<PAGE>
As filed with the Securities and Exchange Commission on July 1, 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 ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Texas 74-0607870
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
123 W. Mills
El Paso, Texas 79901
(915) 543-5711
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
________________________
El Paso Electric Company 1999 Long-Term Incentive Plan
(Full title of the plan)
Terry Bassham
General Counsel
El Paso Electric Company
123 W. Mills
El Paso, Texas 79901
(915) 543-5711
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
______________________
with a copy to:
Daniel G. Kelly, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
<TABLE>
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Title of Each Class Amount to be Proposed Maximum Proposed Maximum Amount of
of Securities to be Registered/1/ Offering Price Per Aggregate Offering Registration Fee
Registered Share/2/ Price
========================================================================================================================
<S> <C> <C> <C> <C>
Common Stock 2,000,000 $8.97 $17,937,500 $4,986.63
(without par value)
========================================================================================================================
</TABLE>
/1/ Registrant will issue shares of common stock upon the exercise of options,
exercise of stock appreciation rights, or achievement of performance measures in
connection with performance shares granted under the El Paso Electric Company
1999 Long-Term Incentive Plan (the "Plan") or upon award of bonus stock or
restricted stock under the Plan. This Registration Statement also covers an
indeterminable number of additional shares that Registrant may issue to prevent
dilution in the event of stock splits, stock dividends or similar transactions
under the terms of the Plan.
/2/ Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h)(1) under the Securities Act of 1933, as amended,
based on the average of the high and low per share price of the Registrant's
common stock reported by the American Stock Exchange on June 29 1999.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Registrant is including the information called for in Part I of Form S-8 in
a prospectus dated July 1, 1999. Registrant will provide these documents to
participants in the El Paso Electric Company 1999 Long-Term Incentive Plan as
required by Rule 428(b)(1) of the General Rules and Regulations under the
Securities Act of 1933, as amended (the "Securities Act"). These documents and
the documents incorporated by reference under Part II, Item 3 of this
Registration Statement together constitute the prospectus that meets the
requirements of Section 10(a) of the Securities Act.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
El Paso Electric Company (the "Company") incorporates by reference in
this Registration Statement the following documents it previously filed with the
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999;
3. The description of the Company's common stock, no par value,
contained in the Company's Form 8-A for Registration of Certain Classes of
Securities Pursuant to Section 12(b) or 12(g) of the Exchange Act,
effective as of February 15, 1996, including any amendments or reports
filed for the purpose of updating such description.
In addition, all documents the Company subsequently files pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to this Registration Statement indicating that all
securities offered hereby have been sold or deregistering all securities then
remaining unsold, are deemed to be incorporated by reference in this
Registration Statement and made a part hereof from their respective dates of
filing (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents").
Any statement contained herein or in an Incorporated Document shall be
deemed modified or superseded for purposes of this Registration Statement 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 shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
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.
3
<PAGE>
Item 6. Indemnification of Directors and Officers.
Article 2.02-1 of the Texas Business Corporation Act provides a
corporation may indemnify its officers and directors against judgments,
penalties (including excise and similar taxes), fines, settlements, and
reasonable expenses actually incurred by the officer or director in connection
with a proceeding where they are or threatened to be made a named defendant or
respondent, if they acted in good faith and in a manner they reasonably believed
was in or not opposed to the corporation's best interests, and in the case of
any criminal proceeding, had no reasonable cause to believe their conduct was
unlawful. Article 2.02-1 provides a corporation shall indemnify its officers and
directors against reasonable expenses incurred in connection with a proceeding
in which the individual is a named defendant or respondent because the
individual is or was an officer or director if the individual is wholly
successful, on the merits or otherwise, in the defense of the proceeding. The
Company's Restated Articles of Incorporation and Bylaws provide for
indemnification of officers and directors of the Company to the fullest extent
permitted by law. The Company has entered into indemnity agreements with each
officer and director requiring the Company to indemnify such officers and
directors to the fullest extent permitted by law. Article 1302-7.06 of the Texas
Miscellaneous Corporations Law Act authorizes a Texas corporation to include a
provision in its articles of incorporation to provide that "a director of the
corporation shall not be liable, or shall be liable only to the extent provided
in the articles of incorporation, to the corporation or its shareholders... for
monetary damages for an act or omission in the director's capacity as a
director," with certain exceptions. The Company's Amended and Restated Articles
of Incorporation include a provision eliminating the liability of a director for
monetary damages to the Company to the fullest extent permitted by Article 1302-
7.06.
Item 7. Exemption from Registration Claimed.
The information required by Item 7 is not applicable to this
Registration Statement.
Item 8. Exhibits.
The following exhibits are filed with this Registration Statement:
Exhibit
Number Description
4.1 El Paso Electric Company's 1999 Long-Term Incentive Plan.
5 Opinion of Clark, Thomas & Winters, a Professional
Corporation regarding legality of the Common Stock.
15 Letter regarding unaudited Interim Financial Information.
23.1 Consent of Clark, Thomas & Winters, P.C. (Incorporated by
reference to Exhibit 5 hereof).
23.2 Consent of KPMG LLP.
4
<PAGE>
Item 9. Undertakings.
(a) The Company 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 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 information required to be included in the post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Company 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 purposes 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 Company hereby undertakes that, for the purposes of determining
any liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company 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
5
<PAGE>
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company 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.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
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 El Paso, State of Texas, on this 1st day of July,
1999.
EL PASO ELECTRIC COMPANY
By: /s/ James S. Haines, Jr.
------------------------------
James S. Haines, Jr.
Chief Executive Officer
And President
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ James S. Haines, Jr. Chief Executive Officer, June 29, 1999
- ----------------------------
James S. Haines, Jr. President and Director
(Principal Executive
Officer)
/s/ Gary R. Hedrick Vice President, Treasurer June 30, 1999
- ----------------------------
Gary R. Hedrick and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ George W. Edwards, Jr. Chairman of the Board and June 26, 1999
- ----------------------------
George W. Edwards, Jr. Director
/s/ Wilson K. Cadman Director June 26, 1999
- ---------------------------
Wilson K. Cadman
/s/ James A. Cardwell Director June 30, 1999
- -----------------------------
James A. Cardwell
7
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Ramiro Guzman Director June 30, 1999
- ----------------------------------
Ramiro Guzman
/s/ James W. Harris Director June 30, 1999
- ----------------------------------
James W. Harris
/s/ Kenneth R. Heitz Director June 30, 1999
- ----------------------------------
Kenneth R. Heitz
/s/ Eric B. Siegel Director June 28, 1999
- ----------------------------------
Eric B. Siegel
/s/ Stephen Wertheimer Director June 26, 1999
- ----------------------------------
Stephen Wertheimer
/s/ Charles A. Yamarone Director June 30, 1999
- ----------------------------------
Charles A. Yamarone
/s/ Michael K. Parks Director June 30, 1999
- ----------------------------------
Michael K. Parks
/s/ James W. Cicconi Director June 28, 1999
- ----------------------------------
James W. Cicconi
/s/ Patricia Z. Holland-Branch Director June 30, 1999
- ----------------------------------
Patricia Z. Holland-Branch
8
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
4.1 El Paso Electric Company's 1999 Long-Term Incentive Plan.
5 Opinion of Clark, Thomas & Winters, a Professional
Corporation regarding legality of the Common Stock.
15 Letter regarding unaudited Interim Financial Information.
23.1 Consent of Clark, Thomas & Winters, P.C. (Incorporated by
reference to Exhibit 5 hereof).
23.2 Consent of KPMG LLP.
9
<PAGE>
EXHIBIT 4.1
EL PASO ELECTRIC COMPANY
1999 LONG-TERM INCENTIVE PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1999 Long-Term Incentive Plan (the "Plan")
-------- ----
of El Paso Electric Company (the "Company") are (i) to align the interests of
-------
the Company's stockholders and the recipients of awards under this Plan by
increasing the proprietary interest of such recipients in the Company's growth
and success, (ii) to advance the interests of the Company by attracting and
retaining directors, officers, managers and other employees and consultants and
(iii) to motivate such persons to act in the long-term best interests of the
Company and its stockholders.
1.2 CERTAIN DEFINITIONS.
-------------------
"AGREEMENT" shall mean the written agreement evidencing an award hereunder
---------
between the Company and the recipient of such award.
"BOARD" shall mean the Board of Directors of the Company.
-----
"BONUS STOCK" shall mean shares of Common Stock which are not subject to a
-----------
Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this Plan.
-----------------
"CAUSE" shall mean any act of dishonesty, commission of a felony,
-----
significant activities harmful to the reputation of the Company, refusal to
perform or substantial disregard of duties properly assigned or significant
violation of any statutory or common law duty of loyalty to the Company.
"CHANGE IN CONTROL" shall have the meaning set forth in Section 6.8(b).
-----------------
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
----
"COMMITTEE" shall mean the Committee designated by the Board, consisting of
---------
two or more members of the Board, each of whom shall be (i) a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act and (ii) an
"outside director" within the meaning of Section 162(m) of the Code.
"COMMON STOCK" shall mean the common stock, no par value, of the Company.
------------
"COMPANY" has the meaning specified in Section 1.1.
-------
<PAGE>
"DIRECTORS OPTIONS" shall have the meaning set forth in Section 5.5.
-----------------
"DIRECTORS RESTRICTED STOCK" shall have the meaning set forth in Section
--------------------------
5.4.
"DISABILITY" shall mean the inability of the holder of an award to perform
----------
substantially such holder's duties and responsibilities for a continuous period
of at least six months, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
------------
"FAIR MARKET VALUE" shall mean the closing transaction price of a share of
-----------------
Common Stock as reported in the American Stock Exchange Composite Transactions
on the date as of which such value is being determined or, if there shall be no
reported transactions for such date, on the next preceding date for which
transactions were reported; provided, however, that Fair Market Value may be
determined by the Committee by whatever means or method as the Committee, in the
good faith exercise of its discretion, shall at such time deem appropriate.
"FREE-STANDING SAR" shall mean an SAR which is not issued in tandem with,
-----------------
or by reference to, an option, which entitles the holder thereof to receive,
upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.
"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of Common
----------------------
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.
"INCUMBENT BOARD" shall have the meaning set forth in Section 6.8(b)(2).
---------------
"MATURE SHARES" shall mean previously-acquired shares of Common Stock for
-------------
which the holder thereof has good title, free and clear of all liens and
encumbrances and which such holder either (i) has held for at least six months
or (ii) has purchased on the open market.
"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is not
---------------------
an officer or employee of the Company or any Subsidiary.
"NON-STATUTORY STOCK OPTION" shall mean an option to purchase shares of
--------------------------
Common Stock which is not an Incentive Stock Option.
"OUTSTANDING COMPANY COMMON STOCK" shall have the meaning set forth in
--------------------------------
Section 6.8(b)(1).
-2-
<PAGE>
"OUTSTANDING COMPANY VOTING SECURITIES" shall have the meaning set forth in
-------------------------------------
Section 6.8(b)(1).
"PERFORMANCE MEASURES" shall mean the criteria and objectives, established
--------------------
by the Committee, which shall be satisfied or met (i) as a condition to the
exercisability of all or a portion of an option or SAR, (ii) as a condition to
the grant of a Stock Award or (iii) during the applicable Restriction Period or
Performance Period as a condition to the holder's receipt, in the case of a
Restricted Stock Award, of the shares of Common Stock subject to such award, or,
in the case of a Performance Share Award, of the shares of Common Stock subject
to such award and/or of payment with respect to such award. Such criteria and
objectives may include, but are not limited to, the attainment by a share of
Common Stock of a specified Fair Market Value for a specified period of time,
earnings per share, return to stockholders (including dividends), return on
equity, earnings of the Company, revenues, market share, cash flow or cost
reduction goals, or any combination of the foregoing and any other criteria and
objectives established by the Board or the Committee.
"PERFORMANCE PERIOD" shall mean any period designated by the Committee
------------------
during which the Performance Measures applicable to a Performance Share Award
shall be measured.
"PERFORMANCE SHARE" shall mean a right, contingent upon the attainment of
-----------------
specified Performance Measures within a specified Performance Period, to receive
one share of Common Stock, which may be Restricted Stock, or in lieu of all or a
portion thereof, the Fair Market Value of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
-----------------------
this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in
------------------------------
Section 22(e)(3) of the Code or any successor thereto.
"PERSON" shall have the meaning set forth in Section 6.8(b)(1).
------
"POST-TERMINATION EXERCISE PERIOD" shall mean the period specified in or
--------------------------------
pursuant to Section 2.3(a), Section 2.3(b), Section 2.3(d) or Section 2.3(e)
following termination of employment with or service to the Company during which
an option or SAR may be exercised.
"RESTRICTED STOCK" shall mean shares of Common Stock which are subject to a
----------------
Restriction Period and shall include Directors Restricted Stock.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under this
----------------------
Plan.
"RESTRICTION PERIOD" shall mean any period designated by the Committee
------------------
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred,
-3-
<PAGE>
assigned, pledged, hypothecated or otherwise encumbered or disposed of, except
as provided in this Plan or the Agreement relating to such award.
"RETIREMENT" shall mean termination of employment with or service to the
----------
Company by reason of retirement in accordance with the Company's normal criteria
or with the consent of the Company.
"SAR" shall mean a stock appreciation right which may be a Free-Standing
---
SAR or a Tandem SAR.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.
-----------
"SUBSIDIARY" and "SUBSIDIARIES" shall have the meanings set forth in
---------- ------------
Section 14.
"TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
----------
reference to, an option (including a Non-Statutory Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.
"TAX DATE" shall have the meaning set forth in Section 6.5.
--------
"TEN PERCENT HOLDER" shall have the meaning set forth in Section 2.1(a).
------------------
1.3 ADMINISTRATION. This Plan shall be administered by the Committee. Any one
--------------
or a combination of the following awards may be made under this Plan to eligible
persons: (i) options to purchase shares of Common Stock in the form of
Incentive Stock Options or Non-Statutory Stock Options, (ii) SARs in the form of
Tandem SARs or Free-Standing SARs, (iii) Stock Awards in the form of Restricted
Stock or Bonus Stock and (iv) Performance Shares. The Committee shall, subject
to the terms of this Plan, select eligible persons for participation in this
Plan and determine the form, amount and timing of each award to such persons
and, if applicable, the number of shares of Common Stock, the number of SARs and
the number of Performance Shares subject to such an award, the exercise price or
base price associated with the award, the time and conditions of exercise or
settlement of the award and all other terms and conditions of the award,
including, without limitation, the form of the Agreement evidencing the award.
The Committee may, in its sole discretion and for any reason at any time,
subject to the requirements of Section 162(m) of the Code and regulations
thereunder in the case of an award intended to be qualified performance-based
compensation, take action such that (i) any or all outstanding options and SARs
shall become exercisable in part or in full, (ii) all or a portion of the
Restriction Period applicable to any outstanding Restricted Stock Award shall
lapse, (iii) all or a portion of the Performance Period applicable to any
outstanding Performance Share Award shall lapse and (iv) the Performance
Measures applicable to any
-4-
<PAGE>
outstanding award (if any) shall be deemed to be satisfied at the maximum or any
other level. The Committee shall, subject to the terms of this Plan, interpret
this Plan and the application thereof, establish rules and regulations it deems
necessary or desirable for the administration of this Plan and may impose,
incidental to the grant of an award, conditions with respect to the award, such
as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be final, binding and
conclusive.
The Committee may delegate some or all of its power and authority hereunder
to the Board or the Chief Executive Officer and President or other executive
officer of the Company as the Committee deems appropriate; provided, however,
that (i) the Committee may not delegate its power and authority to the Board or
the Chief Executive Officer and President or other executive officer of the
Company with regard to the grant of an award to any person who is a "covered
employee" within the meaning of Section 162(m) of the Code or who, in the
Committee's judgment, is likely to be a covered employee at any time during the
period an award hereunder to such employee would be outstanding and (ii) the
Committee may not delegate its power and authority to the Chief Executive
Officer and President or other executive officer of the Company with regard to
the selection for participation in this Plan of an officer or other person
subject to Section 16 of the Exchange Act or decisions concerning the timing,
pricing or amount of an award to such an officer or other person.
No member of the Board or Committee, and neither the Chief Executive
Officer and President nor any other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interpretation, construction or determination made in connection with
this Plan in good faith, and the members of the Board and the Committee and the
Chief Executive Officer and President or other executive officer shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including attorneys' fees) arising therefrom to
the full extent permitted by law, except as otherwise may be provided in the
Company's Articles of Incorporation and/or By-laws, and under any directors' and
officers' liability insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by all of the members of the Committee without a meeting.
1.4 ELIGIBILITY. Participants in this Plan shall consist of such directors
-----------
(including Non-Employee Directors), officers, managers and other employees,
persons expected to become directors, officers, managers and other employees,
and consultants of the Company, and its subsidiaries from time to time
designated by the Board or the Committee (individually a "Subsidiary" and
----------
collectively the "Subsidiaries") as the Committee in its sole discretion may
------------
select from time to time. For purposes of this Plan, references to employment
by the Company shall also mean employment by a Subsidiary. The Committee's
selection of a person to participate in this Plan at any time shall not require
the Committee to select such
-5-
<PAGE>
person to participate in this Plan at any other time. Non-Employee Directors of
the Company shall be eligible to participate in this Plan in accordance with
Section V.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Section 6.7, Two
----------------
Million (2,000,000) shares of Common Stock shall be available under this Plan,
reduced by the sum of the aggregate number of shares of Common Stock which
become subject to outstanding options, including Directors Options, outstanding
Free-Standing SARs, outstanding Stock Awards and outstanding Performance Shares.
To the extent that shares of Common Stock subject to an outstanding option
(except to the extent shares of Common Stock are issued or delivered by the
Company in connection with the exercise of a Tandem SAR), Free-Standing SAR,
Stock Award or Performance Share are not issued or delivered by reason of the
expiration, termination, cancellation or forfeiture of such award or by reason
of the delivery or withholding of shares of Common Stock to pay all or a portion
of the exercise price of an award, if any, or to satisfy all or a portion of the
tax withholding obligations relating to an award, then such shares of Common
Stock shall again be available under this Plan.
Shares of Common Stock shall be made available from authorized and unissued
shares of Common Stock, or authorized and issued shares of Common Stock
reacquired and held as treasury shares or otherwise or a combination thereof.
To the extent required by Section 162(m) of the Code and the regulations
thereunder, the maximum number of shares of Common Stock with respect to which
options or SARs or a combination thereof may be granted during any calendar year
to any person shall be 250,000, subject to adjustment as provided in Section
6.7.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 STOCK OPTIONS. The Committee may, in its discretion, grant options to
-------------
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Non-Statutory Stock Option. An Incentive Stock Option may
not be granted to any person who is not an employee of the Company or any parent
or subsidiary (as defined in Section 424 of the Code). Each Incentive Stock
Option shall be granted within ten years of the effective date of this Plan. To
the extent that the aggregate Fair Market Value (determined as of the date of
grant) of shares of Common Stock with respect to which options designated as
Incentive Stock Options are exercisable for the first time by a participant
during any calendar year (under this Plan or any other plan of the Company, or
any parent or subsidiary as defined in Section 424 of the Code) exceeds the
amount (currently $100,000) established by the Code, such options shall
constitute Non-Statutory Stock Options.
Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
-6-
<PAGE>
(a) Number of Shares and Purchase Price. The number of shares of Common
-----------------------------------
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of Common Stock purchasable
upon exercise of any Non-Statutory and Incentive Stock Option shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date of
grant of such option; provided further, that if an Incentive Stock Option shall
be granted to any person who, at the time such option is granted, owns capital
stock possessing more than ten percent of the total combined voting power of all
classes of capital stock of the Company (or of any parent or subsidiary as
defined in Section 424 of the Code) (a "Ten Percent Holder"), the purchase price
------------------
per share of Common Stock shall be the price (currently 110% of Fair Market
Value) required by the Code in order to constitute an Incentive Stock Option.
(b) Option Period and Exercisability. The period during which an option
--------------------------------
may be exercised shall be determined by the Committee; provided, however, that
no Incentive Stock Option shall be exercised later than ten years after its date
of grant; provided further, that if an Incentive Stock Option shall be granted
to a Ten Percent Holder, such option shall not be exercised later than five
years after its date of grant. The Committee may, in its discretion, establish
Performance Measures which shall be satisfied or met as a condition to the grant
of an option or to the exercisability of all or a portion of an option. The
Committee shall determine whether an option shall become exercisable in
cumulative or non-cumulative installments and in part or in full at any time.
An exercisable option, or portion thereof, may be exercised only with respect to
whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by giving written
------------------
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (A) in cash, (B) by
delivery (either actual delivery or by attestation procedures established by the
Company) of Mature Shares having an aggregate Fair Market Value, determined as
of the date of exercise, equal to the aggregate purchase price payable by reason
of such exercise, (C) in cash by a broker-dealer acceptable to the Company to
whom the optionee has submitted an irrevocable notice of exercise or (D) a
combination of (A) and (B), in each case to the extent set forth in the
Agreement relating to the option, (ii) if applicable, by surrendering to the
Company any Tandem SARs which are canceled by reason of the exercise of the
option and (iii) by executing such documents as the Company may reasonably
request. The Company shall have sole discretion to disapprove of an election
pursuant to any of clauses (B)-(D). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the optionee. No certificate
representing Common Stock shall be delivered until the full purchase price
therefor has been paid (or arrangement made for such payment to the Company's
satisfaction).
(d) Dividend Equivalents. The Agreement relating to any Non-Statutory
--------------------
Stock Option may provide for the grant of "dividend equivalents" with respect to
each Non-Statutory Stock Option. Each dividend equivalent shall entitle the
optionee to receive a cash payment
-7-
<PAGE>
equal to the product of (i) the dividends declared with respect to a share of
Common Stock and (ii) the number of shares of Common Stock subject to such
option.
2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
-------------------------
SARs to such eligible persons as may be selected by the Committee. The
Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) Number of SARs and Base Price. The number of SARs subject to an award
-----------------------------
shall be determined by the Committee. Any Tandem SAR related to an Incentive
Stock Option shall be granted at the same time that such Incentive Stock Option
is granted. The base price of a Tandem SAR shall be the purchase price per
share of Common Stock of the related option. The base price of a Free-Standing
SAR shall be determined by the Committee; provided, however, that such base
price shall not be less than 100% of the Fair Market Value of a share of Common
Stock on the date of grant of such SAR.
(b) Exercise Period and Exercisability. The Agreement relating to an award
----------------------------------
of SARs shall specify whether such award may be settled in shares of Common
Stock (including shares of Restricted Stock) or cash or a combination thereof.
The period for the exercise of an SAR shall be determined by the Committee;
provided, however, that no Tandem SAR shall be exercised later than the
expiration, cancellation, forfeiture or other termination of the related option.
The Committee may, in its discretion, establish Performance Measures which shall
be satisfied or met as a condition to the grant of an SAR or to the
exercisability of all or a portion of an SAR. The Committee shall determine
whether an SAR may be exercised in cumulative or non-cumulative installments and
in part or in full at any time. An exercisable SAR, or portion thereof, may be
exercised, in the case of a Tandem SAR, only with respect to whole shares of
Common Stock and, in the case of a Free-Standing SAR, only with respect to a
whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a
certificate or certificates representing such Restricted Stock shall be issued
in accordance with Section 3.2(c) and the holder of such Restricted Stock shall
have such rights of a stockholder of the Company as determined pursuant to
Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock,
including Restricted Stock, the holder of such SAR shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject to
such SAR and shall have rights as a stockholder of the Company in accordance
with Section 6.10.
(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving
------------------
written notice to the Company specifying the number of whole SARs which are
being exercised, (ii) by surrendering to the Company any options which are
canceled by reason of the exercise of the Tandem SAR and (iii) by executing such
documents as the Company may reasonably request. A Free-Standing SAR may be
exercised (i) by giving written notice to the Company specifying
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<PAGE>
the whole number of SARs which are being exercised and (ii) by executing such
documents as the Company may reasonably request.
2.3 TERMINATION OF EMPLOYMENT OR SERVICE. (a) Disability. Subject to
------------------------------------ ----------
paragraph (e) below and to Section 6.8, and unless otherwise specified in the
Agreement relating to an option or SAR, as the case may be, if the employment
with or service to the Company of the holder of an option or SAR terminates by
reason of Disability, each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR, as the case may be, is
exercisable on the effective date of such holder's termination of employment or
service and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is six (6) months (or such shorter period as set forth in the
Agreement relating to such option or SAR) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(b) Retirement. Subject to paragraph (e) below and to Section 6.8, and
----------
unless otherwise specified in the Agreement relating to an option or SAR, as the
case may be, if the employment with or service to the Company of the holder of
an option or SAR terminates by reason of Retirement, each option and SAR held by
such holder shall be exercisable only to the extent that such option or SAR, as
the case may be, is exercisable on the effective date of such holder's
termination of employment or service and may thereafter be exercised by such
holder (or such holder's legal representative or similar person) until and
including the earliest to occur of (i) the date which is six (6) months (or such
shorter period as set forth in the Agreement relating to such option or SAR)
after the effective date of such holder's termination of employment or service
and (ii) the expiration date of the term of such option or SAR.
(c) Death. Unless otherwise specified in the Agreement relating to an
-----
option or SAR, as the case may be, and subject to Section 6.8, if the employment
with or service to the Company of the holder of an option or SAR terminates by
reason of death, each option and SAR held by such holder shall be exercisable
only to the extent that such option or SAR, as the case may be, is exercisable
on the date of such holder's death, and may thereafter be exercised by such
holder's executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is six
(6) months (or such shorter period as set forth in the Agreement relating to
such option or SAR) after the date of death and (ii) the expiration date of the
term of such option or SAR.
(d) Other Termination. Subject to paragraph (e) below and to Section 6.8,
-----------------
and unless otherwise specified in the Agreement relating to an option or SAR, as
the case may be, if the employment with or service to the Company of the holder
of an option or SAR terminates for any reason other than Disability, Retirement
or death, each option and SAR held by such holder shall be exercisable only to
the extent that such option or SAR is exercisable on the effective date of such
holder's termination of employment or service and may thereafter be exercised by
such holder (or such holder's legal representative or similar person) until and
including the earliest to occur of (i) the date which is six (6) months (or such
shorter period as set forth in the Agreement relating to such option or SAR)
after the effective date of such
-9-
<PAGE>
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(e) Termination of Employment - Incentive Stock Options. Unless otherwise
---------------------------------------------------
specified in the Agreement relating to the option, and subject to Section 6.8,
if the employment with the Company of a holder of an Incentive Stock Option
terminates by reason of Permanent and Total Disability, each Incentive Stock
Option held by such optionee shall be exercisable to the extent set forth in
Section 2.3(a), and may thereafter be exercised by such optionee (or such
optionee's legal representative or similar person) until and including the
earliest to occur of (i) the date which is one year (or such shorter period as
set forth in the Agreement relating to such option) after the effective date of
such optionee's termination of employment and (ii) the expiration date of the
term of such option.
Unless otherwise specified in the Agreement relating to the option,
and subject to Section 6.8, if the employment with the Company of a holder of an
Incentive Stock Option terminates for any reason other than Permanent and Total
Disability, each Incentive Stock Option held by such optionee shall be
exercisable to the extent set forth in Section 2.3(a), Section 2.3(b) or 2.3(d),
as applicable, and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) the date which is three months after the effective date of such
optionee's termination of employment and (ii) the expiration date of the term of
such option; provided, however, that if termination is by reason of death, each
Incentive Stock Option will be exercisable to the same extent and for the same
period set forth above in Section 2.3(c).
(f) Death Following Termination of Employment or Service. Unless otherwise
----------------------------------------------------
specified in the Agreement relating to an option or SAR, as the case may be, and
subject to Section 6.8, if the holder of an option or SAR dies during the
applicable Post-Termination Exercise Period, each option and SAR held by such
holder shall be exercisable only to the extent that such option or SAR, as the
case may be, is exercisable on the date of such holder's death and may
thereafter be exercised by the holder's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is 90 days after the date of death and (ii) the
expiration date of the term of such option or SAR.
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards to
------------
such eligible persons as may be selected by the Committee. The Agreement
relating to a Stock Award shall specify whether the Stock Award is a Restricted
Stock Award or Bonus Stock Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
---------------------
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.
-10-
<PAGE>
(a) Number of Shares and Other Terms. The number of shares of Common Stock
--------------------------------
subject to a Restricted Stock Award or Bonus Stock Award and the Performance
Measures (if any) and Restriction Period applicable to a Restricted Stock Award
shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock
----------------------
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii) if
the holder of such award remains continuously in the employment of or service to
the Company during the specified Restriction Period and for the forfeiture of
all or a portion of the shares of Common Stock subject to such award (x) if
specified Performance Measures are not satisfied or met during the specified
Restriction Period or (y) if the holder of such award does not remain
continuously in the employment of or service to the Company during the specified
Restriction Period.
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.
(c) Share Certificates. During the Restriction Period, a certificate or
------------------
certificates representing a Restricted Stock Award may be registered in the
holder's name or a nominee name at the discretion of the Company and may bear a
legend, in addition to any legend which may be required pursuant to Section 6.6,
indicating that the ownership of the shares of Common Stock represented by such
certificate is subject to the restrictions, terms and conditions of this Plan
and the Agreement relating to the Restricted Stock Award. All certificates
registered in the holder's name shall be deposited with the Company, together
with stock powers or other instruments of assignment (including a power of
attorney), each endorsed in blank with a guarantee of signature if deemed
necessary or appropriate by the Company, which would permit transfer to the
Company of all or a portion of the shares of Common Stock subject to the
Restricted Stock Award in the event such award is forfeited in whole or in part.
Upon termination of any applicable Restriction Period (and the satisfaction or
attainment of applicable Performance Measures), or upon the grant of a Bonus
Stock Award, in each case subject to the Company's right to require payment of
any taxes in accordance with Section 6.5, a certificate or certificates
evidencing ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise set
----------------------------------------------
forth in the Agreement relating to a Restricted Stock Award, and subject to the
terms and conditions of a Restricted Stock Award, the holder of such award shall
have all rights as a stockholder of the Company, including, but not limited to,
voting rights, the right to receive dividends and the right to participate in
any capital adjustment applicable to all holders of Common Stock; provided,
however, that a distribution with respect to shares of Common Stock, other than
a regular cash dividend, shall be deposited with the Company and shall be
subject to the same restrictions as the shares of Common Stock with respect to
which such distribution was made. The Agreement relating to Restricted Stock
Award may provide that regular cash dividends
-11-
<PAGE>
made with respect to Common Stock in a Restricted Stock Award prior to the
termination of the Restriction Period shall be deposited with the Company and
such cash dividends shall be used to purchase additional shares of Common Stock
which shall be subject to the same restrictions, vesting period, Performance
Measures and other provisions as the shares of Common Stock with respect to
which such cash dividend was made.
3.3 TERMINATION OF EMPLOYMENT OR SERVICE. Unless otherwise set forth in the
------------------------------------
Agreement relating to a Restricted Stock Award, and subject to Section 6.8, if
the employment with or service to the Company of the holder of such award
terminates by reason of Disability, Retirement, death, or any other reason, the
portion of such award which is subject to a Restriction Period on the effective
date of such holder's termination of employment or service shall be forfeited by
such holder and such portion shall be canceled by the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
------------------------
Performance Share Awards to such eligible persons as may be selected by the
Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
---------------------------------
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
(a) Number of Performance Shares and Performance Measures. The number of
-----------------------------------------------------
Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Performance Share
----------------------
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
award, if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of all or a portion of such
award, if specified Performance Measures are not satisfied or met during the
specified Performance Period.
(c) Settlement of Vested Performance Share Awards. The Agreement relating
---------------------------------------------
to a Performance Share Award (i) shall specify whether such award may be settled
in shares of Common Stock (including shares of Restricted Stock) or cash or a
combination thereof and (ii) may specify whether the holder thereof shall be
entitled to receive, on a current or deferred basis, dividend equivalents, and,
if determined by the Committee, interest on or the deemed reinvestment of any
deferred dividend equivalents, with respect to the number of shares of Common
Stock subject to such award. If a Performance Share Award is settled in shares
of Restricted Stock, a certificate or certificates representing such Restricted
Stock shall be issued in accordance with Section 3.2(c) and the holder of such
Restricted Stock shall have such rights of a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the settlement of a Performance
Share Award in shares of Common Stock, including Restricted Stock, the holder of
such award shall have no rights as a stockholder of the Company with
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<PAGE>
respect to the shares of Common Stock subject to such award and shall have
rights as a stockholder of the Company in accordance with Section 6.10.
4.3 TERMINATION OF EMPLOYMENT. Unless otherwise set forth in the Agreement
-------------------------
relating to a Performance Share Award, and subject to Section 6.8, if the
employment with or service to the Company of the holder of such award terminates
by reason of Disability, Retirement, death, or any other reason, the portion of
such award which is subject to a Performance Period on the effective date of
such holder's termination of employment shall be forfeited and such portion
shall be canceled by the Company.
V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
5.1 ELIGIBILITY. Each Non-Employee Director shall receive a Restricted Stock
-----------
Award in accordance with this Article V.
5.2 RESTRICTED STOCK AWARDS
-----------------------
(a) Time of Award. On May 27, 1999 (or, if later, on the date on which a
-------------
person is first elected or begins to serve as a Non-Employee Director other than
by reason of termination of employment), and, thereafter, on the date of each
annual meeting of stockholders of the Company, each person who is a Non-Employee
Director immediately after such meeting of stockholders shall receive a
Restricted Stock Award of 3,500 shares (which amount shall be pro-rated if such
Non-Employee Director is first elected or begins to serve as a Non-Employee
Director on a date other than the date of an annual meeting of stockholders);
provided, that such award will be made under the Plan only after no shares
remain available for awards under the Company's 1996 Long-Term Incentive Plan.
(b) Terms of Award. The Restriction Period and other terms governing any
--------------
award under this section 5.2 shall be as set forth in section 5.4 below.
5.3 ELECTIVE PARTICIPATION. Each Non-Employee Director may from time to time
----------------------
elect, in accordance with procedures to be specified by the Committee, to
receive in lieu of all or part of the cash retainer and any meeting fees that
would otherwise be payable to such Non-Employee Director, on each date on which
such retainer and meeting fees would otherwise be payable during the period that
such election is in effect, either (i) Restricted Stock having the terms
described in Section 5.4 ("Directors Restricted Stock") with a Fair Market Value
--------------------------
as of such payment date equal to 100% of the foregone amount of such retainer
payment and meeting fees or (ii) options having the terms described in Section
5.5 ("Directors Options") to purchase shares of Common Stock having a Fair
-----------------
Market Value as of such payment date equal to 100% of the foregone amount of
such retainer payment and meeting fees.
5.4 DIRECTORS RESTRICTED STOCK. Shares of Directors Restricted Stock shall be
--------------------------
subject to a Restriction Period commencing on the date of grant of such award
and terminating on the date of the first anniversary of the date of grant of
such award, shall vest (subject to earlier vesting pursuant to Section 6.8) if
the holder of such award remains continuously in the service of the
-13-
<PAGE>
Company as a Non-Employee Director during the Restriction Period and shall be
forfeited if the holder of such award does not remain continuously in the
service of the Company as a Non-Employee Director during the Restriction Period.
A certificate or certificates representing Directors Restricted Stock shall be
issued in accordance with Section 3.2(c) and the holder of such award shall have
such rights of a stockholder of the Company as determined pursuant to Section
3.2(d).
Notwithstanding the foregoing paragraph, if the service to the Company as a
Non-Employee Director of the holder of Directors Restricted Stock terminates for
any reason other than Cause, the Restriction Period shall terminate as of the
effective date of such holder's termination of service.
5.5 DIRECTORS OPTIONS. Each Directors Option shall be subject to the following
-----------------
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Exercise Period and Exercisability. Each Directors Option shall not be
----------------------------------
exercisable during the first year following its date of grant, and may be
exercised in full thereafter and from and after a Change in Control. Each
Directors Option shall expire ten (10) years after its date of grant.
(b) Purchase Price. The purchase price for the shares of Common Stock
--------------
subject to any Directors Option shall be equal to 100% of the Fair Market Value
of a share of Common Stock on the date of grant of such Directors Option. An
exercisable Directors Option, or portion thereof, may be exercised in whole or
in part only with respect to whole shares of Common Stock. Directors Options
shall be exercisable in accordance with Section 2.1(c).
(c) Termination of Directorship. If the holder of a Directors Option
---------------------------
ceases to be a director of the Company by reason of Disability, each such option
held by such holder shall be fully exercisable and may thereafter be exercised
by such holder (or such holder's legal representative or similar person) until
and including the expiration date of the term of such option.
If the holder of a Directors Option ceases to be a director of the
Company by reason of death, each such option held by such holder shall be fully
exercisable and may thereafter be exercised by such holder's executor,
administrator, legal representative, beneficiary or similar person until and
including the expiration date of the term of such option.
If the holder of a Directors Option ceases to be a director of the
Company for any reason other than Disability or death, each such option held by
such holder shall be fully exercisable and may thereafter be exercised by such
holder (or such holder's legal representative or similar person) until the
expiration date of the term of such option.
5.6 OTHER AWARDS OF RESTRICTED STOCK TO DIRECTORS. The Committee, with the
---------------------------------------------
approval of the Board, may award shares of Restricted Stock for service as
Chairman of the Board (or for
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<PAGE>
service in other capacities to the Board). Any such award of Restricted Stock
shall be governed by the provisions of Section 5.4 or such other provisions as
shall be adopted by the Committee with the approval of the Board.
VI. GENERAL
6.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
-------------------------------
stockholders of the Company for approval and, if approved by the affirmative
vote of the holders of a majority of the shares of Common Stock entitled to vote
and present in person or represented by proxy at the 1999 annual meeting of
stockholders, shall become effective on the date of such approval. No option may
be exercised prior to the date of such stockholder approval. This Plan shall
terminate ten (10) years after its effective date, unless terminated earlier by
the Board. Termination of this Plan shall not affect the terms or conditions of
any award granted prior to termination.
In the event that this Plan is not approved by the stockholders, this Plan
and any awards granted hereunder shall be null and void.
6.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
----------
subject to any requirement of stockholder approval required by applicable law,
rule or regulation, including Section 162(m) and Section 422 of the Code;
provided, however, that no amendment shall be made without stockholder approval
if such amendment would (a) increase the maximum number of shares of Common
Stock available under this Plan (subject to Section 6.7), (b) effect any change
inconsistent with Section 422 of the Code or (c) extend the term of this Plan.
No amendment may impair the rights of a holder of an outstanding award without
the consent of such holder.
6.3 AGREEMENT. No award shall be valid until an Agreement is executed by the
---------
Company and the recipient of such award and, upon execution by each party and
delivery of the Agreement to the Company, such award shall be effective as of
the effective date set forth in the Agreement.
6.4 NON-TRANSFERABILITY OF AWARDS. Unless otherwise specified in the Agreement
-----------------------------
relating to an award, no award shall be transferable other than by will, the
laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company. Except to the extent permitted by the
foregoing sentence or the Agreement relating to an award, each award may be
exercised or settled during the holder's lifetime only by the holder or the
holder's legal representative or similar person. Except to the extent permitted
by the second preceding sentence or the Agreement relating to an award, no award
may be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such
award, such award and all rights thereunder shall immediately become null and
void.
-15-
<PAGE>
6.5 TAX WITHHOLDING. The Company shall have the right to require, prior to the
---------------
issuance or delivery of any shares of Common Stock or the payment of any cash
pursuant to an award made hereunder, payment by the holder of such award of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the "Tax Date"), or withhold an amount of cash which would otherwise be
--------
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(A) a cash payment to the Company, (B) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company of Mature
Shares having an aggregate Fair Market Value, determined as of the Tax Date,
equal to the amount necessary to satisfy any such obligation, (C) authorizing
the Company to withhold whole shares of Common Stock which would otherwise be
delivered having an aggregate Fair Market Value, determined as of the Tax Date,
or withhold an amount of cash which would otherwise be payable to a holder,
equal to the amount necessary to satisfy any such obligation, (D) in the case of
the exercise of an option, a cash payment by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of exercise or
(E) any combination of (A), (B) and (C), in each case to the extent set forth in
the Agreement relating to the award; provided, however, that the Company shall
have sole discretion to disapprove of an election pursuant to any of clauses
(B)- (E). Any fraction of a share of Common Stock which would be required to
satisfy such an obligation shall be disregarded and the remaining amount due
shall be paid in cash by the holder.
6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to the
----------------------
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise or settlement
of such award or the delivery of shares thereunder, such award shall not be
exercised or settled and such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
6.7 ADJUSTMENT. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option and the
purchase price per security, the number and class of securities subject to each
Restricted Stock Award granted to Non-Employee Directors pursuant to Article V,
the terms of each outstanding SAR,
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<PAGE>
the number and class of securities subject to each outstanding Stock Award, and
the terms of each outstanding Performance Share shall be appropriately adjusted
by the Committee, such adjustments to be made in the case of outstanding options
and SARs without an increase in the aggregate purchase price or base price. The
decision of the Committee regarding any such adjustment shall be final, binding
and conclusive. If any such adjustment would result in a fractional security
being (a) available under this Plan, such fractional security shall be
disregarded, or (b) subject to an award under this Plan, the Company shall pay
the holder of such award, in connection with the first the vesting, exercise or
settlement of such award in whole or in part occurring after such adjustment, an
amount in cash determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair
Market Value on the vesting, exercise or settlement date over (B) the exercise
or base price, if any, of such award.
6.8 CHANGE IN CONTROL. (a) Notwithstanding any provision in this Plan or any
-----------------
Agreement, in the event of a Change in Control, (i) all outstanding options and
SARs shall immediately become exercisable in full, (ii) the Restriction Period
applicable to any outstanding Restricted Stock Award shall lapse, (iii) the
Performance Period applicable to any outstanding Performance Share Award shall
lapse, (iv) the Performance Measures applicable to any outstanding Restricted
Stock Award (if any) and to any outstanding Performance Share Award shall be
deemed to be satisfied at the maximum level.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a "Person"),
------
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 30% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding Company
-------------------
Common Stock") or (ii) the combined voting power of the then outstanding
- ------------
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); excluding, however, the
-------------------------------------
following: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was
acquired directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this Section 6.8(b);
(2) individuals who, as of May 27, 1999, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at least a
---------------
majority of such Board; provided that any individual who becomes a director of
the Company subsequent to May 27, 1999 whose election, or nomination for
election by the Company's stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened election
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<PAGE>
contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act, or any other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the Board shall not
be deemed a member of the Incumbent Board;
(3) approval by the stockholders of the Company of a reorganization,
merger or consolidation of the Company or sale or other disposition of all or
substantially all of the assets of the Company (a "Corporate Transaction");
---------------------
excluding, however, a Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock, and the combined voting power of the
outstanding securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or indirectly) in substantially the same proportions relative to
each other as their ownership, immediately prior to such Corporate Transaction,
of the Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than: the Company; any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company; the corporation resulting from
such Corporate Transaction; and any Person which beneficially owned, immediately
prior to such Corporate Transaction, directly or indirectly, 30% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) will beneficially own, directly or indirectly, 30% or more
of, respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the
election of directors and (iii) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.
(c) (1) With respect to any optionee who is subject to Section 16 of the
Exchange Act, (i) notwithstanding the exercise periods set forth in subsections
(a) through (f) of Section 2.3, Section 5.5 or as set forth pursuant to such
subsections in any Agreement to which such optionee is a party and (ii)
notwithstanding the expiration date of the term of such option, in the event the
Company is involved in a business combination which is intended to be treated as
a pooling of interests for financial accounting purposes (a "Pooling
-------
Transaction") or pursuant to which such optionee receives a substitute option to
- -----------
purchase securities of any entity, including an entity directly or indirectly
acquiring the Company, then each option (or option in substitution thereof) held
by such optionee shall be exercisable to the extent set forth in this Plan or
the Agreement evidencing such option, as applicable, until and including the
latest of (x) the expiration date of the term of the option or, in the event of
such optionee's
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<PAGE>
termination of employment or service, the date determined pursuant to the then
applicable subsection or paragraph of Section 2.3, or 5.5, (y) the date which is
seven months after the consummation of such business combination and (z) the
date which is 30 days after the date of expiration of any period during which
such optionee may not dispose of a security issued in the Pooling Transaction in
order for the Pooling Transaction to be accounted for as a pooling of interests;
and
(2) With respect to any holder of an SAR (other than an SAR which may
be settled only for cash) who is subject to Section 16 of the Exchange Act, (i)
notwithstanding the exercise periods set forth in subsections (a) through (f) of
Section 2.3, Section 5.5 or as set forth pursuant to such subsections in any
Agreement to which such holder is a party and (ii) notwithstanding the
expiration date of the term of such SAR (or related option in the case of a
Tandem SAR), in the event the Company is involved in a Pooling Transaction or
pursuant to which such holder receives a substitute SAR relating to any entity,
including an entity directly or indirectly acquiring the Company, then each such
SAR (or SAR in substitution thereof) held by such holder shall be exercisable to
the extent set forth in the Agreement evidencing such SAR until and including
the latest of (x) the expiration date of the term of such SAR (or related option
in the case of a Tandem SAR), or, in the event of such holder's termination of
employment or service, the date determined pursuant to the then applicable
subsection of Section 2.3, or 5.5 (y) the date which is seven months after the
consummation of such business combination and (z) the date which is 30 days
after the date of expiration of any period during which such holder may not
dispose of a security issued in the Pooling Transaction in order for the Pooling
Transaction to be accounted for as a pooling of interests.
6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any right to
---------------------------------------
participate in this Plan. Neither this Plan nor any award made hereunder shall
confer upon any person any right to continued employment by the Company, any
Subsidiary or any affiliate of the Company or affect in any manner the right of
the Company, any Subsidiary or any affiliate of the Company to terminate the
employment of any person at any time without liability hereunder.
6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a stockholder of
---------------------
the Company with respect to any shares of Common Stock or other equity security
of the Company which is subject to an award hereunder unless and until such
person becomes a stockholder of record with respect to such shares of Common
Stock or equity security.
6.11 DESIGNATION OF BENEFICIARY. If permitted by the Company, a holder of an
--------------------------
award may file with the Committee a written designation of one or more persons
as such holder's beneficiary or beneficiaries (both primary and contingent) in
the event of the holder's death. To the extent an outstanding option or SAR
granted hereunder is exercisable, such beneficiary or beneficiaries shall be
entitled to exercise such option or SAR.
Each beneficiary designation shall become effective only when filed in
writing with the Committee during the holder's lifetime on a form prescribed by
the Committee. The spouse of a married holder domiciled in a community property
jurisdiction shall join in any designation of
-19-
<PAGE>
a beneficiary other than such spouse. The filing with the Committee of a new
beneficiary designation shall cancel all previously filed beneficiary
designations.
If a holder fails to designate a beneficiary, or if all designated
beneficiaries of a holder predecease the holder, then each outstanding option
and SAR hereunder held by such holder, to the extent exercisable, may be
exercised by such holder's executor, administrator, legal representative or
similar person.
6.12 GOVERNING LAW. This Plan, each award hereunder and the related Agreement,
-------------
and all determinations made and actions taken pursuant thereto, to the extent
not otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Texas and construed in accordance therewith
without giving effect to principles of conflicts of laws.
6.13 FOREIGN EMPLOYEES. Without amending this Plan, the Committee may grant
-----------------
awards to eligible persons who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Committee be necessary or desirable to foster and promote achievement of the
purposes of this Plan and, in furtherance of such purposes the Committee may
make such modifications, amendments, procedures, subplans and the like as may be
necessary or advisable to comply with provisions of laws in other countries or
jurisdictions in which the Company or its Subsidiaries operates or has
employees.
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<PAGE>
Exhibit 5
July 1, 1999
El Paso Electric Company
Board of Directors
123 W. Mills Street
El Paso, Texas 79901
Re: 2,000,000 Shares of Common Stock, no par value, of El Paso Electric
Company
Gentlemen:
We refer to the Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on July 1, 1999 (the "Registration
Statement") by El Paso Electric Company (the "Company") under the Securities Act
of 1933, as amended (the "Act"), relating to the registration of 2,000,000
shares of common stock (the "New Shares"), no par value, of the Company.
This opinion is being furnished in accordance with the requirements of Item
8 of Form S-8 and Item 601(b)(5)(i) of the Regulation S-K.
As Texas legal counsel for the Company, we are generally familiar with the
proceedings to date with respect to the proposed issuance of the New Shares
pursuant to the Company's 1999 Long-Term Incentive Plan (the "1999 Plan")
pursuant to the Registration Statement and have examined such records, documents
and questions of law, and satisfied ourselves as to such matters of fact, as we
have considered relevant and necessary as a basis for this opinion. We have
reviewed an undated draft of the Registration Statement and an undated draft of
the Plan. In rendering our opinion below, we have relied in part on the General
Counsel's Certificate dated July 1, 1999.
Based on the foregoing and assuming the minutes of the Annual Meeting of
the Company's Shareholders held on May 27, 1999, are duly executed as presented
to us as Exhibit E to the General Counsel's Certificate referred to above, we
are of the opinion that:
<PAGE>
El Paso Electric Company
July 1, 1999
Page 2 of 2
The New Shares issued pursuant to the 1999 Plan will be validly issued,
fully paid and nonassessable when (i) the Company's Board of Directors or a duly
authorized committee of the Board shall have duly adopted final resolutions
authorizing the award of such New Shares in accordance with the terms of the
1999 Plan, and (ii) certificates representing the New Shares shall have been
duly executed, countersigned and registered in the books of the Company and duly
delivered to the participants in the 1999 Plan in accordance with the terms of
the 1999 Plan and, with respect to the Stock Appreciation Rights and Stock
Options (as such terms are defined in the 1999 Plan), upon receipt of the
consideration therefor upon the exercise of such rights and options.
We are licensed to practice law only in the State of Texas, and the opinion
expressed above is limited to the applicable laws of such State. We have assumed
the authenticity of all signatures and have assumed the genuineness of all
copies of documents which we have reviewed.
This opinion is as of the date hereof and may not be relied upon by any
other person without our prior consent. We do not undertake any obligation to
inform you after the date hereof of any facts or circumstances that are brought
to our attention, or of changes in applicable law occurring after the date
hereof, that affect or alter the opinion expressed above. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the 1999 Plan or the New Shares.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act,
the rules and regulations of the Securities and Exchange Commission, or Item 509
of Regulation S-K.
Very truly yours,
/s/ CLARK, THOMAS & WINTERS
CLARK, THOMAS & WINTERS
<PAGE>
Exhibit 15
El Paso Electric Company
El Paso, Texas
Ladies and Gentlemen:
Re: Registration Statement on Form S-8 for El Paso Electric Company 1999 Long-
Term Incentive Plan
With respect to the subject registration statement, we acknowledge our awareness
of the use therein of our report dated April 26, 1999 related to our review of
interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such a report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
Very truly yours,
KPMG LLP
El Paso, Texas
July 1, 1999
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
The Board of Directors
El Paso Electric Company:
We consent to the incorporation by reference in this registration statement for
El Paso Electric Company 1999 Long-Term Incentive Plan on Form S-8 of El Paso
Electric Company of our audit report dated February 5, 1999, relating to the
balance sheets of El Paso Electric Company as of December 31, 1998 and 1997 and
the related statement of operations, comprehensive operations, changes in common
stock equity (deficit), and cash flows for the years in the two-year period
ended December 31, 1998 and 1997, the period February 12, 1996 to December 31,
1996, and the period January 1, 1996 to February 11, 1996, which report appears
in the December 31, 1998 annual report on Form 10-K of El Paso Electric Company.
KPMG LLP
El Paso, Texas
July 1, 1999
