As filed with the Securities and Exchange Commission on May 24, 2000
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-----------------
THE COASTAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1734212
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of Principal Executive Offices) (Zip Code)
-----------------
THE COASTAL CORPORATION
1994 INCENTIVE STOCK PLAN
(Full title of the plan)
-------------------
Austin M. O'Toole, Esq.
Senior Vice President and Secretary
The Coastal Corporation, Coastal Tower, Nine Greenway Plaza
Houston, Texas 77046-0995
(Name and address of agent for service)
(713) 877-1400
(Telephone number, including area code, of agent for service)
-----------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Proposed Proposed
Amount maximum maximum
Title of securities to be offering price aggregate Amount of
to be registered registered per share(1) offering price (1) registration fee
- ----------------------------------------------- -------------- -------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock of The Coastal Corporation, 4,000,000 shs $15.16 -
par value $.331/3 per share.................... $58.97 $80,353,620 $21,213.36
=============================================== ============== =============== ================== ================
<FN>
(1) The price per share, estimated solely for purposes of calculating the
registration fee pursuant to Rule 457 under the Securities Act of 1933, as
amended, is based upon option prices of shares subject to options granted
to date and upon the average of the high and low prices of shares of Common
Stock on the New York Stock Exchange Composite Transactions on May 19, 2000
with respect to shares to be subject to options not yet granted.
</FN>
</TABLE>
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
*The information required by Part I of Form S-8 to be contained in the Section
10(a) prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended, and the Note to Part I
of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
This Registration Statement incorporates herein by reference the
following documents which have been filed with the Securities and Exchange
Commission (the "Commission") by The Coastal Corporation ("Coastal") pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"):
(a) Coastal's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (the "1999 Annual Report"); and
(c) Coastal's Registration Statement on Form S-3 describing Coastal's
Common Stock - Registration No. 33-30902 filed with the
Commission on September l, 1989.
All documents subsequently filed by Coastal pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the filing of the
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Legal Matters
The legality of the securities offered hereby has been passed upon by
Austin M. O'Toole, Esq., Senior Vice President and Secretary of Coastal, Coastal
Tower, Nine Greenway Plaza, Houston, Texas 77046-0995. As of May 1, 2000, Mr.
O'Toole beneficially owned approximately 58,996 shares of Common Stock and 553
shares of Class A Common Stock of Coastal, including exercisable stock options.
- 2 -
<PAGE>
Experts
The annual consolidated financial statements of Coastal incorporated
in this Registration Statement by reference to the 1999 Annual Report have been
audited by Deloitte & Touche LLP, independent accountants, as stated in their
report. Such financial statements are incorporated herein by reference and have
been so incorporated in reliance on the report of such firm, given on the
authority of such firm as experts in accounting and auditing.
Item 6. Indemnification of Directors and Officers
(a) Section 145 of the General Corporation Law of the State of
Delaware permits a corporation to indemnify its officers, directors and other
agents against certain liabilities at least to the extent provided for in the
Certificates of Incorporation and By-Laws of Coastal.
(b) Article FIFTH of Coastal's Certificate of Incorporation provides
as follows:
FIFTH: 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 (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper personal
benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this article to authorize corporate
action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by
the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at
the time of such repeal or modification.
(c) Article IX of Coastal's By-Laws reads as follows:
ARTICLE IX
INDEMNIFICATION
SECTION 1. Third Party Actions. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceedings,
whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation,
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he 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 with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith
- 3 -
<PAGE>
and in a manner which he 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 reasonable cause to believe that his conduct
was unlawful.
SECTION 2. Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he 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 except that no indemnification shall
be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation unless
and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
SECTION 3. Determination of Conduct. The determination that an
officer, director, employee or agent, has met the applicable standard
of conduct set forth in Section 1 and 2 of this Article IX (unless
indemnification is ordered by a court) shall be made (i) by the Board
of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceedings or (ii) if such
quorum is not obtainable, or even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders.
SECTION 4. Payment of Expenses in Advance. Expenses incurred
in defending a civil or criminal action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount
if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article IX.
SECTION 5. Definition. As used in this Article IX, the term
"Corporation" includes all constituent corporations absorbed by The
Coastal Corporation or a subsidiary thereof in a consolidation, merger
or other acquisition transaction, as well as the resulting or surviving
corporation, so that any person who is or was a director, officer,
employee or agent of such a constituent corporation, or is or was
serving at the request of such a constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position
under the provisions of this Article IX with respect to The Coastal
Corporation as he would if he had served the resulting or surviving
corporation in the same capacity.
SECTION 6. Indemnity Not Exclusive. The indemnification and
advancement of expenses provided hereunder shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any other by-law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
- 4 -
<PAGE>
administrators of such a person. It is the intent of this Article IX
that the Corporation shall indemnify those persons eligible hereunder
to the fullest extent permitted under The General Corporation Laws of
Delaware.
(d) An Indemnity Agreement was approved on May 27, 1981, at the annual
meeting of the holders of the common and convertible preferred stocks of Coastal
and is incorporated herein by reference to the definitive Proxy Statement of
Coastal (Exhibit A) dated April 15, 1981. In April of 1988, the Board of
Directors of Coastal approved a revised and updated Indemnity Agreement which is
incorporated herein by reference to the 1990 Annual Report (Exhibit 28).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "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 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 Act and will be governed by the final adjudication of
such issue.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
The following documents are filed as a part of this Registration
Statement:
4.1 The Coastal Corporation 1994 Incentive Stock Plan.
5 Opinion of Austin M. O'Toole, Esq., Senior Vice President and
Secretary of The Coastal Corporation, as to the legality of
securities to be registered.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Austin O'Toole, Esq. (included in Exhibit 5).
24 Powers of Attorney (included on the signature pages hereof).
- 5 -
<PAGE>
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 Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the 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 the 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 the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the Registration Statement is on Form S-3 or Form S-8, and 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 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 deeded 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 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the 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.
- 6 -
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints David A.
Arledge, Coby C. Hesse and Austin M. O'Toole and each of them, any of whom may
act without the joinder of the others, as his attorney-in-fact to sign on his
behalf and in the capacity stated below and to file all amendments and
post-effective amendments to this Registration Statement, which amendment or
amendments may make such changes and additions in this Registration Statement as
such attorney-in-fact may deem necessary or appropriate.
SIGNATURES
The Registrant. 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 May 24, 2000.
THE COASTAL CORPORATION
(Registrant)
By /S/ DAVID A. ARLEDGE
--------------------------------------
David A. Arledge
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/S/ DAVID A. ARLEDGE Chairman of the Board, May 24, 2000
- ------------------------------ President, Chief Executive
David A. Arledge Officer, and Director
/S/ COBY C. HESSE Principal Accounting Officer May 24, 2000
- ------------------------------ and Principal Financial
Coby C. Hesse Officer
/S/ JOHN M. BISSELL Director May 24, 2000
- ------------------------------
John M. Bissell
/S/ GEORGE L. BRUNDRETT, JR. Director May 24, 2000
- ------------------------------
George L. Brundrett, Jr.
- 7 -
<PAGE>
Signature Title Date
--------- ----- ----
/S/ HAROLD BURROW Director May 24, 2000
- ------------------------------
Harold Burrow
/S/ JAMES F. CORDES Director May 24, 2000
- ------------------------------
James F. Cordes
/S/ ROY L. GATES Director May 24, 2000
- ------------------------------
Roy L. Gates
/S/ ANTHONY W. HALL, JR. Director May 24, 2000
- ------------------------------
Anthony W. Hall, Jr.
/S/ KENNETH O. JOHNSON Director May 24, 2000
- ------------------------------
Kenneth O. Johnson
/S/ JEROME S. KATZIN Director May 24, 2000
- ------------------------------
Jerome S. Katzin
Director May __, 2000
- ------------------------------
J. Carleton MacNeil, Jr.
/S/ THOMAS R. MCDADE Director May 24, 2000
- ------------------------------
Thomas R. McDade
/S/ OSCAR S. WYATT, JR. Director May 24, 2000
- ------------------------------
O. S. Wyatt, Jr.
- 8 -
<PAGE>
INDEX TO EXHIBITS
THE COASTAL CORPORATION
1994 INCENTIVE STOCK PLAN
Exhibit
No. Description
- ----------- ---------------------------------------------------------------
4.1 The Coastal Corporation 1994 Incentive Stock Plan.
5 Opinion of Austin M O'Toole, Esq., Senior Vice President and
Secretary of The Coastal Corporation, as to the legality of the
securities to be registered.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Austin M. O'Toole (included in Exhibit 5).
24 Powers of Attorney (included on the signature pages hereof).
- 9 -
Exhibit 4.1
Exhibit 4.1
<PAGE>
Exhibit 4.1
THE COASTAL CORPORATION
1994 INCENTIVE STOCK PLAN
<PAGE>
Exhibit 4.1
THE COASTAL CORPORATION
1994 INCENTIVE STOCK PLAN
Table of Contents
1. Purpose.............................................................. A-1
2. Administration....................................................... A-1
3. Shares Available Under the Plan...................................... A-1
4. Authority to Grant Options, Restricted Stock Grants and Stock Awards. A-2
5. Eligibility.......................................................... A-2
6. Option Price......................................................... A-3
7. Duration of Options.................................................. A-3
8. Maximum Value of Stock Subject to Options Which are Incentive Stock
Options.............................................................. A-3
9. Amount Exercisable................................................... A-3
10. Exercise of Options.................................................. A-3
11. Non-Transferability of Options....................................... A-4
12. Termination of Employment or Death of Optionee....................... A-4
13. Requirements of Law.................................................. A-5
14. No Rights as Shareholder............................................. A-6
15. Restricted Stock Grants.............................................. A-6
16. Stock Awards......................................................... A-7
17. Employment Obligation................................................ A-8
18. Changes in the Company's Capital Structure........................... A-8
19. Substitution Options................................................. A-9
20. Amendment or Termination of Plan..................................... A-9
21. Forfeitures.......................................................... A-10
22. Tax Withholding...................................................... A-10
23. Written Agreement.................................................... A-10
24. Indemnification of Committee......................................... A-10
25. Effective Date of Plan............................................... A-11
<PAGE>
Exhibit 4.1
THE COASTAL CORPORATION
1994 INCENTIVE STOCK PLAN
1. Purpose. This 1994 Incentive Stock Plan (the "Plan") of The Coastal
Corporation (the "Company") for key employees (including officers and employee
directors) of the Company and its subsidiaries, is intended to advance the best
interests of the Company by providing personnel who have substantial
responsibility for the management and growth of the Company and its subsidiaries
with additional incentive by increasing their proprietary interest in the
success of the Company, thereby encouraging them to remain in the employ of the
Company or any of its subsidiaries.
2. Administration. The Plan shall be administered by a committee (the
"Committee") consisting of not less than three members of the Board of Directors
of the Company (the "Board"). Until changed by the Board, the Compensation and
Executive Development Committee of the Board shall serve as the Committee. All
of the members of the Committee shall be "disinterested persons" as defined in
Rule 16b-3 of the Rules and Regulations promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act") or any similar or successor rule and
"outside directors" as described in Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations issued thereunder. The Board
shall have the power to add or remove members of the Committee from time to
time, and to fill vacancies thereon arising by resignation, death, removal, or
otherwise. The Committee shall designate a chairman from among its members, who
shall preside at all of its meetings, and shall designate a secretary, without
regard to whether that person is a member of the Committee, who shall keep the
minutes of the proceedings and all records, documents, and data pertaining to
its administration of the Plan. Meetings shall be held at such times and places
as shall be determined by the Committee. A majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting shall decide any
question brought before that meeting. In addition, the Committee may take any
action otherwise proper under the Plan by the affirmative vote, taken without a
meeting, of a majority of its members. Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it
had been made by a majority vote at a meeting properly called and held. No
member of the Committee shall be liable for any act or omission of any other
member of the Committee or for any act or omission on his own part, including
but not limited to the exercise of any power or discretion given to him under
the Plan, except those resulting from his own gross negligence or willful
misconduct. All questions of interpretation and application of the Plan,
including those involving options (the "Options"), restricted stock ("Restricted
Stock"), or awards of stock ("Stock Awards") shall be subject to the
determination of the Committee. The actions of the Committee in exercising all
of the rights, powers and authorities set out in this Plan, when performed in
good faith and in its sole judgment, shall be final, conclusive, and binding on
the parties. When appropriate, the Plan shall be administered in order to
qualify certain of the Options granted hereunder as "incentive stock options"
described in Section 422 of the Internal Revenue Code of 1986, as amended.
3. Shares Available Under the Plan. The stock subject to Options,
Restricted Stock Grants and Stock Awards shall be shares of the Company's Common
Stock, $.331/3 par value (the "Common Stock"). The total number of shares of
Common Stock available under the Plan shall not exceed in the aggregate
2,000,000 shares; provided, that the class and aggregate number of shares which
may be subject to grant hereunder shall be subject to adjustment in accordance
with the provisions of Paragraph 18 hereof. Such shares may be treasury shares
or authorized but unissued shares. The maximum aggregate number of shares with
respect to which Options, Restricted Stock, or Stock Awards may be granted or
issued to any employee under the Plan during each year is 100,000 shares.
In the event that any outstanding Option or Restricted Stock for any
reason shall expire or terminate by reason of the death or severance of
employment of the optionee or grantee, the surrender of any Option, the
forfeiture of any Restricted Stock, or any other cause, the shares of Common
Stock allocable to the unexercised portion of that Option or the forfeited
Restricted Stock may again be available under the Plan.
A-1
<PAGE>
Exhibit 4.1
4. Authority to Grant Options, Restricted Stock Grants and Stock Awards.
The Committee in its discretion and subject to the provisions of the Plan, may
grant the following from time to time to eligible employees of the Company or
any of its subsidiaries:
(a) "Incentive" Stock Options. The Committee may grant to an eligible
employee an Option or Options to buy a stated number of shares of Common
Stock under the terms and conditions of the Plan, so that the Option
qualifies as an "incentive stock option" within the meaning of Section 422
of the Code ("Incentive Stock Option").
(b) "Non-incentive" Stock Options. The Committee may grant to an
eligible employee an Option or Options to buy a stated number of shares of
Common Stock under the terms and conditions of the Plan, which Option or
Options do not constitute "incentive stock options" within the meaning of
Section 422 of the Code ("Non-incentive Stock Option").
(c) Restricted Stock Grant. The Committee may grant to an eligible
employee shares of Common Stock subject to specified restrictions on
transferability and vesting as provided in the Plan ("Restricted Stock
Grant").
(d) Stock Award. The Committee may award and cause the Company to
issue shares of Common Stock under the Plan to an eligible employee
("Stock Award"). Stock Awards may be made in lieu of cash compensation
or as additional compensation. Stock Awards may also be made pursuant
to performance based goals established by the Committee.
Each Option granted by the Committee shall specify whether the Option
constitutes an Incentive Stock Option or Non-incentive Stock Option. Subject
only to any applicable limitations set forth in the Plan, the number of shares
of Common Stock covered by any Option, Restricted Stock Grant, and Stock Award,
shall be determined by the Committee.
5. Eligibility. The individuals who shall be eligible to participate in
the Plan shall be the key employees, including officers and directors if they
are employees, of the Company, or of any parent or subsidiary corporations, as
the Committee shall determine from time to time. However, no eligible employee
who owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the corporation employing the employee
or of its parent or subsidiary corporation shall be eligible to receive an
Option which is an Incentive Stock Option unless at the time the Option is
granted, the Option price is at least one hundred ten percent (110%) of the
fair market value of the Common Stock, and the Option by its own terms is not
exercisable after the expiration of five years from the date of grant. No
individual shall be eligible to receive an Option under the Plan while a member
of the Committee.
For the purposes of the preceding paragraph, an employee shall be
considered as owning the stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or beneficiaries.
Except as otherwise provided, for all purposes of the Plan relating to
Incentive Stock Options, the term "parent corporation" shall mean any
corporation (other than the Company) in an unbroken chain of corporations ending
with the Company if, on the date of grant of the Incentive Stock Option in
question, each of the corporations other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain; and the term "subsidiary
corporation" shall mean any corporation in an unbroken chain of corporations,
beginning with the Company if, on the date of grant of the Option in question,
each of the corporations, other than the last corporation in the chain, owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
A-2
<PAGE>
Exhibit 4.1
For all purposes of the Plan relating to Non-incentive Stock Options,
Restricted Stock Grants, and Stock Awards, the terms "parent corporation" and
"subsidiary corporation" as defined above shall be expanded to include, in
addition to the specified entities which are corporations, any unincorporated
trade, business, or partnership in which fifty percent (50 %) or more of the
ownership interest in such entity is owned directly or indirectly by the
Company.
6. Option Price. The price at which shares may be purchased pursuant to an
Option, whether it is an Incentive Stock Option or a Non-incentive Stock Option,
shall not be less than the fair market value of the shares of Common Stock on
the date the Option is granted. However, the Committee in its discretion may
provide that the price at which shares may be purchased shall be more than the
fair market value of the shares of Common Stock on the date the Option is
granted. The Option price determined under this Paragraph 6 shall be referred to
herein as the "Option Price."
In the case of any eligible employee under the Plan who owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the corporation employing the employee, or of its parent or
subsidiary corporation (described in Paragraph 5), the Option Price at which
shares may be purchased pursuant to any Option which is an Incentive Stock
Option granted under this Plan shall not be less than one hundred ten percent
(110%) of the fair market value of the Common Stock on the date the Option is
granted.
For all purposes of this Plan, the "fair market value" of a share of Common
Stock as of any particular date shall mean the average of the high and low sales
price of a share of Common Stock on that date as reported by the principal
national securities exchange on which the Common Stock is then listed, if the
Common Stock is then listed on a national securities exchange, or the average of
the bid and asked price of a share of Common Stock on that date as reported in
the NASDAQ listing, if the Common Stock is not then listed on a national
securities exchange, provided that if no closing price or quotes are reported on
that date or, if in the discretion of the Committee, another means of
determining the fair market value of a share of Common Stock at that date shall
be necessary or advisable, the Committee may provide for another means of
determining fair market value.
7. Duration of Options. No Option, whether an Incentive Stock Option or a
Non-incentive Stock Option, shall be exercisable after the expiration of ten
(10) years from the date the Option is granted; and the Committee in its
discretion may provide that the Option shall be exercisable throughout the
ten-year period or during any lesser period of time commencing on or after the
date of grant and ending on or before the expiration of the ten-year period.
Provided, in the case of any eligible employee who owns stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the corporation employing the employee or of its parent or subsidiary
corporation (described in Paragraph 5), no Option which is an Incentive Stock
Option shall be exercisable after the expiration of five (5) years from the date
the Option is granted.
8. Maximum Value of Stock Subject to Options which are Incentive Stock
Options. Notwithstanding any other provisions of the Plan to the contrary, the
aggregate fair market value (determined as of the date the Option is granted) of
the Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by the optionee in any calendar year (under this Plan and any
other incentive stock option plan(s) of the Company and any parent or subsidiary
corporation thereof), shall not exceed $100,000. In making this determination,
Options shall be taken into account in the order in which they were granted.
9. Amount Exercisable. Each option may be exercised, so long as it is
valid and outstanding, at a cumulative rate of 20 % of the Option shares on
each annual anniversary of the date the Option is granted, beginning with the
second anniversary of the date the Option is granted, or from time to time in
part or as a whole, subject to any limitations with respect to the number of
shares for which the Option may be exercised at a particular time and to such
other conditions as the Committee in its discretion may specify upon granting
the Option. However, the Committee in its absolute discretion may accelerate
the time at which any outstanding Option may be exercised.
10. Exercise of Options. An optionee may exercise an Option by delivering
to the Company a written notice stating (i) that the optionee wishes to exercise
the Option on the date notice is delivered, (ii) the number of shares
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<PAGE>
Exhibit 4.1
of Common Stock with respect to which the Option is to be exercised, (iii) the
address to which the certificate representing the shares of Common Stock should
be mailed, and (iv) the social security number of the optionee. In order to be
effective, the written notice shall be accompanied by (i) payment of the Option
Price of the shares of Common Stock and (ii) payment of an amount of money
necessary to satisfy the withholding tax liability, if any, that may result from
the exercise of the Option. Each payment shall be made by cash or by check drawn
on a national banking association and payable to the order of the Company in
United States dollars.
At the time of receipt by the Company of written notice of exercise, the
optionee may deliver to the Company, to the extent permitted by law, in payment
of the Option Price of the shares of Common Stock with respect to which the
Option is exercised, (x) certificates registered in the name of the optionee
that represent a number of shares of Common Stock legally and beneficially owned
by the optionee (free of all liens, claims and encumbrances of every kind) and
having a fair market value on the date of receipt by the Company of written
notice that is not greater than the Option Price of the shares of Common Stock
with respect to which the Option is to be exercised, the certificates to be
accompanied by stock powers duly endorsed in blank by the record holder of the
shares of Common Stock represented by certificates (or in lieu of such
certificates, other arrangements for the transfer of shares to the Company which
are satisfactory to the Company), and cash or a check for the balance and (y) if
the Option Price of the shares of Common Stock with respect to which such Option
is to be exercised exceeds the fair market value, a check drawn on a national
banking association and payable to the order of the Company in an amount, in
United States dollars, equal to the amount of the excess plus (z) the amount of
money, in a form acceptable to the Committee, necessary to satisfy the
withholding tax liability, if any, that may result from the exercise of the
Option.
Notwithstanding the provisions of the immediately preceding sentence, the
Committee, in its sole discretion, may refuse to accept shares of Common Stock
in payment of the Option Price of the shares of Common Stock with respect to
which the Option is to be exercised and, in that event, any certificates
representing shares of Common Stock that were received by the Company with
written notice shall be returned to the optionee, together with notice by the
Company to the optionee of the refusal of the Committee to accept the shares of
Common Stock. The Company, upon approval of the Committee and in its sole
discretion, following the request of the optionee, may retain shares of Common
Stock which would otherwise be issued upon exercise of an Option to satisfy the
withholding tax liability that may result from the exercise of an Option. In
this case, the retained shares shall be valued at their then fair market value.
If, at the expiration of seven business days after the delivery to the optionee
of written notice from the Company that it will not accept shares of Common
Stock in payment of the exercise price, the optionee shall not have delivered to
the Company a check or money order drawn on a national banking association and
payable to the order of the Company in an amount, in United States dollars,
equal to the Option Price of the shares of Common Stock with respect to which
such Option is to be exercised, the written notice from the optionee to the
Company shall be ineffective to exercise the Option.
As promptly as practicable after the receipt by the Company of (i) the
written notice from the optionee, (ii) payment, in the form required by the
foregoing provisions of this Paragraph of the Option Price of the shares of
Common Stock with respect to which the Option is to be exercised, and (iii)
payment, in the form required by the foregoing provisions of this Paragraph of
an amount of money necessary to satisfy any withholding tax liability that may
result from the exercise of the Option, the Company shall deliver to the
optionee a certificate representing the number of shares of Common Stock with
respect to which the Option has been exercised, reduced to the extent applicable
by the number of shares retained by the Company as provided above to pay any
required withholding tax liability, the certificate to be registered in the name
of the optionee, provided that delivery shall be considered to have been made
when the certificate shall have been mailed, postage prepaid, to the optionee at
the address specified for that purpose in written notice from the optionee to
the Company.
11. Non-Transferability of Options. Options shall not be transferable by
the optionee other than by will or under the laws of descent and distribution,
and shall be exercisable, during the optionee's lifetime, only by the optionee.
12. Termination of Employment or Death of Optionee. Except as may be
otherwise expressly provided herein, each Option, to the extent it shall not
previously have been exercised, shall terminate on the earlier of the date
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<PAGE>
Exhibit 4.1
of the expiration of the Option or one day less than three months after the date
of the severance of the employment relationship between the Company and the
optionee, whether with or without cause, for any reason other than the death or
disability of the optionee, during which period the optionee shall be entitled
to exercise the Option in respect of the number of shares that the optionee
would have been entitled to purchase had the optionee exercised the Option on
the date of severance of employment. Whether authorized leave of absence, or
absence on military or government service, shall constitute severance of the
employment relationship between the Company and the optionee shall be determined
by the Committee at the time thereof.
In the event of severance because of the disability of the holder of any
Option while in the employ of the Company and before the date of expiration of
the Option, the Option shall terminate on the earlier of the date of expiration
or one day less than one year following the date of severance because of
disability, during which period the optionee shall be entitled to exercise the
Option in respect of the number of shares that the optionee would have been
entitled to purchase had the optionee exercised the Option on the date of
severance because of disability.
In the event of the death of the holder of any Option while in the employ
of the Company and before the date of expiration of the Option, the Option shall
terminate on the earlier of the date of expiration or one day less than one year
following the date of death. After the death of the optionee, the executors,
administrators or any person or persons to whom the Option was transferred by
will or by the laws of descent and distribution, shall have the right, at any
time prior to the expiration of an Option, to exercise the Option in whole or in
part, without regard to any limitation the optionee would have been subject to
had he exercised the Option on the day of his death while in employment.
An employment relationship between the Company and the optionee shall be
deemed to exist during any period in which the optionee is employed by the
Company, by any parent or subsidiary corporation, by a corporation issuing or
assuming a common stock option in a transaction to which Section 424(a) of the
Code applies, or by a parent or subsidiary corporation of the corporation
issuing or assuming a stock option (and for this purpose, the phrase
"corporation issuing or assuming a stock option" shall be substituted for the
word "Company" in the definitions of parent and subsidiary corporations
specified in Paragraph 5 of this Plan, and the parent-subsidiary relationship
shall be determined at the time of the corporate action described in Section
424(a) of the Code).
13. Requirements of Law. The Company shall not be required to sell or issue
any shares under any Option or Stock Award if the issuance of those shares would
constitute a violation by the optionee, recipient, or the Company of any
provisions of any law or regulation of any governmental authority. Each Option
and Stock Award granted under the Plan shall be subject to the requirements
that, if at any time the Board or the Committee shall determine that the
listing, registration or qualification of the shares subject thereto upon any
securities exchange or under any state or federal law of the United States or of
any other country or governmental subdivision thereof, or the consent or
approval of any governmental regulatory body, or investment or other
representations, are necessary or desirable in connection with the issue or
purchase of shares subject thereto, no Option may be exercised in whole or in
part, or Stock Award issued, unless the listing, registration, qualification,
consent, approval or representations shall have been effected or obtained free
of any conditions not acceptable to the Board. If required at any time by the
Board or the Committee, an Option may not be exercised or a Stock Award issued
until the optionee or recipient has delivered an investment letter to the
Company. In addition, specifically in connection with the Securities Act of 1933
(as now in effect or hereafter amended) (the "1933 Act"), upon exercise of any
Option or entitlement to a Stock Award, the Company shall not be required to
issue the underlying shares unless the Committee has received evidence
satisfactory to it to the effect that the holder of the Option or Stock Award
will not transfer the shares except pursuant to a registration statement in
effect under the 1933 Act or unless an opinion of counsel satisfactory to the
Committee has been received by the Company to the effect that registration is
not required. Any determination in this connection by the Committee shall be
final, binding and conclusive. In the event the shares issuable on exercise of
an Option or pursuant to a Stock Award are not registered under the 1933 Act,
the Company may imprint on the certificate for the shares the following legend
or any other legend which counsel for the Company considers necessary or
advisable to comply with the 1933 Act:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon such
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<PAGE>
Exhibit 4.1
registration or upon receipt by the Corporation of an opinion of
counsel satisfactory to the Corporation, in form and substance
satisfactory to the Corporation, that registration is not required for
such sale or transfer.
The Company may, but shall not be obligated to, register any securities covered
hereby pursuant to the 1933 Act (as now in effect or as hereafter amended) and,
in the event any shares are registered, the Company may remove any legend on
certificates representing these shares. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an Option or
the issuance of shares pursuant thereto or pursuant to a Stock Award to comply
with any law or regulation of any governmental authority.
14. No Rights as Shareholder. No optionee shall have rights as a
shareholder with respect to shares covered by an Option until the date of
issuance of a stock certificate for the shares; and, except as otherwise
provided in Paragraph 18 hereof, no adjustment for dividends, or otherwise,
shall be made if the record date therefor is prior to the date of issuance of
the certificate.
15. Restricted Stock Grants. The Committee may issue shares of Common Stock
to an eligible employee subject to the terms of a Restricted Stock Grant. The
shares may be issued for no payment by the employee or for a payment below the
fair market value on the date of grant. Restricted Stock shall be subject to
restrictions as to sale or other transfer and generally will be subject to
vesting over a period of time specified in the Restricted Stock Grant. The
Committee shall determine the number of shares and the price, if any, at which
shares of Restricted Stock will be granted.
Restricted Stock shall be subject to the following terms and conditions as
determined by the Committee, including without limitation any or all of the
following:
(a) a prohibition against the sale, transfer, pledge or other
encumbrance of the shares of Restricted Stock, such prohibition to
lapse (i) at such time or times as the Committee shall determine
(whether in annual or more frequent installments, at the time of the
death, disability or retirement of the holder of such shares, or
otherwise);
(b) a requirement that the holder of shares of Restricted
Stock forfeit, or in the case of shares sold to a Participant, resell
back to the Company at his cost, all or a part of such shares in the
event of termination of the holder's employment during any period in
which the shares remain subject to restrictions;
(c) a prohibition against employment of the holder of
Restricted Stock by any competitor of the Company or its affiliates, or
against such holder's dissemination of any secret or confidential
information belonging to the Company or a subsidiary of the Company;
(d) unless stated otherwise in the Restricted Stock Grant, if
restrictions remain at the time of severance of employment with the
Company or a parent or subsidiary corporation, the Restricted Stock
shall be forfeited; provided however, if severance of employment is by
reason of disability or death, the restrictions on the shares shall
lapse and the grantee or his heirs or estate shall be 100% vested in
the shares subject to the Restricted Stock Grant.
No holder of Restricted Stock shall exercise the election authorized by
Section 83(b) of the Code without the express written consent of the Committee
to this election. Any grantee of Restricted Stock making this election without
the consent of the Committee shall forfeit all shares of Restricted Stock
granted to him.
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<PAGE>
Exhibit 4.1
Shares of Restricted Stock shall be registered in the name of the grantee
and deposited, together with a stock power endorsed in blank, with the Company.
Each such certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of Common Stock
represented by it are subject to the terms and conditions (including
conditions of forfeiture) contained in The Coastal Corporation 1994
Incentive Stock Plan, and an agreement entered into between the
registered owner and the Company. A copy of the Plan and agreement is
on file in the office of the Secretary of the Company.
At the end of any time period during which the shares of Restricted Stock
are subject to forfeiture and restrictions on transfer, the shares will be
delivered free of all restrictions to the grantee or to the grantee's legal
representative, beneficiary or heir; provided the certificate shall bear such
legend, if any, as the Committee determines is reasonably required by applicable
law.
Subject to the terms and conditions of the Plan, each grantee receiving
Restricted Stock shall have all the rights of a stockholder with respect to the
shares of Common Stock during any period in which such shares are subject to
forfeiture and restrictions on transfer, including without limitation, the right
to vote such shares. By accepting a Restricted Stock Grant, the grantee agrees
to remit when due any federal and state income and employment taxes required to
be withheld. Dividends paid in cash or property other than stock with respect to
shares of Restricted Stock shall be paid to the grantee currently.
16. Stock Awards.
(a) The Committee may grant Common Stock to an eligible
employee under the Plan, without any payment by the employee, in lieu
of certain cash compensation or as additional compensation. The Stock
Award is subject to appropriate tax withholding. After compliance with
the tax withholding requirements, a stock certificate shall be issued
to the employee recipient of the Stock Award. The certificate shall
bear such legend, if any, as the Committee determines is reasonably
required by applicable law. Prior to receipt of a Stock Award, the
employee must comply with appropriate requests of the Committee to
assure compliance with all relevant laws.
(b) The Committee may award shares of Common Stock, without
any payment for such shares, to designated employees if specified
performance goals established by the Committee are satisfied. The terms
and provisions herein relating to performance-based Stock Awards are
intended to satisfy Section 162(m) of the Code and regulations issued
thereunder. The designation of an employee eligible for a specific
performance-based Stock Award shall be made by the Committee in writing
prior to the beginning of the 12-month period for which the performance
is measured. The Committee shall establish the number of shares to be
issued to a designated employee if the performance goal is met;
provided the maximum number of shares which may be issued to any one
employee per year under this Paragraph 16 is 100,000 shares. The
Committee must certify in writing that a performance goal has been met
prior to issuance of any certificate for a performance-based Stock
Award to any employee. If the Committee certifies the entitlement of an
employee to the performance-based Stock Award, the certificate shall be
issued to the employee as soon as administratively practicable, and
subject to other applicable provisions of the Plan, including but not
limited to, all legal requirements and tax withholding.
Performance goals determined by the Committee may be based on
specified increases in net profits, stock price, Company or segment
sales, market share, earnings per share, and/or return on equity.
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<PAGE>
Exhibit 4.1
The employees eligible for a performance-based Stock Award are
the senior officers (i.e., Vice President, Secretary, Treasurer, and
above) of the Company and its subsidiaries.
17. Employment Obligation. The granting of any Option, Restricted Stock
Grant, or Stock Award shall not impose upon the Company any obligation to employ
or continue to employ any optionee or grantee; and the right of the Company to
terminate the employment of any officer or other employee shall not be
diminished or affected by reason of the fact that an Option, Restricted Stock
Grant or Stock Award, has been granted to him.
18. Changes in the Company's Capital Structure. The existence of
outstanding Options, Restricted Stock Grants, and Stock Awards shall not affect
in any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a dividend in capital stock or other
equity securities of the Company on its Common Stock or other increase or
reduction of the number of shares of the Common Stock outstanding, without
receiving consideration therefor in money, services, or property, or the
reclassification of its Common Stock, in whole or in part, into other equity
securities of the Company, then (a) the number, class and per share price of
shares of Common Stock subject to outstanding Options, Restricted Stock Grants,
and Stock Awards hereunder shall be appropriately adjusted (or in the case of
the issuance of other equity securities as a dividend on, or in a
reclassification of, the Common Stock, the Options, Restricted Stock Grants, and
Stock Awards shall extend to such other securities) in a manner so as to entitle
an optionee or a grantee to receive, upon exercise of an Option, for the same
aggregate cash consideration, and for the vesting of Restricted Stock, and award
of pending performance-based Stock Awards, the same total number and class or
classes of shares (or in the case of a dividend of, or reclassification into,
other equity securities, those other securities) he would have held after
adjustment if he had exercised his Option, or the Restricted Stock was vested in
full, or the Stock Award was earned, immediately prior to the event requiring
the adjustment, or, if applicable, the record date for determining shareholders
to be affected by the adjustment; and (b) the number and class of shares then
reserved for issuance under the Plan (or in the case of a dividend of, or
reclassification into, other equity securities, those other securities) shall be
adjusted by substituting for the total number and class of shares of stock then
reserved, the number and class or classes of shares of stock (or in the case of
a dividend of, or reclassification into, other equity securities, those other
securities) that would have been received by the owner of an equal number of
outstanding shares of Common Stock as a result of the event requiring the
adjustment. Comparable rights shall accrue to each optionee or employee in the
event of successive subdivisions, consolidations, capital adjustments, dividends
or reclassifications of the character described above.
After a merger of one or more corporations into the Company, after any
consolidation of the Company and any one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which the
Company shall be the surviving corporation, each optionee, at no additional
cost, shall be entitled to receive (subject to any required action by
stockholders), upon any exercise of his Option, in lieu of the number of shares
as to which the Option shall then be exercisable, the number and class of shares
of stock or other securities to which the holder would have been entitled
pursuant to the terms of the agreement of merger or consolidation, if,
immediately prior to such merger or consolidation, such holder had been the
holder of a number of shares of Common Stock equal to the number of shares as to
which the Option shall then be exercised and, if as a result of the merger,
consolidation or other transaction, the holders of Common Stock are not entitled
to receive any shares of Common Stock pursuant to the terms thereof, each
optionee, at no additional cost, shall be entitled to receive, upon exercise of
his Option, other assets and property, including cash, to which he would have
been entitled if at the time of such merger, consolidation or other transaction
he had been the holder of the number of shares of Common Stock equal to the
number of shares as to which the Option shall then be exercised. Comparable
rights shall accrue to each optionee in the event of successive mergers or
consolidations of the character described above. Appropriate adjustments shall
also be made to shares of Restricted Stock and to pending Stock Awards.
A-8
<PAGE>
Exhibit 4.1
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated, or sells or otherwise disposes of substantially all
its assets to another corporation while unexercised Options remain outstanding
under the Plan, (i) subject to the provisions of clause (iii) below, after the
effective date of such merger, consolidation or sale, as the case may be, each
holder of an outstanding Option shall be entitled, upon exercise of such Option,
to receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of the merger, consolidation or sale; (ii) the Board may waive any
limitations set forth in or imposed pursuant to Paragraph 9 hereof so that all
Options from and after a date prior to the effective date of such merger,
consolidation, liquidation or sale, as the case may be, specified by the Board
shall be exercisable in full; and (iii) all outstanding Options may be canceled
by the Board as of the effective date of any such merger, consolidation,
liquidation or sale provided that (x) notice of such cancellation shall be given
to each holder of an Option and (y) each holder of an Option shall have the
right to exercise such Option in full (without regard to any limitations set
forth in or imposed pursuant to Paragraph 9 hereof) during a 30-day period
preceding the effective date of such merger, consolidation, liquidation, sale or
acquisition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to outstanding Options, Restricted Stock Grants, or Stock Awards.
19. Substitution Options. Options may be granted under the Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of the Company, or whose employer
is about to become a parent or subsidiary corporation of the Company, as a
result of the merger or consolidation of the Company with another corporation,
or the acquisition by the Company of substantially all the assets of another
corporation, or the acquisition by the Company of at least 50% of the issued and
outstanding stock of another corporation as the result of which it becomes a
subsidiary of the Company, conditioned in the case of an Incentive Stock Option
upon the employee being an employee of the Company or a parent or subsidiary
corporation of the Company. The terms and conditions of the substitute Options
granted may vary from the terms and conditions set forth in the Plan to the
extent the Board at the time of grant may deem appropriate to conform, in whole
or in part, to the provisions of the stock options in substitution for which
they are granted, but with respect to stock options which are incentive stock
options, no variation shall be such as to affect the status of any substitute
option as an incentive stock option under Section 422 of the Code.
20. Amendment or Termination of Plan. The Board may modify, revise or
terminate the Plan at any time and from time to time; provided, however, that
without the further approval by the affirmative vote of a majority of the votes
cast attributable to shares present in person or by proxy and entitled to vote
at a meeting of shareholders, or if the provisions of the corporate charter,
by-laws or applicable state law prescribes a greater degree of shareholder
approval for this action, without the degree of shareholder approval thus
required, the Board may not (a) change the aggregate number of shares which may
be issued under Options, Restricted Stock Grants, and Stock Awards pursuant to
the provisions of the Plan, (b)extend the term during which an Option,
Restricted Stock Grant, or Stock Award may be exercised or granted or the
termination date of the Plan, (c) change the class of employees eligible to
receive Options, Restricted Stock Grants, or Stock Awards under the Plan, or (d)
reduce the Option Price; unless, in each such case, the Board shall obtain an
opinion of legal counsel to the effect that shareholder approval of the
amendment is not required (i) by law, (ii) by the applicable rules and
regulations of, or any agreement with, any national securities exchange on which
the Common Stock is then listed or if the Common Stock is not so listed, the
rules and regulations, or any agreement with, the National Association of
Securities Dealers, Inc. and (iii) in order to make available to the optionee
with respect to any option granted under the Plan, the benefits of Rule 16b-3 of
the Rules and Regulations under the Exchange Act, or any similar or successor
rule. In addition, the Board shall have the power to make changes in the Plan
and in the regulations and administrative provisions hereunder or in any
outstanding Option as in the opinion of counsel for the Company may be necessary
or appropriate from time to time to enable any Option granted pursuant to the
Plan
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<PAGE>
Exhibit 4.1
to qualify as an Incentive Stock Option under Section 422 of the Code, and the
regulations which may be issued thereunder as in existence from time to time.
21. Forfeitures. Notwithstanding any other provisions of this Plan, if the
Committee finds by a majority vote after full consideration of the facts that
the employee, before or after termination of his employment with the Company or
its subsidiaries for any reason (a) committed or engaged in fraud, embezzlement,
theft, commission of a felony, or proven dishonesty in the course of his
employment by the Company or its subsidiaries, which conduct damaged the Company
or its subsidiaries, or disclosed trade secrets of the Company or its
subsidiaries, or (b) participated, engaged in or had a financial or other
interest, whether as an employee, officer, director, consultant, contractor,
shareholder, owner, or otherwise, in any commercial endeavor in the United
States which is competitive with the business of the Company or its subsidiaries
without the written consent of the Company or its subsidiaries, the employee
shall forfeit all outstanding Options and Restricted Stock which is not fully
vested, including all rights related to such matters, and including all
unexercised Options, exercised Options, and any performance based Stock Awards
to which he may be entitled, and other elections pursuant to which the Company
has not yet delivered a stock certificate. Clause (b) shall not be deemed to
have been violated solely by reason of the employee's ownership of stock or
securities of any publicly owned corporation, if that ownership does not result
in effective control of the corporation, and if written notice of the ownership
is given the Committee by the employee within 60 days after the later of the
date on which the employee is notified of a grant of an Option, Restricted Stock
Grant, or Stock Award under this Plan or the date on which the employee acquires
the ownership.
The decision of the Committee as to the cause of the employee's discharge,
the damage done to the Company or its subsidiaries, and the extent of the
employee's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the employee by the
Company or its subsidiaries in any manner. To provide the Company with an
opportunity to enforce this Section, no certificate for Stock may be issued
under this Plan without the certification by the Committee that no action
forbidden by this provision has been raised for their determination.
22. Tax Withholding. The Company or any parent or subsidiary shall be
entitled to deduct from other compensation payable to each employee any sums
required by federal, state, or local tax law to be withheld with respect to the
grant, exercise, or vesting, as appropriate, of an Option, Restricted Stock
Grant, or Stock Award. In the alternative, the Company may require the employee
(or other person exercising the Option, or receiving the Restricted Stock or
Stock Award) to pay the sum directly to the employer corporation. If the
employee (or other person) is required to pay the sum directly, payment in cash
or by check of such sums for taxes shall be delivered within five (5) days after
the date of exercise. The Company shall have no obligation upon exercise of any
Option, vesting of Restricted Stock or issuance of a Stock Award until payment
has been received, unless withholding (or offset against a cash payment) as of
or prior to the date of exercise is sufficient to cover all sums due with
respect to that exercise or vesting. The Company shall not be obligated to
advise an employee of the existence of the tax or the amount which the employer
corporation will be required to withhold.
33. Written Agreement. Each Option, Restricted Stock Grant, and Stock Award
granted hereunder shall be embodied in a written agreement, which shall be
subject to the terms and conditions prescribed herein, and shall be signed by
the optionee or grantee and by an appropriate officer of the Company for and in
the name and on behalf of the Company. Each agreement shall contain other
provisions which the Committee in its discretion shall deem advisable.
24. Indemnification of Committee. The Company shall, to the fullest extent
provided by law, indemnify each present and future member of the Committee
against, and each member of the Committee shall be entitled without further act
on his part to indemnity from the Company for all expenses (including the amount
of judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his being or
having been a member of the Committee, whether or not he continues to be a
member of the Committee at the time of incurring such expenses; provided,
however, that such indemnity shall not include any expenses incurred by any such
member of the Committee (a) in respect of matters as
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<PAGE>
Exhibit 4.1
to which he shall be finally adjudged in any such action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duty as such member of the Committee, or (b) in respect of any matter in
which any settlement is effected, to an amount in excess of the amount approved
by the Company on the advice of its legal counsel; and provided further, that no
right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee unless, within
sixty (60) days after institution of any such action, suit or proceeding, he
shall have offered the Company, in writing, the opportunity to handle and defend
same at its own expense. The foregoing right of indemnification shall inure to
the benefit of the heirs, executors or administrators of each member of the
Committee and shall be in addition to all other rights to which the member of
the Committee may be entitled as a matter of law, contract, or otherwise.
25. Effective Date of Plan. The Plan shall become effective and shall be
deemed to have been adopted on March 3, 1994, if within one year of that date it
shall have been approved by the affirmative vote of a majority of the votes cast
attributable to shares present in person or by proxy and entitled to vote at a
meeting of stockholders, or if the provisions of the corporate charter, by-laws
or applicable state law prescribes a greater degree of shareholder approval for
this action, the approval by the holders of that percentage, at a meeting of
shareholders. No Option, Restricted Stock Grant, or Stock Award shall be granted
pursuant to the Plan after March 2, 2004.
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Exhibit 5
Exhibit 5
<PAGE>
Exhibit 5
May 24, 2000
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, TX 77046-0995
Gentlemen:
I have acted as counsel to The Coastal Corporation (the "Company") in
connection with the Registration Statement on Form S-8 of the Company for the
registration of shares of Common Stock, par value $331/3 per share (the "Common
Stock") of the Company issuable under the Company's 1994 Incentive Stock Plan
(the "Plan").
In such capacity, I am familiar with the Certificate of Incorporation and
By-laws, each as amended to date, of the Company and have examined the
originals, or copies certified or otherwise identified, of the Plan, corporate
records of the Company, certificates of public officials and representatives of
the Company, statutes and other instruments and documents as the basis for the
opinion hereinafter expressed.
On the basis of the foregoing, I am of the opinion that:
(1) The Company is a corporation, duly organized and validly existing, in
good standing under the laws of the State of Delaware.
(2) The Plan has been duly authorized by the Company and is a legal and
binding agreement of the Company in accordance with its terms.
(3) The shares of Common Stock, as purchased and issued in accordance with
the terms of the Plan, are legally and validly issued, fully paid and
nonassessable.
I hereby consent to the use and filing of this opinion as an exhibit to the
Registration Statement. I further consent to all references to me in the
Registration Statement, any amendments thereto, or in any Prospectus.
Very truly yours,
Austin M. O'Toole
Exhibit 23.1
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Exhibit 23.1
Consent of Deloitte & Touche LLP
We consent to the incorporation by reference in this Registration Statement
of The Coastal Corporation on Form S-8 relating to The Coastal Corporation 1994
Incentive Stock Plan of (i) our report dated February 8, 2000, appearing in the
Annual Report on Form 10-K of The Coastal Corporation for the year ended
December 31, 1999, and (ii) to the reference to us under the heading "Experts"
in this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
May 24, 2000
Exhibit 23.2
<PAGE>
Exhibit 23.2
Consent of Austin M. O'Toole
The consent of AUSTIN M. O'TOOLE, Esq., Senior Vice President and Secretary
of The Coastal Corporation, is contained in his opinion filed as Exhibit 5 to
this Registration Statement.
