the Company's continued success. Members of the Board of
Directors of the Company who are full-time salaried officers
shall be eligible to participate. Members of the Board of
Directors who are not employees are not eligible to
participate in this Plan.
SECTION 5 SHARES AND UNITS AVAILABLE FOR THE PLAN
5.1 Subject to Section 5.5, the maximum number of
shares that may be issued upon settlement of Incentive
Awards or Performance Units and exercise of options, limited
stock appreciation rights, stock appreciation rights and
Restricted Stock granted under the Plan is six million
(6,000,000) shares of Common Stock, from shares held in the
Company's treasury or out of authorized but unissued shares
of the Company, or partly out of each, as shall be
determined by the Board of Directors. For purposes of
Section 5.1, the aggregate number of shares of Common Stock
issued under this Plan at any time shall equal only the
number of shares actually issued upon exercise or settlement
of options, limited stock appreciation rights, stock
appreciation rights, Restricted Stock, Incentive Awards and
Performance Units and not returned to the Company upon
cancellation, expiration or forfeiture of any such award or
delivered (either actually or by attestation) in payment or
satisfaction of the purchase price, exercise price or tax
obligation of the award.
5.2 Notwithstanding the foregoing, and subject to
Section 5.5, the number of shares for which Restricted Stock
may be granted pursuant to Section 10 of the Plan may not
exceed two million (2,000,000) shares of Common Stock,
including the granting or vesting of Restricted Stock that
is in compliance with the performance-based requirements of
Section 162(m) (the "Performance Restricted Stock").
5.3 Subject to Section 5.5, the number of Performance
Units which may be granted under the Plan is set at five
hundred thousand (500,000) Units. Units that have been
granted and are fully vested or that still may become fully
vested under the terms of the Plan shall reduce the number
of outstanding Units that are available for use in making
future grants under the Plan.
5.4 The maximum number of shares, as calculated in
accordance with the provisions of Section 5.1, and maximum
dollar amount with respect to which awards under this Plan
may be granted to any eligible employee in any one year
shall not exceed: (a) one million (1,000,000) in the case of
options (and related limited stock appreciation rights or
stock appreciation rights) or issuable upon settlement of
Performance Units; (b) one million (1,000,000) in the case
of shares of Restricted Stock (whether or not such
Restricted Stock is Performance Restricted Stock); and (c)
five million dollars ($5,000,000) in cash, Restricted Stock
or a combination thereof, in the case of Incentive Awards.
With respect to Performance Units, the maximum Units granted
to any eligible employee for any Performance Cycle shall not
exceed one hundred thousand (100,000) Performance Units.
Collectively, the foregoing maximums referred in this
Section 5.5 shall be referred to as the "Maximum Annual
Employee Grant."
5.5 In the event of a recapitalization, stock split,
stock dividend, exchange of shares, merger, reorganization,
change in corporate structure or shares of the Company or
similar event, the Board of Directors, upon the
recommendation of the Plan Administrator, may make
appropriate adjustments in the number of shares authorized
for the Plan, the Maximum Annual Employee Grant and, with
respect to outstanding options, limited stock appreciation
rights, stock appreciation rights, and Restricted Stock, the
Plan Administrator may make appropriate adjustments in the
number of shares and the Option Price, except that any such
adjustments for purposes of Sections 5.4 and 6.3 shall be
consistent with the requirements under Code Sections 162(m)
and 422, respectively.
SECTION 6 STOCK OPTIONS
6.1 Options may be granted to eligible employees in
such number, and at such times during the term of the Plan
as the Plan Administrator shall determine, the Plan
Administrator taking into account the duties of the
respective employees, their present and potential
contributions to the success of the Company, and such other
factors as the Plan Administrator shall deem relevant in
accomplishing the purposes of the Plan. The granting of an
option shall take place when the Plan Administrator by
resolution, written consent or other appropriate action
determines to grant such an option to a particular
Participant at a particular price. Each option shall be
evidenced by a written instrument delivered by or on behalf
of the Company containing provisions not inconsistent with
the Plan, which may (but need not) require the Participant's
signature.
6.2 An option granted under the Plan may be either an
Incentive Stock Option or a Nonqualified Option.
6.3 Each provision of the Plan and each Incentive
Stock Option granted thereunder shall be construed so that
each such option shall qualify as an Incentive Stock Option,
and any provision thereof that cannot be so construed shall
be disregarded, unless the Participant agrees otherwise.
The total number of shares which may be purchased upon the
exercise of Incentive Stock Options granted under the Plan
shall not exceed the total specified in Section 5.1.
Incentive Stock Options, in addition to complying with the
other provisions of the Plan relating to options generally,
shall be subject to the following conditions:
(a) Ten Percent (10%) Stockholders
A Participant must not, immediately before an
Incentive Stock Option is granted to him or her, own
stock representing more than ten percent (10%) of the
voting power or value of all classes of stock of the
Company or of a Subsidiary. This requirement is waived
if (i) the Option Price of the Incentive Stock Option
to be granted is at least one hundred ten percent
(110%) of the Fair Market Value of the stock subject to
the option, determined at the time the option is
granted, and (ii) the option is not exercisable more
than five (5) years from the date the option is
granted.
(b) Annual Limitation
To the extent that the aggregate Fair Market Value
(determined at the time of the grant of the option) of
the stock with respect to which Incentive Stock Options
are exercisable for the first time by the Participant
during any calendar year exceeds One Hundred Thousand
Dollars ($100,000), such options shall be treated as
Nonqualified Options.
(c) Additional Terms
Any other terms and conditions which the Plan
Administrator determines, upon advice of counsel, must
be imposed for the option to be an Incentive Stock
Option.
6.4 Except as otherwise provided in Section 6.3, all
Incentive Stock Options and Nonqualified Options under the
Plan shall be granted subject to the following terms and
conditions:
(a) Option Price
The Option Price shall be determined by the Plan
Administrator, but shall not be less than one hundred
percent (100%) of the Fair Market Value of the Common
Stock on the date the option is granted.
(b) Duration of Options
Options shall be exercisable at such time and
under such conditions as set forth in the option grant,
but in no event shall any Incentive Stock Option be
exercisable subsequent to the day before the tenth
anniversary of the date on which the option is granted,
nor shall any other option be exercisable later than
the tenth anniversary of the date of its grant.
(c) Exercise of Options
Subject to Section 6.4(j), a Participant may not
exercise an option until the Participant has completed
one (1) year of continuous employment with the Company
or any of its Subsidiaries from and including the date
on which the option is granted, or such longer period
as the Plan Administrator may determine in a particular
case. This requirement is waived in the event of
death, Permanent Disability of a Participant or a
Change in Control before such period of continuous
employment is completed and may be waived or modified
in the agreement evidencing the option or by resolution
adopted at any time by the Plan Administrator.
Thereafter, shares of Common Stock covered by an option
may be purchased at one time or in such installments
over the balance of the option period as may be
provided in the option grant. Any shares not purchased
on the applicable installment date may be purchased
thereafter at any time prior to the final expiration of
the option. To the extent that the right to purchase
shares has accrued thereunder, options may be exercised
from time to time by written notice to the Company
setting forth the number of shares with respect to
which the option is being exercised.
(d) Payment
The purchase price of shares purchased under
options shall be paid in full to the Company upon the
exercise of the option by delivery of consideration
equal to the product of the Option Price and the number
of shares purchased (the "Purchase Price"). Such
consideration may be either (i) in cash or (ii) at the
discretion of the Plan Administrator, in Common Stock
already owned by the Participant for at least six (6)
months, or any combination of cash and Common Stock.
The Fair Market Value of such Common Stock as delivered
shall be valued as of the day prior to delivery. The
Plan Administrator can determine that additional forms
of payment will be permitted. To the extent permitted
by the Plan Administrator and applicable laws and
regulations (including, but not limited to, federal tax
and securities laws, regulations and state corporate
law), an option may also be exercised in a "cashless"
exercise by delivery of a properly executed exercise
notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of
sale or loan proceeds to pay the Purchase Price. A
Participant shall have none of the rights of a
stockholder until the shares of Common Stock are issued
to the Participant.
If specifically authorized in the option grant, a
Participant may elect to pay all or a portion of the
Purchase Price by having shares of Common Stock with a
Fair Market Value equal to all or a portion of the
Purchase Price be withheld from the shares issuable to
the Participant upon the exercise of the option;
provided that such shall be permitted of a Participant
who is a Section 16 Insider only if approved in advance
by the Board of Directors or the Compensation
Committee, if required by Section 16, and rules
promulgated thereunder, of the Exchange Act. The Fair
Market Value of such Common Stock as is withheld shall
be determined as of the same day as the exercise of the
option.
Notwithstanding any other provision in this Plan
to the contrary and unless the Plan Administrator shall
otherwise determine, in the event of a "cashless"
exercise, and for that purpose only under this Plan, a
Participant's compensation shall be equal to the
difference between the actual sales price received for
the underlying Common Stock and the Option Price. For
all other purposes under this Plan, the Fair Market
Value shall be the value against which compensation is
determined.
(e) Restrictions
The Plan Administrator shall determine and reflect
in the option grant, with respect to each option, the
nature and extent of the restrictions, if any, to be
imposed on the shares of Common Stock which may be
purchased thereunder, including, but not limited to,
restrictions on the transferability of such shares
acquired through the exercise of such options for such
periods as the Plan Administrator may determine and,
further, that in the event a Participant's employment
by the Company, or a Subsidiary, terminates during the
period in which such shares are nontransferable, the
Participant shall be required to sell such shares back
to the Company at such prices as the Plan Administrator
may specify in the option. In addition, the Plan
Administrator may require that a Participant who wants
to effectuate a "cashless" exercise of options be
required to sell the shares of Common Stock acquired in
the associated exercise to the Company, or in the open
market through the use of a broker selected by the
Company, at such price and on such terms as the Plan
Administrator may determine at the time of grant, or
otherwise.
(f ) Nontransferability of Options
Options granted under the Plan and the rights and
privileges conferred thereby shall not be subject to
execution, attachment or similar process and may not be
transferred, assigned, pledged or hypothecated in any
manner (whether by operation of law or otherwise) other
than by will or by the applicable laws of descent and
distribution. Notwithstanding the foregoing and only
as provided by the Plan Administrator or the Company,
as applicable, Nonqualified Options may be transferred
to a Participant's immediate family members, directly
or indirectly or by means of a trust, corporate entity
or partnership (a person who thus acquires this option
by such transfer, a "Permitted Transferee"). A
transfer of an option may only be effected by the
Company at the request of the Participant and shall
become effective upon the Permitted Transferee agreeing
to such terms as the Plan Administrator may require and
only when recorded in the Company's record of
outstanding options. In the event an option is
transferred as contemplated hereby, the option may not
be subsequently transferred by the Permitted Transferee
except a transfer back to the Participant or by will or
the laws of descent and distribution. A transferred
option may be exercised by a Permitted Transferee to
the same extent as, and subject to the same terms and
conditions as, the Participant (except as otherwise
provided herein), as if no transfer had taken place.
As used herein, "immediate family" shall mean, with
respect to any person, such person's child, stepchild,
grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law, and
shall include adoptive relationships. In the event of
exercise of a transferred option by a Permitted
Transferee, any amounts due to (or to be withheld by)
the Company upon exercise of the option shall be
delivered by (or withheld from amounts due to) the
Participant, the Participant's estate or the Permitted
Transferee, in the reasonable discretion of the
Company.
In addition, to the extent permitted by applicable
law and Rule 16b-3, the Plan Administrator may permit a
recipient of a Nonqualified Option to designate in
writing during the Participant's lifetime a Beneficiary
to receive and exercise the Participant's Nonqualified
Options in the event of such Participant's death (as
provided in Section 6.4(i)). A designation by a
Participant under the Company's Omnibus Compensation
Plan dated as of January 1, 1992, as amended, or the
Company's 1995 Omnibus Compensation Plan effective as
of January 13, 1995, as amended and restated (the
"Predecessor Plans"), shall remain in effect under the
Plan for any options unless such designation is revoked
or changed under the Plan. Except as otherwise
provided for herein, if any Participant attempts to
transfer, assign, pledge, hypothecate or otherwise
dispose of any option under the Plan or of any right or
privilege conferred thereby, contrary to the provisions
of the Plan or such option, or suffers the sale or levy
or any attachment or similar process upon the rights
and privileges conferred hereby, all affected options
held by such Participant shall be immediately
forfeited.
(g) Purchase for Investment
The Plan Administrator shall have the right to
require that each Participant or other person who shall
exercise an option under the Plan, and each person into
whose name shares of Common Stock shall be issued
pursuant to the exercise of an option, represent and
agree that any and all shares of Common Stock purchased
pursuant to such option are being purchased for
investment only and not with a view to the distribution
or resale thereof and that such shares will not be sold
except in accordance with such restrictions or
limitations as may be set forth in the option or by the
Plan Administrator. This Section 6.4(g) shall be
inoperative during any period of time when the Company
has obtained all necessary or advisable approvals from
governmental agencies and has completed all necessary
or advisable registrations or other qualifications of
shares of Common Stock as to which options may from
time to time be granted as contemplated in Section 12.
(h) Termination of Employment
Upon the termination of a Participant's employment
for any reason other than death or Permanent
Disability, the Participant's option shall be
exercisable only to the extent that it was then
exercisable and, unless the term of the options expires
sooner, such options shall expire according to the
following schedule; provided, that the Plan
Administrator may at any time determine in a particular
case that specific limitations and restrictions under
the Plan shall not apply:
(i) Retirement
The option shall expire, unless exercised,
thirty-six (36) months after the Participant's
retirement from the Company or any Subsidiary.
(ii) Disability
The option shall expire, unless exercised,
thirty-six (36) months after the Participant's
termination on account of Permanent Disability.
(iii) Termination
Subject to subparagraphs (iv) and (v) below,
the option shall expire, unless exercised, for a
period not to exceed thirty-six (36) months, as
specified in the grant letter, after a Participant
resigns or is terminated as an employee of the
Company or any of its Subsidiaries, unless the
Chief Executive Officer of the Company shall have
determined in a specific case that the option
should expire sooner or should terminate when the
Participant's employment status ceases; provided,
however, that for Section 16 Insiders, such
determination shall be made by the Plan
Administrator.
(iv) Termination Following a Change in Control
The option shall expire, unless exercised or
expiring earlier in accordance with its original
terms, thirty-six (36) months after a
Participant's termination of employment (other
than a termination by the Company for Cause or a
voluntary termination by the Participant other
than for Good Reason) following a Change in
Control, provided that said termination of
employment occurs within two (2) years following a
Change in Control.
(v) All Other Terminations
Notwithstanding subparagraphs (iii) and (iv)
above, the option shall expire upon termination of
employment for Cause and any option intended to
qualify as an Incentive Stock Option shall expire,
unless exercised, one year after the Participant's
termination of employment on account of disability
(as defined in Section 22(e)(3) of the Code) and
shall expire three (3) months after the
Participant's termination of employment other than
on account of death, Permanent Disability or
termination for Cause.
(i) Death of Participant
Upon the death of a Participant, whether during
the Participant's period of employment or during the
thirty-six (36) month period referred to in Sections
6.4(h)(i), (ii) and (iii), the option shall expire,
unless the original term of the option expires sooner,
twelve (12) months after the date of the Participant's
death, unless the option is exercised within such
twelve (12) month period by the Participant's
Beneficiary, legal representatives, estate or the
person or persons to whom the deceased's option rights
shall have passed by will or the laws of descent and
distribution; provided, that the Plan Administrator may
determine in a particular case that specific
limitations and restrictions under the Plan shall not
apply. Notwithstanding any other Plan provisions
pertaining to the times at which options may be
exercised, no option shall continue to be exercisable,
pursuant to Section 6.4(h) or this Section 6.4(i), at a
time that would violate the maximum duration of Section
6.4(b).
(j) Change in Control
Notwithstanding other Plan provisions pertaining
to the times at which options may be exercised, all
outstanding options, to the extent not then currently
exercisable, shall become exercisable in full upon the
occurrence of a Change in Control. No option (whether
or not intended to be an Incentive Stock Option) shall
continue to be exercisable, pursuant to Sections 6.4(h)
and 6.4(i), at a time that would violate the maximum
duration of Section 6.4(b).
(k) Deferral Election
A Participant may elect irrevocably (at a time and
in a manner determined by the Plan Administrator or the
Company, as appropriate) prior to exercising an option
granted under the Plan that issuance of shares of
Common Stock upon exercise of such option and/or
associated stock appreciation right shall be deferred
until a pre-specified date in the future or until the
Participant ceases to be employed by the Company or any
of its Subsidiaries, as elected by the Participant.
After the exercise of any such option and prior to the
issuance of any deferred shares, the number of shares
of Common Stock issuable to the Participant shall be
credited to the deferred stock account (or such other
account(s) as the management committee shall deem
necessary and appropriate) under a memorandum deferred
account established pursuant the Company's then-
existing Deferred Compensation Plan (as it may be
further amended) (the "Deferred Compensation Plan"),
and any dividends or other distributions paid on the
Common Stock (or its equivalent) shall be deemed
reinvested in additional shares of Common Stock (or its
equivalent) until all credited deferred shares shall
become issuable pursuant to the Participant's election,
unless the management committee of the Deferred
Compensation Plan shall otherwise determine.
SECTION 7 STOCK APPRECIATION RIGHTS
7.1 The Plan Administrator may grant stock
appreciation rights to Participants in connection with any
option granted under the Plan, either at the time of the
grant of such option or at any time thereafter during the
term of the option. Such stock appreciation rights shall
cover the same number of shares covered by the options (or
such lesser number of shares of Common Stock as the Plan
Administrator may determine) and shall, except as provided
in Section 7.3, be subject to the same terms and conditions
as the related options and such further terms and conditions
not inconsistent with the Plan as shall from time to time be
determined by the Plan Administrator.
7.2 Each stock appreciation right shall entitle the
holder of the related option to surrender to the Company
unexercised the related option, or any portion thereof, and
to receive from the Company in exchange therefor an amount
equal to the excess of the Fair Market Value of one share of
Common Stock on the date the right is exercised over the
Option Price per share times the number of shares covered by
the option, or portion thereof, which is surrendered.
Payment shall be made in shares of Common Stock valued at
Fair Market Value as of the date the right is exercised, or
in cash, or partly in shares and partly in cash, at the
discretion of the Plan Administrator; provided, however,
that payment shall be made solely in cash with respect to a
stock appreciation right which is exercised within seven (7)
months following a Change in Control. Stock appreciation
rights may be exercised from time to time upon actual
receipt by the Company of written notice stating the number
of shares of Common Stock with respect to which the stock
appreciation right is being exercised. The value of any
fractional shares shall be paid in cash.
7.3 Stock appreciation rights are subject to the
following restrictions:
(a) Each stock appreciation right shall be
exercisable at such time or times as the option to
which it relates shall be exercisable, or at such other
times as the Plan Administrator may determine. In the
event of death or Permanent Disability of a Participant
during employment but before the Participant has
completed such period of continuous employment, such
stock appreciation right shall be exercisable; but only
within the period specified in the related option. In
the event of a Change in Control, the requirement that
a Participant shall have completed a six (6) month
period of continuous employment is waived with respect
to a Participant who is employed by the Company at the
time of the Change in Control but who, within the six
(6) month period, voluntarily terminates employment for
Good Reason or is terminated by the Company other than
for Cause.
(b) Except following a Change in Control, each
request to exercise a stock appreciation right
shall be subject to approval or denial in whole or
in part by the Plan Administrator in its sole
discretion. Denial or approval of such request
shall not require a subsequent request to be
similarly treated by the Plan Administrator.
(c) The right of a Participant to exercise a stock
appreciation right shall be canceled if and to the
extent the related option is exercised. To the
extent that a stock appreciation right is
exercised, the related option shall be deemed to
have been surrendered unexercised and canceled.
(d) A holder of stock appreciation rights shall
have none of the rights of a stockholder until
shares of Common Stock, if any, are issued to such
holder pursuant to such holder's exercise of such
rights.
(e) The acquisition of Common Stock pursuant to
the exercise of a stock appreciation right shall
be subject to the same restrictions as would apply
to the acquisition of Common Stock acquired upon
exercise of the related option, as set forth in
Section 6.4.
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS
8.1 The Plan Administrator may grant limited stock
appreciation rights to Participants in connection with any
options granted under the Plan, either at the time of the
grant of such option or at any time thereafter during the
term of the option. Such limited stock appreciation rights
shall cover the same number of shares covered by the options
(or such lesser number of shares of Common Stock as the Plan
Administrator may determine) and shall, except as provided
in Section 8.3, be subject to the same terms and conditions
as the related options and such further terms and conditions
not inconsistent with the Plan as shall from time to time be
determined by the Plan Administrator.
8.2 Each limited stock appreciation right shall
entitle the holder of the related option to surrender to the
Company the unexercised portion of the related option and to
receive from the Company in exchange therefor an amount in
cash equal to the excess of the Fair Market Value of one (1)
share of Common Stock on the date the right is exercised
over the Option Price per share times the number of shares
covered by the option, or portion thereof, which is
surrendered.
8.3 Limited stock appreciation rights are subject to
the following restrictions:
(a) Each limited stock appreciation right shall be
exercisable in full for a period of seven (7) months
following the date of a Change in Control regardless of
whether the holder is employed by the Company or any of
its Subsidiaries on the date the right is exercised.
Limited stock appreciation rights shall be exercisable
only to the same extent and subject to the same
conditions as the options related thereto are
exercisable, as provided in Section 6.4(j).
(b) The right of a Participant to exercise a
limited stock appreciation right shall be canceled
if and to the extent the related option is
exercised. To the extent that a limited stock
appreciation right is exercised, the related
option shall be deemed to have been surrendered
unexercised and canceled.
SECTION 9 PERFORMANCE UNITS
9.1 Grants of Units
Subject to the Maximum Annual Employee Grant, Units may
be granted to Participants in such number as the Plan
Administrator shall determine, taking into account the
duties of the respective Participants, their present and
potential contributions to the success of the Company or its
Subsidiaries, their compensation provided by other incentive
plans, their salaries, and such other factors as the Plan
Administrator shall deem appropriate. Normally, Units will
be granted only at the beginning of each Performance Cycle
except in cases where a prorated grant may be made in mid-
cycle to a newly eligible Participant or a Participant whose
job responsibilities have significantly changed during the
cycle.
9.2 Notice to Participants
The Plan Administrator shall notify each Participant in
writing of the grant of Units to the Participant. Such
notice shall set forth the Total Shareholder Return
requirements, vesting schedule and other terms and
conditions applicable to such Units, and may (but need not)
require the Participant's signature.
9.3 Vesting
(a) Vesting Schedule
The Plan Administrator shall adopt a vesting
schedule for each year of a Performance Cycle. Vesting
of Units for each year may (i) occur automatically
after a Participant has completed the specified period
of continuous employment with the Company or any of its
Subsidiaries from the date of grant of such Units, (ii)
be contingent upon attaining certain levels of Total
Shareholder Return for the year in which the Units are
eligible to vest, or (iii) occur at such other times or
subject to such other criteria as the Plan
Administrator may determine. The Plan Administrator
may, in its discretion, alter the vesting guidelines in
the event of unusual circumstances provided that to the
extent applicable any such discretion shall be
exercised in a manner consistent with Section 162(m).
Vesting of Units with respect to Participants who begin
participation or receive an additional grant of Units
during the Performance Cycle will be determined by the
Plan Administrator at the time of grant.
(b) Change in Control
Notwithstanding the foregoing vesting provisions,
upon a Change in Control all unvested Units shall
become fully vested on a pro rata basis measured in the
next higher whole year between (i) the date of grant
and (ii) the date of a Change in Control.
9.4 Valuation of Performance Units
All Performance Units granted to Participants under the
Plan shall be valued as follows:
(a) Initial and Continuing Value
Each Performance Unit shall have an initial value
of one hundred dollars ($100) as of the date of the
grant of Performance Units. Except where the Adjusted
Value of Performance Units is determined as provided
under Section 9.4(b), each Performance Unit shall
continue to have a dollar value of one hundred dollars
($100) on each date subsequent to the date of grant of
the Performance Unit.
(b) Adjusted Value
The determination of the Adjusted Value of
Performance Units for benefit payments under Sections
9.5(b)(i) and 9.5(b)(ii) as of any relevant Valuation
Date shall be made based on the Company's Performance
Ranking Position for the applicable Performance Cycle
compared to the Performance Ranking Position of the
Performance Peer Group, based on the following
schedule:
Company's
Performance Adjusted
Ranking Position Value
------------------- ---------------
1st Quartile $ 150
2nd Quartile $ 100
3rd Quartile $ 50
4th Quartile $ 0
If any company which is a member of the Performance
Peer Group that (i) ceases to exist by reason of a
liquidation, merger or other transaction; (ii)
undergoes a significant alternation in size, through
recapitalization or otherwise, such that its total
market capitalization as determined from its published
financial statements is more than fifty (50%) greater
or less than its total market capitalization as of the
grant date for the applicable Performance Cycle; or
(iii) otherwise changes its line of business
significantly to make it inappropriate to use such
company in comparison, and if such event(s) occurs
after the time the Plan Administrator can alter the
Performance Peer Group under Section 2.20 above, then
such company shall be considered to remain in the
Performance Peer Group, and to have achieved a Total
Shareholder Return less than the Company's Total
Shareholder Return without regard to any actual Total
Shareholder Return actually achieved by such company,
provided, however, that the Plan Administrator shall
have the authority to reduce the Adjusted Value of
Performance Units in such event if it determines that
such reduction is appropriate in view of the Company's
performance relative to those companies in the
Performance Peer Group and not described in clauses
(i), (ii) or (iii), above.
9.5 Entitlement to Payment
(a) Performance Certification
The Plan Administrator shall certify in writing,
prior to payment of the Performance Units pursuant to
this Section 9.5, the Company's Performance Ranking
Position. In no event will an award be payable under
this Section 9 if the Company's Performance Ranking
Position is in the fourth (4th) quartile.
(b) Eligibility for Benefit Payments
Benefit payments with respect to vested
Performance Units shall be paid under the following
circumstances:
(i) Primary Benefit Payment
Upon the expiration of each Performance
Cycle, all uncanceled Performance Units granted
with respect to such Performance Cycle shall vest
and benefit payments with respect to such
Performance Units shall become payable. A
Participant who has remained an employee
continuously from the date of the grant of the
Performance Units for a Performance Cycle through
the last day of such Performance Cycle shall be
eligible to receive a benefit payment equal to the
Adjusted Value, as provided for in Section 9.4(b),
of the Performance Units (the "Primary Benefit")
with respect to and as of the close of such
Performance Cycle. The Valuation Date for
determining such Adjusted Value shall be
established by the Plan Administrator at the time
the Performance Units are granted. The amount of
any benefit payment payable with respect to
Performance Units shall be reduced by the amount
of any interim benefit payments made pursuant to
Section 9.5(b)(ii) with respect to such
Performance Units. If the interim benefit
payments exceed the Primary Benefit, no payment
shall be made.
(ii) Interim Benefit Payments
The Plan Administrator may in its sole
discretion provide for an interim benefit payment
to be made to a Participant with respect to
Performance Units granted for any particular
Performance Cycle. The right to any interim
benefit payment shall be set forth in the grant of
Performance Units to a Participant, or at such
other time as the Plan Administrator shall
determine, and must establish the terms and
conditions of such interim benefit payment
(including the Company's Total Shareholder Return
which must be attained during such Performance
Period). An interim benefit payment may be
provided for after the second year of a
Performance Cycle. The interim benefit payment
shall be based upon the Adjusted Value of the
Performance Units, as provided for in Section
9.4(b) for the period up to the date of the
interim payment valuation, and the amount of any
such payment shall not exceed fifty percent (50%)
of such Adjusted Value for the Performance Units
which are vested at the end of the second year;
provided, however, that such interim payment will
be made only if the Company's Performance Ranking
Position is in the first (1st) or second (2nd)
quartile. The Valuation Date for determining such
Adjusted Value shall be set forth in the grant of
Performance Units, or at such other time as
determined by the Plan Administrator. The
Performance Units which are valued for the interim
benefit payment shall also be valued in accordance
with Section 9.5(b)(i) or Section 9.7 if
applicable, to determine what, if any, additional
value the Participant may be entitled to. Interim
benefit payments may be made to those Participants
who have remained employees continuously from the
date of the grant of the applicable Performance
Units until the date of the interim benefit
payment relating to such Performance Units. The
amount of any benefit payment payable with respect
to Performance Units pursuant to Sections
9.5(b)(i) and 9.5(d) shall be reduced by the
amount of any interim benefit payment made
pursuant to this Section 9.5(b)(ii), but not below
zero.
(c) Form of Payment
A Participant or a Participant's Beneficiary shall
be entitled to receive from the Company a benefit
payment as provided pursuant to Sections 9.5(b)(i) or
9.5(b)(ii), as applicable, equal to the product of the
Adjusted Value and the number of vested Units of a
Participant. Such payment shall be made as soon as
practicable following the applicable Valuation Date in
accordance with this Section 9.5(c).
Except as provided in Sections 9.5(d) and 9.7 (or
unless the Plan Administrator otherwise determines at
any time that the form of payment should be changed),
each benefit payment made to a Participant pursuant to
this Section 9, shall be made as follows:
(i) Participants employed by the Company holding
the position of Chairman of the Board, President
or Chief Executive Officer and Participants
employed by Company Subsidiaries holding
equivalent positions, but not necessarily the same
title, shall receive their Performance Unit payout
as follows:
(A) 50% (fifty percent) in cash and
(B) 50% (fifty percent) in Common Stock.
(ii) Participants employed by the Company holding
the position of Vice Chairman of the Board, Chief
Operating Officer, or Executive Vice President and
Participants employed by Company Subsidiaries
holding equivalent positions, but not necessarily
the same title, shall receive their Performance
Unit payout as follows:
(A) 60% (sixty percent) in cash and
(B) 40% (forty percent) in Common Stock.
(iii)Participants employed by the Company holding
the position of Senior Vice President and
Participants employed by Company Subsidiaries
holding equivalent positions, but not necessarily
the same title, shall receive their Performance
Unit payout as follows:
(A) 75% (seventy-five percent) in cash and
(B) 25% (twenty-five percent) in Common
Stock.
(d) Retirement, Death, Disability or Termination of
Employment
Participants (or their Beneficiaries in the case
of their deaths) who have retired, died, become
Permanently Disabled, or who have terminated their
employment, prior to the end of a Performance Cycle
shall not be entitled to receive payment from the
Company or its Subsidiaries for any Units which were
not vested as of the time such Participants ceased
active employment with the Company or its Subsidiaries.
Notwithstanding Section 9.5(c), such Participants (or
their Beneficiaries in the case of their deaths) will
be entitled to receive a cash payment for vested Units
in accordance with Section 9.5(b)(i). No payments
shall be made to such Participants (or Beneficiaries)
pursuant to Section 9.5(b)(ii). Unless the Plan
Administrator otherwise determines, a Participant who
is terminated with Cause shall receive no benefit under
this Section 9.
9.6 Deferred Payment
Prior to the time that Units first vest pursuant to
Section 9.3, the Participant may, subject to the consent of
the Management Committee and in accordance with procedures
that the Management Committee has approved, elect to have
all or a portion (subject to a $1,000 minimum) of the lump-
sum cash payment payable pursuant to Section 9.5(c) with
respect to such vested Units deferred according to the terms
and conditions of the Company's Deferred Compensation Plan.
9.7 Acceleration of Payment Due to Change In Control
Upon a Change in Control, the current Performance Cycle
shall immediately end and all vested Units (including Units
that vest pursuant to Section 9.3(b)) shall be paid in cash
to Participants based on a value of one hundred fifty
dollars ($150) per Unit. This payment will be reduced to
reflect any interim benefit payments made in accordance with
Section 9.5(b)(ii) and shall be made (i) in a lump sum in
cash that is in lieu of any otherwise applicable form and
time of payment for such Unites under the Plan and (ii)
within ten (10) days after the Change in Control.
SECTION 10 RESTRICTED STOCK
10.1 Subject to Sections 5.2 and 5.4, Restricted Stock
(including Performance Restricted Stock) may be granted to
Participants in such number and at such times during the
term of the Plan as the Plan Administrator shall determine,
the Plan Administrator taking into account the duties of the
respective Participants, their present and potential
contributions to the success of the Company, and such other
factors as the Plan Administrator shall deem relevant in
accomplishing the purposes of the Plan. The granting of
Restricted Stock shall take place when the Plan
Administrator by resolution, written consent or other
appropriate action determines to grant such Restricted Stock
to a particular Participant. Each grant shall be evidenced
by a written instrument delivered by or on behalf of the
Company containing provisions not inconsistent with the
Plan, which may (but need not) require the Participant's
signature. The Participant receiving a grant of Restricted
Stock shall be recorded as a stockholder of the Company.
Each Participant who receives a grant of Restricted Stock
shall have all the rights of a stockholder with respect to
such shares (except as provided in the restrictions on
transferability), including the right to vote the shares and
receive dividends and other distributions; provided,
however, that no Participant awarded Restricted Stock shall
have any right as a stockholder with respect to any shares
subject to the Participant's Restricted Stock grant prior to
the date of issuance to the Participant of a certificate or
certificates, or the establishment of a book-entry account,
for such shares.
10.2 Notwithstanding any other provision to the
contrary in this Section 10, before Performance Restricted
Stock can be granted or vested, as applicable, the Plan
Administrator shall:
(a) Determine the Performance Goals, if any,
applicable to the particular Performance Period; and
(b) Certify in writing that any such Performance Goals
for a particular Performance Period have been attained.
10.3 A grant of Restricted Stock shall entitle a
Participant to receive, on the date or dates designated by
the Plan Administrator, or, if later, upon payment to the
Company of the par value of the Common Stock, if required,
in a manner determined by the Plan Administrator, the number
of shares of Common Stock selected by the Plan
Administrator. The Plan Administrator may require, under
such terms and conditions as it deems appropriate or
desirable, that the certificates for Restricted Stock
delivered under the Plan may be held in custody by a bank or
other institution, or that the Company may itself hold such
shares in custody until the Restriction Period (as defined
in Section 10.4) expires or until restrictions thereon
otherwise lapse, and may require, as a condition of any
issuance of Restricted Stock that the Participant shall have
delivered a stock power endorsed in blank relating to the
shares of Restricted Stock.
10.4 During a period of years following the date of
grant, as determined by the Plan Administrator, which shall
in no event be less than one (1) year (the "Restriction
Period"), the Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise encumbered
or disposed of by the recipient, except in the event of
death or termination of employment on account of Permanent
Disability, the transfer to the Company as provided under
the Plan, the Plan Administrator's waiver or modification of
such restrictions in the agreement evidencing the grant of
Restricted Stock, or by resolution of the Plan Administrator
adopted at any time.
10.5 Except as provided in Sections 10.4, 10.6 or 10.7,
if a Participant terminates employment with the Company for
any reason before the expiration of the Restriction Period,
all shares of Restricted Stock still subject to restriction
shall be forfeited by the Participant to the Company. In
addition, in the event of any attempt by the Participant to
sell, exchange, transfer, pledge or otherwise dispose of
shares of Restricted Stock in violation of the terms of the
Plan without the Company's prior written consent, such
shares shall be forfeited to the Company.
10.6 The Restriction Period for any Participant shall
be deemed to end and all restrictions on shares of
Restricted Stock shall lapse, upon the Participant's death
or termination of employment on account of Permanent
Disability or any termination of employment determined by
the Plan Administrator to end the Restriction Period.
10.7 The Restriction Period for any Participant shall
be deemed to end and all restrictions on shares of
Restricted Stock shall terminate immediately upon a Change
in Control.
10.8 When the restrictions imposed by Section 10.4
expire or otherwise lapse with respect to one or more shares
of Restricted Stock, the Company shall deliver to the
Participant (or the Participant's legal representative,
Beneficiary or heir) one (1) share of Common Stock for each
share of Restricted Stock.
10.9 Subject to Section 10.3 (and Section 10.2 in the
case of Performance Restricted Stock), a Participant
entitled to receive Restricted Stock under the Plan shall be
issued a certificate, or have a book-entry account
established, for such shares. Such certificate, or book-
entry account, shall be registered in the name of the
Participant, and shall bear an appropriate legend reciting
the terms, conditions and restrictions, if any, applicable
to such shares and shall be subject to appropriate stop-
transfer orders.
10.10Restricted Stock awarded to Participants pursuant
to Section 11 in lieu of cash shall be considered
Performance Restricted Stock for purposes of the Plan.
10.11The Restriction Period for any Participant shall
be deemed to end and all restrictions on shares of
Restricted Stock awarded pursuant to Sections 11.5(a)(ii),
11.5(b)(ii), and 11.6 (except for Restricted Stock awarded
pursuant to Section 11.5(c)) shall lapse upon the
Participant's death, retirement, Permanent Disability, or
any other involuntary termination without Cause. The
Restriction Period shall be deemed to end and all
restrictions on a Participant's shares of Restricted Stock
awarded pursuant to Section 11.5(c) shall lapse on a pro
rata basis measured in years between (i) the amount of time
which has elapsed between the Award Date and the
Participant's death, retirement, Permanent Disability, or
any other involuntary termination without Cause and (ii) the
Restriction Period for such shares. All shares of
Restricted Stock for which the Restriction Period has not
lapsed as described above shall be forfeited to the Company.
Notwithstanding the foregoing, the Plan Administrator, or
the Management Committee in the case of Participants other
than Section 16 Insiders, may determine that such
Restriction Period should not lapse or that the Restriction
Period on additional shares of Restricted Stock should
lapse.
10.12A Participant may elect irrevocably (at a time and
in the manner determined by the Plan Administrator or the
Company, as appropriate), prior to vesting of Restricted
Stock, that the Participant relinquishes any and all rights
in the shares of Restricted Stock in exchange for an
interest in the Deferred Compensation Plan, in which case
receipt of such shares shall be deferred until a pre-
specified date in the future or until the Participant ceases
to be employed by the Company or any of its Subsidiaries, as
elected by the Participant. At the time the restrictions
would have otherwise lapsed on the shares of Restricted
Stock (as specified at the time of grant, or otherwise if
changed by the Plan Administrator), the number of shares of
Common Stock issuable to the Participant shall be credited
to the deferred stock account (or such other account(s) as
the Management Committee shall deem necessary and
appropriate) under a memorandum deferred account established
pursuant to the Deferred Compensation Plan, and any
dividends or other distributions paid on the Common Stock
(or its equivalent) shall be deemed reinvested in additional
shares of Common Stock (or its equivalent) until all
credited deferred shares shall become issuable pursuant to
the Participant's election, unless the Management Committee
of the Deferred Compensation Plan shall otherwise determine.
SECTION 11 INCENTIVE AWARDS
11.1 Procedures for Incentive Awards
Prior to the beginning of a particular Performance
Period, or such other date as the Code may allow, the Plan
Administrator shall specify in writing:
(a) the Participants who shall be eligible to receive
an Incentive Award for a Performance Period,
(b) the Performance Goals for such Performance Period,
and
(c) the maximum Incentive Award amount payable to each
Participant if the Performance Goals are met.
Any Participant chosen to participate in under this
Section 11 for a given Performance Period shall receive the
maximum Incentive Award amount if the designated Performance
Goals are achieved, subject to the discretion of the Plan
Administrator to reduce such award, as described in Section
11.4.
11.2 Performance Goal Certification
An Incentive Award shall become payable to the extent
provided herein in the event that the Plan Administrator
certifies in writing prior to payment of the award that the
Performance Goal or Goals selected for a particular
Performance Period has or have been attained. In no event
will an award be payable under this Plan if the threshold
level of performance set for each Performance Goal for the
applicable Performance Period is not attained.
11.3 Maximum Incentive Award Payable
The maximum Incentive Award payable under this Plan to
any Participant for any Performance Period shall be five
million dollars ($5,000,000) in cash, Restricted Stock, or a
combination of cash and Restricted Stock.
11.4 Discretion to Reduce Awards; Participant's
Performance
The Plan Administrator, in its sole and absolute
discretion, may reduce the amount of any Incentive Award
otherwise payable to a Participant upon attainment of any
Performance Goal for the applicable Performance Period. A
Participant's individual performance must be satisfactory,
regardless of the Company's performance and the attainment
of Performance Goals, before he or she may be granted an
Incentive Award. In evaluating a Participant's performance,
the Plan Administrator shall consider the Performance Goals
of the Company and the Participant's responsibilities and
accomplishments, and such other factors as it deems
appropriate.
11.5 Required Payment of Incentive Awards
The Plan Administrator, or the Management Committee in
the case of Participants other than Section 16 Insiders,
shall make a determination within thirty (30) days after the
Company's financial information is available for a
particular Performance Period (the "Award Date") whether the
Performance Goals for that Performance Period have been
achieved and the amount of the award for each Participant.
In the absence of an election by the Participant pursuant to
Sections 11.6 or 11.7, the award shall be paid not later
than the end of the month following the month in which the
Plan Administrator determines the amount of the award and
shall be paid as follows:
(a) Participants employed by the Company holding the
position of Chairman of the Board, President, Chief
Executive Officer, Vice Chairman of the Board, Chief
Operating Officer, Executive Vice President, or Senior
Vice President and Participants employed by Company
subsidiaries with equivalent positions thereto, but not
necessarily the same titles, shall receive their
incentive award as follows:
(i) 50% (fifty percent) in cash and
(ii)50% (fifty percent) in Restricted Stock.
(b)Participants employed by the Company holding
the position of Vice President and Participants
employed by Company subsidiaries with an
equivalent position thereto, but not necessarily
the same title, shall receive their incentive
award as follows:
(i) 75% (seventy-five percent) in cash and
(ii)25% (twenty-five percent) in Restricted
Stock.
(c) Because the Participant bears forfeiture, price
fluctuation, and other attendant risks during the
Restriction Period (as defined in Section 10.4) associated
with the Restricted Stock awarded under this Plan,
Participants shall be awarded an additional amount of
Restricted Stock equal to the amount of Restricted Stock
which a Participant is awarded pursuant to Sections
11.5(a)(ii) or 11.5(b)(ii), as applicable.
(d) Notwithstanding subsections (a) and (b) above, the
Plan Administrator or Management Committee, as appropriate,
may determine that a Participant must receive a greater
amount of his or her award in Restricted Stock, up to and
including the entire award in Restricted Stock. (For
purposes of the Plan, such required shares shall be treated
as being awarded pursuant to Section 11.5(a)(ii) or Section
11.5(b)(ii), as applicable.) In such event, a Participant
shall be entitled to the additional shares of Restricted
Stock, awarded pursuant to Section 11.5(c) above.
The value of awards payable in Restricted Stock
pursuant to this Section 11 shall be calculated by using
Fair Market Value.
11.6 Restricted Stock Election
In lieu of receiving all or any portion of the cash in
accordance with Sections 11.5(a)(i) or 11.5(b)(i), a
Participant may elect to receive additional Restricted Stock
with a value equal to the portion of the incentive award
which the Participant would otherwise have received in cash,
but has elected to receive in Restricted Stock ("Restricted
Stock Election"). Participants must make their Restricted
Stock Election at such time and in such a manner as
prescribed by the Management Committee. If required by Rule
16b-3 promulgated under Section 16(b) of the Exchange Act,
any Restricted Stock Election made by a Participant who is a
Section 16 Insider shall be made at least six months prior
to the Award Date, or at such other time as is allowed by
Section 16(b) of the Exchange Act. Each Participant who
makes the Restricted Stock Election shall be entitled to the
additional Restricted Stock granted pursuant to Section
11.5(c) with respect to the amount of the Participant's
Restricted Stock Election. Except as provided in Section
10, all shares of Restricted Stock awarded pursuant to the
Restricted Stock Election are subject to the same terms and
conditions as the Restricted Stock a Participant receives
pursuant to Sections 11.5(a)(ii) or 11.5(b)(ii), as
applicable.
11.7 Deferred Payment
Each Participant may elect to have the payment of all
or a portion of any Incentive Award made pursuant to
Sections 11.5(a)(i) or 11.5(b)(i), as applicable, for the
year deferred according to the terms and conditions of the
Company's Deferred Compensation Plan. The election shall be
irrevocable and shall be made at such time and in such a
manner as prescribed by the Management Committee. The
election shall apply only to that year. If a Participant
has not made an election under this Section, any incentive
award granted to the Participant for that year shall be paid
pursuant to Sections 11.5 or 11.6, as applicable.
11.8 Payment Upon Change in Control
Notwithstanding any other provision of this Plan, in
the event of a Change in Control of the Company, the
Incentive Award attributable to the Performance Period in
which the Change in Control occurs shall become fully vested
and distributable, in cash, within 30 days after the date of
the Change in Control, in an amount equal to the greater of
the annual incentive percentage of Annual Salary established
by the Plan Administrator, or the following:
Participants employed by the Company
holding any of the following positions
and Participants employed by Company
subsidiaries with positions equivalent
thereto, but not necessarily with the
Percentage of Annual Salary same titles:
--------------------------- --------------------------------------
100% of Annual Salary Chairman of the Board, President,
Chief Executive Officer, Vice Chairman
of the Board, Chief Operating Officer,
or Executive Vice President
80% of Annual Salary Senior Vice President
60% of Annual Salary Vice President
The term "Annual Salary" as used in this Plan
shall mean a Participant's annual base salary
(whether actual or illustrative) in effect on the
date of a Change in Control.
In the event a Change in Control is deemed to have
occurred after the end of a Performance Period, but before
the Award Date, each Participant shall be entitled to
receive in cash, within 30 days after the date of the Change
in Control, those amounts set forth above in this Section
11.8 for such Performance Period. Such amounts are in
addition to the amount to which Participants shall be
entitled for the Performance Period in which a Change in
Control is deemed to occur.
SECTION 12 REGULATORY APPROVALS AND LISTING
The Company shall not be required to issue any
certificate for shares of Common Stock upon the exercise of
an option or a stock appreciation right granted under the
Plan, in payment of an Incentive Award, with respect to a
grant of Restricted Stock or Common Stock awarded as payment
of vested Units prior to:
(a) obtaining any approval or ruling from the
Securities and Exchange Commission, the Internal
Revenue Service or any other governmental agency which
the Company, in its sole discretion, shall determine to
be necessary or advisable;
(b) listing of such shares on any stock exchange
on which the Common Stock may then be listed; and
(c) completing any registration or other
qualification of such shares under any federal or
state laws, rulings or regulations of any
governmental body which the Company, in its sole
discretion, shall determine to be necessary or
advisable.
All certificates, or book-entry accounts, for shares of
Common Stock delivered under the Plan shall also be subject
to such stop-transfer orders and other restrictions as the
Plan Administrator may deem advisable under the rules,
regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which Common
Stock is then listed and any applicable federal or State
securities laws, and the Plan Administrator may cause a
legend or legends to be placed on any such certificates, or
notations on such book-entry accounts, to make appropriate
reference to such restrictions. The foregoing provisions of
this paragraph shall not be effective if and to the extent
that the shares of Common Stock delivered under the Plan are
covered by an effective and current registration statement
under the Securities Act of 1933, as amended, or if and so
long as the Plan Administrator determines that application
of such provisions are no longer required or desirable. In
making such determination, the Plan Administrator may rely
upon an opinion of counsel for the Company.
SECTION 13 EFFECTIVE DATE AND TERM OF PLAN
The Plan was adopted by the Board of Directors on
January 20, 1999, and is subject to approval by the
Company's stockholders within the earlier of the date of the
Company's next annual meeting of stockholders and twelve
(12) months after the date the Plan is adopted by the Board
of Directors. Subject to the foregoing condition, options,
limited stock appreciation rights, stock appreciation
rights, Restricted Stock, Incentive Awards and Performance
Units may be granted pursuant to the Plan from time to time
within the period commencing upon adoption of the Plan by
the Board of Directors and ending ten (10) years after the
earlier of such adoption and the approval of the Plan by the
stockholders. Options, limited stock appreciation rights,
stock appreciation rights, Restricted Stock, Incentive
Awards and Performance Units theretofore granted may extend
beyond that date and the terms and conditions of the Plan
shall continue to apply thereto and to shares of Common
Stock acquired thereunder. To the extent required to
qualify as "performance-based compensation" under Section
162(m), shares of Common Stock underlying options, limited
stock appreciation rights, stock appreciation rights,
Restricted Stock and Common Stock granted, subject to
stockholder approval of the Plan may not be vested, paid,
exercised or sold until such stockholder approval is
obtained.
SECTION 14 GENERAL PROVISIONS
14.1 Nothing contained in the Plan, or in any option,
limited stock appreciation right, stock appreciation right,
Restricted Stock, Incentive Award or Performance Unit
granted pursuant to the Plan, shall confer upon any employee
any right with respect to continuance of employment by the
Company or a Subsidiary, nor interfere in any way with the
right of the Company or a Subsidiary to terminate the
employment of such employee at any time with or without
assigning any reason therefor.
14.2 Grants, vesting or payment of stock options,
limited stock appreciation rights, stock appreciation
rights, Restricted Stock, Incentive Awards or Performance
Units shall not be considered as part of a Participant's
salary or used for the calculation of any other pay,
allowance, pension or other benefit unless otherwise
permitted by other benefit plans provided by the Company or
its Subsidiaries, or required by law or by contractual
obligations of the Company or its Subsidiaries.
Notwithstanding the preceding sentence, the Restricted Stock
awarded pursuant to Section 11.5(c) shall not be considered
as part of a Participant's salary or used for the
calculation of any other pay, allowance, pension, or other
benefit unless required by contractual obligations of the
Company or its subsidiaries.
14.3 Unless otherwise provided in the Plan, the right
of a Participant or Beneficiary to the payment of any
compensation under the Plan may not be assigned,
transferred, pledged or encumbered, nor shall such right or
other interests be subject to attachment, garnishment,
execution or other legal process.
14.4 Leaves of absence for such periods and purposes
conforming to the personnel policy of the Company, or of its
Subsidiaries, as applicable, shall not be deemed
terminations or interruptions of employment, unless a
Participant commences a leave of absence from which he or
she is not expected to return to active employment with the
Company or its Subsidiaries. The foregoing notwithstanding,
with respect to Incentive Stock Options, employment shall
not be deemed to continue beyond the first ninety (90) days
of such leave unless the Participant's reemployment rights
are guaranteed by statute or contract.
14.5 In the event a Participant is transferred from the
Company to a Subsidiary, or vice versa, or is promoted or
given different responsibilities, the stock options, limited
stock appreciation rights, stock appreciation rights,
Restricted Stock, Incentive Awards and Performance Units
granted to the Participant prior to such date shall not be
affected.
14.6 Any amounts (deferred or otherwise) to be paid to
Participants pursuant to the Plan are unfunded obligations.
Neither the Company nor any Subsidiary is required to
segregate any monies from its general funds, to create any
trusts or to make any special deposits with respect to this
obligation. The Management Committee, in its sole
discretion, may direct the Company to share with its
subsidiaries the costs of a portion of the incentive awards
paid to Participants who are executives of those companies.
Beneficial ownership of any investments, including trust
investments which the Company may make to fulfill this
obligation, shall at all times remain in the Company. Any
investments and the creation or maintenance of any trust or
any Participant account shall not create or constitute a
trust or a fiduciary relationship between the Plan
Administrator, the Management Committee, the Company or any
Subsidiary and a Participant, or otherwise create any vested
or beneficial interest in any Participant or the
Participant's Beneficiary or the Participant's creditors in
any assets of the Company or its Subsidiaries whatsoever.
The Participants shall have no claim against the Company for
any changes in the value of any assets which may be invested
or reinvested by the Company with respect to the Plan.
14.7 The designation of a Beneficiary shall be on a
form provided by the Management Committee, executed by the
Participant (with the consent of the Participant's spouse,
if required by the Management Committee for reasons of
community property or otherwise), and delivered to the
Management Committee. A Participant may change his or her
Beneficiary designation at any time. A designation by a
Participant under the Predecessor Plans shall remain in
effect under the Plan for any Restricted Stock, Incentive
Awards or Performance Units unless such designation is
revoked or changed under the Plan. If no Beneficiary is
designated, if the designation is ineffective, or if the
Beneficiary dies before the balance of a Participant's
account is paid, the balance shall be paid to the
Participant's spouse, or if there is no surviving spouse, to
the Participant's lineal descendants, pro rata, or if there
is no surviving spouse or any lineal descendant, to the
Participant's estate. Notwithstanding the foregoing,
however, a Participant's Beneficiary shall be determined
under applicable state law if such state law does not
recognize Beneficiary designations under plans of this sort
and is not preempted by laws which recognize the provisions
of this Section 14.7.
14.8 The Plan shall be construed and governed in
accordance with the laws of the State of Texas, except that
it shall be construed and governed in accordance with
applicable federal law in the event that such federal law
preempts state law.
14.9 Appropriate provision shall be made for all taxes
required to be withheld in connection with the exercise,
grant or other taxable event with respect to options,
limited stock appreciation rights, stock appreciation
rights, Restricted Stock, Incentive Awards and Performance
Units under the applicable laws and regulations of any
governmental authority, whether federal, state or local and
whether domestic or foreign, including, but not limited to,
the required withholding of a sufficient number of shares of
Common Stock otherwise issuable to a Participant to satisfy
the said required minimum tax withholding obligations.
Unless otherwise provided in the grant, a Participant is
permitted to deliver shares of Common Stock (including
shares acquired pursuant to the exercise of an option or
stock appreciation right other than the option or stock
appreciation right currently being exercised, to the extent
permitted by applicable regulations) for payment of
withholding taxes on the exercise of an option, stock
appreciation right, or limited stock appreciation right,
upon the grant or vesting of Restricted Stock or upon the
payout of Incentive Awards or Performance Units. At the
election of the Plan Administrator or, subject to approval
of the Plan Administrator at its sole discretion, at the
election of a Participant, shares of Common Stock may be
withheld from the shares issuable to the Participant upon
the exercise of an option or stock appreciation right, upon
the vesting of the Restricted Stock or upon the payout of
Performance Units to satisfy tax withholding obligations.
The Fair Market Value of Common Stock as delivered pursuant
to this Section 14.9 shall be determined as of the day prior
to delivery, and shall be calculated in accordance with
Section 2.9.
Any Participant that makes a Section 83(b) election
under the Code shall, within ten (10) days of making such
election, notify the Company in writing of such election and
shall provide the Company with a copy of such election form
filed with the Internal Revenue Service.
Tax advice should be obtained by the Participant prior
to the Participant's (i) entering into any transaction under
or with respect to the Plan, (ii) designating or choosing
the times of distributions under the Plan, or (iii)
disposing of any shares of Common Stock issued under the
Plan.
14.10The Plan administrator may in its discretion
provide financing to a Participant in a principal amount
sufficient to pay the purchase price of any award under the
Plan and/or to pay the amount of taxes required by law to be
withheld with respect to any award. Any such loan shall be
subject to all applicable legal requirements and
restrictions pertinent thereto, including Regulation G
promulgated by the Federal Reserve Board. The grant of an
award shall in no way obligate the Company or the Plan
Administrator to provide any financing whatsoever in
connection therewith.
SECTION 15 COMPLIANCE WITH RULE 16b-3 AND SECTION 162(m)
The Company's intention is that, so long as any of the
Company's equity securities are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, with respect to
awards granted to or held by Section 16 Insiders, the Plan
shall comply in all respects with Rule 16b-3 and Section
162(m) and, if any Plan provision is later found not to be
in compliance with Rule 16b-3 or Section 162(m), that
provision shall be deemed modified as necessary to meet the
requirements of Rule 16b-3 and Section 162(m).
Notwithstanding the foregoing, and subject to Section 5.2,
the Plan Administrator may grant or vest Restricted Stock in
a manner which is not in compliance with Section 162(m) if
the Plan Administrator determines that it would be in the
best interests of the Company.
Notwithstanding anything in the Plan to the contrary,
the Board of Directors, in its 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
Section 16 Insiders without so restricting, limiting or
conditioning the Plan with respect to other Participants.
SECTION 16 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN
16.1 Subject to the Board of Directors and Section
16.2, the Plan Administrator may from time to time make such
amendments to the Plan as it may deem proper and in the best
interest of the Company without further approval of the
stockholders of the Company, including, but not limited to,
any amendment necessary to ensure that the Company may
obtain any regulatory approval referred to in Section 12;
provided, however, that after a Change in Control no change
in any option, limited stock appreciation right, stock
appreciation right, Restricted Stock, Incentive Award or
Performance Unit theretofore granted may be made without the
consent of the Participant which would impair the right of
the Participant to acquire or retain Common Stock or cash
that the Participant may have acquired as a result of the
Plan.
16.2 The Plan Administrator and the Board of Directors
may not amend the Plan without the approval of the
stockholders of the Company to
(a) materially increase the number of shares,
rights, Incentive Awards or Units that may be issued
under the Plan to Section 16 Insiders; or
(b) lower the Option Price at which options may
be granted pursuant to Section 6.4(a) or lower the
Option Price of any outstanding options, except as
provided by Section 5.5.
16.3 The Board of Directors may at any time suspend the
operation of or terminate the Plan with respect to any
shares of Common Stock, rights or Performance Units which
are not at that time subject to option, limited stock
appreciation right, stock appreciation right or grant of
Restricted Stock, Incentive Awards or Performance Units.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed effective as of January 20, 1999.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards
-----------------------
Title: Executive Vice President
ATTEST:
By /s/ David L. Siddall
---------------------
Title: Corporate Secretary
EXHIBIT 10.2
EL PASO ENERGY CORPORATION
OMNIBUS PLAN FOR
MANAGEMENT EMPLOYEES
Amended and Restated Effective as of August 1, 1998
TABLE OF CONTENTS
Page
SECTION 1 PURPOSE.................................... 1
SECTION 2 DEFINITIONS................................ 1
2.1 Beneficiary............................ 1
2.2 Board of Directors..................... 1
2.3 Cause.................................. 1
2.4 Change in Control...................... 2
2.5 Code................................... 2
2.6 Common Stock........................... 3
2.7 Exchange Act........................... 3
2.8 Fair Market Value...................... 3
2.9 Good Reason............................ 3
2.10 Management Committee.................. 4
2.11 Option................................ 4
2.12 Option Price.......................... 5
2.13 Participant........................... 5
2.14 Permanent Disability or
Permanently Disabled................. 5
2.15 Plan Administrator.................... 5
2.16 Restricted Stock...................... 5
2.17 Subsidiary............................ 5
SECTION 3 ADMINISTRATION............................. 5
SECTION 4 ELIGIBILITY................................ 6
SECTION 5 SHARES AVAILABLE FOR THE PLAN.............. 6
SECTION 6 STOCK OPTIONS.............................. 7
SECTION 7 STOCK APPRECIATION RIGHTS.................. 11
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS.......... 12
SECTION 9 RESTRICTED STOCK........................... 13
SECTION 10 REGULATORY APPROVALS AND LISTING........... 15
SECTION 11 EFFECTIVE DATE AND TERM OF THE PLAN........ 15
SECTION 12 GENERAL PROVISIONS......................... 16
SECTION 13 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN................................ 17
<PAGE>
EL PASO ENERGY CORPORATION
OMNIBUS PLAN FOR MANAGEMENT EMPLOYEES
Amended and Restated Effective as of August 1, 1998
SECTION 1 PURPOSE
The purpose of the El Paso Energy Corporation Omnibus Plan
for Management Employees, originally known as the El Paso Natural
Gas Company Stock Option Plan for Management Employees, (the
"Plan") is to promote the interests of El Paso Energy Corporation
(the "Company") and its stockholders by strengthening its ability
to attract and retain key employees in the employ of the Company
and its Subsidiaries (as defined below) by furnishing suitable
recognition of their ability and industry which materially
contributes to the success of the Company. The Plan provides for
the grant of stock options, limited stock appreciation rights,
stock appreciation rights and restricted stock in accordance with
the terms and conditions set forth below.
SECTION 2 DEFINITIONS
Unless otherwise required by the context, the following
terms when used in the Plan shall have the meanings set forth in
this Section 2:
2.1 Beneficiary
The person or persons designated by the Participant pursuant
to Section 6.2(f) to whom payments are to be paid pursuant to the
terms of the Plan in the event of the Participant's death.
2.2 Board of Directors
The Board of Directors of the Company.
2.3 Cause
A termination for Cause is a termination evidenced by a
statement adopted in good faith by the Management Committee that
the Participant (i) willfully and continually failed to
substantially perform the Participant's duties with the Company
(other than a failure resulting from the Participant's incapacity
due to physical or mental illness) which failure continued for a
period of at least thirty (30) days after a written notice of
demand for substantial performance has been delivered to the
Participant specifying the manner in which the Participant has
failed to substantially perform or (ii) willfully engaged in
conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise; provided, however, that no
termination of the Participant's employment shall be for Cause as
set forth in clause (ii) above until (A) there shall have been
delivered to the Participant a copy of a written notice setting
forth that the Participant was guilty of the conduct set forth in
clause (ii) above and specifying the particulars thereof in
detail, and (B) the Participant shall have been provided an
opportunity to be heard by the Management Committee (with the
assistance of the Participant's counsel if the Participant so
desires). No act, nor failure to act, on the Participant's part
shall be considered "willful" unless the Participant has acted,
or failed to act, with an absence of good faith and without a
reasonable belief that the Participant's action or failure to act
was in the best interest of the Company. Notwithstanding
anything contained in the Plan to the contrary, no failure to
perform by the Participant after notice of termination is given
to the Participant shall constitute Cause.
2.4 Change in Control
As used in the Plan, a Change in Control shall be deemed to
occur (i) if any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly
or indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the
Company's then outstanding securities, (ii) upon the first
purchase of the Common Stock pursuant to a tender or exchange
offer (other than a tender or exchange offer made by the
Company), (iii) upon the approval by the Company's stockholders
of a merger or consolidation, a sale or disposition of all or
substantially all the Company's assets or a plan of liquidation
or dissolution of the Company, or (iv) if, during any period of
two (2) consecutive years, individuals who at the beginning of
such period constitute the Board of Directors cease for any
reason to constitute at least a majority thereof, unless the
election or nomination for the election by the Company's
stockholders of each new director was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
were directors at the beginning of the period. Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur
if the Company either merges or consolidates with or into another
company or sells or disposes of all or substantially all of its
assets to another company, if such merger, consolidation, sale or
disposition is in connection with a corporate restructuring
wherein the stockholders of the Company immediately before such
merger, consolidation, sale or disposition own, directly or
indirectly, immediately following such merger, consolidation,
sale or disposition at least eighty percent (80%) of the combined
voting power of all outstanding classes of securities of the
company resulting from such merger or consolidation, or to which
the Company sells or disposes of its assets, in substantially the
same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
2.5 Code
The Internal Revenue Code of 1986, as amended and in effect
from time to time, and the temporary or final regulations of the
Secretary of the U.S. Treasury adopted pursuant to the Code.
2.6 Common Stock
The common stock of the Company, $3 par value per share, or
such other class of shares or other securities as may be
applicable pursuant to the provisions of Section 5.
2.7 Exchange Act
The Securities Exchange Act of 1934, as amended.
2.8 Fair Market Value
As applied to a specific date, Fair Market Value shall be
deemed to be the mean between the highest and lowest quoted
selling prices at which Common Stock was sold on such date as
reported in the NYSE-Composite Transactions by The Wall Street
Journal on such date, or if no Common Stock was traded on such
date, on the next preceding day on which Common Stock was so
traded.
Notwithstanding the foregoing, upon the exercise,
(a) during the thirty (30) day period following a
Change in Control, of a limited stock appreciation right or
stock appreciation right granted in connection with an
Option more than six (6) months prior to a Change in
Control, or
(b) during the seven (7) month period following a
Change in Control, of a limited stock appreciation right or
of a stock appreciation right granted in connection with an
Option less than six (6) months prior to a Change in
Control,
On or after a Change in Control, Fair Market Value on the
date of exercise shall be deemed to be the greater of (i)
the highest price per share of Common Stock as reported in
the NYSE-Composite Transactions by The Wall Street Journal
during the sixty (60) day period ending on the day preceding
the date of exercise of the stock appreciation right or
limited stock appreciation right, as the case may be, and
(ii) if the Change in Control is one described in clause
(ii) or (iii) of Section 2.4, the highest price per share
paid for Common Stock in connection with such Change in
Control.
2.9 Good Reason
Good Reason shall mean the occurrence of any of the
following events or conditions, after a Change in Control:
(a) a change in the Participant's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Participant's reasonable
judgment, represents a substantial reduction of the status,
title, position or responsibilities as in effect immediately
prior thereto; the assignment to the Participant of any
duties or responsibilities which, in the Participant's
reasonable judgment, are inconsistent with such status,
title, position or responsibilities; or any removal of the
Participant from or failure to reappoint or reelect the
Participant to any of such positions, except in connection
with the termination of the Participant's employment for
Cause, for Permanent Disability, as a result of his or her
death, or by the Participant other than for Good Reason;
(b) a reduction in the Participant's annual base
salary;
(c) the Company requires the Participant (without the
consent of the Participant) to be based at any place outside
a thirty-five (35) mile radius of his or her place of
employment prior to a Change in Control, except for
reasonably required travel due to the Company's business
which is not materially greater than such travel
requirements prior to the Change in Control;
(d) the failure by the Company to (i) continue in
effect any material compensation or benefit plan in which
the Participant was participating at the time of the Change
in Control, including, but not limited to, the Plan, the
El Paso Energy Corporation Pension Plan and the El Paso
Energy Corporation Retirement Savings Plan; or (ii) provide
the Participant with compensation and benefits at least
equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each employee
benefit plan, program and practice as in effect immediately
prior to the Change in Control (or as in effect following
the Change in Control, if greater);
(e) any material breach by the Company of any
provision of the Plan; or
(f) any purported termination of the Participant's
employment for Cause by the Company which does not otherwise
comply with the terms of the Plan.
2.10 Management Committee
A committee consisting of the Chief Executive Officer of the
Company and such other officers as the Chief Executive Officer
shall designate.
2.11 Option
A stock option which is not intended to meet the
requirements of an Incentive Stock Option, as defined in Section
422 of the Code.
2.12 Option Price
The price per share of Common Stock at which each Option is
exercisable.
2.13 Participant
An eligible employee to whom an Option, limited stock
appreciation right, stock appreciation right or Restricted Stock
is granted under the Plan as set forth in Section 4.
2.14 Permanent Disability or Permanently Disabled
A Participant shall be deemed to have become Permanently
Disabled for purposes of the Plan if the Chief Executive Officer
of the Company shall find upon the basis of medical evidence
satisfactory to the Chief Executive Officer that the Participant
is totally disabled, whether due to physical or mental condition,
so as to be prevented from engaging in further employment with
the Company or any of its Subsidiaries, and that such disability
will be permanent and continuous during the remainder of the
Participant's life.
2.15 Plan Administrator
The Management Committee shall, pursuant to Section 3,
administer the Plan.
2.16 Restricted Stock
Common Stock granted under the Plan that is subject to the
requirements of Section 9 and such other restrictions as the Plan
Administrator deems appropriate.
2.17 Subsidiary
An entity that is designated by the Plan Administrator as a
subsidiary for purposes of the Plan and that is a corporation (or
other form of business association that is treated as a
corporation for tax purposes) of which shares (or other ownership
interests) having more than fifty percent (50%) of the voting
power are owned or controlled, directly or indirectly, by the
Company so as to qualify as a "subsidiary corporation" within the
meaning of Section 424(f) of the Code.
SECTION 3 ADMINISTRATION
3.1 The Plan shall be administered by the Management
Committee, unless the Board of Directors shall otherwise
determine the administrator of the Plan. The administrator of
the Plan is referred to herein as the "Plan Administrator."
3.2 The members of the Management Committee serving as Plan
Administrator shall be appointed by the Chief Executive Officer
for such term as the Chief Executive Officer may determine. The
Chief Executive Officer may from time to time remove members
from, or add members to, the Management Committee.
3.3 Except for the terms and conditions explicitly set
forth in the Plan, the Plan Administrator shall have full
authority to construe and interpret the Plan, to establish, amend
and rescind rules and regulations relating to the Plan, to select
persons eligible to participate in the Plan, to grant Options,
limited stock appreciation rights, stock appreciation rights and
Restricted Stock thereunder, to administer the Plan, to make
recommendations to the Board of Directors, to take all such steps
and make all such determinations in connection with the Plan and
the Options, limited stock appreciation rights, stock
appreciation rights and Restricted Stock granted thereunder as it
may deem necessary or advisable, which determination shall be
final and binding upon all Participants. The Plan Administrator
shall cause the Company at its expense to take any action related
to the Plan which may be required or necessary to comply with the
provisions of any federal or state law or any regulations issued
thereunder.
3.4 Each member of the Management Committee acting as Plan
Administrator, while serving as such, shall be considered to be
acting in his or her capacity as an officer of the Company.
Members of the Management Committee acting under the Plan shall
be fully protected in relying in good faith upon the advice of
counsel and shall incur no liability except for gross negligence
or willful misconduct in the performance of their duties.
SECTION 4 ELIGIBILITY
To be eligible for selection by the Plan Administrator to
participate in the Plan, an individual must be a key employee of
the Company, or of any Subsidiary, as of the date on which the
Plan Administrator grants to such individual an Option, limited
stock appreciation right, stock appreciation right or Restricted
Stock and who in the judgment of the Plan Administrator holds a
position of responsibility and is able to contribute
substantially to the Company's continued success.
SECTION 5 SHARES AVAILABLE FOR THE PLAN
5.1 Subject to Section 5.2, the maximum number of shares
for which Options, limited stock appreciation rights, stock
appreciation rights and Restricted Stock may at any time be
granted under the Plan is ten million (10,000,000) shares of
Common Stock, from shares held in the Company's treasury or out
of authorized but unissued shares of the Company, or partly out
of each, as shall be determined by the Plan Administrator,
subject to, and reduced by (on a post-split basis), the number of
shares of Common Stock awarded prior to the occurrence of a two-
for-one stock split effected by the Company in the form of a 100%
stock dividend on April 1, 1998. Upon (i) the expiration or
termination in whole or in part of unexercised Options, (ii) the
surrender of an Option, or portion thereof, upon exercise of a
related limited stock appreciation right or stock appreciation
right for cash, or (iii) the forfeiture of shares of Restricted
Stock, shares of Common Stock which were subject thereto shall
again be available for grant of Options, limited stock
appreciation rights, stock appreciation rights and Restricted
Stock under the Plan, as the Plan Administrator may determine.
Any Options, limited stock appreciation rights, stock
appreciation rights and shares of Restricted Stock outstanding
under the Plan on April 1, 1998, shall be adjusted on a two-for-
one basis to reflect the stock dividend.
5.2 In the event of a recapitalization, stock split, stock
dividend, exchange of shares, merger, reorganization, change in
corporate structure or shares of the Company or similar event,
the Board of Directors, upon the recommendation of the Plan
Administrator, may make appropriate adjustments in the number of
shares authorized for the Plan and, with respect to outstanding
Options, limited stock appreciation rights, stock appreciation
rights and Restricted Stock, the Plan Administrator may make
appropriate adjustments in the number of shares and the Option
Price.
SECTION 6 STOCK OPTIONS
6.1 Options may be granted to eligible employees in such
number and at such times during the term of the Plan as the Plan
Administrator shall determine. When determining a grant, the Plan
Administrator may take into account the duties of the respective
employees, their present and potential contributions to the
success of the Company, and such other factors as the Plan
Administrator shall deem relevant in accomplishing the purpose of
the Plan. The granting of an Option shall take place when the
Plan Administrator determines to grant such an Option to a
particular Participant at the Option Price. Each Option shall be
evidenced by a written instrument delivered by or on behalf of
the Company containing provisions not inconsistent with the Plan.
6.2 All Options under the Plan shall be granted subject to
the following terms and conditions:
(a) Option Price
The Option Price shall be the Fair Market Value of the
Common Stock on the date the Option is granted, unless
otherwise specified by the Plan Administrator.
(b) Duration of Options
Options shall be exercisable at such time and under
such conditions as set forth in the Option grant, but in no
event shall any Option be exercisable later than the tenth
anniversary of the date of its grant.
(c) Exercise of Options
Subject to Section 6.2(j), a Participant may not
exercise an Option until the Participant has completed one
(1) year of continuous employment with the Company or any of
its Subsidiaries immediately following the date on which the
Option is granted, or such other shorter or longer period as
the Plan Administrator may determine in a particular case.
This requirement is waived in the event of death or
Permanent Disability of a Participant before such period of
continuous employment is completed and may be waived or
modified in the agreement evidencing the Option or by
written notice to the Participant from the Plan
Administrator. Thereafter, shares of Common Stock covered
by an Option may be purchased at one time or in such
installments over the balance of the Option period as may be
provided in the Option grant. Any shares not purchased on
the applicable installment date may be purchased at one time
or in such installments at any time prior to the final
expiration of the Option as may be provided in the Option
grant. To the extent that the right to purchase shares has
accrued thereunder, Options may be exercised from time to
time by providing written notice to the Company setting
forth the number of shares to which the Option is being
exercised.
(d) Payment
The product of the Option Price and the number of
shares purchased (the "Purchase Price") shall be paid in
full to the Company upon the exercise of an Option. The
Purchase Price may be paid either (i) in cash or (ii) at the
discretion of the Plan Administrator, in Common Stock
already owned by the Participant for at least six (6)
months, or any combination of cash and Common Stock. The
Fair Market Value of such Common Stock as delivered shall be
valued as of the day prior to delivery. To the extent
permitted by the Plan Administrator and applicable laws and
regulations (including, but not limited to, federal tax and
securities laws and regulations and state corporate law), an
Option may also be exercised by delivering a properly
executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company
the amount of sale or loan proceeds to pay the Purchase
Price. A Participant shall have none of the rights of a
stockholder until the shares of Common Stock are issued to
the Participant.
(e) Restrictions
The Plan Administrator shall determine, with respect to
each Option, the nature and extent of the restrictions, if
any, to be imposed on the shares of Common Stock which may
be purchased thereunder, including, but not limited to,
restrictions on the transferability of such shares acquired
through the exercise of an Option for such periods as the
Plan Administrator may determine and, further, that in the
event a Participant's employment by the Company, or a
Subsidiary, terminates during the period in which such
shares are nontransferable, the Participant shall be
required to sell such shares back to the Company at such
prices as the Plan Administrator may specify in the Option.
(f) Nontransferability of Options
During a Participant's lifetime, an Option may be
exercisable only by the Participant. Options granted under
the Plan and the rights and privileges conferred thereby
shall not be subject to execution, attachment or similar
process and may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of
descent and distribution, except that to the extent
permitted by applicable law, the Plan Administrator may
permit a recipient of an Option to designate in writing
during the Participant's lifetime a Beneficiary to receive
and exercise Options in the event of such Participant's
death (as provided in Section 6.2(i)). Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose
of any Option under the Plan or of any right or privilege
conferred thereby, contrary to the provisions of the Plan,
or the sale or levy or any attachment or similar process
upon the rights and privileges conferred hereby, shall be
null and void.
(g) Purchase for Investment
The Plan Administrator shall have the right to require
that each Participant or other person who shall exercise an
Option under the Plan, and each person into whose name
shares of Common Stock shall be issued pursuant to the
exercise of an Option, represent and agree that any and all
shares of Common Stock purchased pursuant to such Option are
being purchased for investment only and not with a view to
the distribution or resale thereof and that such shares will
not be sold except in accordance with such restrictions or
limitations as may be set forth in the Option. This Section
6.2(g) shall be inoperative during any period of time when
the Company has obtained all necessary or advisable
approvals from governmental agencies and has completed all
necessary or advisable registrations or other qualifications
of shares of Common Stock as to which Options may from time
to time be granted.
(h) Termination of Employment
Upon the termination of a Participant's employment for
any reason other than death or Permanent Disability, the
Participant's Option shall be exercisable only to the extent
that it was then exercisable and, unless the term of the
Option expires sooner, such Option shall expire according to
the following schedule; provided, that the Plan
Administrator may at any time determine in a particular case
that specific limitations and restrictions under the Plan
shall not apply:
(i) Retirement
The Option shall expire, unless exercised,
thirty-six (36) months after the Participant's
retirement from the Company or any Subsidiary.
(ii) Disability
The Option shall expire, unless exercised,
thirty-six (36) months after the Participant's
Permanent Disability.
(iii) Termination
Subject to subparagraph (iv) below, the Option
shall expire, unless exercised, thirty-six (36) months
after a Participant resigns or is terminated as an
employee of the Company or any of its Subsidiaries,
unless the Plan Administrator shall have determined in
a specific case that the Option should expire sooner or
should terminate when the Participant's employment
status ceases.
(iv) Termination Following a Change in Control
The Option shall expire, unless exercised, within
thirty-six (36) months of a Participant's termination
of employment (other than a termination by the Company
for Cause or a voluntary termination by the Participant
other than for Good Reason) following a Change in
Control, provided that said termination of employment
occurs within two (2) years following a Change in
Control.
(v) All Other Terminations
Except as provided in subparagraphs (iii) and (iv)
above, the Option shall expire upon termination of
employment.
(i) Death of Participant
Upon the death of a Participant, whether during the
Participant's period of employment or during the thirty-six
(36) month period referred to in Sections 6.2(h)(i), (ii)
and (iii), the Option shall expire, unless the term of the
Option expires sooner, twelve (12) months after the date of
the Participant's death, unless the Option is exercised
within such twelve (12) month period by the Participant's
Beneficiary, legal representatives, estate or the person or
persons to whom the deceased's Option rights shall have
passed by will or the laws of descent and distribution;
provided, that the Plan Administrator may determine in a
particular case that specific limitations and restrictions
under the Plan shall not apply.
(j) Change in Control
Notwithstanding other Plan provisions pertaining to the
times at which Options may be exercised, all outstanding
Options, to the extent not then currently exercisable, shall
become exercisable in full upon the occurrence of a Change
in Control. No Option shall be exercisable at a time that
would violate the maximum duration of Section 6.2(b).
SECTION 7 STOCK APPRECIATION RIGHTS
7.1 The Plan Administrator may grant stock appreciation
rights to Participants in connection with any Option granted
under the Plan, either at the time of the grant of such Option or
at any time thereafter during the term of the Option. Such stock
appreciation rights shall cover the same shares covered by the
Options (or such lesser number of shares of Common Stock as the
Plan Administrator may determine) and shall, except as provided
in Section 7.3, be subject to the same terms and conditions as
the related Options and such further terms and conditions not
inconsistent with the Plan as shall from time to time be
determined by the Plan Administrator.
7.2 Each stock appreciation right shall entitle the holder
of the related Option to surrender to the Company the related
unexercised Option, or any portion thereof, and to receive from
the Company in exchange therefor an amount equal to the excess of
the Fair Market Value of one share of Common Stock on the date
the right is exercised over the Option Price per share times the
number of shares covered by the Option, or portion thereof, which
is surrendered. Payment shall be made in shares of Common Stock
valued at Fair Market Value as of the date the right is
exercised, or in cash, or partly in shares and partly in cash, at
the discretion of the Plan Administrator; provided, however, that
payment shall be made solely in cash with respect to a stock
appreciation right which is exercised within seven (7) months
following a Change in Control. Stock appreciation rights may be
exercised from time to time upon actual receipt by the Company of
written notice stating the number of shares of Common Stock with
respect to which the stock appreciation rights are being
exercised. The value of any fractional shares shall be paid in
cash.
7.3 Stock appreciation rights are subject to the following
restrictions:
(a) Each stock appreciation right shall be exercisable
at such time or times that the Option to which they relate
shall be exercisable or at such other times as the Plan
Administrator may determine; provided, however, that such
rights shall not be exercisable until the Participant shall
have completed six (6) months of continuous employment with
the Company or any of its Subsidiaries immediately following
the date on which the stock appreciation right is granted.
In the event of death or Permanent Disability of a
Participant during employment but before the Participant has
completed such period of continuous employment, such stock
appreciation right shall be exercisable only within the
period specified in the related Option. In the event of a
Change in Control, the requirement that a Participant shall
have completed a six (6) month period of continuous
employment is waived with respect to a Participant who is
employed by the Company at the time of the Change in Control
but who, within the six (6) month period, voluntarily
terminates employment for Good Reason or is terminated by
the Company other than for Cause.
(b) Except in the event of a Change in Control, the
Plan Administrator in its sole discretion may approve or
deny in whole or in part a request to exercise a stock
appreciation right. Denial or approval of such request
shall not require a subsequent request to be similarly
treated by the Plan Administrator.
(c) The right of a Participant to exercise a stock
appreciation right shall be canceled if and to the extent
the related Option is exercised. To the extent that a stock
appreciation right is exercised, the related Option shall be
deemed to have been surrendered, unexercised and canceled.
(d) A holder of stock appreciation rights shall have
none of the rights of a stockholder until shares of Common
Stock, if any, are issued to such holder pursuant to such
holder's exercise of such rights.
(e) The acquisition of Common Stock pursuant to the
exercise of a stock appreciation right shall be subject to
the same restrictions as would apply to the acquisition of
Common Stock acquired upon acquisition of the related
Option, as set forth in Section 6.2.
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS
8.1 The Plan Administrator may grant limited stock
appreciation rights to Participants in connection with any
Options granted under the Plan, either at the time of the grant
of such Option or at any time thereafter during the term of the
Option. Such limited stock appreciation rights shall cover the
same shares covered by the Options (or such lesser number of
shares of Common Stock as the Plan Administrator may determine)
and shall, except as provided in Section 8.3, be subject to the
same terms and conditions as the related Options and such further
terms and conditions not inconsistent with the Plan as shall from
time to time be determined by the Plan Administrator.
8.2 Each limited stock appreciation right shall entitle the
holder of the related Option to surrender to the Company the
unexercised portion of the related Option and to receive from the
Company in exchange therefor an amount in cash equal to the
excess of the Fair Market Value of one (1) share of Common Stock
on the date the right is exercised over the Option Price per
share times the number of shares covered by the Option, or
portion thereof, which is surrendered.
8.3 Limited stock appreciation rights are subject to the
following restrictions:
(a) Each limited stock appreciation right shall be
exercisable in full for a period of seven (7) months
following the date of a Change in Control, provided,
however, that limited stock appreciation rights may not be
exercised under any circumstances until the expiration of
the six (6) month period following the date of grant.
Limited stock appreciation rights shall be exercisable only
to the same extent and subject to the same conditions as the
Options related thereto are exercisable, as provided in
Section 6.2(j).
(b) The right of a Participant to exercise a limited
stock appreciation right shall be canceled if and to the
extent the related Option is exercised. To the extent that a
limited stock appreciation right is exercised, the related
Option shall be deemed to have been surrendered, unexercised
and canceled.
SECTION 9 RESTRICTED STOCK
9.1 Restricted Stock may be granted to Participants in such
number and at such times during the term of the Plan as the Plan
Administrator shall determine, the Plan Administrator taking into
account the duties of the respective Participants, their present
and potential contributions to the success of the Company, and
such other factors as the Plan Administrator shall deem relevant
in accomplishing the purposes of the Plan. The granting of
Restricted Stock shall take place when the Plan Administrator by
resolution, written consent or other appropriate action
determines to grant such Restricted Stock to a particular
Participant. Each grant shall be evidenced by a written
instrument delivered by or on behalf of the Company containing
provisions not inconsistent with the Plan. The Participant
receiving a grant of Restricted Stock shall be recorded as a
stockholder of the Company. Each Participant who receives a
grant of Restricted Stock shall have all the rights of a
stockholder with respect to such shares (except as provided in
the restrictions on transferability), including the right to vote
the shares and receive dividends and other distributions;
provided, however, that no Participant awarded Restricted Stock
shall have any right as a stockholder with respect to any shares
subject to the Participant's Restricted Stock grant prior to the
date of issuance to the Participant of a certificate or
certificates for such shares.
9.2 A grant of Restricted Stock shall entitle a Participant
to receive, on the date or dates designated by the Plan
Administrator, upon payment to the Company of the par value of
the Common Stock in a manner determined by the Plan
Administrator, the number of shares of Common Stock selected by
the Plan Administrator. The Plan Administrator may require,
under such terms and conditions as it deems appropriate or
desirable, that the certificates for Restricted Stock delivered
under the Plan may be held in custody by a bank or other
institution, or that the Company may itself hold such shares in
custody until the Restriction Period (as defined in Section 9.3)
expires or until restrictions thereon otherwise lapse, and may
require, as a condition of any issuance of Restricted Stock that
the Participant shall have delivered a stock power endorsed in
blank relating to the shares of Restricted Stock.
9.3 During a period of years following the date of grant,
which shall in no event be less than one (1) year and until
required performance targets are achieved, if applicable, as
determined by the Plan Administrator (the "Restriction Period"),
the Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered or disposed of by
the recipient, except in the event of death or Permanent
Disability, the transfer to the Company as provided under the
Plan or the Plan Administrator's waiver or modification of such
restrictions in the agreement evidencing the grant of Restricted
Stock, or by resolution of the Plan Administrator adopted at any
time.
9.4 Except as provided in Section 9.5 or 9.6, if a
Participant terminates employment with the Company for any reason
before the expiration of the Restriction Period, all shares of
Restricted Stock still subject to restriction shall be forfeited
by the Participant to the Company. In addition, in the event of
any attempt by the Participant to sell, exchange, transfer,
pledge or otherwise dispose of shares of Restricted Stock in
violation of the terms of the Plan, such shares shall be
forfeited to the Company.
9.5 The Restriction Period for any Participant shall be
deemed to end and all restrictions on shares of Restricted Stock
shall lapse, upon the Participant's death, Permanent Disability,
retirement or any termination of employment determined by the
Plan Administrator to end the Restriction Period.
9.6 The Restriction Period for any Participant shall be
deemed to end and all restrictions on shares of Restricted Stock
shall terminate immediately upon a Change in Control.
9.7 When the restrictions imposed by Section 9.3 expire or
otherwise lapse with respect to one or more shares of Restricted
Stock, the Company shall deliver to the Participant (or the
Participant's legal representative, Beneficiary or heir) one (1)
share of Common Stock for each share of Restricted Stock. At
that time, the agreement referred to in Section 9.1, as it
relates to such shares, shall be terminated.
9.8 Subject to Section 9.2, a Participant entitled to
receive Restricted Stock under the Plan shall be issued a
certificate for such shares. Such certificate shall be
registered in the name of the Participant, and shall bear an
appropriate legend reciting the terms, conditions and
restrictions, if any, applicable to such shares and shall be
subject to appropriate stop-transfer orders.
SECTION 10 REGULATORY APPROVALS AND LISTING
10.1 The Company shall not be required to issue any
certificate for shares of Common Stock upon the exercise of an
Option or a stock appreciation right granted under the Plan, or
with respect to a grant of Restricted Stock prior to:
(a) the obtaining of any approval or ruling from the
Securities and Exchange Commission, the Internal Revenue
Service or any other governmental agency which the Company,
in its sole discretion, shall determine to be necessary or
advisable;
(b) the listing of such shares on any stock exchange
on which the Common Stock may then be listed; or
(c) the completion of any registration or other
qualification of such shares under any federal or state
laws, rulings or regulations of any governmental body which
the Company, in its sole discretion, shall determine to be
necessary or advisable.
SECTION 11 EFFECTIVE DATE AND TERM OF THE PLAN
The Plan was originally adopted by the Board of Directors as
of December 14, 1993. The Board of Directors amended and
restated the Plan effective as of August 1, 1998, in connection
with the reorganization of the Company into a holding company
structure whereby El Paso Energy Corporation became the publicly
held company and El Paso Natural Gas Company became a wholly
owned subsidiary. This Plan was assumed by El Paso Energy
Corporation pursuant to an Assignment and Assumption Agreement
effective as of August 1, 1998, by and between El Paso Energy
Corporation and El Paso Natural Gas Company. Options, limited
stock appreciation rights, stock appreciation rights and
Restricted Stock may be granted pursuant to the Plan from time to
time as the Plan Administrator shall determine. The Plan shall
terminate on December 14, 2003. However, Options, limited stock
appreciation rights, stock appreciation rights and Restricted
Stock granted prior to the expiration of the Plan may extend
beyond that date and the terms and conditions of the Plan shall
continue to apply thereto and to shares of Common Stock acquired
hereunder.
SECTION 12 GENERAL PROVISIONS
12.1 Nothing contained in the Plan, or in any Option,
limited stock appreciation right, stock appreciation right or
Restricted Stock granted pursuant to the Plan, shall confer upon
any employee any right with respect to continuance of employment
by the Company or a Subsidiary, nor interfere in any way with the
right of the Company or a Subsidiary to terminate the employment
of such employee at any time with or without assigning any reason
therefor.
12.2 Grants, vesting or payment of Options, limited stock
appreciation rights, stock appreciation rights or Restricted
Stock shall not be considered as part of a Participant's salary
or used for the calculation of any other pay, allowance, pension
or other benefit unless otherwise permitted by other benefit
plans provided by the Company or its Subsidiaries, or required by
law or by contractual obligations of the Company or its
Subsidiaries.
12.3 The right of a Participant or Beneficiary to the
payment of any compensation under the Plan may not be assigned,
transferred, pledged or encumbered, nor shall such right or other
interests be subject to attachment, garnishment, execution or
other legal process.
12.4 Leaves of absence for such periods and purposes
conforming to the personnel policy of the Company, or of its
Subsidiaries, as applicable, shall not be deemed terminations or
interruptions of employment.
12.5 In the event a Participant is transferred from the
Company to a Subsidiary, or vice versa, or is promoted or given
different responsibilities, the Options, limited stock
appreciation rights, stock appreciation rights and Restricted
Stock granted to the Participant prior to such date shall not be
affected. Notwithstanding the foregoing or any other provision
in this Plan, in the event a Participant becomes an officer or
director of the Company subject to Section 16(b) of the Exchange
Act, the Plan Administrator may take any and all action necessary
to prevent any violation of Section 16(b), including, but not
limited to, accelerating the vesting of Options, rights or
Restricted Stock, canceling any unvested Options, rights or
Restricted Stock and/or requiring the Participant to exercise any
and all vested Options or rights at such times as the Plan
Administrator may determine.
12.6 Each grant to a Participant of an Option, limited stock
appreciation right, stock appreciation right and Restricted Stock
hereunder shall make reference to this Plan by title and date to
confirm the applicability of the Plan and the source of shares
and rights covered by the grant.
12.7 The Plan shall be construed and governed in accordance
with the laws of the State of Texas, except that it shall be
construed and governed in accordance with applicable federal law
in the event that such federal law preempts state law.
12.8 Appropriate provision shall be made for all taxes
required to be withheld in connection with the exercise, grant or
other taxable event with respect to Options, limited stock
appreciation rights, stock appreciation rights and Restricted
Stock under the applicable laws or regulations of any
governmental authority, whether federal, state or local and
whether domestic or foreign. Unless otherwise provided in the
grant, a Participant is permitted to deliver shares of Common
Stock for payment of withholding taxes on the exercise of an
option, stock appreciation right, or limited stock appreciation
right or upon the grant or vesting of Restricted Stock. At the
election of the Plan Administrator or, subject to approval of the
Plan Administrator at its sole discretion, at the election of a
Participant, shares of Common Stock may be withheld from the
shares issuable to the Participant upon the exercise of an option
or stock appreciation right or upon the vesting of the Restricted
Stock to satisfy tax withholding obligations. The Fair Market
Value of Common Stock as delivered pursuant to this Section 12.8
shall be valued as of the day prior to delivery, and shall be
calculated in accordance with Section 2.8.
Any Participant that makes a Section 83(b) election under
the Code shall, within ten (10) days of making such election,
notify the Company in writing of such election and shall provide
the Company with a copy of such election form filed with the
Internal Revenue Service.
Tax advice should be obtained by the Participant prior to
the Participant's (i) entering into any transaction under or with
respect to the Plan, (ii) designating or choosing the times of
distributions under the Plan, or (iii) disposing of any shares of
Common Stock issued under the Plan.
SECTION 13 AMENDMENT, TERMINATION OR DISCONTINUANCE OF THE
PLAN
13.1 Subject to Section 13.2, the Plan Administrator may
from time to time make such amendments to the Plan as it may deem
proper and in the best interest of the Company without further
approval of the Board of Directors, including, but not limited
to, any amendment necessary to ensure that the Company may obtain
any regulatory approval referred to in Section 10; provided,
however, that no change in any Option, limited stock appreciation
right, stock appreciation right or Restricted Stock theretofore
granted may be made without the consent of the Participant which
would impair the right of the Participant to acquire or retain
Common Stock or cash that the Participant may have acquired as a
result of the Plan.
13.2 The Plan Administrator may not amend the Plan without
the approval of the Board of Directors to:
(a) increase the number of shares or rights that may
be issued under the Plan; or
(b) otherwise materially increase the benefits
accruing to the Participants under the Plan.
13.3 The Plan Administrator may at any time suspend the
operation of or terminate the Plan with respect to any shares of
Common Stock not subject to Option, limited stock appreciation
right, stock appreciation right or Restricted Stock at the time.
IN WITNESS WHEREOF, the Company has caused the Plan to be
amended and restated effective as of August 1, 1998.
EL PASO ENERGY CORPORATION
By /s/ Joel Richards
_________________________________
Executive Vice President
ATTEST:
By David L. Siddall
_________________________________
Corporate Secretary
<PAGE>
AMENDMENT NO. 1 TO THE
OMNIBUS PLAN FOR MANAGEMENT EMPLOYEES
Pursuant to Section 13.1 of the El Paso Energy Corporation
Omnibus Plan for Management Employees, as amended and restated
(the "Plan"), the Plan is hereby amended as follows, effective
December 3, 1998:
Section 4 is amended to read as follows:
"To be eligible for selection by the Plan Administrator
to participate in the Plan, an individual must be a must be
a salaried employee (other than an employee who is a member
of a unit covered by a collective bargaining agreement) of
the Company, or of any Subsidiary, as of the date on which
the Plan Administrator grants to such individual an Option,
limited stock appreciation right, stock appreciation right
or Restricted Stock and who in the judgment of the Plan
Administrator holds a position of responsibility and is able
to contribute substantially to the Company's continued
success."
The following sentences shall be added as the last sentence to
Section 6.2(d) to read as follows:
"Notwithstanding any other provision in this Plan to the
contrary and unless the Plan Administrator shall otherwise
determine, in the event of a "cashless" exercise, and for
that purpose only under this Plan, a Participant's
compensation shall be equal to the difference between the
actual sales price received for the underlying Common Stock
and the Option Price. For all other purposes under this
Plan, the Fair Market Value shall be value against which
compensation is determined."
The following sentence shall be added as the last sentence to
Section 6.2(e) to read as follows:
"In addition, the Plan Administrator may require that a
Participant who wants to effectuate a "cashless" exercise of
Options be required to sell the shares of Common Stock
acquired in the associated exercise to the Company, or in
the open market through the use of a broker selected by the
Plan Administrator, at such price and on such terms as the
Plan Administrator may determine at the time of grant, or
otherwise."
The following subsection (k) shall be added to Section 6.2 to
read as follows:
"(k) Deferral Election
A Participant may elect irrevocably (at a time and in a
manner determined by the Plan Administrator or the Company,
as appropriate) at any time prior to exercising an option
granted under the Plan that issuance of shares of Common
Stock upon exercise of such option and/or associated stock
appreciation right shall be deferred until a pre-specified
date in the future or until the Participant ceases to be
employed by the Company or any of its Subsidiaries, as
elected by the Participant. After the exercise of any such
option and prior to the issuance of any deferred shares, the
number of shares of Common Stock issuable to the Participant
shall be credited to the deferred stock account (or such
other account(s) as the Management Committee shall deem
necessary and appropriate) under a memorandum deferred
account established pursuant to the Company's then-existing
Deferred Compensation Plan (as it may be further amended)
(the "Deferred Compensation Plan"), and any dividends or
other distributions paid on the Common Stock (or its
equivalent) shall be deemed reinvested in additional shares
of Common Stock (or its equivalent) until all credited
deferred shares shall become issuable pursuant to the
Participant's election, unless the Management Committee of
the Deferred Compensation Plan shall otherwise determine."
The following Section 9.9 shall be added to read as follows:
"9.9 A Participant may elect irrevocably (at a time
and in the manner determined by the Plan Administrator or
the Company, as appropriate), prior to vesting of Restricted
Stock, that the Participant relinquishes any and all rights
in the shares of Restricted Stock in exchange for an
interest in the Deferred Compensation Plan and receipt of
such shares shall be deferred until a pre-specified date in
the future or until the Participant ceases to be employed by
the Company or any of its Subsidiaries, as elected by the
Participant. At the time the restrictions lapse on the
shares of Restricted Stock (as specified at the time of
grant, or otherwise if changed by the Plan Administrator),
the number of shares of Common Stock issuable to the
Participant shall be credited to the deferred stock account
(or such other account(s) as the Management Committee shall
deem necessary and appropriate) under a memorandum deferred
account established pursuant to the Deferred Compensation
Plan, and any dividends or other distributions paid on the
Common Stock (or its equivalent) shall be deemed reinvested
in additional shares of Common Stock (or its equivalent)
until all credited deferred shares shall become issuable
pursuant to the Participant's election, unless the
Management Committee of the Deferred Compensation Plan shall
otherwise determine."
The first sentence of Section 12.8 is hereby deleted in its
entirety and replaced with the following sentence:
"Appropriate provision shall be made for all taxes required
to be withheld in connection with the exercise, grant or
other taxable event with respect to Options, limited stock
appreciation rights, stock appreciation rights and
Restricted Stock under the applicable laws and regulations
of any governmental authority, whether federal, state or
local and whether domestic or foreign, including, but not
limited to, the required withholding of a sufficient number
of shares of Common Stock otherwise issuable to a
Participant to satisfy the said required minimum tax
withholding obligations."
IN WITNESS WHEREOF, the Company has caused this amendment to
be duly executed on this 3rd day of December, 1998.
EL PASO ENERGY CORPORATION
By: /s/ Joel Richards III
_____________________________
Joel Richards III
Executive Vice President
Plan Administrator
Attest:
/s/ David L. Siddall
____________________________
Corporate Secretary
<PAGE>
AMENDMENT NO. 2 TO THE
OMNIBUS PLAN FOR MANAGEMENT EMPLOYEES
Pursuant to Section 13.1 of the El Paso Energy Corporation
Omnibus Plan for Management Employees, Amended and Restated as of
August 1, 1998 (the "Plan"), the Plan is hereby amended as
follows:
Section 2.4 is hereby amended to add the following language as
the last sentence of such Section:
"In addition, the consummation of the merger between the
Company and Sonat Inc. as publicly announced on March 15, 1999,
and as the terms of such merger may be amended or modified, shall
not constitute a Change in Control under this Plan with respect
to all grants made pursuant to the Plan to employees who are
hired, promoted, or acquired in an acquisition (including, but
not limited to, employees of EnCap Investments L.L.C.) effective
on or after January 29, 1999, through the date of consummation of
the Company and Sonat Inc. merger."
IN WITNESS WHEREOF, the Company has caused this amendment to
be duly executed on this 31st day of March, 1999.
EL PASO ENERGY CORPORATION
By: /s/ Joel Richards III
_____________________________
Joel Richards III
Executive Vice President
Plan Administrator
Attest:
/s/ David L. Siddall
____________________________
Corporate Secretary
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated
March 9, 1999 relating to the consolidated financial
statements and financial statement schedule, which appears
in El Paso Energy Corporation's Annual Report on Form 10-K
for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Houston, Texas
May 20, 1999
