As filed with the Securities and Exchange Commission on May 9, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EL PASO NATURAL GAS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Delaware 74-0608280
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(Address of Principal Executive Offices, Including Zip Code)
EL PASO ENERGY CORPORATION STRATEGIC STOCK PLAN
(Full Title of the Plan)
BRITTON WHITE, JR.
Executive Vice President and General Counsel
El Paso Natural Gas Company
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(713) 757-2131
(Name, Address and Telephone Number, Including Area Code, of Agent For Service)
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COPY TO:
JAMES P. PRENETTA, JR.
KELLEY DRYE & WARREN LLP
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Aggregate Offering Registration Fee
Share(1) Price(1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $3 per share 1.0 million shares(2) $58.625 $58,625,000.00 $17,765.00
================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the amount of the registration fee. The price per share is estimated based
on the average of the high and low trading prices for El Paso Natural Gas
Company's Common Stock on May 2, 1997, as reported by the New York Stock
Exchange.
(2) Includes an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the El Paso Energy Corporation Strategic Stock Plan as a result of any
future stock split, stock dividend or similar adjustment of the
outstanding Common Stock of El Paso Natural Gas Company.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") by El Paso Natural Gas Company (the "Registrant") pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are hereby
incorporated by reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, which contains audited financial statements for the most
recent year for which such statements have been filed;
(b) All other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Exchange Act, since the end of the fiscal year covered by the
Annual Report referred to in (a) above; and
(c) The description of the Registrant's common stock, $3 par value (the
"Common Stock"), contained in the Registrant's Registration Statement on Form
8-A (Registration No. 1-2700) filed with the Commission on February 13, 1992
under Section 12 of the Exchange Act, including any amendments or reports filed
for the purpose of updating such descriptions.
All documents and reports filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date hereof and prior
to the filing of a post-effective amendment to the Registration Statement which
indicates that the securities offered hereby have been sold, or which
deregisters all such securities remaining unsold, shall also be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof commencing on the respective dates on which such documents are filed.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may 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 proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (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. A
Delaware corporation may indemnify any person under such Section in connection
with a proceeding by or in the right of the corporation to procure judgment in
its favor, as provided in the preceding sentence, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action, except that no indemnification shall be
made in respect thereof unless, and then only to the extent that, a court of
competent
<PAGE>
jurisdiction shall determine upon application that such person is fairly and
reasonably entitled to indemnity for such expenses as the court shall deem
proper. A Delaware corporation must indemnify any person who was successful on
the merits or otherwise in defense of any action, suit or proceeding or in
defense of any claim, issue or matter in any proceeding, 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, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. A Delaware corporation may pay for the expenses (including attorneys'
fees) incurred by an officer or director in defending a proceeding in advance of
the final disposition upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation.
Article X of the Registrant's By-laws requires indemnification to the full
extent permitted under Delaware law as from time to time in effect. Subject to
any restrictions imposed by Delaware law, the By-laws provide an unconditional
right to indemnification for all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes, or penalties and amounts
paid in settlement) actually and reasonably incurred or suffered by any person
in connection with any actual or threatened proceeding (including, to the extent
permitted by law, any derivative action) by reason of the fact that such person
is or was serving as a director, officer or employee of the Registrant or that,
being or having been such a director or officer or an employee of the
Registrant, such person is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including an employee benefit plan. The
By-laws also provide that the Registrant may, by action of its Board of
Directors, provide indemnification to its agents with the same scope and effect
as the foregoing indemnification of directors and officers.
Section 102(b)(7) of the DGCL, permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a 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 any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article 10 of the Registrant's
Restated Certificate of Incorporation, as amended, provides that to the full
extent that the DGCL, as it now exists or may hereafter be amended, permits the
limitation or elimination of the liability of directors, a director of the
Registrant shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director. Any amendment to or
repeal of such Article 10 shall not adversely affect any right or protection of
a director of the Registrant for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal. The DGCL permits the
purchase of insurance on behalf of directors and officers against any liability
asserted against directors and officers and incurred by such persons in such
capacity, or arising out of their status as such, whether or not the corporation
would have the power to indemnify directors and officers against such liability.
The Registrant maintains Directors' and Officers' liability insurance
which provides for payment on behalf of the directors and officers of the
Registrant and its subsidiaries, of certain losses of such persons (other than
matters uninsurable under the law) arising from claims, including claims arising
under the Securities Act of 1933, as amended (the "Securities Act"), for acts or
omissions by such persons while acting as directors or officers of the
Registrant and/or its subsidiaries, as the case may be.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
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<PAGE>
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
4.1 Restated Certificate of Incorporation of the Registrant dated
January 22, 1992 (incorporated by reference to Exhibit 3.A to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, File No. 1-2700, filed January 29, 1992);
Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of the Registrant, dated
July 7, 1992 (incorporated by reference to Exhibit 3.A.1 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-2700, filed February 3, 1993).
*4.2 El Paso Energy Corporation Strategic Stock Plan.
*5 Opinion of Kelley Drye & Warren LLP regarding legality of the
Common Stock being registered.
*23.1 Consent of Kelley Drye & Warren LLP (included in their opinion
filed as Exhibit 5).
*23.2 Consent of Coopers & Lybrand L.L.P.
*24 Powers of Attorney (See signature page).
- ----------
* Filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
-3-
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions of Item 6, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 El Paso, State of Texas, on May 9, 1997.
EL PASO NATURAL GAS COMPANY
By: /S/ WILLIAM A. WISE
-----------------------------------
William A. Wise
Chairman of the Board and
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes H.
Brent Austin and Britton White, Jr., and each of them as attorneys-in-fact with
full power of substitution, to execute in the name and on behalf of such person,
individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates as indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/S/ WILLIAM A. WISE Chairman of the Board, Chief Executive May 9, 1997
- ---------------------------------- Officer and Director
William A. Wise
/S/ RICHARD O. BAISH President May 9, 1997
- ----------------------------------
Richard O. Baish
/S/ H. BRENT AUSTIN Executive Vice President and Chief May 9, 1997
- ---------------------------------- Financial Officer
H. Brent Austin
/S/ JEFFREY I. BEASON Vice President, Chief Accounting Officer May 9, 1997
- ---------------------------------- and Controller
Jeffrey I. Beason
/S/ BYRON ALLUMBAUGH Director May 9, 1997
- ----------------------------------
Byron Allumbaugh
/S/ PETER T. FLAWN
- ---------------------------------- Director May 9, 1997
Peter T. Flawn
/S/ EUGENIO GARZA LAGUERA Director May 9, 1997
- ----------------------------------
Eugenio Garza Laguera
/S/ JAMES F. GIBBONS Director May 9, 1997
- ----------------------------------
James F. Gibbons
<PAGE>
/S/ BEN F. LOVE Director May 9, 1997
- ----------------------------------
Ben F. Love
/S/ KENNETH L. SMALLEY Director May 9, 1997
- ----------------------------------
Kenneth L. Smalley
/S/ MALCOLM WALLOP Director May 9, 1997
- ----------------------------------
Malcolm Wallop
</TABLE>
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<PAGE>
EXHIBITS INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Restated Certificate of Incorporation of the Registrant dated
January 22, 1992 (incorporated by reference to Exhibit 3.A to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, File No. 1-2700, filed January 29, 1992);
Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of the Registrant dated July
7, 1992 (incorporated by reference to Exhibit 3.A.1 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, File No. 1-2700, filed February 3, 1993).
*4.2 El Paso Energy Corporation Strategic Stock Plan.
*5 Opinion of Kelley Drye & Warren LLP regarding legality of the
Common Stock being registered.
*23.1 Consent of Kelley Drye & Warren LLP (included in their opinion
filed as Exhibit 5).
*23.2 Consent of Coopers & Lybrand L.L.P.
*24 Powers of Attorney (See signature page).
- ------------
* Filed herewith.
-7-
EL PASO ENERGY CORPORATION
STRATEGIC STOCK PLAN
EFFECTIVE AS OF JUNE 19, 1996
<PAGE>
TABLE OF CONTENTS
SECTION 1 PURPOSES..................................................1
SECTION 2 DEFINITIONS...............................................1
2.1 Beneficiary...............................................1
2.2 Board of Directors........................................1
2.3 Cause.....................................................1
2.4 Change in Control.........................................2
2.5 Code......................................................3
2.6 Common Stock..............................................3
2.7 Company...................................................3
2.8 Exchange Act..............................................3
2.9 Fair Market Value.........................................3
2.10 Good Reason...............................................4
2.11 Management Committee......................................4
2.12 Option....................................................5
2.13 Option Price..............................................5
2.14 Participant...............................................5
2.15 Performance Goals.........................................5
2.16 Performance Period........................................5
2.17 Permanent Disability or Permanently Disabled..............5
2.18 Plan Administrator........................................6
2.19 Restricted Stock..........................................6
2.20 Rule 16b-3................................................6
2.21 Section 16 Insider........................................6
2.22 Subsidiary................................................6
2.23 Total Shareholder Return..................................6
SECTION 3 ADMINISTRATION............................................7
SECTION 4 ELIGIBILITY...............................................7
SECTION 5 SHARES AVAILABLE FOR THE PLAN.............................8
SECTION 6 STOCK OPTIONS.............................................8
SECTION 7 STOCK APPRECIATION RIGHTS................................12
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS........................14
SECTION 9 RESTRICTED STOCK.........................................15
SECTION 10 REGULATORY APPROVALS AND LISTING.........................16
SECTION 11 EFFECTIVE DATE AND TERM OF PLAN..........................17
SECTION 12 GENERAL PROVISIONS.......................................17
SECTION 13 COMPLIANCE WITH RULE 16b-3...............................19
SECTION 14 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN.............................................20
<PAGE>
EL PASO ENERGY CORPORATION
STRATEGIC STOCK PLAN
SECTION 1 PURPOSES
The purposes of the El Paso Energy Corporation Strategic Stock Plan
(the "Plan") are to promote the interests of the Company (as defined below) and
its stockholders by strengthening its ability to attract and retain officers and
key management employees in the employ of the Company and its Subsidiaries (as
defined below) by furnishing suitable recognition of their ability and industry
which contributes materially to the success of the Company in strategic
transactions and to align the interests and efforts of the Company's officers
and key management employees to the long-term interests of the Company's
stockholders. The Plan provides for the grant of stock options, limited stock
appreciation rights, stock appreciation rights and restricted stock in
accordance with the terms and conditions set forth below.
SECTION 2 DEFINITIONS
Unless otherwise required by the context, the following terms when used
in the Plan shall have the meanings set forth in this Section 2:
2.1 BENEFICIARY
The person or persons designated by the Participant pursuant to Section
6.2(f) of this Plan to whom payments are to be paid pursuant to the terms of the
Plan in the event of the Participant's death.
2.2 BOARD OF DIRECTORS
The Board of Directors of the Company.
2.3 CAUSE
The Company may terminate the Participant's employment for Cause. A
termination for Cause is a termination evidenced by a resolution adopted in good
faith by the Management Committee (or by two-thirds (2/3) of the Board of
Directors in the case of a Management Committee member) that the Participant (i)
willfully and continually failed to substantially perform the Participant's
duties with the Company (other than a failure resulting from the Participant's
incapacity due to physical or mental illness) which failure continued for a
period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Participant specifying the
manner in which the Participant has failed to substantially perform or (ii)
willfully engaged in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise; PROVIDED, HOWEVER, that no termination of
the Participant's employment shall be for Cause
<PAGE>
as set forth in clause (ii) above until (A) there shall have been delivered to
the Participant a copy of a written notice setting forth that the Participant
was guilty of the conduct set forth in clause (ii) above and specifying the
particulars thereof in detail and (B) the Participant shall have been provided
an opportunity to be heard by the Board of Directors (with the assistance of the
Participant's counsel if the Participant so desires). No act, nor failure to
act, on the Participant's part shall be considered "willful" unless the
Participant has acted, or failed to act, with an absence of good faith and
without a reasonable belief that the Participant's action or failure to act was
in the best interest of the Company. Notwithstanding anything contained in the
Plan to the contrary, no failure to perform by the Participant after notice of
termination is given by the Participant shall constitute Cause.
2.4 CHANGE IN CONTROL
As used in the Plan, a Change in Control shall be deemed to occur (i)
if any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities, (ii) upon the first purchase of the
Common Stock pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company), (iii) upon the approval by the Company's
stockholders of a merger or consolidation, a sale or disposition of all or
substantially all of the Company's assets or a plan of liquidation or
dissolution of the Company, or (iv) if, during any period of two (2) consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof, unless
the election or nomination for the election by the Company's stockholders of
each new director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the
period. Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if the Company either merges or consolidates with or into another
company or sells or disposes of all or substantially all of its assets to
another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least eighty percent (80%) of the combined voting power of all
outstanding classes of securities of the company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition. The acquisition and
merger of Tenneco Inc. shall not constitute a Change in Control under this Plan.
<PAGE>
2.5 CODE
The Internal Revenue Code of 1986, as amended and in effect from time
to time, and the temporary or final regulations of the Secretary of the U.S.
Treasury adopted pursuant to the Code.
2.6 COMMON STOCK
The Common Stock of the Company, $3 par value per share, or such other
class of shares or other securities as may be applicable pursuant to the
provisions of Section 5.
2.7 COMPANY
El Paso Energy Corporation or El Paso Natural Gas Company, which ever
entity is publicly held.
2.8 EXCHANGE ACT
The Securities Exchange Act of 1934, as amended.
2.9 FAIR MARKET VALUE
As applied to a specific date, Fair Market Value shall be deemed to be
the mean between the highest and lowest quoted selling prices at which Common
Stock is sold on such date as reported in the NYSE-Composite Transactions by THE
WALL STREET JOURNAL on such date, or if no Common Stock was traded on such date,
on the next preceding day on which Common Stock was so traded. Notwithstanding
the foregoing, upon the exercise,
(a) during the thirty (30) day period following a Change in
Control, of a limited stock appreciation right or stock appreciation
right granted in connection with an option more than six (6) months
prior to a Change in Control, or
(b) during the seven (7) month period following a Change in
Control, of a limited stock appreciation right or of a stock
appreciation right granted in connection with an option less than six
(6) months prior to a Change in Control,
On or after a Change in Control, Fair Market Value on the date of
exercise shall be deemed to be the greater of (i) the highest price per
share of Common Stock as reported in the NYSE-Composite Transactions by
THE WALL STREET JOURNAL during the sixty (60) day period ending on the
day preceding the date of exercise of the stock appreciation right or
limited stock appreciation right, as the case may be, and (ii) if the
Change in Control is one described in clause (ii) or (iii) of Section
2.4, the highest price per share paid for Common Stock in connection
with such Change in Control.
<PAGE>
2.10 GOOD REASON
Good Reason shall mean the occurrence of any of the following events or
conditions, after a Change in Control:
(a) a change in the Participant's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Participant's reasonable judgment, represents a substantial reduction
of the status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Participant of any
duties or responsibilities which, in the Participant's reasonable
judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Participant from or failure to
reappoint or reelect the Participant to any of such positions, except
in connection with the termination of the Participant's employment for
Cause, for Permanent Disability or as a result of his or her death, or
by the Participant other than for Good Reason;
(b) a reduction in the Participant's annual base salary;
(c) the Company's requiring the Participant (without the
consent of the Participant) to be based at any place outside a
thirty-five (35) mile radius of his or her place of employment prior to
a Change in Control, except for reasonably required travel on the
Company's business which is not materially greater than such travel
requirements prior to the Change in Control;
(d) the failure by the Company to (i) continue in effect any
material compensation or benefit plan in which the Participant was
participating at the time of the Change in Control or (ii) provide the
Participant with compensation and benefits at least equal (in terms of
benefit levels and/or reward opportunities) to those provided for under
each employee benefit plan, program and practice as in effect
immediately prior to the Change in Control (or as in effect following
the Change in Control, if greater);
(e) any material breach by the Company of any provision of
the Plan; or
(f) any purported termination of the Participant's employment
for Cause by the Company which does not otherwise comply with the terms
of the Plan.
2.11 MANAGEMENT COMMITTEE
A committee consisting of the Chief Executive Officer and such other
senior officers as the Chief Executive Officer shall designate. The Chief
Executive Officer may
<PAGE>
from time to time remove members from, or add members to, the Management
Committee.
2.12 OPTION
An option which is not intended to meet the requirements of an
Incentive Stock Option as defined in Section 422 of the Code.
2.13 OPTION PRICE
The price per share of Common Stock at which each option is
exercisable.
2.14 PARTICIPANT
An eligible employee to whom an option, limited stock appreciation
right, stock appreciation right or Restricted Stock is granted under the Plan as
set forth in Section 4.
2.15 PERFORMANCE GOALS
The Plan Administrator shall establish one or more performance goals
("Performance Goals") for each Performance Period in writing. Each Performance
Goal selected for a particular Performance Period shall be a relative or
absolute measure of any one or more of the following (or such other measures as
the Plan Administrator may determine): Total Shareholder Return, operating
income, pre-tax profit, earnings per share, cash flow, return on capital, return
on equity, return on net assets, net income, debt reduction, safety, return on
investment or revenues. The foregoing terms shall have the same meaning as used
in the Company's financial statements, or if the terms are not used in the
Company's financial statements, they shall have the meaning generally applied
pursuant to general accepted accounting principles, or as used in the industry,
as applicable.
2.16 PERFORMANCE PERIOD
That period of time during which Performance Goals are measured to
determine the vesting or granting of options, limited stock appreciation rights,
stock appreciation rights or Restricted Stock, as the Plan Administrator may
determine.
2.17 PERMANENT DISABILITY OR PERMANENTLY DISABLED
A Participant shall be deemed to have become Permanently Disabled for
purposes of the Plan if the Plan Administrator shall find upon the basis of
medical evidence satisfactory to the Plan Administrator that the Participant is
totally disabled, whether due to physical or mental condition, so as to be
prevented from engaging in further employment by the Company or any of its
Subsidiaries, and that such disability will be permanent and continuous during
the remainder of the Participant's life; provided, that
<PAGE>
with respect to Section 16 Insiders such determination shall be made by the
Board of Directors, or the Compensation Committee thereof, if required.
2.18 PLAN ADMINISTRATOR
The Management Committee (or the Board of Directors or a committee
thereof in the case of Section 16 Insiders, if required), pursuant to Section 3,
shall administer the Plan.
2.19 RESTRICTED STOCK
Common Stock granted under the Plan that is subject to the requirements
of Section 9 and such other restrictions as the Plan Administrator deems
appropriate.
2.20 RULE 16b-3
Rule 16b-3 of the General Rules and Regulations under the Exchange Act.
2.21 SECTION 16 INSIDER
Any person who is selected by the Plan Administrator to receive
options, limited stock appreciation rights, stock appreciation rights and/or
Restricted Stock pursuant to the Plan and who is subject to the requirements of
Section 16 of the Exchange Act, and the rules and regulations promulgated
thereunder.
2.22 SUBSIDIARY
An entity that is designated by the Plan Administrator as a subsidiary
for purposes of the Plan and that is a corporation (or other form of business
association that is treated as a corporation for tax purposes) of which shares
(or other ownership interests) having more than fifty percent (50%) of the
voting power are owned or controlled, directly or indirectly, by the Company so
as to qualify as a "subsidiary corporation" (within the meaning of Section
424(f) of the Code).
2.23 TOTAL SHAREHOLDER RETURN
The sum of (i) the appreciation or depreciation in the price of a share
of a company's common stock, and (ii) the dividends and other distributions paid
and/or declared during the applicable Performance Period, expressed as a
percentage basis of the Fair Market Value of such share on the first day of the
applicable Performance Period, as calculated in a manner determined by the Plan
Administrator.
<PAGE>
SECTION 3 ADMINISTRATION
3.1 The Plan shall be administered by the Management Committee, unless
the Board of Directors shall otherwise determine the administrator of the Plan.
3.2 Except for the terms and conditions explicitly set forth in the
Plan, the Plan Administrator shall have full authority to construe and interpret
the Plan, to establish, amend and rescind rules and regulations relating to the
Plan, to select persons eligible to participate in the Plan, to grant options,
limited stock appreciation rights, stock appreciation rights and Restricted
Stock thereunder, to administer the Plan, to make recommendations to the Board
of Directors, to take all such steps and make all such determinations in
connection with the Plan and the options, limited stock appreciation rights,
stock appreciation rights and Restricted Stock granted thereunder as it may deem
necessary or advisable, which determination shall be final and binding upon all
Participants. The Plan Administrator shall cause the Company at its expense to
take any action related to the Plan which may be required or necessary to comply
with the provisions of any federal or state law or any regulations issued
thereunder.
3.3 Each member of the Management Committee acting as Plan
Administrator, while serving as such, shall be considered to be acting in his or
her capacity as an officer of the Company. Members of the Management Committee
acting under the Plan shall be fully protected in relying in good faith upon the
advice of counsel and shall incur no liability except for gross negligence or
willful misconduct in the performance of their duties.
SECTION 4 ELIGIBILITY
To be eligible for selection by the Plan Administrator to participate
in the Plan, an individual must be an officer or key management employee of the
Company, or of any Subsidiary, as of the date on which the Plan Administrator
grants to such individual an option, limited stock appreciation right, stock
appreciation right or Restricted Stock or a person who, in the judgment of the
Plan Administrator, holds a position of responsibility and is able to contribute
substantially to the Company's continued success. Notwithstanding the foregoing,
the Plan Administrator may make a grant under this Plan to individuals who are
not officers or key management employees, provided that the effectiveness of
such grant shall be conditioned upon such individual becoming an officer or key
management employee of the Company or any Subsidiary. Members of the Board of
Directors of the Company who are full-time salaried officers shall be eligible
to participate. Members of the Board of Directors who are not employees are not
eligible to participate in this Plan.
<PAGE>
SECTION 5 SHARES AVAILABLE FOR THE PLAN
5.1 Subject to Section 5.2, the maximum number of shares that may be
issued for which options, limited stock appreciation rights, stock appreciation
rights and Restricted Stock may at any time be granted under the Plan is one
million (1,000,000) shares of Common Stock, from shares held in the Company's
treasury or out of the authorized but unissued shares of the Company, or partly
out of each, as shall be determined by the Plan Administrator.
5.2 In the event of a recapitalization, stock split, stock dividend,
exchange of shares, merger, reorganization, change in corporate structure or
shares of the Company or similar event, the Board of Directors, upon the
recommendation of the Plan Administrator, may make appropriate adjustments in
the number of shares authorized for the Plan and, with respect to outstanding
options, limited stock appreciation rights, stock appreciation rights, and
Restricted Stock, the Plan Administrator may make appropriate adjustments in the
number of shares and the Option Price.
SECTION 6 STOCK OPTIONS
6.1 Options may be granted to eligible employees in such number, and at
such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective employees, their present and potential contributions to the success
of the Company, and such other factors as the Plan Administrator shall deem
relevant in accomplishing the purposes of the Plan. The granting of an option
shall take place when the Plan Administrator by resolution, written consent or
other appropriate action determines to grant such an option to a particular
Participant at a particular price. Each option shall be evidenced by a written
instrument delivered by or on behalf of the Company containing provisions not
inconsistent with the Plan.
6.2 All options granted under the Plan shall be subject to the
following terms and conditions:
(a) OPTION PRICE
The Option Price shall be the Fair Market Value of the Common
Stock on the date the option is granted, unless otherwise determined by
the Plan Administrator.
(b) DURATION OF OPTIONS
Options shall be exercisable at such time and under such
conditions as set forth in the option grant, but in no event shall any
option be exercisable later than the tenth anniversary of the date of
its grant.
<PAGE>
(c) EXERCISE OF OPTIONS
Subject to Section 6.2(j), a Participant may not exercise an
option until the Participant has completed one (1) year of continuous
employment with the Company or any of its Subsidiaries from and
including the date on which the option is granted, or such shorter or
longer period as the Plan Administrator may determine in a particular
case. This requirement is waived in the event of death or Permanent
Disability of a Participant before such period of continuous employment
is completed and may be waived or modified in the agreement evidencing
the option or by written notice to the Participant from the Plan
Administrator. Thereafter, shares of Common Stock covered by an option
may be purchased at one time or in such installments over the balance
of the option period as may be provided in the option grant. Any shares
not purchased on the applicable installment date may be purchased
thereafter at any time prior to the final expiration of the option. To
the extent that the right to purchase shares has accrued thereunder,
options may be exercised from time to time by written notice to the
Company setting forth the number of shares with respect to which the
option is being exercised.
(d) PAYMENT
The purchase price of shares purchased under options shall be
paid in full to the Company upon the exercise of the option by delivery
of consideration equal to the product of the Option Price and the
number of shares purchased (the "Purchase Price"). Such consideration
may be either (i) in cash or (ii) at the discretion of the Plan
Administrator, in Common Stock already owned by the Participant for at
least six (6) months, or any combination of cash and Common Stock. The
Fair Market Value of such Common Stock as delivered shall be valued as
of the day prior to delivery. The Plan Administrator can determine at
the time the option is granted that additional forms of payment will be
permitted. To the extent permitted by the Plan Administrator and
applicable laws and regulations (including, but not limited to, federal
tax and securities laws, regulations and state corporate law), an
option may also be exercised by delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds to
pay the Purchase Price. A Participant shall have none of the rights of
a stockholder until the shares of Common Stock are issued to the
Participant.
If specifically authorized in the option grant, a Participant
may elect to pay all or a portion of the Purchase Price by having
shares of Common Stock with a Fair Market Value equal to all or a
portion of the Purchase Price be withheld from the shares issuable to
the Participant upon the exercise of the option. The Fair Market Value
of such Common Stock as is withheld shall be determined as of the same
day as the exercise of the option. In the event an option grant to a
Section 16 Insider provides that the Purchase Price may be paid in
whole or in part by
<PAGE>
having shares with a Fair Market Value equal to all or a portion of
the Purchase Price withheld from the shares issuable to the
Participant upon the exercise of the option, the following
restrictions shall apply. To the extent required for compliance with
Rule 16b-3, the withholding of shares issuable upon the exercise of an
option to pay the Purchase Price by a Section 16 Insider must be
approved by the Plan Administrator and must be made (x) pursuant to an
irrevocable election made six (6) months in advance of the
transaction, (y) during the period beginning on the third business day
following the date of release for publication of the quarterly or
annual summary statements of sales and earnings of the Company and
ending on the twelfth business day following such date, or (z)
otherwise in accordance with Rule 16b-3 and interpretations
thereunder.
(e) RESTRICTIONS
The Plan Administrator shall determine and reflect in the
option grant, with respect to each option, the nature and extent of the
restrictions, if any, to be imposed on the shares of Common Stock which
may be purchased thereunder, including, but not limited to,
restrictions on the transferability of such shares acquired through the
exercise of such options for such periods as the Plan Administrator may
determine and, further, that in the event a Participant's employment by
the Company, or a Subsidiary, terminates during the period in which
such shares are nontransferable, the Participant shall be required to
sell such shares back to the Company at such prices as the Plan
Administrator may specify in the option.
(f) NONTRANSFERABILITY OF OPTIONS
During a Participant's lifetime, an option may be exercisable
only by the Participant. Options granted under the Plan and the rights
and privileges conferred thereby shall not be subject to execution,
attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by
applicable law and Rule 16b-3, the Plan Administrator may permit a
recipient of an option to designate in writing during the Participant's
lifetime a Beneficiary to receive and exercise the Participant's
options in the event of such Participant's death (as provided in
Section 6.2(i)). If any Participant attempts to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under the Plan
or of any right or privilege conferred thereby, contrary to the
provisions of the Plan, or suffers the sale or levy or any attachment
or similar process upon the rights and privileges conferred hereby, all
affected options held by such Participant shall be immediately
forfeited.
<PAGE>
(g) PURCHASE FOR INVESTMENT
The Plan Administrator shall have the right to require that
each Participant or other person who shall exercise an option under the
Plan, and each person into whose name shares of Common Stock shall be
issued pursuant to the exercise of an option, represent and agree that
any and all shares of Common Stock purchased pursuant to such option
are being purchased for investment only and not with a view to the
distribution or resale thereof and that such shares will not be sold
except in accordance with such restrictions or limitations as may be
set forth in the option. This Section 6.2(g) shall be inoperative
during any period of time when the Company has obtained all necessary
or advisable approvals from governmental agencies and has completed all
necessary or advisable registrations or other qualifications of shares
of Common Stock as to which options may from time to time be granted.
(h) TERMINATION OF EMPLOYMENT
Upon the termination of a Participant's employment for any
reason other than death or Permanent Disability, the Participant's
option shall be exercisable only to the extent that it was then
exercisable and, unless the term of the options expires sooner, such
options shall expire according to the following schedule; provided,
that the Plan Administrator may at any time determine in a particular
case that specific limitations and restrictions under the Plan shall
not apply:
(i) Retirement
The option shall expire, unless exercised, thirty-six
(36) months after the Participant's retirement from the
Company or any Subsidiary.
(ii) Disability
The option shall expire, unless exercised, thirty-six
(36) months after the Participant's Permanent Disability.
(iii) Termination
Subject to subparagraph (iv) below, the option shall
expire, unless exercised, thirty-six (36) months after a
Participant resigns or is terminated as an employee of the
Company or any of its Subsidiaries, unless the Plan
Administrator shall have determined in a specific case that
the option should expire sooner or should terminate when the
Participant's employment status ceases.
<PAGE>
(iv) Termination Following a Change in Control
The option shall expire, unless exercised, thirty-six
(36) months after a Participant's termination of employment
(other than a termination by the Company for Cause or a
voluntary termination by the Participant other than for Good
Reason) following a Change in Control, provided that said
termination of employment occurs within two (2) years
following a Change in Control.
(v) All Other Terminations
Notwithstanding subparagraphs (iii) and (iv) above,
the option shall expire upon termination of employment for
Cause.
(i) DEATH OF PARTICIPANT
Upon the death of a Participant, whether during the
Participant's period of employment or during the thirty-six (36) month
period referred to in Sections 6.2(h)(i), (ii) and (iii), the option
shall expire, unless the original term of the option expires sooner,
twelve (12) months after the date of the Participant's death, unless
the option is exercised within such twelve (12) month period by the
Participant's Beneficiary, legal representatives, estate or the person
or persons to whom the deceased's option rights shall have passed by
will or the laws of descent and distribution; provided, that the Plan
Administrator shall determine in a particular case that specific
limitations and restrictions under the Plan shall not apply.
Notwithstanding any other Plan provisions pertaining to the times at
which options may be exercised, no option shall continue to be
exercisable, pursuant to Section 6.2(h) or this Section 6.2(i), at a
time that would violate the maximum duration of Section 6.2(b).
(j) CHANGE IN CONTROL
Notwithstanding other Plan provisions pertaining to the times
at which options may be exercised, all outstanding options, to the
extent not then currently exercisable, shall become exercisable in full
upon the occurrence of a Change in Control. In addition, no option
shall continue to be exercisable at a time that would violate the
maximum duration of Section 6.2(b).
SECTION 7 STOCK APPRECIATION RIGHTS
7.1 The Plan Administrator may grant stock appreciation rights to
Participants in connection with any option granted under the Plan, either at the
time of the grant of such option or at any time thereafter during the term of
the option. Such stock appreciation rights shall cover the same shares covered
by the options (or such lesser
<PAGE>
number of shares of Common Stock as the Plan Administrator may determine) and
shall, except as provided in Section 7.3, be subject to the same terms and
conditions as the related options and such further terms and conditions not
inconsistent with the Plan as shall from time to time be determined by the Plan
Administrator.
7.2 Each stock appreciation right shall entitle the holder of the
related option to surrender to the Company unexercised the related option, or
any portion thereof, and to receive from the Company in exchange therefor an
amount equal to the excess of the Fair Market Value of one share of Common Stock
on the date the right is exercised over the Option Price per share times the
number of shares covered by the option, or portion thereof, which is
surrendered. Payment shall be made in shares of Common Stock valued at Fair
Market Value as of the date the right is exercised, or in cash, or partly in
shares and partly in cash, at the discretion of the Plan Administrator;
provided, however, that payment shall be made solely in cash with respect to a
stock appreciation right which is exercised within seven (7) months following a
Change in Control. Notwithstanding the foregoing and to the extent required by
Rule 16b-3, a payment, in whole or in part, of cash upon exercise of a stock
appreciation right by a Section 16 Insider may be made only if the Plan
Administrator approves such election to receive cash and the right is exercised
during the period beginning on the third business day following the date of
release for publication of the quarterly or annual summary statements of sales
and earnings of the Company and ending on the twelfth business day following
such date. Stock appreciation rights may be exercised from time to time upon
actual receipt by the Company of written notice stating the number of shares of
Common Stock with respect to which the stock appreciation right is being
exercised. The value of any fractional shares shall be paid in cash.
7.3 Stock appreciation rights are subject to the following
restrictions:
(a) Each stock appreciation right shall be exercisable at such
time or times as the option to which it relates shall be exercisable,
or at such other times as the Plan Administrator may determine;
provided, however, that such right shall not be exercisable until the
Participant shall have completed a six (6) month period of continuous
employment with the Company or any of its Subsidiaries immediately
following the date on which the stock appreciation right is granted. In
the event of death or Permanent Disability of a Participant during
employment but before the Participant has completed such period of
continuous employment, such stock appreciation right shall be
exercisable; but only within the period specified in the related
option. In the event of a Change in Control, the requirement that a
Participant shall have completed a six (6) month period of continuous
employment is waived with respect to a Participant who is employed by
the Company at the time of the Change in Control but who, within the
six (6) month period, voluntarily terminates employment for Good Reason
or is terminated by the Company other than for Cause. Notwithstanding
the foregoing, a stock appreciation right may not be exercised for cash
by a Section 16 Insider under any circumstances until the expiration of
the six (6) month period required under Rule 16b-3.
<PAGE>
(b) Except in the event of a Change in Control, the Plan
Administrator in its sole discretion may approve or deny in whole or in
part a request to exercise a stock appreciation right. Denial or
approval of such request shall not require a subsequent request to be
similarly treated by the Plan Administrator.
(c) The right of a Participant to exercise a stock
appreciation right shall be canceled if and to the extent the related
option is exercised. To the extent that a stock appreciation right is
exercised, the related option shall be deemed to have been surrendered
unexercised and canceled.
(d) A holder of stock appreciation rights shall have none of
the rights of a stockholder until shares of Common Stock, if any, are
issued to such holder pursuant to such holder's exercise of such
rights.
(e) The acquisition of Common Stock pursuant to the exercise
of a stock appreciation right shall be subject to the same restrictions
as would apply to the acquisition of Common Stock acquired upon
acquisition of the related option, as set forth in Section 6.2.
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS
8.1 The Plan Administrator may grant limited stock appreciation rights
to Participants in connection with any options granted under the Plan, either at
the time of the grant of such option or at any time thereafter during the term
of the option. Such limited stock appreciation rights shall cover the same
shares covered by the options (or such lesser number of shares of Common Stock
as the Plan Administrator may determine) and shall, except as provided in
Section 8.3, be subject to the same terms and conditions as the related options
and such further terms and conditions not inconsistent with the Plan as shall
from time to time be determined by the Plan Administrator.
8.2 Each limited stock appreciation right shall entitle the holder of
the related option to surrender to the Company the unexercised portion of the
related option and to receive from the Company in exchange therefor an amount in
cash equal to the excess of the Fair Market Value of one (1) share of Common
Stock on the date the right is exercised over the Option Price per share times
the number of shares covered by the option, or portion thereof, which is
surrendered.
8.3 Limited stock appreciation rights are subject to the
following restrictions:
(a) Each limited stock appreciation right shall be exercisable
in full for a period of seven (7) months following the date of a Change
in Control regardless of whether the holder is employed by the Company
or any of its Subsidiaries on the date the right is exercised;
provided, however, that limited stock appreciation rights may not be
exercised under any circumstances until the expiration of the six
<PAGE>
(6) month period required under Rule 16b-3. Limited stock appreciation
rights shall be exercisable only to the same extent and subject to the
same conditions as the options related thereto are exercisable, as
provided in Section 6.2(j).
(b) The right of a Participant to exercise a limited stock
appreciation right shall be canceled if and to the extent the related
option is exercised. To the extent that a limited stock appreciation
right is exercised, the related option shall be deemed to have been
surrendered unexercised and canceled.
SECTION 9 RESTRICTED STOCK
9.1 Restricted Stock may be granted to Participants in such number and
at such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective Participants, their present and potential contributions to the
success of the Company, and such other factors as the Plan Administrator shall
deem relevant in accomplishing the purposes of the Plan. The granting of
Restricted Stock shall take place when the Plan Administrator by resolution,
written consent or other appropriate action determines to grant such Restricted
Stock to a particular Participant. Each grant shall be evidenced by a written
instrument delivered by or on behalf of the Company containing provisions not
inconsistent with the Plan. The Participant receiving a grant of Restricted
Stock shall be recorded as a stockholder of the Company. Each Participant who
receives a grant of Restricted Stock shall have all the rights of a stockholder
with respect to such shares (except as provided in the restrictions on
transferability), including the right to vote the shares and receive dividends
and other distributions; provided, however, that no Participant awarded
Restricted Stock shall have any right as a stockholder with respect to any
shares subject to the Participant's Restricted Stock grant prior to the date of
issuance to the Participant of a certificate or certificates for such shares, or
before the effective date of any book entry form, as applicable.
9.2 A grant of Restricted Stock shall entitle a Participant to receive,
on the date or dates designated by the Plan Administrator, upon payment to the
Company of the par value of the Common Stock in a manner determined by the Plan
Administrator, the number of shares of Common Stock selected by the Plan
Administrator. The Plan Administrator may require, under such terms and
conditions as it deems appropriate or desirable, that the certificates for
Restricted Stock delivered under the Plan may be held in custody by a bank or
other institution, or that the Company may itself hold such shares in custody
until the Restriction Period (as defined in Section 9.3) expires or until
restrictions thereon otherwise lapse, and may require, as a condition of any
issuance of Restricted Stock that the Participant shall have delivered a stock
power endorsed in blank relating to the shares of Restricted Stock.
9.3 During a period of years following the date of grant, as determined
by the Plan Administrator, which shall in no event be less than one (1) year
and/or until the required Performance Goals are achieved, if applicable (the
"Restriction Period"), the
<PAGE>
Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated
or otherwise encumbered or disposed of by the recipient, except in the event of
death or Permanent Disability, the transfer to the Company as provided under the
Plan or the Plan Administrator's waiver or modification of such restrictions in
the agreement evidencing the grant of Restricted Stock, or by resolution of the
Plan Administrator adopted at any time.
9.4 Except as provided in Section 9.5 or 9.6, or as determined by the
Plan Administrator, if a Participant terminates employment with the Company for
any reason before the expiration of the Restriction Period, all shares of
Restricted Stock still subject to restriction shall be forfeited by the
Participant to the Company. In addition, in the event of any attempt by the
Participant to sell, exchange, transfer, pledge or otherwise dispose of shares
of Restricted Stock in violation of the terms of the Plan, such shares shall be
forfeited to the Company.
9.5 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall lapse, upon the
Participant's death or Permanent Disability or any termination of employment
determined by the Plan Administrator to end the Restriction Period.
9.6 The Restriction Period for any Participant shall be deemed to end
and all restrictions on shares of Restricted Stock shall terminate immediately
upon a Change in Control.
9.7 When the restrictions imposed by Section 9.3 expire or otherwise
lapse with respect to one or more shares of Restricted Stock, the Company shall
deliver to the Participant (or the Participant's legal representative,
Beneficiary or heir) one (1) share of Common Stock for each share of Restricted
Stock. At that time, the agreement referred to in Section 9.1, as it relates to
such shares, shall be terminated.
9.8 Subject to Section 9.2, a Participant entitled to receive
Restricted Stock under the Plan shall be issued a certificate for such shares.
Such certificate shall be registered in the name of the Participant, and shall
bear an appropriate legend reciting the terms, conditions and restrictions, if
any, applicable to such shares and shall be subject to appropriate stop-transfer
orders.
SECTION 10 REGULATORY APPROVALS AND LISTING
10.1 The Company shall not be required to issue any certificate for
shares of Common Stock upon the exercise of an option or a stock appreciation
right granted under the Plan, with respect to a grant of Restricted Stock:
(a) obtaining any approval or ruling from the Securities and
Exchange Commission, the Internal Revenue Service or any other
governmental agency
<PAGE>
which the Company, in its sole discretion, shall determine to be
necessary or advisable;
(b) listing of such shares on any stock exchange on which
the Common Stock may then be listed; or
(c) completing any registration or other qualification of such
shares under any federal or state laws, rulings or regulations of any
governmental body which the Company, in its sole discretion, shall
determine to be necessary or advisable.
All certificates for shares of Common Stock delivered under the Plan
shall also be subject to such stop-transfer orders and other restrictions as the
Plan Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which Common Stock is then listed and any applicable federal or State securities
laws, and the Plan Administrator may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions. The
foregoing provisions of this paragraph shall not be effective if and to the
extent that the shares of Common Stock delivered under the Plan are covered by
an effective and current registration statement under the Securities Act of
1933, as amended, or if and so long as the Plan Administrator determines that
application of such provisions as no longer required or desirable. In making
such determination, the Plan Administrator may rely upon an opinion of counsel
for the Company.
SECTION 11 EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be effective as of June 19, 1996 provided that the Plan
is adopted by the Board. Subject to the foregoing condition, options, limited
stock appreciation rights, stock appreciation rights and Restricted Stock may be
granted pursuant to the Plan from time to time within the period commencing upon
adoption of the Plan by the Board of Directors and ending ten (10) years after
such adoption. Options, limited stock appreciation rights, stock appreciation
rights and Restricted Stock theretofore granted may extend beyond that date and
the terms and conditions of the Plan shall continue to apply thereto and to
shares of Common Stock acquired thereunder. To the extent required for
compliance with Rule 16b-3, shares of Common Stock underlying options, limited
stock appreciation rights, stock appreciation rights, Restricted Stock and
Common Stock granted to Section 16 Insiders may not be sold until a date at
least six (6) months after the date of such grant.
SECTION 12 GENERAL PROVISIONS
12.1 Nothing contained in the Plan, or in any option, limited stock
appreciation right, stock appreciation right or Restricted Stock granted
pursuant to the Plan, shall
<PAGE>
confer upon any employee any right with respect to continuance of employment by
the Company or a Subsidiary, nor interfere in any way with the right of the
Company or a Subsidiary to terminate the employment of such employee at any time
with or without assigning any reason therefor.
12.2 Grants, vesting or payment of stock options, limited stock
appreciation rights, stock appreciation rights or Restricted Stock shall not be
considered as part of a Participant's salary or used for the calculation of any
other pay, allowance, pension or other benefit unless otherwise permitted by
other benefit plans provided by the Company or its Subsidiaries, or required by
law or by contractual obligations of the Company or its Subsidiaries.
12.3 The right of a Participant or Beneficiary to the payment of any
compensation under the Plan may not be assigned, transferred, pledged or
encumbered, nor shall such right or other interests be subject to attachment,
garnishment, execution or other legal process.
12.4 Leaves of absence for such periods and purposes conforming to the
personnel policy of the Company, or of its Subsidiaries, as applicable, shall
not be deemed terminations or interruptions of employment, unless a Participant
commences a leave of absence from which he or she is not expected to return to
active employment with the Company or its Subsidiaries.
12.5 In the event a Participant is transferred from the Company to a
Subsidiary, or VICE VERSA, or is promoted or given different responsibilities,
the stock options, limited stock appreciation rights, stock appreciation rights
and Restricted Stock granted to the Participant prior to such date shall not be
affected. Notwithstanding the foregoing or any other provision in this Plan, in
the event a Participant becomes an officer or director of the Company subject to
Section 16(b) of the Exchange Act, the Plan Administrator may take any and all
action necessary to prevent any violation of Section 16(b), including, but not
limited to, accelerating the vesting of options, rights or Restricted Stock,
canceling any unvested options, rights or Restricted Stock and/or requiring the
Participant to exercise any and all vested options or rights at such times as
the Plan Administrator may determine.
12.6 The Plan shall be construed and governed in accordance with the
laws of the State of Texas, except that it shall be construed and governed in
accordance with applicable federal law in the event that such federal law
preempts state law.
12.7 Appropriate provision shall be made for all taxes required to be
withheld in connection with the exercise, grant or other taxable event with
respect to options, limited stock appreciation rights, stock appreciation rights
and Restricted Stock under the applicable laws or regulations of any
governmental authority, whether federal, state or local and whether domestic or
foreign. Unless otherwise provided in the grant, a Participant is permitted to
deliver shares of Common Stock (including shares acquired pursuant to the
exercise of an option or stock appreciation right other than the option or
<PAGE>
stock appreciation right currently being exercised, to the extent permitted by
applicable regulations) for payment of withholding taxes on the exercise of an
option, stock appreciation right, or limited stock appreciation right, upon the
grant or vesting of Restricted Stock. At the election of the Plan Administrator
or, subject to approval of the Plan Administrator at its sole discretion, at the
election of a Participant, shares of Common Stock may be withheld from the
shares issuable to the Participant upon the exercise of an option or stock
appreciation right or upon the vesting of the Restricted Stock to satisfy tax
withholding obligations. The Fair Market Value of Common Stock as delivered
pursuant to this Section 12.7 shall be valued as of the day prior to delivery,
and shall be calculated in accordance with Section 2.9. The withholding of
shares of Common Stock to pay tax obligations in connection with the exercise of
an option or stock appreciation right or the vesting of Restricted Stock by a
Section 16 Insider must be approved by the Plan Administrator and must occur (i)
pursuant to an irrevocable election made six (6) months in advance of the
transaction, (ii) during the period beginning on the third business day
following the date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date, or (iii) otherwise in accordance with the
provisions of Rule 16b-3 and interpretations thereunder. In the event Section 16
of the Exchange Act and rules thereunder, including Rule 16b-3, is amended or
interpreted to permit shares of Common Stock to be withheld to pay tax
obligations outside the periods described in clause (i) or (ii) of the preceding
sentence, or without Plan Administrator approval, the Plan Administrator may
determine that such provisions shall no longer apply to Section 16 Insiders.
Any Participant that makes a Section 83(b) election under the Code
shall, within ten (10) days of making such election, notify the Company in
writing of such election and shall provide the Company with a copy of such
election form filed with the Internal Revenue Service.
Tax advice should be obtained by the Participant prior to the
Participant's (i) entering into any transaction under or with respect to the
Plan, (ii) designating or choosing the times of distributions under the Plan, or
(iii) disposing of any shares of Common Stock issued under the Plan.
SECTION 13 COMPLIANCE WITH RULE 16b-3
The Company's intention is that, so long as any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, with respect to awards granted to or held by Section 16 Insiders, the Plan
shall comply in all respects with Rule 16b-3, or with any other exemption
available pursuant to Section 16 of the Exchange Act or rules thereunder, and,
if any Plan provision is later found not to be in compliance with Rule 16b-3,
that provision shall be deemed modified as necessary to meet the requirements of
Rule 16b-3.
<PAGE>
Notwithstanding anything in the Plan to the contrary, the Board of
Directors, in its absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are
Section 16 Insiders without so restricting, limiting or conditioning the Plan
with respect to other Participants.
SECTION 14 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN
14.1 Subject to the Board of Directors and Section 14.2, the Plan
Administrator may from time to time make such amendments to the Plan as it may
deem proper and in the best interest of the Company, including, but not limited
to, any amendment necessary to ensure that the Company may obtain any regulatory
approval referred to in Section 10; provided, however, that no change in any
option, limited stock appreciation right, stock appreciation right or Restricted
Stock theretofore granted may be made without the consent of the Participant
which would impair the right of the Participant to acquire or retain Common
Stock or cash that the Participant may have acquired as a result of the Plan.
14.2 The Board of Directors may at any time suspend the operation of or
terminate the Plan with respect to any shares of Common Stock or rights which
are not at that time subject to option, limited stock appreciation right, stock
appreciation right or grant of Restricted Stock.
<PAGE>
IN WITNESS WHEREOF, the Company has caused the Plan to be executed
effective as of June 19, 1996.
EL PASO ENERGY CORPORATION
/S/ JOEL RICHARDS, III
By_____________________________
Title: Senior Vice President
ATTEST:
/S/ DAVID SIDDALL
By_____________________________
Title: Assistant Secretary
EXHIBIT 5.1
KELLEY DRYE & WARREN LLP
A Limited Liability Partnership Including Professional Associations
TWO STAMFORD PLAZA
281 TRESSER BOULEVARD
STAMFORD, CT 06901-3229
May 9, 1997
El Paso Natural Gas Company
El Paso Energy Building
1001 Lousiana Street
Houston, Texas 77002
Re: EL PASO ENERGY CORPORATION STRATEGIC STOCK PLAN
Dear Sirs:
We are acting as special counsel to El Paso Natural Gas Company, a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission of a Registration Statement
on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"). The Registration Statement relates to 1,000,000 shares of
the Company's Common Stock, $3 par value per share (the "Shares"), which will be
issued pursuant to the El Paso Energy Corporation Strategic Stock Plan (the
"Plan").
In connection with this opinion, we have examined and relied upon
copies certified or otherwise identified to our satisfaction of: (i) the Plan;
(ii) an executed copy of the Registration Statement; (iii) the Company's
Restated Certificate of Incorporation and By-laws, as amended; (iv) the minute
books and other records of corporate proceedings of the Company, as made
available to us by officers of the Company; and have reviewed such matters of
law as we have deemed necessary or appropriate for the purpose of rendering this
opinion.
For purposes of this opinion we have assumed the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of all documents submitted to us as copies. We
have also assumed the legal capacity of all natural persons, the genuineness
<PAGE>
El Paso Natural Gas Company
May 9, 1997
Page 2
of all signatures on all documents examined by us, the authority of such persons
signing on behalf of the parties thereto other than the Company and the due
authorization, execution and delivery of all documents by the parties thereto
other than the Company. As to certain factual matters material to the opinion
expressed herein, we have relied to the extent we deemed proper upon
representations, warranties and statements as to factual matters of officers and
other representatives of the Company. Our opinion expressed below is subject to
the qualification that we express no opinion as to any law other than the laws
of the State New York, the federal laws of the United States of America and the
General Corporation Law of the State of Delaware. Without limiting the
foregoing, we express no opinion with respect to the applicability thereto or
effect of municipal laws or the rules, regulations or orders of any municipal
agencies within any such state.
Based upon and subject to the foregoing qualifications, assumptions
and limitations and the further limitations set forth below, it is our opinion
that the Shares to be issued by the Company pursuant to the Plan have been duly
authorized and reserved for issuance and, when certificates for the Shares have
been duly executed by the Company, countersigned by a transfer agent, duly
registered by a registrar for the Shares and issued and paid for in accordance
with the terms of the Plan, the Shares will be validly issued, fully paid and
non-assessable.
This opinion is limited to the specific issues addressed herein, and
no opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the State New York, the federal laws of the United States of America or
the General Corporation Law of the State of Delaware be changed by legislative
action, judicial decision or otherwise.
We hereby consent to the filing of this letter as an exhibit 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 or
the rules and regulations of the Commission promulgated thereunder.
This opinion is furnished to you in connection with the filing of
the Registration Statement and is not to be used, circulated, quoted or
otherwise relied upon for any other purpose.
Very truly yours,
/S/ KELLEY DRYE & WARREN LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-8, relating to the El Paso Energy Corporation Strategic Stock Plan, of
our report dated February 28, 1997, on our audits of the consolidated financial
statements and financial statement schedule of El Paso Natural Gas Company as
of December 31, 1996 and 1995, and for each of the three years in the period
ended December 31, 1996, which report is included in its Annual Report on Form
10-K for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/S/ COOPERS & LYBRAND L.L.P
El Paso, Texas
May 6, 1997
