SWIFT ENERGY COMPANY
1990 STOCK COMPENSATION PLAN
(AMENDED AND RESTATED AS OF MAY 13, 1997)
1. PURPOSE.
This 1990 Stock Compensation Plan (Amended and Restated as of May 13,
1997) (the "Plan") is intended as an incentive to encourage stock ownership by
certain officers and employees of SWIFT ENERGY COMPANY (the "Company"), or of
its subsidiary corporations (the "Subsidiaries," as that term is defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended from time to
time), so that they may acquire or increase their proprietary interest in the
success of the Company and Subsidiaries, and to encourage them to remain in the
employ of the Company or of the Subsidiaries. The Plan is designed to meet this
intent by offering performance-based stock and cash incentives and other equity
based incentive awards, thereby providing a proprietary interest in pursuing the
long-term growth, profitability and financial success of the Company.
2. DEFINITIONS.
For purposes of this Plan, the following terms shall have the meanings
set forth below:
(a) "AWARD" or "AWARDS" means an award or grant made to a Participant
under Sections 6 through 9, inclusive, of the Plan.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended,
together with the regulations promulgated thereunder.
(d) "COMMITTEE" means the Compensation Committee of the Board, or any
committee of the Board performing similar functions, constituted as provided in
Section 3 of the Plan.
(e) "COMMON STOCK" means the Common Stock of the Company or any
security of the Company issued in substitution, exchange or lieu thereof.
(f) "COMPANY" means Swift Energy Company, a Texas corporation, or any
successor corporation.
(g) "DEFERRED COMPENSATION STOCK OPTION" means any Stock Option
granted pursuant to the provisions of Section 6 of the Plan that is specifically
designated as such.
(h) "DISABILITY" means permanent and total disability. An individual
is permanently and totally disabled if he or she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.
(j) "FAIR MARKET VALUE" means on any given date (i) the highest
closing price of the Common Stock on any established national exchange or
exchanges or, if no sale of Common Stock is made on such day, the next preceding
day on which there was a sale of such stock, or (ii) if the Common Stock is not
listed on an established stock exchange, the mean between the closing bid and
low asked quotations of the Common Stock in the New York over-the-counter market
as reported by the National Association of Securities Dealers, Inc. for such
date.
(k) "IMMEDIATE FAMILY MEMBER" means the spouse, children or
grandchildren of the Participant.
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(l) "INCENTIVE STOCK OPTION" means any Stock Option (as defined below)
that is intended to be and is specifically designated as an "incentive stock
option" within the meaning of Section 422 of the Code.
(m) "NONQUALIFIED STOCK OPTION" means any Stock Option granted
pursuant to the provisions of Section 6 of the Plan that is not an Incentive
Stock Option.
(n) "PARTICIPANT" means an employee of the Company or a Subsidiary or
an individual who is performing services for either entity and who is granted an
Award under the Plan.
(o) "PERFORMANCE BONUS AWARD" means an Award of cash and/or shares of
Common Stock granted pursuant to the provisions of Section 9 of the Plan.
(p) "PLAN" means this Swift Energy Company 1990 Stock Compensation
Plan (Amended and Restated as of May 9, 1995), as set forth herein and as it may
be hereafter amended.
(q) "RESTRICTED AWARD" means an Award granted pursuant to the
provisions of Section 8 of the Plan.
(r) "RESTRICTED STOCK GRANT" means an Award of shares of Common Stock
granted pursuant to the provisions of Section 8 of the Plan.
(s) "RESTRICTED UNIT GRANT" means an Award of units representing
shares of Common Stock granted pursuant to the provisions of Section 8 of the
Plan.
(t) "STOCK APPRECIATION RIGHT" means an Award to benefit from the
appreciation of Common Stock granted pursuant to the provisions of Section 7 of
the Plan.
(u) "STOCK OPTION" means an Award to purchase shares of Common Stock
granted pursuant to the provisions of Section 6 of the Plan.
(v) "SUBSIDIARY" means any corporation or entity in which the Company
directly or indirectly controls 50% or more of the total voting power of all
classes of its stock having voting power.
(w) "TEN PERCENT SHAREHOLDER" means a person who owns (or is
considered to own after taking into account the attribution of ownership rules
of Section 424(d) of the Code) more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any of its Subsidiaries.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Committee, as appointed from
time to time by the Board. The Board may from time to time remove members from,
or add members to, the Committee. The Committee shall be constituted so as to
permit the Plan to comply with Rule 16b-3 promulgated by the Securities and
Exchange Commission ("SEC") under the Exchange Act or any successor rule ("Rule
16b-3") and shall initially be comprised of not less than two of the members of
the Board who are "Non-Employee Directors" as defined in Rule 16b-3.
(b) A majority of the members of the Committee shall constitute a
quorum for the transaction of business. Action approved in writing by a majority
of the members of the Committee then serving shall be as effective as if the
action had been taken by unanimous vote at a meeting duly called and held.
(c) The Committee is authorized to construe and interpret the Plan, to
promulgate, amend, and rescind rules and procedures relating to the
implementation of the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. Any determination, decision, or
action of the Committee in connection with the construction, interpretation,
administration, or application of the Plan shall be binding upon all
Participants and any person validly claiming under or through any Participant.
(d) The Committee may designate persons other than members of the
Committee to carry out its responsibilities under such conditions and
limitations as it may prescribe, except that the Committee may not delegate its
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authority with regard to selection for participation of, and the granting of
Awards to, persons subject to Sections 16(a) and 16(b) of the Exchange Act or
who are eligible to receive Awards under this Plan.
(e) The Committee is expressly authorized to make modifications to the
Plan as necessary to effectuate the intent of the Plan as a result of any
changes in the tax, accounting, or securities laws treatment of Participants and
the Plan, subject to those restrictions that are set forth in Section 14 below.
(f) The Company shall effect the granting of Awards under the Plan, in
accordance with the determinations made by the Committee, by execution of
instruments in writing in such form as approved by the Committee.
4. ELIGIBILITY.
Persons eligible for Awards under the Plan shall consist of employees
(including officers, whether or not they are directors) of the Company or its
Subsidiaries who from time to time shall be designated by the Committee, and,
with respect to Nonqualified Stock Options only, may, at the discretion of the
Committee, consist of retired former employees of the Company or its
subsidiaries. Any person who shall be eligible for Awards under this Plan shall
not be eligible to participate in the Company's 1990 Nonqualified Stock Option
Plan, as amended.
5. DURATION OF AND COMMON STOCK SUBJECT TO PLAN.
(a) TERM. The Plan shall terminate on April 1, 2000 except with
respect to Awards then outstanding.
(b) SHARES OF COMMON STOCK SUBJECT TO PLAN. The maximum number of
shares of Common Stock in respect of which Awards may be granted under the Plan
(the "Plan Maximum") shall be 2,500,000, subject to adjustment as provided in
Section 12 below. Common Stock issued under the Plan may be either authorized
and unissued shares or issued shares which have been reacquired by the Company.
The following terms and conditions shall apply to Common Stock subject to the
Plan:
(i) In no event shall more than the Plan Maximum be
cumulatively available for Awards under the Plan;
(ii) For the purpose of computing the total number of shares
of Common Stock available for Awards under the Plan, there shall be
counted against the foregoing limitations (A) the number of shares of
Common Stock subject to issuance upon exercise or settlement of Awards
(regardless of vesting), and (B) the number of shares of Common Stock
which equal the value of Restricted Unit Grants or Stock Appreciation
Rights determined at the dates on which such Awards are granted;
(iii) If any Awards are forfeited, terminated, expire
unexercised, settled in cash in lieu of stock or exchanged for other
Awards, the shares of Common Stock which were previously subject to
the Awards shall again be available for Awards under the Plan to the
extent of such forfeiture or expiration of the Awards; and
(iv) Any shares of Common Stock which are used as full or
partial payment to the Company by a Participant of the purchase price
of shares of Common Stock upon exercise of a Stock Option shall again
be available for Awards under the Plan.
(c) GRANTS. No Award shall be granted hereunder prior to April 1,
1991; provided, however, that Awards may be granted hereunder at such earlier
date as it shall be determined through SEC regulation or administrative
regulation or position or based upon an opinion of counsel to the Company that
the Committee shall be comprised of "disinterested persons" within the meaning
of Rule 16b-3 promulgated under the Exchange Act.
6. STOCK OPTIONS.
Stock Options granted under the Plan may be in the form of Incentive
Stock Options, Non-Qualified Stock Options or Deferred Compensation Stock
Options (collectively, the "Stock Options"). Stock Options shall be subject to
the following terms and conditions, and each Stock Option shall contain such
additional terms and conditions, not inconsistent with the express provisions of
the Plan, as the Committee shall deem desirable:
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(a) GRANT. Stock Options shall be granted separately. In no event will
Stock Options or Awards be issued in tandem whereby the exercise of one affects
the right to exercise the other.
(b) STOCK OPTION PRICE. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant. However, in no event shall the exercise price of an Incentive
Stock Option be less than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the date of the grant of the Stock Option. In the case of a
Ten Percent Shareholder, the exercise price of an Incentive Stock Option shall
be not less than one hundred ten percent (110%) of the Fair Market Value of the
Common Stock on the date of the grant.
(c) OPTION TERM. The term of each Stock Option, other than an
Incentive Stock Option, shall be fixed by the Committee. The term of Incentive
Stock Options shall not exceed ten (10) years after the date the Incentive Stock
Option is granted, and the term of any Incentive Stock Options granted to Ten
Percent Shareholders shall not exceed five (5) years after the date of the
grant.
(d) EXERCISABILITY.
(i) Incentive Stock Options and Nonqualified Stock Options
shall be exercisable in installments as provided in the following
sentence, or as the Compensation Committee in its sole discretion
shall otherwise determine, and shall be subject to such other terms
and conditions as the Committee shall determine at the date of grant;
provided, however, that except as provided in Sections 10(a), 10(b),
10(c) and 13, no Incentive Stock Option or Nonqualified Stock Option
shall be exercisable prior to the first anniversary date of the date
of grant (hereinafter, "Anniversary Date"). Incentive Stock Options
and Nonqualified Stock Options may be exercised as to twenty percent
(20%) of the shares covered thereby beginning on the first Anniversary
Date, thereafter, an additional twenty percent (20%) of shares subject
to such stock options shall be exercisable beginning on the
Anniversary Date in each of the following four years, except as
otherwise provided in Sections 10(a), 10(b), 10(c) and 13.
(ii) Reload Options shall become exercisable in accordance
with Section 6(h)(iii) hereof.
(iii) Deferred Compensation Stock Options shall become
exercisable in accordance with the terms of the grant thereof as
established by the Committee.
(e) METHOD OF EXERCISE. Subject to applicable exercise restrictions
set forth in Section 6(d) above, a Stock Option may be exercised, in whole or in
part, by giving written notice of exercise to the Company specifying the number
of shares to be purchased. The notice shall be accompanied by payment in full of
the purchase price. The purchase price may be paid by any of the following
methods, subject to the restrictions set forth in Section 6(f) hereof:
(i) in cash, by certified or cashier's check, by money order
or by personal check (if approved by the Committee) of an amount equal
to the aggregate purchase price of the shares of Common Stock to which
such exercise relates;
(ii) if acceptable to the Committee, by delivery of shares
of Common Stock already owned by the Participant, which shares,
including any cash tendered therewith, have an aggregate Fair Market
Value (determined as of the date preceding the Company's receipt of
exercise notice) equal to the aggregate purchase price of the shares
of Common Stock to which such exercise relates; or
(iii) if acceptable to the Committee, by delivery to the
Company of an exercise notice that requests the Company to issue to
the Participant the full number of shares of Common Stock as to which
the Stock Option is then exercisable, less the number of shares of
Common Stock that have an aggregate Fair Market Value (determined as
of the date preceding the Company's receipt of the exercise notice)
equal to the aggregate purchase price of the shares of Common Stock to
which such exercise relates.
(f) RESTRICTIONS ON METHOD OF EXERCISE. Notwithstanding the foregoing
payment provisions, the Committee, in granting Stock Options pursuant to the
Plan, may limit the methods by which a Stock Option may be exercised by any
person and, in processing any purported exercise of a Stock Option granted
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pursuant to the Plan, may refuse to recognize the method of exercise selected by
the Participant (other than the method of exercise set forth in Section
6(e)(i)), if, in the opinion of counsel to the Company, (i) the Participant is,
or within the six months preceding such exercise was, subject to reporting under
Section 16(a) of the Exchange Act, and (ii) there is a substantial likelihood
that the method of exercise selected by the Participant would subject the
Participant to substantial risk of liability under Section 16 of the Exchange
Act. Furthermore, no Incentive Stock Option may be exercised in accordance with
the methods of exercise set forth in subsections 6(e)(ii) and 6(e)(iii) above
unless, in the opinion of counsel to the Company, such exercise would not have a
material adverse effect upon the incentive stock option tax treatment of any
outstanding Incentive Stock Options or Incentive Stock Options (other than the
particular option or options then exercised in accordance with such subsection
6(e)(ii) or 6(e)(iii)) granted pursuant to the Plan.
(g) TRANSFERABILITY OF NONQUALIFIED STOCK OPTIONS. The Committee may,
in its discretion, authorize all or a portion of any Nonqualified Stock Option
to be on terms which permit transfer by the Participant to (i) a retirement or
pension plan for the benefit of the Participant, (ii) the spouse, children or
grandchildren of the Participant ("Immediate Family Members"), (iii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, (iv) a
charitable trust or trusts created or controlled by the Participant, or (v) a
partnership in which such Immediate Family Members are the only partners,
provided that (x) there may be no consideration for any such transfer, (y) the
Stock Option must be approved by the Committee, and the Stock Option or an
amendment thereto must expressly provide for transferability in a manner
consistent with this Section, and (z) subsequent transfers of transferred
Options shall be prohibited except to a transferee to whom the Participant could
have transferred the Option pursuant to this Section 6(g) or by will or the laws
of descent and distribution, after which assignment Section 10(a) hereof shall
apply to exercise of the Option by the assignee. Following transfer, any such
Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for all purposes hereof
the term "Participant" shall be deemed to refer to the transferee. The events of
termination of employment of Section 10 hereof shall continue to be applied with
respect to the original Participant, following which the Options shall be
exercisable by the transferee only to the extent, and for the periods specified
in Section 10.
(h) TAX WITHHOLDING. In addition to the alternative methods of
exercise set forth in Section 6(e), holders of Nonqualified Stock Options,
subject to the discretion of the Committee, may be entitled to elect at or prior
to the time the exercise notice is delivered to the Company, to have the Company
withhold from the shares of Common Stock to be delivered upon exercise of the
Nonqualified Stock Option the number of shares of Common Stock (determined based
on the Fair Market Value as of the date preceding the Company's receipt of the
exercise notice) that is necessary to satisfy any withholding taxes attributable
to the exercise of the Nonqualified Stock Option. If withholding is made in
shares of the Common Stock pursuant to the method set forth above, the
Committee, in its discretion, may grant "Reload Option(s)" (as defined in
Section 6(i) below) on the terms specified in Section 6(i) below for the number
of shares so withheld. Notwithstanding the foregoing provisions, a holder of a
Nonqualified Stock Option may not elect to satisfy his or her withholding tax
obligation in respect of any exercise as contemplated above if, in the opinion
of counsel to the Company, (i) the holder of the Nonqualified Stock Option is,
or within the six months preceding such exercise was, subject to reporting under
Section 16(a) of the Exchange Act, (ii) there is a substantial likelihood that
the election or timing of the election would subject the holder to a substantial
risk of liability under Section 16 of the Exchange Act, or (iii) such
withholding would have an adverse tax or accounting effect to the Company.
(i) GRANT OF RELOAD OPTIONS. Whenever the Participant holding any
Incentive Stock Option or Nonqualified Stock Option (the "Original Option")
outstanding under this Plan (including any "Reload Options" granted under the
provisions of this Section 6(i)) exercises the Original Option and makes payment
of the option price by tendering shares of the Common Stock previously held by
him or her pursuant to Section 6(e)(ii) hereof, or by taking delivery of a net
number of shares of Common Stock upon exercise of an option pursuant to Section
6(e)(iii) hereof, then the Committee may grant a new option (the "Reload
Option") for that number of additional shares of Common Stock which is equal to
the number of shares tendered by the Participant (or credited on behalf of the
Participant) in payment of the option price for the Original Option being
exercised. All such Reload Options granted hereunder shall be on the following
terms and conditions:
(i) The Reload Option price per share shall be an amount
equal to the then current Fair Market Value per share of the Common
Stock, determined as of the date of the Company's receipt of the
exercise notice for the Original Option;
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(ii) The option exercise period shall expire, and the Reload
Option shall no longer be exercisable, on the expiration of the option
period of the Original Option or two (2) years from the date of the
grant of the Reload Option, whichever is later;
(iii) Any Reload Option granted under this Section 6(h)
shall vest and first become exercisable one (1) year following the
date of exercise of the Original Option; and
(iv) All other terms of Reload Options granted hereunder
shall be identical to the terms and conditions of the Original Option,
the exercise of which gives rise to the grant of the Reload Option.
Even if the shares of Common Stock which are issued upon exercise of the
Original Option are sold or exchanged within one (1) year following the exercise
of the Original Option such that the sale constitutes a disqualifying
disposition for Incentive Stock Option treatment under the Code, no provision of
this Plan shall be construed as prohibiting such a sale.
(j) SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. With respect to
Incentive Stock Options granted under the Plan, the aggregate Fair Market Value
(determined as of the date Incentive Stock Options are granted) of the number of
shares with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year shall not exceed one
hundred thousand dollars ($100,000) as of the time the option with respect to
such stock is granted or such other limits as may be required by the Code.
(k) DEFERRED COMPENSATION STOCK OPTIONS. Deferred Compensation Stock
Options are intended to provide a means by which compensation payments can be
deferred to future dates. The number of shares of Common Stock subject to a
Deferred Compensation Stock Option shall be determined by the Committee, in its
sole discretion, in accordance with the following formula:
Amount of Compensation to be Deferred
------------------------------------- = Number of Shares
Fair Market Value - Stock Option Price
Amounts of compensation deferred may include amounts earned under Awards granted
under the Plan or under any other compensation plan, program, or arrangement of
the Company as permitted by the Committee.
(l) INCENTIVE STOCK OPTIONS. Notwithstanding anything in the Plan to
the contrary, no term of this Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code or, without the consent of the Participant(s) affected, to
disqualify any Incentive Stock Option under such Section 422 of the Code. To the
extent permitted under Section 422 of the Code or applicable regulations
thereunder or any applicable Internal Revenue Service pronouncements:
(i) if a Participant's employment is terminated by reason of
death or Disability and the portion of any Incentive Stock Option that
becomes exercisable during the post-termination period specified in
Section 10(a) or 10(b) exceeds the $100,000 limitation contained in
Section 422(d) of the Code set forth in Section 6(i) above, such
excess shall be treated as a Nonqualified Stock Option; and
(ii) if the exercise of an Incentive Stock Option is
accelerated by reason of a Change in Control (as defined in Section 13
below), any portion of such Option that exceeds the $100,000
limitation set forth in Section 6(i) above shall be treated as a
Nonqualified Stock Option.
7. STOCK APPRECIATION RIGHTS.
The grant of Stock Appreciation Rights under the Plan shall be subject
to the following terms and conditions, and shall contain such additional terms
and conditions, not inconsistent with the express terms of the Plan, as the
Committee shall deem desirable:
(a) STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to (or if the Committee shall
determine at the time of grant, less than) the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the Fair Market Value of
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a share of Common Stock on t date of grant of the Stock Appreciation Right, or
such other price as may be set by the Committee, multiplied by the number of
shares of Common Stock with respect to which the Stock Appreciation Right shall
have been exercised.
(b) GRANT. A Stock Appreciation Right shall be granted separately. In
no event will Stock Appreciation Rights and other Awards be issued in tandem
whereby the exercise of one such Award affects the right to exercise the other.
(c) EXERCISE. A Stock Appreciation Right may be exercised by a
Participant in accordance with procedures established by the Committee, except
that in no event shall a Stock Appreciation Right be exercisable prior to the
first Anniversary Date of the date of grant. The Committee shall establish
procedures to provide that, with respect to any Participant subject to Section
16(b) of the Exchange Act who would receive cash in whole or in part upon
exercise of the Stock Appreciation Right, such exercise may only occur during an
exercise period described in Rule 16b-3(e)(3)(iii) (as such provision exists
from time to time) which, as of the date of adoption of this Plan, is a period
beginning on the third (3rd) business day following the Company's public release
of quarterly or annual summary statements of sales and earnings and ending on
the twelfth (12th) business day following such public release ("Window Period").
To the extent it is not inconsistent with the preceding sentence, the Committee,
in its discretion, may provide that a Stock Appreciation Right shall be
automatically exercised on one or more specified dates, or that a Stock
Appreciation Right may be exercised during only limited time periods.
(d) FORM OF PAYMENT. Payment to the Participant upon exercise of a
Stock Appreciation Right may be made (i) in cash, by certified or cashier's
check or by money order, (ii) in shares of Common Stock, (iii) in the form of a
Deferred Compensation Stock Option, or (iv) any combination of the above, as the
Committee shall determine. The Committee may elect to make this determination
either at the time the Stock Appreciation Right is granted, or with respect to
payments contemplated in clauses (i) and (ii) above, at the time of the
exercise.
8. RESTRICTED AWARDS.
Restricted Awards granted under the Plan may be in the form of either
Restricted Stock Grants or Restricted Unit Grants. Restricted Awards shall be
subject to the following terms and conditions, and may contain such additional
terms and conditions, not inconsistent with the express provisions of the Plan,
as the Committee shall deem desirable:
(a) RESTRICTED STOCK GRANTS. A Restricted Stock Grant is an Award of
shares of Common Stock transferred to a Participant subject to such terms and
conditions as the Committee deems appropriate, as set forth in Section 8 (d)
below. Further, as a condition to the grant of Restricted Stock to any
Participant who, at the date of grant has not been employed by the Company and
has not performed services for the Company, the Committee shall require such
Participant to pay at least an amount equal to the par value of the shares of
Common Stock subject to the Restricted Stock Grant within thirty (30) days of
the date of the grant, and failure to pay such amount shall result in an
automatic termination of the Restricted Stock Grant.
(b) RESTRICTED UNIT GRANTS. A Restricted Unit Grant is an Award of
units granted to a Participant subject to such terms and conditions as the
Committee deems appropriate, including, without limitation, the requirement that
the Participant forfeit such units upon termination of employment for specified
reasons within a specified period of time, and restrictions on the sale,
assignment, transfer or other disposition of the units. Based on the discretion
of the Committee at the time a Restricted Unit Grant is awarded to a
Participant, a unit will have a value (i) equivalent to one share of Common
Stock, or (ii) equivalent to the excess of the Fair Market Value of a share of
Common Stock on the date the restriction lapses over the Fair Market Value of a
share of Common Stock on the date of the grant of the Restricted Unit Grant (or
over such other value as the Committee determines at the time of the grant).
(c) GRANT OF AWARDS. Restricted Awards shall be granted separately
under the Plan in such form and on such terms and conditions as the Committee
may from time to time approve. Restricted Awards, however, may not be granted in
tandem with other Awards whereby the exercise of one such Award affects the
right to exercise the other. Subject to the terms of the Plan, the Committee
shall determine the number of Restricted Awards to be granted to a Participant
and the Committee may impose different terms and conditions on any particular
Restricted Award made to any Participant. Each Participant receiving a
Restricted Stock Grant shall be issued a stock certificate in respect of the
shares of Common Stock. The certificate shall be registered in the name of the
Participant, shall be accompanied by a stock power duly executed by the
Participant, and shall bear an appropriate legend referring to the terms,
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conditions and restrictions applicable to the Award. The certificate evidencing
the shares shall be held in custody by the Company until the restrictions
imposed thereon shall have lapsed or been removed.
(d) RESTRICTION PERIOD. Restricted Awards shall provide that in order
for a Participant to vest in the Awards, the Participant must continuously
provide services for the Company or its Subsidiaries, subject to relief for
specified reasons, for a period of not less than one (1) year commencing on the
date of the Award and ending on such later date or dates as the Committee may
designate at the time of the Award ("Restriction Period"). During the
Restriction Period, a Participant may not sell, assign, transfer, pledge,
encumber, or otherwise dispose of shares of Common Stock received under a
Restricted Stock Grant. The Committee, in its sole discretion, may provide for
the lapse of restrictions in installments during the Restriction Period. Upon
expiration of the applicable Restriction Period (or lapse of restrictions during
the Restriction Period where the restrictions lapse in installments), the
Participant shall be entitled to receive his or her Restricted Award or the
applicable portion thereof, as the case may be. Upon termination of a
Participant's employment with the Company or any Subsidiary for any reason
during the Restriction Period, all or a portion of the shares or units, as
applicable, that are still subject to a restriction may vest or be forfeited, in
accordance with the terms and conditions established by the Committee at or
after grant.
(e) PAYMENT OF AWARDS. A Participant shall be entitled to receive
payment for a Restricted Unit Grant (or portion thereof) in an amount equal to
the aggregate Fair Market Value of the units covered by the Award upon the
expiration of the applicable Restriction Period. Payment in settlement of a
Restricted Unit Grant shall be made as soon as practicable following the
conclusion of the respective Restriction Period (i) in cash, by certified or
cashier's check or by money order, (ii) in shares of Common Stock equal to the
number of units granted under the Restricted Unit Grant with respect to which
such payment is made, (iii) in the form of a Deferred Compensation Stock Option,
or (iv) in any combination of the above, as the Committee shall determine,
subject, however, to any applicable Window Period requirement imposed by the
Committee with respect to Restricted Unit Grants settled in whole or in part in
cash. The Committee may elect to make this determination either at the time the
Award is granted, or with respect to payments contemplated in clause (i) and
(ii) above, at the time the Award is settled.
(f) RIGHTS AS A SHAREHOLDER. A Participant shall have, with respect to
the shares of Common Stock received under a Restricted Stock Grant, all of the
rights of a shareholder of the Company, including the right to vote the shares,
and the right to receive any cash dividends. Stock dividends issued with respect
to the shares covered by a Restricted Stock Grant shall be treated as additional
shares under the Restricted Stock Grant and shall be subject to the same
restrictions and other terms and conditions that apply to shares under the
Restricted Stock Grant with respect to which the dividends are issued.
9. PERFORMANCE BONUS AWARDS.
Performance Bonus Awards granted under the 1990 Plan may be in the
form of cash or shares of Common Stock, or a combination thereof. If a
Performance Bonus Award is a combination of cash and Common Stock, the portion
of the Performance Bonus Award comprising cash and Common Stock will be
determined by the Board based upon the Board's judgment as to the best interests
of the Company as a whole, taking into account both long-term and short-term
strategic goals. Performance Bonus Awards shall be subject to the following
terms and conditions, and shall contain such additional terms and conditions,
not inconsistent with the express provisions of the 1990 Plan, in such form as
the Committee shall deem desirable:
(a) GRANT OF AWARDS. Performance Bonus Awards will be granted on the
basis of Company performance as well as the Committee's judgment as to each
Participant's contribution to Company Performance. Company performance will
generally be analyzed in terms of (i) short-term results as measured by
increases in earnings per share and increases in cash flow and (ii) long-term
results as measured by changes in the volume of the proved oil and gas assets of
the Company and changes in the probable reserves as reflected in defined
prospects which the Company has available to drill. In addition to the measures
of performance set forth above, the Committee will evaluate and rate the
individual contribution of each of the Participants to the Company's achievement
of its goals. Performance will be classified as "Excellent," "Good+," "Good," or
"Good-." The Committee will give bonus consideration to Participants only when
Company performance and individual contribution are "Excellent," "Good+" or
"Good." The three major measures of performance - short-term Company results,
long-term Company results and individual contribution - will be given equal
weight. The Committee may consider other factors as well when it considers such
other factors to be appropriate.
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<PAGE>
(b) PERFORMANCE FACTORS. The Committee shall evaluate the following
performance factors for a particular calendar year ("Performance Factors") in
ascertaining the numerical rating factors ("Rating Factors") to be used in
determining a Participant's Performance Bonus Award under the formula set forth
in Section 9(c) below:
(1) SHORT TERM INCENTIVE FACTORS.
(i) Annual increases in earnings per share of the Company
("Earnings Per Share") as reflected from the end of one year to the end
of the immediately following calendar year, shall be ascribed the
following Rating Factors, subject to any adjustment deemed necessary by
the Committee in light of circumstances affecting the Company's
Earnings Per Share, with one set of Rating Factors applying to the
Chief Executive Officer of the Company ("CEO Rating Factors") and
another set of Rating Factors applying to all other Participants
("Other Rating Factors"):
<TABLE>
<CAPTION>
EARNINGS PER SHARE PARTICIPANTS' NUMERICAL CEO RATING
INCREASE CLASSIFICATION RATING FACTORS FACTORS
----------------------------- ----------------------------- ----------------------------- ------------------
<S> <C> <C> <C>
Below 15% Good- 0 0
15% - 17.5% Good 0 - 0.175 0 - 0.349
17.6% - 22.5% Good+ 0.175 - 0.290 0.349 - 0.583
22.6% and above Excellent 0.290 - 0.350 0.583 - 0.70
</TABLE>
(ii) Annual increases in cash flow per share of the Company ("Cash
Flow Per Share") as reflected from the end of one year to the end of
the immediately following calendar year, shall be ascribed the
following Rating Factors, subject to any adjustment deemed necessary by
the Committee in light of circumstances affecting the Company's Cash
Flow Per Share.
<TABLE>
<CAPTION>
CASH FLOW PER SHARE PARTICIPANTS' NUMERICAL CEO RATING
INCREASE CLASSIFICATION RATING FACTORS FACTORS
----------------------------- ----------------------------- ----------------------------- ------------------
<S> <C> <C> <C>
Below 15% Good- 0 0
15% - 17.5% Good 0 - 0.175 0 - 0.349
17.6% - 22.5% Good+ 0.175 - 0.290 0.349 - 0.583
22.6% and above Excellent 0.290 - 0.350 0.583 - 0.70
</TABLE>
(iii)The short term incentive factor shall be the average of the
percentages for increases in Earnings Per Share and Cash Flow Per Share
with Earnings Per Share and Cash Flow Per Share having equal weight
within the short term incentive factor. When combined as an average,
the short term incentive factors will have a weight of 0.334.
(2) LONG TERM INCENTIVE FACTORS.
(i) Increases in the Company's volume of oil and gas proved reserves
as defined in Attachment 1 hereto ("Proved Reserves"), shall be
ascribed the following Rating Factors, subject to any adjustment deemed
necessary by the Committee in light of circumstances affecting the
value of the Company's Proved Reserves:
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<PAGE>
<TABLE>
<CAPTION>
INCREASE IN PARTICIPANTS' NUMERICAL CEO RATING
PROVED RESERVES CLASSIFICATION RATING FACTORS FACTORS
----------------------------- ----------------------------- ----------------------------- ------------------
<S> <C> <C> <C>
Below 15% Good- 0 0
15% - 17.5% Good 0 - 0.175 0 - 0.349
17.6% - 22.5% Good+ 0.175 - 0.290 0.349 - 0.583
22.6% and above Excellent 0.290 - 0.350 0.583 - 0.70
</TABLE>
(ii) Increases in the Company's volume of oil and gas probable
reserves, as defined in Attachment 1 hereto ("Probable Reserves"),
shall be ascribed the following Rating Factors, subject to any
adjustment deemed necessary by the Committee in light of circumstances
affecting the value of the Company's Probable Reserves:
<TABLE>
<CAPTION>
INCREASE IN PARTICIPANTS' NUMERICAL CEO RATING
PROBABLE RESERVES CLASSIFICATION RATING FACTORS FACTORS
----------------------------- ----------------------------- ----------------------------- ------------------
<S> <C> <C> <C>
Below 15% Good- 0 0
15% - 17.5% Good 0 - 0.175 0 - 0.349
17.6% - 22.5% Good+ 0.175 - 0.290 0.349 - 0.583
22.6% and above Excellent 0.290 - 0.350 0.583 - 0.70
</TABLE>
(iii) The weighting factor for increases in Proved Reserves and
Probable Reserves shall each be 0.167. In any year in which there is a
positive increase in either Proved Reserves or Probable Reserves, the
three year compounded average of that category of reserves which has
increased for the most recent three years may be substituted for the
year-to-year values if, in the judgment of the Committee, such
substitute would better represent the performance of the Company in
view of the fact that these are intended as long term incentives. For
example, there may be a year in which a number of closings of
acquisitions of producing properties occur within a short period of
each other, but which would normally occur over a longer period of time
and which the Committee therefore determines do not accurately reflect
the longer term performance of the Company.
The long term incentive factor shall be the average of the numerical
factors for increases in Proved Reserves and Probable Reserves with Proved
Reserves and Probable Reserves having equal weight within the long term
incentive factor. When combined as an average, long term incentive factors will
have a weight of 0.334.
(3) INDIVIDUAL CONTRIBUTION INCENTIVE. The Committee, in
consultation with the CEO (except when the CEO is the Participant being
evaluated), shall evaluate the overall performance of each Participant in
contributing to the Company's achievement of its strategic objectives
("Contribution") . "Contribution" includes both an evaluation of individual
contribution and an evaluation of the Participant's management of the
organization for which he or she is responsible. The following Rating Factors
shall be ascribed to the indicated Contribution classifications:
PARTICIPANTS'
NUMERICAL RATING CEO RATING
CLASSIFICATION FACTORS FACTORS
-------------- ---------------- ----------
Good- 0 0
Good 0 - 0.175 0 - 0.349
Good+ 0.175 - 0.290 0.349 - 0.583
Excellent 0.290 - 0.350 0.583 - 0.70
10
<PAGE>
(c) FORMULA FOR DETERMINING PERFORMANCE BONUS AWARDS. Some time after
final annual Company financial results are available, the CEO shall make his
recommendations as to personnel to be Participants in the Performance Bonus
Award for the Participants other than himself, based on the Performance Factors
and the application of the formula thereto set forth in this Section 9(c), and
the CEO shall provide supporting documentation for his recommendations. Except
as provided elsewhere herein, using this and other information the Committee
deems appropriate, the Committee shall determine each Participant's Performance
Bonus Award by (i) multiplying 0.334 by the applicable Rating Factors for the
average of the short term factors, the average of the long term factors and for
Contribution calculated as described in Section 9(b), (ii) adding the three
products thereof to obtain a Participant's "Bonus Percentage," and (iii)
multiplying the applicable Bonus Percentage by the Participant's base salary at
December 31 of the year for which the Award is being determined. See Attachment
2 for a sample calculation.
(d) COMMITTEE DISCRETION. The Committee will determine its
recommendations as to actual Performance Bonus Awards taking into account the
overall circumstances of the Company. The sum of the Performance Bonus Awards,
for all Participants except for that of the CEO, is expected to range from 0 to
35 percent of the annual aggregate base compensation of each individual
Participant other than the CEO. When, in the Committee's judgment, performance
is exceptionally strong, the Committee may recommend Performance Bonus Awards
which total in excess of 35 percent of the annual aggregate compensation of
Participants (other than the CEO). The Performance Bonus Award for the CEO is
expected to range from 0 to 70 percent of the CEO's annual base compensation.
10. TERMINATION OF EMPLOYMENT.
The terms and conditions under which an Award may be exercised after a
Participant's termination of employment shall be determined by the Committee,
except as otherwise provided herein. The conditions under which such
post-termination exercises shall be permitted with respect to Incentive Stock
Options shall be determined in accordance with the provisions of Section 422 of
the Code and as otherwise provided in Section 6 above, provided that the
Compensation Committee, in its sole discretion, may accelerate the dates upon
which all or a portion of any outstanding unexercised Incentive Stock Option
held by a Participant may be exercised following such termination of employment.
(a) TERMINATION BY DEATH. Subject to Section 6(l), if a Participant's
employment by the Company or any Subsidiary terminates by reason of the
Participant's death or if the Participant's death occurs within three months
after the termination of his or her employment, any Award held by such
Participant may thereafter be exercised, to the extent such Award otherwise was
then exercisable by the Participant, by the legal representative of the
Participant's estate or by any person who acquired the Award by will or the laws
of descent and distribution, for a period of one year from the Participant's
termination of employment (as contemplated in this Section 10(a)) or until the
expiration of the stated term of the Award, whichever period is the shorter. Any
right of exercise under a nonvested Award held by a Participant at the time of
his or her death is extinguished and terminated.
(b) TERMINATION BY REASON OF DISABILITY. Subject to Section 6(l), if a
Participant's employment by the Company or Subsidiary terminates by reason of
Disability, any Award held by such Participant may thereafter be exercised by
the Participant, to the extent such Award otherwise was then exercisable by the
Participant, for a period of one year from the date of such termination of
employment or until the expiration of the stated term of such Award, whichever
period is the shorter; provided, however, that if the Participant dies within
such one-year period, any unexercised Award held by such Participant shall
thereafter be exercisable to the extent to which it was exercisable at the time
of such death or until the expiration of the stated term of such Award,
whichever period is shorter. Any right of exercise under a nonvested Award held
by the Participant at the time of his or her termination by reason of Disability
is terminated and extinguished.
(c) OTHER TERMINATION. Subject to Section 6(l), if a Participant's
employment by the Company or any Subsidiary is terminated for any reason other
than retirement, any Award held by the Participant at the time of his or her
termination shall be exercisable, to the extent otherwise then exercisable, for
the lesser of three (3) months from the date of such termination or the balance
of the term of the Award, and any right of exercise under any nonvested Award
held by a Participant at the time of his or her termination is terminated and
extinguished, provided that in the case of an Award other than an Incentive
Stock Option, the Committee may extend such Award for periods determined in its
discretion; provided, however, that upon termination of employment, if the
Participant continues to serve, or commences serving, as a director of the
Company, then in such event any Awards may continue to be held by the
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<PAGE>
Participant under the original terms thereof, with any Incentive Stock Options
held by such Participant to henceforth be treated as Nonqualified Stock Options.
11. NON-TRANSFERABILITY OF INCENTIVE STOCK OPTIONS.
No Incentive Stock Option under the Plan, and no rights or interest
therein, shall be assignable or transferable by a Participant except by will or
the laws of descent and distribution, after which assignment Section 10(a)
hereof shall apply to exercise of the Incentive Stock Option by the assignee.
During the lifetime of a Participant, Incentive Stock Options are exercisable
only by, and payments in settlement of Incentive Stock Options will be payable
only to, the Participant or his or her legal representative.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
(a) The existence of the Plan and the Awards granted hereunder shall
not affect or restrict in any way the right or power of the Board or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
the Company's Common Stock or the rights thereof, the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding.
(b) In the event of any change in capitalization affecting the Common
Stock of the Company, such as a stock dividend, stock split, recapitalization,
merger, consolidation, split-up, combination, exchange of shares, other form of
reorganization, or any other change affecting the Common Stock, the Board, in
its discretion, may make proportionate adjustments it deems appropriate to
reflect such change with respect to (i) the maximum number of shares of Common
Stock which may be sold or awarded to any Participant, (ii) the number of shares
of Common Stock covered by each outstanding Award, and (iii) the price per share
in respect of the outstanding Awards. Notwithstanding the foregoing, the Board
may only increase the aggregate number of shares of Common Stock for which
Awards may be granted under the Plan solely to reflect the change, if any, of
the capitalization of the Company or a Subsidiary.
(c) The Committee may also make such adjustments in the number of
shares covered by, and the price or other value of any outstanding Awards in the
event of a spin-off or other distribution (other than normal cash dividends) of
Company assets to shareholders.
13. CHANGE OF CONTROL.
(a) In the event of a Change of Control (as defined in Paragraph (b)
below) of the Company, and except as the Board may expressly provide otherwise
in resolutions adopted prior to the Change of Control:
(i) All Stock Options or Stock Appreciation Rights then
outstanding shall become fully exercisable as of the date of the Change
of Control, and
(ii) All restrictions and conditions of all Restricted Stock Grants
and Restricted Unit Grants then outstanding shall be deemed satisfied
as of the date of the Change of Control,
subject to the limitation that any Award which has been outstanding less than
one (1) year on the date of the Change of Control shall not be afforded such
treatment.
(b) A "Change of Control" shall be deemed to have occurred upon the
occurrence of any one (or more) of the following events, other than a
transaction with another person controlled by the Company or its officers or
directors, or a benefit plan or trust established by the Company for its
employees:
(i) Any person, including a group as defined in Section 13(d)(3)
of the Exchange Act, becomes the beneficial owner of shares of the
Company with respect to which 40% or more of the total number of votes
for the election of the Board may be cast;
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<PAGE>
(ii) As a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election, or combination of the above, persons who were
directors of the Company immediately prior to such event shall cease to
constitute a majority of the Board;
(iii) The stockholders of the Company shall approve an agreement
providing either for a transaction in which the Company will cease to
be an independent publicly owned corporation or for a sale or other
disposition of all or substantially all the assets of the Company; or
(iv) A tender offer or exchange offer is made for shares of the
Company's Common Stock (other than one made by the Company), and shares
of Common Stock are acquired thereunder ("Offer"). However, the
acceleration of the exercisability of outstanding Awards upon the
occurrence of an Offer shall be within the discretion of the Board.
14. AMENDMENT AND TERMINATION.
(a) AMENDMENTS WITHOUT SHAREHOLDER APPROVAL. Except as set forth in
Sections 14(b) and 14(c) below, the Board may, without further approval of the
shareholders, at any time amend, alter, discontinue or terminate this Plan, in
such respects as the Board may deem advisable.
(b) AMENDMENTS REQUIRING SHAREHOLDER APPROVAL. Except as set forth in
Section 14(c) below, subject to changes in law or other legal requirements
(including any change in the provisions of the Code and accompanying Regulations
that would permit otherwise), the Board must obtain approval of the shareholders
to make any amendment that would (a) increase the aggregate number of shares of
Common Stock that may be issued under the Plan (except for adjustments pursuant
to Section 12 of the Plan), (b) materially modify the requirements as to
eligibility for participation in the Plan, or (c) be required to be approved by
the shareholders under any rules for listed companies promulgated by any
national stock exchange on which the Company's stock is traded.
(c) PROHIBITED AMENDMENTS. Notwithstanding Sections 14(a) and 14(b),
under no circumstances may the Board or Committee (i) amend, alter, discontinue
or terminate the requirements set forth in Sections 6(b), 6(c), 6(j) and 6(l)
with respect to Incentive Stock Options unless (a) such modifications are made
to comply with changes in the tax laws, or (b) the Plan is completely
terminated, or (ii) make any amendment, alteration or modification to the Plan
that would impair the vested rights of a Participant under any Award theretofore
granted under this Plan.
15. MISCELLANEOUS MATTERS.
(a) TAX WITHHOLDING. In addition to the authority set forth in Section
6(g) above, the Company shall have the right to deduct from a Participant's
wages or from any settlement, including the delivery of shares, made under the
Plan any federal, state, or local taxes of any kind required by law to be
withheld with respect to such payments, or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.
(b) NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the
granting of any Award shall confer upon any Participant any right to continue
employment with the Company or any Subsidiary, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary to terminate
the employment of any Participant at any time, with or without cause.
(c) ANNULMENT OF AWARDS. The grant of any Award under the Plan payable
in cash is provisional until cash is paid in settlement thereof. Except in those
circumstances set forth in Section 13 hereof, the grant of any Award payable in
Common Stock is provisional until the Participant becomes entitled to the
certificate in settlement thereof. Except in those circumstances set forth in
Section 13 hereof, in the event the employment of a Participant is terminated
for cause (as defined below), any Award which is provisional shall be annulled
as of the date of such termination for cause. For the purpose of this Section
15(c), the term "terminated for cause" means any discharge for violation of the
policies and procedures of the Company or a Subsidiary or for other job
performance or conduct which is detrimental to the best interests of the Company
or a Subsidiary, but shall not include a termination solely related to a "Change
of Control" as defined in Section 13 hereof.
13
<PAGE>
(d) SECURITIES LAW RESTRICTIONS. No shares of Common Stock shall be
issued under the Plan unless counsel for the Company shall be satisfied that
such issuance will be in compliance with applicable Federal and state securities
laws. Certificates for shares of Common Stock delivered under the Plan may be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed, and any applicable Federal or state securities law. The
Committee may cause a legend or legends to be put on any such certificates to
refer to those restrictions.
(e) AWARD AGREEMENT. Each Participant receiving an Award under the
Plan shall enter into an agreement with the Company in a form specified by the
Committee agreeing to the terms and conditions of the Award and such related
matters as the Committee, in its sole discretion, shall determine.
(f) COSTS OF PLAN. The costs and expenses of administering the Plan
shall be borne by the Company.
(g) GOVERNING LAW. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Texas.
(h) EFFECTIVE DATE. This Plan, having been approved by a majority of
the non-employee Board members, is effective as amended, and subject to approval
by the Company's shareholders, as of May 13, 1997.
SWIFT ENERGY COMPANY, a Texas corporation
/s/ Raymond O. Loen
Raymond O. Loen, Chairman, Compensation Committee
14
