Registration No. 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICAN EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-2086890
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1331 Lamar, Suite 900
Houston, Texas 77010-3088
(Address of Principal Executive Offices) (Zip Code)
1994 AMERICAN EXPLORATION COMPANY
STOCK COMPENSATION PLAN
(Full Title of the Plan)
John M. Hogan
Senior Vice President and Chief Financial Officer
AMERICAN EXPLORATION COMPANY
1331 Lamar, Suite 900
Houston, Texas 77010-3088
(Name and address of agent for service)
(713) 756-6000
(Telephone number, including area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Amount to be Maximum Maximum
Securities Registered Offering Aggregate Amount of
to be Price Per Offering Registration
Registered Share(1) Price(1) Fee
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Common Stock,
par value 900,000 shares(2) $11.875 $10,687,500 $3,685.34
$.05 per share
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1 In accordance with Rule 457(h), the maximum aggregate offering price and
the registration fee have been computed on the basis of the average of the
high and low prices for the Common Stock of American Exploration Company,
par value $0.05 per share (the "Common Stock"), as reported on the American
Stock Exchange for May 9, 1996 ($11.875 per share).
2 This Registration Statement also covers such additional shares of Common
Stock as may be issuable pursuant to adjustments, as provided in Section
5.1 of the American Exploration Company Stock Compensation Plan, for stock
dividends, splits, combinations or other changes or recapitalizations.
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1994 AMERICAN EXPLORATION COMPANY STOCK COMPENSATION PLAN
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Item 1. Plan Information
This Registration Statement relates to the registration of 900,000
shares of Common Stock, par value $.05 per share (the "Common Stock"), of
American Exploration Company (the "Company" or "Registrant") to be offered or
sold pursuant to the 1994 American Exploration Company Stock Compensation Plan
(the "Plan").
The documents containing the information about the Plan specified in
Part I of Form S-8 will be sent or given to eligible and/or participating
employees of the Company as specified by Rule 428(b)(1) of Regulation C under
the Securities Act of 1933, as amended (the "Securities Act"), and such
documents taken together with the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of Form S-8 shall
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act.
Item 2. Registrant Information and Employee Plan Annual Information.
The Company shall provide a written statement to participants in the
Plan advising them of the availability, without charge, upon written or oral
request, of the documents incorporated by reference in Item 3 of Part II of this
Registration Statement, such documents which are incorporated by reference into
the Section 10(a) prospectus and the documents required to be delivered to them
pursuant to Rule 428(b) of Regulation C under the Securities Act. The address,
title of the individual or department and telephone number to which the request
is to be directed shall be provided to participants in the Plan.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, which are on file with the Securities and
Exchange Commission (the "Commission"), are incorporated herein by reference and
made a part hereof:
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(a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(b) Quarterly Report on Form 10-Q for the fiscal period
ended March 31, 1996.
(c) Report on Form 8-K dated March 15, 1996.
(d) Description of Common Stock on Forms 8-A, filed on
April 30, 1984, November 16, 1987 and October 1,1993;
and
(e) Description of Depositary Shares and Convertible
Preferred Stock on Form 8-A, filed on March 23, 1994;
including any amendment or reports filed for the
purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of any
post-effective amendment to this Registration Statement which indicates that all
of the shares of Common Stock offered have been sold or which deregister all of
such shares then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not Applicable; the class of securities to be offered is registered
under Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel.
Not Applicable
Item 6. Indemnification of Directors and Officers.
The Company's Bylaws provide that the Company shall indemnify
all directors and officers of the Company to the fullest extent now permitted by
the Delaware General Corporation Law. Under such provisions, any director or
officer who, in his capacity as such, is made or threatened to be made a party
to any suit or proceeding, shall be indemnified if such director or officer
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company and, with respect to any criminal
proceeding, had no reasonable cause to believe his conduct was unlawful. The
Bylaws and the Delaware General Corporation Law further provide that such
indemnification is not exclusive of any other rights to which such individuals
may be entitled under the Company's Restated Certificate of Incorporation,
Bylaws, any agreement, insurance policies, vote of stockholders or disinterested
directors or otherwise.
In addition, the Company's Restated Certificate of Incorporation
provides that the Company's directors will not be liable for monetary damages
for breach of the directors' fiduciary duty of care to the Company and its
stockholders. This provision in the Restated Certificate of Incorporation does
not eliminate the directors' fiduciary duty of care, and in appropriate
circumstances, equitable remedies such as an injunction or other forms of
nonmonetary relief would remain available under Delaware law. Furthermore, each
director will continue to be subject to liability for (i) breach of the
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director's duty of loyalty to the Company and its stockholders, (ii) acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, (iii) liability arising under Section 174 of the Delaware
General Corporation Law (relating to unlawful payment of dividends and unlawful
purchases of redemptions of the Company's stock) or (iv) any transaction from
which the director derived an improper personal benefit. This provision does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
No member of the Compensation Committee (the "Committee") of
the Board of Directors (the "Board") or the Board shall be personally liable by
reason of any contract or other instrument relating to the Plan executed by such
member or on such member's behalf in his or her capacity as a member of the
Committee or the Board or for any mistake of judgment made in good faith, and
the Company shall indemnify and hold harmless each employee, officer or Director
of the Company to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith.
The Company also maintains insurance policies insuring its
directors and officers against liability for certain acts and omissions while
acting in their official capacities.
Item 7. Exemption From Registration Claimed.
Not Applicable, because no securities are being reoffered or resold.
Item 8. Exhibits.
The following exhibits are filed as part of this Registration Statement
on Form S-8:
Exhibit No.
*3.1 Restated Certificate of Incorporation of American Exploration Company
as supplemented by Certificate of Amendment of Restated Certificate of
Incorporation of American Exploration Company dated June 13, 1995 (Form
10-K, December 31, 1995, Exhibit 3(a)).
*3.3 Amended and Restated Bylaws of the Company (Form 8-A, March 23, 1994,
Exhibit 2).
4.1 Copy of the 1994 American Exploration Company Stock Compensation Plan
(Share and share equivalent amounts are prior to the 1 for 10 reverse
stock split effective June 13, 1995).
*4.2 Rights Agreement, dated as of September 28, 1993, between American
Exploration Company and Society National Bank (Form 8-K, September 28,
1993, Exhibit 4), as supplemented by Amendment to Rights Agreement,
dated as of August 3, 1994, between American Exploration Company and
Society National Bank (Form 8-K, August 31, 1994, Exhibit 4).
*4.3 Certificate of Designation of the $450 Cumulative Convertible Preferred
Stock, Series C, dated December 14, 1993 (Form S-3, January 4, 1994,
Registration No. 33-51795, Exhibit 4.3), as supplemented by Certificate
of Correction to the Certificate of Designation of the $450 Cumulative
Convertible Preferred Stock, Series C, dated December 29, 1993 (Form
S-3, January 4, 1994, Registration No. 33-51795, Exhibit 4.4).
*4.4 Deposit Agreement, dated as of December 10, 1993, by and among American
Exploration Company, Harris Trust and Savings Bank and the holders from
time to time of Depositary Receipts (Form S-3, January 4, 1994,
Registration No. 33-51795, Exhibit 4.5).
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5.1 Legal Opinion of Patterson, Belknap, Webb & Tyler LLP, counsel to the
Company, regarding the legality of the Common Stock being registered by
the Company.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Patterson, Belknap, Webb & Tyler LLP (contained in Exhibit
5.1)
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*Incorporated by reference
Item 9. Undertakings.
(a) RULE 415 OFFERING. The 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 to include any material
information with respect to the plan of distribution
not previously disclosed in the Registration
Statement or any material change to such information
in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE. The 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 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act), that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) INDEMNIFICATION. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 9th day of May, 1996.
AMERICAN EXPLORATION COMPANY
By: /s/ MARK E. ANDREWS
Mark E. Andrews
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ MARK E. ANDREWS Chairman of the Board, May 9, 1996
Mark E. Andrews Chief Executive Officer
and Director (Principal
Executive Officer)
/s/ JOHN M. HOGAN Senior Vice President May 9, 1996
John M. Hogan and Chief Financial
Officer (Principal
Financial and
Accounting Officer)
/s/ HARRY W. COLMERY, JR. Director May 9, 1996
Harry W. Colmery, Jr.
/s/ IRVIN K. CULPEPPER, JR. Director May 9, 1996
Irvin K. Culpepper, Jr.
___________________ Director May __, 1996
Walter J.P. Curley
/s/ PHILLIP FROST, M.D. Director May 9, 1996
Phillip Frost, M.D.
/s/ PETER G. GERRY Director May 9, 1996
Peter G. Gerry
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/s/ H. PHIPPS HOFFSTOT, III Director May 9, 1996
H. Phipps Hoffstot, III
/s/ JOHN H. MOORE Director May 9, 1996
John H. Moore
/s/ PETER P. NITZE Director May 9, 1996
Peter P. Nitze
<PAGE>
1994 AMERICAN EXPLORATION COMPANY STOCK COMPENSATION PLAN
SECTION 1. INTRODUCTION
1.1 PURPOSE
The purpose of the 1994 American Exploration Company Stock
Compensation Plan (the "Plan") is to advance and promote the interests of the
American Exploration Company (the "Company"). The Plan does this by encouraging
and enabling directors, officers and other employees of the Company to acquire
shares of its common stock and by providing for monetary payments to such
employees based in part on the value of such shares. Accordingly, the Plan is
intended as a further means not only of attracting and retaining outstanding
employees but also of promoting a close identity of interests between the
Company's employees and its stockholders.
1.2 DEFINITIONS
When used herein, the following terms shall have the meanings
set forth below:
(a) "ACTUAL AWARD" means the value of an Award of Performance
Shares or Performance Units, determined according to Section 4.2, which becomes
payable upon the attainment of a Program Target.
(b) "AWARD" means the grant of any Option, Restricted Common
Stock, Performance Share or Performance Unit, or any combination, by the
Committee to a Participant.
(c) "AWARD PERIOD" means those consecutive fiscal years
designated by the Committee, during which Performance Shares or Performance
Units may be earned under the Plan.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CHANGE IN CONTROL" means that any of the following events
has occurred after the effective date of the Plan:
(i) twenty percent (20%) or more of the outstanding
Common Stock has been acquired by any person (as
defined by Section 3(a)(9) of the Securities Exchange
Act of 1934) other than directly from the Company;
(ii) there has been a merger or equivalent combination
involving the Company after which 49% or more of the
voting stock of the surviving corporation is held by
persons other than former shareholders of the
Company; or
(iii) twenty percent (20%) or more of the Directors elected
by shareholders are persons who were not nominated in
the then most recent proxy statement of the Company;
provided, however, that, notwithstanding anything in the Plan to the contrary,
no Change in Control shall be deemed to have occurred and no rights arising upon
a Change in Control described in Section 5.2 shall exist to the extent that the
Board of Directors otherwise directs by resolution adopted either prior to the
Change in Control, or not later than forty-five (45) days after the Change in
Control (if the percentage of
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Common Stock acquired or Directors elected under clauses (i) or (iii) of the
definition of Change in Control shall be at least twenty percent (20%) but less
than twenty-five percent (25%)). Any resolution of the Board adopted in
accordance with the provisions of this Section directing that this Section and
Section 5.2, or any part of such Sections, not become effective may be rescinded
or countermanded at any time with or without retroactive effect.
(f) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "COMMITTEE" means the Compensation Committee of the Board,
which Committee shall consist of at least two Directors and shall at all times
be constituted in conformity with the "disinterested administration"
requirements of SEC Rule 16b-3.
(h) "COMMON STOCK" means common stock, $0.05 par value, of the
Company.
(i) "DETERMINED VALUE" means the higher of (i) the highest bid
price per share of Common Stock during the twelve months immediately preceding
the date of a Change in Control, or (ii) the highest price per share of Common
Stock actually paid in connection with any Change in Control (including, without
limitation, prices paid in any subsequent merger or combination with any entity
that acquires control of the Company).
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means complete and permanent inability by
reason of illness or accident to perform the duties of the occupation at which a
Participant was employed when such disability commenced, as determined by the
Committee based on medical evidence acceptable to it.
(l) "DISCOUNTED NONQUALIFIED STOCK OPTION" means a
Nonqualified Stock Option which provides for a purchase price in accordance with
the second sentence of Section 2.1(b).
(m) "ESCROW AGENT" means the escrow agent designated by the
Committee to act under the provisions of the Escrow Agreement.
(n) "ESCROW AGREEMENT" means the document approved by the
Committee or its designee which sets forth the agreement among the Company, a
Participant, and the Escrow Agent pursuant to which an Award is held in escrow
in order to enforce the Restrictions during the Restricted Period.
(o) "FORMULA GRANT" means an Award with respect to a
non-employee Director pursuant to Section 2.1(o).
(p) "INCENTIVE STOCK OPTION" means a stock option, granted by
the Committee to a Participant, that is designated by the Committee as an
Incentive Stock Option and qualifies as such within the meaning of Section 422
of the Code.
(q) "NONQUALIFIED STOCK OPTION" means a stock option, granted
by the Committee to a Participant, that is not an Incentive Stock Option.
(r) "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option, including a Discounted Nonqualified Stock Option.
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(s) "OPTION AGREEMENT" means, with respect to an Option, the
agreement evidencing such Option, as approved by the Committee.
(t) "PARENT" means a domestic corporation that is a "parent
corporation", as defined in Section 424(e) of the Code.
(u) "PARTICIPANT" means any of the Directors and any of the
officers or other employees of the Company (or any Subsidiary or Parent of the
Company) compensated for such employment by a regular salary, who are selected
to participate in the Plan in the manner described in Section 1.4. For purposes
of this Plan, a Participant who is employed by any Parent or Subsidiary of the
Company shall be deemed to be employed by the Company.
(v) "PERFORMANCE SHARE" means a unit of measurement equivalent
to one share of Common Stock.
(w) "PERFORMANCE UNIT" means a unit of measurement equivalent
to one share of Common Stock, payable entirely in cash pursuant to Section 4.4.
(x) "PRIOR PLAN" means the American Exploration Company Stock
Compensation Plan, as amended and restated.
(y) "PROGRAM" means any separate plan or cycle to be
established by the Committee under which Awards of Performance Shares or
Performance Units shall be determined and Actual Awards may be earned by
Participants to the extent that the predetermined Program Target is achieved
during the corresponding Award Period.
(z) "PROGRAM TARGET" means an appropriate measure of financial
or other corporate performance and levels of attainment, fixed or approved by
the Committee for each Program, employed for the determination of Participants'
Actual Awards.
(aa) "RESTRICTED COMMON STOCK" means shares of Common Stock
issued or transferred to a Participant subject to the Restrictions set forth in
Sections 3 and 5.4.
(ab) "RESTRICTED PERIOD" means, with respect to any share of
Restricted Common Stock, the period of time determined by the Committee during
which such share of Restricted Common Stock is subject to the Restrictions set
forth in Sections 3 and 5.4.
(ac) "RESTRICTIONS" means the restrictions on transfer of
Restricted Common Stock as set forth in Sections 3 and 5.4.
(ad) "RETIREMENT" means separation from service under
conditions which constitute retirement as determined by the Committee.
(ae) "SEC RULE" means a particular rule under the Securities
Exchange Act of 1934 and includes any corresponding successor rule or
regulation.
(af) "SHARE EQUIVALENTS" means the number of shares of Common
Stock with reference to which the amounts of any Performance Shares, Performance
Units and Stock Appreciation Rights are measured.
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(ag) "STOCK APPRECIATION RIGHTS" means the right to elect to
cancel an Option under Section 2.1(m).
(ah) "SUBSIDIARY" means a domestic corporation that is a
"subsidiary corporation" as defined in Section 424(f) of the Code.
1.3 ADMINISTRATION
(a) The Plan shall be administered by the Committee. Each
member of the Committee shall be selected from among the non-employee members of
the Board, shall not be eligible to receive any Award under the Plan (other than
a Formula Grant pursuant to Section 2.1(o)) and shall be a "disinterested
person" within the meaning of SEC Rule 16b-3(c)(2)(i).
(b) A majority of the members of the Committee shall
constitute a quorum. The Committee may act at a meeting, including a telephone
meeting, by action of a majority of the members present, or without a meeting by
unanimous written consent.
(c) Subject to the provisions of the Plan, the Committee
shall have the authority to:
(i) select Participants;
(ii) determine the fair market value of the Common Stock from
time to time for all purposes of the Plan;
(iii) grant to such Participants Options, Restricted Common
Stock, Performance Shares and Performance Units in such
combination and in such amounts as it shall determine,
subject to the terms and conditions of the Plan;
(iv) determine whether an Option that is granted to such a
Participant is a Nonqualified Stock Option or an
Incentive Stock Option, the number of shares to be
covered by each such Option and the time or times when
and the manner in which each Option shall be
exercisable;
(v) amend any Incentive Stock Option so as to make it a
Nonqualified Stock Option;
(vi) determine the purchase price under any Option and
determine, at the time of grant or thereafter, whether
or not an Option shall contain a right to cancel all or
any portion of any such Option as provided in Section
2.1(m);
(vii) establish from time to time any guidelines deemed
necessary or appropriate for the administration or
interpretation of the Plan, interpret the Plan, and make
all determinations and take all other actions considered
necessary or advisable for the administration of the
Plan; and
(viii) cause records to be established in which shall be
entered, from time to time as Awards are made to
Participants, the date of each Award, the number of
Incentive Stock Options, Nonqualified Stock Options,
Performance Shares, Performance Units and shares of
Restricted Common Stock awarded to each Participant, the
Option expiration date and the duration of any
applicable Restricted Period.
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All decisions, actions or interpretations of the Committee that are within the
scope of this Section 1.3 shall be final, conclusive and binding upon all
parties.
1.4 PARTICIPATION
Participants in the Plan shall be limited to those Directors,
officers and other employees who have received written notification from the
Committee, or from a person designated by the Committee, that they have been
selected to participate in the Plan. In no event shall any Director who is not
also an employee of the Company be entitled to receive any Award under the Plan,
other than a Formula Grant under Section 2.1(o). No director or employee shall
at any time have the right to be selected as a Participant or granted an Award.
No Participant, having been granted an Award, shall have the right to be granted
an additional Award in the future.
1.5 MAXIMUM NUMBER OF SHARES
The Common Stock (and Share Equivalents) available for Awards
under the Plan shall be limited to 9,000,000 shares (and Share Equivalents).
This limitation is subject to adjustment as provided in Section 5.1. The Common
Stock used for Awards under the Plan may be treasury shares, authorized but
previously unissued shares, or shares purchased on the open market (at such time
or times and in such manner as the Company may determine).
SECTION 2. STOCK OPTIONS
2.1 TERMS AND CONDITIONS OF OPTIONS
Each Option Agreement shall be subject to the following express
terms and conditions and to such other terms and conditions as the Committee may
deem appropriate:
(a) Each Option Agreement shall specify the period for which the
Option granted thereunder is granted and shall provide that the Option shall
expire at the end of such period. In the case of an Incentive Stock Option such
period shall not exceed ten years (or five years as specified in Section 2.1(l))
from the date of grant. The Committee may extend such Option period in the case
of a Nonqualified Stock Option.
(b) The purchase price per share under any Option other than a
Discounted Nonqualified Stock Option shall be determined by the Committee at
the time such Option is granted, and shall be not less than the fair market
value (but in no event less than the par value) of the Common Stock (or 110
percent of such fair market value, as specified in Section 2.1(l)) on the date
the Option is granted, as determined by the Committee. The purchase price per
share under any Discounted Nonqualified Stock Option shall be determined by the
Committee at the time such Option is granted and shall be less than the fair
market value of the Common Stock on the date the Option is granted, as
determined by the Committee.
(c) Except as otherwise provided under the Plan, no part of any
Option may be exercised until the Participant shall have remained in the employ
of the Company for such period after the date on which the Option is granted as
the Committee may specify in the Option Agreement, and the Option Agreement may
provide for exercisability in installments.
(d) Each Option Agreement shall provide that the purchase price
of the shares as to which an Option shall be exercised shall be paid to the
Company at the time of exercise in (i) cash, (ii) Common Stock already owned by
the Participant, or which would otherwise be issued to the Participant upon such
exercise, having a total fair market value on the date of such exercise equal to
the purchase
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price, or (iii) a combination of cash and Common Stock having a total fair
market value on the date of such exercise equal to the purchase price. In the
event that the purchase price is paid to the Company by the delivery of shares
of Common Stock described in clause (ii) or (iii) of the immediately preceding
sentence, the Committee may, in its sole discretion, grant to the Participant a
Nonqualified Stock Option with respect to the same number of shares as the
Participant so delivered to the Company plus the number of any shares withheld
for purposes of any taxes in accordance with Section 5.6. The Committee in its
sole discretion may also provide that the purchase price may be paid by
delivering a properly executed exercise notice in a form approved by the
Committee together with irrevocable instructions to a broker to promptly deliver
to the Company, against receipt of the certificates representing the shares of
Common Stock issuable upon such exercise, the amount of the applicable sale or
loan proceeds to pay the purchase price.
(e) If a Participant shall die (i) while an employee of the
Company, (ii) within three months after termination of employment with the
Company because of Retirement or (iii) within twelve months after termination of
such employment because of Disability, any Option held by such Participant may
be exercised, notwithstanding any installment schedule otherwise applicable to
such Option, by the person or persons to whom the Participant's rights under the
Option pass by will or applicable law or, if no such person has such right, by
his executors or administrators, at any time, or from time to time, within
twelve months after the Participant's death; provided, however, that no
Incentive Stock Option may be exercised after the expiration date specified in
Section 2.1(a) or 2.1(l), as applicable.
(f) A Participant whose employment by the Company shall
terminate because of Disability or Retirement may exercise any Option held by
such Participant, notwithstanding any installment schedule otherwise applicable
to such Option, at any time, or from time to time, within three months after the
termination of employment because of Retirement or within twelve months after
the termination of employment because of Disability; provided, however, that no
Incentive Stock Option may be exercised after the expiration date specified in
Section 2.1(a) or 2.1(l), as applicable.
(g) A Participant whose employment by the Company shall
terminate for any reason other than death, Disability or Retirement as
aforesaid, may exercise any Option held by such Participant within three months
after the termination of employment, but only to the extent that such
Participant may be entitled to do so at the date of the termination of
employment, except as may otherwise be determined by the Committee; provided,
however, that no Incentive Stock Option may be exercised after the expiration
date specified in Section 2.1(a) or 2.1(l), as applicable.
(h) For the purposes of Sections 2.1(e), 2.1(f) and 2.1(g), the
period after termination of employment within which any Option can be exercised
may be extended by the Committee.
(i) Each Option Agreement may contain an agreement that, upon
demand by the Committee for such a representation, the Participant (or any
person acting under Section 2.1(e)) shall deliver to the Committee at the time
of any exercise of an Option a written representation that the shares to be
acquired upon such exercise are to be acquired for investment and not for resale
or with a view to the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares issued upon exercise of an
Option and prior to the expiration of the date specified in Section 2.1(a) shall
be a condition precedent to the right of the Participant or such other person to
purchase any shares. In the event certificates for Common Stock are delivered
under the Plan with respect to which such an investment representation has been
obtained, the Committee may cause a legend or legends to be placed on such
certificates to make appropriate reference to such representation and to
restrict transfer in the absence of compliance with applicable federal or state
securities laws.
(j) No Participant shall have any rights as a stockholder with
respect to any shares subject to such Participant's Option prior to the date of
issuance of such shares.
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(k) To the extent required by Section 422(d) of the Code, the
aggregate fair market value (determined as of the time the Option is granted) of
Common Stock for which Incentive Stock Options are exercisable for the first
time by any Participant during any calendar year (under all plans of the Company
and its Parent and Subsidiaries) shall not exceed $100,000.
(l) Notwithstanding Sections 2.1(a) and 2.1(b), if an Incentive
Stock Option is granted to a Participant who owns stock representing more than
ten percent of the voting power of all classes of stock of the Company, the
period specified in the Option Agreement for which the Option thereunder is
granted and at the end of which such Option shall expire shall not exceed five
years from the date of grant of such Option and the option price shall be at
least 110 percent of the fair market value (as of the time of grant) of the
Common Stock subject to the Option.
(m) Each Option Agreement shall also contain the applicable
terms and conditions set forth in Sections 5.1(a), 5.2, 5.4 and 5.5 and may
contain such other provisions as the Committee may, from time to time,
determine. Without limiting the foregoing, the Committee may determine at the
time of grant or thereafter that an Option Agreement may provide Stock
Appreciation Rights which entitle the Participant to elect to cancel all or any
portion of any such Option then subject to exercise; provided, however, that,
with respect to individuals subject to SEC Rule 16b-3, such cancellation shall
be permitted only during the period beginning on the third business day
following the date of release by the Company of the financial data specified in
SEC Rule 16b-3(e)(1)(ii) and ending on the twelfth business day following such
date. In the case of an Incentive Stock Option, such right shall not be granted
after the time of grant of such Option without the consent of the holder of such
Option. Upon such election, the Company's obligation in respect of such Option
shall be discharged, in the Committee's sole discretion, by (i) payment to the
Participant of an amount in cash equal to the excess (or such percentage thereof
as may be specified in the agreement or amended agreement), if any, of the fair
market value at the time of cancellation of the shares of Common Stock subject
to the Option or the portion thereof so cancelled over the aggregate purchase
price for such shares as set forth in the Option Agreement and/or (ii) the
issuance or transfer to the Participant of whole shares of Common Stock (plus
cash for any fraction of a share) with a fair market value at such time equal to
such excess (or such percentage thereof as may be specified in the agreement or
amended agreement). Notwithstanding any other provision of the Plan, in the case
of an Option containing a right to cancel all or any portion of such Option as
provided in this Section 2.1(m), no Participant who is subject to SEC Rule 16b-3
may (i) exercise such Option within six months of the date such Option was
granted or (ii) cancel such Option within six months of the date the right to
cancel such Option was granted, unless such Participant's employment by the
Company shall have terminated because of death.
(n) Any Option granted in connection with the Stock Accumulation
Program shall be subject to such other terms and conditions, including
limitations with respect to when such Option may be exercised, as may be
determined by the Committee and set forth in the Option Agreement.
(o) Each year, each non-employee Director shall receive a
Formula Grant of a Nonqualified Stock Option which shall be fully exercisable
immediately, with respect to 25,000 shares of Common Stock in the first year of
service during the term of the 1994 Plan and 5,000 shares of Common Stock for
each year thereafter.
2.2 EXCHANGE OF OPTIONS
The Committee may permit the voluntary surrender of all or any
portion of any Option granted under the Plan to be conditioned upon the granting
to the Participant of a new Option for the same or a different number of shares
as the Option surrendered or require such surrender as a condition precedent to
a grant of a new Option to such Participant. Such new Option shall be
exercisable in
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accordance with the terms or conditions specified by the Committee at the time
the new Option is granted, all determined in accordance with the provisions of
the Plan without regard to the option price, exercise period, or any other terms
and conditions of the Option surrendered.
2.3 SEQUENTIAL EXERCISE OF OPTIONS NOT REQUIRED
Options granted under the Plan may be exercised in any order,
regardless of the date of grant or the existence of any other outstanding
Option.
SECTION 3. RESTRICTED STOCK
3.1 TERMS AND CONDITIONS
Each Participant receiving an Award of Restricted Common Stock
shall execute an Escrow Agreement and appropriate blank stock powers with
respect to his or her Restricted Common Stock. Stock certificates for such
Restricted Common Stock registered in the name of each Participant shall be
issued and deposited together with the Escrow Agreement and stock powers, with
the Escrow Agent. The Escrow Agent shall issue to each Participant a receipt
evidencing any stock certificate registered in the Participant's name and held
by the Escrow Agent. A Participant shall be entitled to the delivery of such
stock certificates out of escrow only in accordance with the provisions of
Sections 3.4 and 3.5. All shares of Common Stock or other securities issued with
respect to or in substitution for Common Stock held under the Escrow Agreement
from time to time, whether such Common Stock or securities are issued by the
Company or by another issuer, and all cash or other property received by the
Escrow Agent on account of a redemption of the Restricted Common Stock or the
liquidation of the Company, shall be treated as Common Stock and shall be
subject to all of the terms and conditions of the Escrow Agreement and shall be
delivered out of escrow to a Participant or to the Company as if it were the
portion of Common Stock regarding which they were issued.
The Committee shall impose such conditions on the receipt of,
or take such actions in connection with the making of, any Award of Restricted
Common Stock as the Committee, with the advice of counsel, deems appropriate to
ensure that lawful and adequate consideration is received by the Company for the
issuance of the Restricted Common Stock included in such Award, including
without limitation imposing a requirement that a Participant pay to the Company
in cash an amount equal to the aggregate par value of the Restricted Common
Stock to be received or causing an Award of Restricted Common Stock to be made
in part for consideration consisting of services previously rendered by a
Participant to the Company having a value equal to the aggregate par value of
such Restricted Common Stock. If the Committee imposes any such condition or
takes any such action with respect to any Award, it may also, in its discretion,
provide that in the event of the forfeiture of all or a portion of the
Restricted Common Stock included in such Award, the Participant will receive
reimbursement of or other credit for any consideration which such Participant
pays or is deemed to have paid for such Restricted Common Stock at or prior to
the receipt of such Award.
3.2 RIGHTS OF PARTICIPANTS
Except for the Restrictions and the forfeiture conditions set
forth in Sections 3.3, 3.4 and 5.4, each Participant shall have all of the
rights and privileges of a stockholder of the Company as to his or her
Restricted Common Stock, including the right to receive any cash dividends
declared with respect to such stock and to direct the Escrow Agent as to the
exercise of voting rights.
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3.3 RESTRICTIONS
Restricted Common Stock covered by an Award shall be subject to
the Restrictions and forfeiture conditions set forth in this Section 3.3 and in
Sections 3.4 and 5.4, which shall apply from the date the Award is granted and
shall continue until such Common Stock becomes vested pursuant to the provisions
of Section 3.4, 3.5 or 5.2. The Committee shall have the authority to modify or
remove any or all of such Restrictions whenever it may determine that, by reason
of changes in applicable laws or other changes in circumstances arising after
the date hereof, such action is appropriate.
3.4 VESTING
At the time each Award of Restricted Common Stock is made, the
Committee shall establish a schedule according to which the Restricted Common
Stock shall vest and the Restricted Period shall end. Subject to accelerated
vesting upon a Change in Control (as provided in Section 5.2) or upon a
termination of employment because of Retirement, Disability or death (as
provided in Section 3.5) or otherwise at the discretion of the Committee, at the
expiration of the Restricted Period, and subject to the satisfaction of the
Company's obligation to withhold taxes as set forth in Section 5.6, a stock
certificate evidencing Common Stock with respect to which the Restricted Period
has expired (to the nearest full share) shall be delivered out of escrow to the
Participant, or the legal representative of such Participant, free of the
Restrictions and forfeiture conditions set forth in this Section 3.4 and in
Sections 3.3 and 5.4.
Except in the case of Retirement, Disability or death, all as
provided in Section 3.5, or as otherwise determined by the Committee, upon the
termination of employment with the Company of any Participant, all Restricted
Common Stock awarded under the Plan which is then subject to Restrictions shall
be forfeited by the Participant and become the property of the Company and all
of the rights of such Participant to such Restricted Common Stock and as a
holder of such Restricted Common Stock (including the right to accrued but
unpaid dividends) shall terminate without further obligation on the part of the
Company.
3.5 RETIREMENT, DISABILITY OR DEATH
With respect to any Participant whose employment by the Company
terminates because of (i) Retirement, (ii) Disability, or (iii) such
Participant's death, the expiration date of the Restricted Period of any
outstanding Restricted Common Stock held for the account of such Participant
shall be advanced to the date of such termination of employment and the full
balance of Restricted Common Stock in such account shall be delivered out of
escrow as provided in Section 3.4.
3.6 SECTION 83(B) ELECTIONS
A Participant who files an election with the Internal Revenue
Service to include the fair market value of any shares of Restricted Common
Stock in gross income while they are still subject to Restrictions shall
promptly furnish the Company with a copy of such election together with the
amount of any federal, state, local or other taxes required to be withheld (or
make such other arrangements acceptable to the Company) to enable the Company to
claim an income tax deduction with respect to such election.
3.7 LIMITATIONS
Awards of Restricted Common Stock under the Plan shall not
exceed 5,000,000 shares of Common Stock in the aggregate.
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SECTION 4. PERFORMANCE SHARES AND PERFORMANCE UNITS
4.1 PROGRAM ESTABLISHMENT AND PARTICIPANT GRANTS
The Committee is authorized to establish Programs to be
effective over designated Award Periods. At the beginning of each Award Period,
the Committee will fix or approve a Program Target for the Company for such
Award Period and a schedule relating the accomplishment of the Program Target to
the Awards that can be earned by Participants. The Committee will then allocate
a number of Performance Shares or Performance Units to each Participant who is
selected to receive an Award of Performance Shares or Performance Units. The
Committee may add new Participants to a Program after its commencement by making
pro rata Awards. A Participant shall have no rights as a stockholder with
respect to any Performance Shares or Performance Units.
4.2 DETERMINATION OF ACTUAL AWARD
At the completion of a Program, or at such other times as
required under the Plan, the Committee shall calculate each Participant's Actual
Award for the Program by multiplying the average fair market value of one share
of Common Stock during the 31-calendar-day period that ends on the last day of
the Award Period by the number of Performance Shares and Performance Units
granted to the Participant and multiplying the amount so determined by a
performance factor representing the degree of attainment of the Program Target.
4.3 PARTIAL AWARDS
An employee who is a Participant for less than a full Program,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award of Performance Shares and Performance
Units, if any, for that Program as the Committee shall determine.
4.4 PAYMENT OF ACTUAL AWARDS
The Actual Awards of Performance Shares shall be payable
one-half in Common Stock and one-half in cash; provided, however, that, at its
discretion, the Committee may vary such form of payment as to any Participant.
The Actual Awards of Performance Units shall be payable entirely in cash.
Payments of Actual Awards shall be made as soon as practicable after the
completion of a Program.
4.5 ADJUSTMENT OF PROGRAM TARGETS
The Committee may, during the Award Period, make such
adjustments to Program Targets as it may deem appropriate to compensate for, or
reflect, any significant changes that may have occurred during such Award Period
in accounting practices, tax laws or other laws or regulations that alter or
affect the computation of the measures of performance used for the calculation
of Actual Awards.
SECTION 5. GENERAL PROVISIONS
5.1 CERTAIN ADJUSTMENTS TO PLAN SHARES
(a) For all purposes under the Plan, in the event of any
change in the Common Stock by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or any rights offering to purchase Common Stock at a price substantially
below fair market value, or of any similar change affecting the Common Stock,
the number and kind of shares available for Awards under the Plan, the number
and kind of shares represented by
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Performance Shares or Performance Units and the number and kind of shares
subject to Restrictions or subject to Options in outstanding Option Agreements
and the purchase price per share thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem equitable
to prevent substantial dilution or enlargement of the rights granted to the
Participants hereunder. Any adjustment of an Incentive Stock Option pursuant to
this Section 5.1(a) shall be made only to the extent that it does not constitute
a "modification" within the meaning of Section 424(h)(3) of the Code, unless the
holder of such Option shall agree otherwise. The Committee shall give notice to
each Participant of any adjustment made pursuant to this Section 5.1(a), and,
upon notice, such adjustment shall be effective and binding for all purposes of
the Plan.
(b) In the event (i) any Option granted under the Plan shall
be surrendered, or terminate or expire or (ii) Awards of Performance Shares,
Performance Units or Restricted Common Stock shall be forfeited, the number of
shares of Common Stock no longer subject to such Option or no longer payable
under such Awards, or shares of Restricted Common Stock that are forfeited shall
thereupon be released and shall thereafter be available for new Awards under the
Plan. Notwithstanding the foregoing, in the event of a cancellation of an Option
as described in Section 5.2, the number of shares as to which such Option was
cancelled shall not again become available for use under the Plan. Furthermore,
in determining the number of shares of Common Stock available for Awards under
the Plan, only the number of shares of stock (i) paid in satisfaction of Actual
Awards pursuant to Section 4.4 and (ii) delivered upon the cancellation of an
Option pursuant to Section 2.1(m) shall be considered to have been used under
the Plan with respect to such Awards; provided, however, that the number of
shares of Common Stock represented by Performance Shares and Performance Units
paid for in cash lump sums pursuant to Section 5.2 shall not again become
available for use under the Plan.
5.2 EFFECT OF CHANGE IN CONTROL
(a) Notwithstanding any other provision of the Plan, in the
event of a Change in Control, the following rules shall apply (except as
otherwise provided in any applicable individual employment agreement or any
applicable severance arrangement entered into prior to the Change in Control):
(i) All Options granted under the Plan which the
Participant shall not then have been entitled to exercise shall become
exercisable immediately prior to or concurrently with the occurrence of the
Change in Control and the Participant shall have the right, subject to clause
(ii) of this Section 5.2(a), to exercise all Options held by such Participant.
(ii) The Company shall cancel all Options that were
granted under the Plan at least six months prior to the date of such Change in
Control. In the event of any such cancellation, the Company's obligation in
respect of each such Option shall be discharged by payment to the Participant of
a single cash lump sum (reduced by any taxes withheld pursuant to Section 5.6)
in an amount equal to the excess, if any, of the Determined Value of the Common
Stock subject to the Option or portion thereof so cancelled over the aggregate
purchase price of such shares as set forth in the applicable Option Agreement.
All such amounts shall be payable as soon as practicable following the Change in
Control.
(iii) All Restricted Periods shall end, the
Restrictions applicable to all previously granted Awards of Restricted Common
Stock shall lapse and such shares shall be delivered to the Participant free
from such Restrictions as soon as practicable following such Change in Control.
(iv) All incomplete Programs in effect on the date
the Change in Control occurs shall end on the date of such change, and the
Program Targets with respect to each such Program shall be deemed to have been
attained to the full and maximum extent. The Committee shall cause to be paid to
each Participant full Awards with respect to Program Targets for each such
Program. All Awards of
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Performance Shares and Performance Units which are deemed to have been earned to
the full and maximum extent upon the Change in Control shall be payable in
single cash lump sums (reduced by any taxes withheld pursuant to Section 5.6),
determined by multiplying the number of Performance Shares and Performance Units
corresponding to such full Awards by the Determined Value of one share of Common
Stock. All such amounts shall be payable as soon as practicable following the
Change in Control.
(b) The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company. The Company agrees that it will make
appropriate provisions for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
5.3 LISTING AND QUALIFICATION OF SHARES
The Company, in its discretion, may postpone the issuance or
delivery of shares upon any exercise of an Option or pursuant to Restricted
Common Stock or Performance Shares until completion of such stock exchange
listing, or other qualification of such shares under any state or federal law,
rule or regulation as the Company may consider appropriate, and may require any
Participant to make such representations and furnish such information as the
Company may consider appropriate in connection with the issuance or delivery of
the shares in compliance with applicable laws, rules and regulations.
5.4 TRANSFERABILITY
Options, Restricted Common Stock, Performance Shares and
Performance Units shall not be transferable other than under a qualified
domestic relations order (as defined under Section 414(p) of the Code) (a
"QDRO") or by will or by the laws of descent and distribution, and no transfer
under a QDRO or by will or by the laws of descent and distribution shall be
effective to bind the Company unless the Committee shall have been furnished
with a copy of such QDRO or will or such other evidence as the Committee may
deem necessary to establish the validity of the transfer. During the lifetime of
a Participant, only the Participant may exercise Options and receive cash
payments and deliveries of shares of Common Stock pursuant to the Plan.
5.5 NO RIGHT TO CONTINUED EMPLOYMENT
Neither the Plan nor any action taken thereunder shall be
construed as giving any employee the right to be retained in the employ of the
Company, nor shall they interfere in any way with the right of the Company to
terminate any employee's employment at any time.
5.6 TAXES
The Company may make such provisions and take such steps as it
may deem necessary or appropriate for the withholding of all federal, state,
local and other taxes required by law to be withheld with respect to Awards
delivered or paid under the Plan including, but not limited to, (i) reducing the
number of shares of Common Stock otherwise deliverable, based upon their fair
market value on the date of exercise to permit deduction of the amount of any
such withholding taxes from the amount otherwise payable under the Plan, (ii)
deducting the amount required to be withheld from any other amount then or
thereafter payable to a Participant, beneficiary or legal representative, and
(iii) requiring a Participant, beneficiary or legal representative to pay to the
Company the amount required to be withheld as a condition of releasing the
Common Stock and any other distributions under the Plan.
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5.7 AWARDS NOT TREATED AS COMPENSATION UNDER BENEFIT PLANS
No Award shall be considered as compensation under any employee
benefit plan of the Company, except as specifically provided in any such plan or
as otherwise determined by the Board.
5.8 PAYMENTS OR DELIVERIES TO PERSONS OTHER THAN PARTICIPANTS
If the Committee shall find that any person to whom any amount
is payable, or shares are deliverable, under the Plan is unable to care for such
person's affairs because of illness or accident, or is a minor, or has died,
then any payment or delivery due to such person or such person's estate (unless
a prior claim therefore has been made by a duly appointed legal representative)
may, if the Committee so directs the Company, be paid or delivered to such
person's spouse, child, a relative, an institution maintaining or having custody
of such person, or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to payment or delivery.
Any such payment or delivery shall be a complete discharge of the liability of
the Company, the Committee and the Board.
5.9 NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee or the Board shall be personally
liable by reason of any contract or other instrument relating to the Plan
executed by such member or on such member's behalf in his or her capacity as a
member of the Committee or the Board or for any mistake of judgment made in good
faith, and the Company shall indemnify and hold harmless each employee, officer
or Director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own fraud or bad
faith.
5.10 GENERAL CREDITOR STATUS
Participants shall have no right, title, or interest whatsoever
in or to any investments which the Company may make to aid in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Company and any Participant,
beneficiary, legal representative or any other person. To the extent that any
person acquires a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company. All payments to be made hereunder shall be paid from the general
funds of the Company and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts except as
expressly set forth in the Plan. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or pay cash; provided, however,
that, unless the Committee otherwise determines with the consent of the affected
Participant, the existence of such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan.
5.11 AMENDMENT OR TERMINATION
Except as to matters that in the opinion of the Company's
counsel require stockholder approval, any provision of the Plan may be modified
as to a Participant by an individual agreement approved by the Board. The Board
may, with prospective or retroactive effect, amend, suspend or terminate the
Plan or any portion thereof at any time and may delegate to the Committee the
authority to amend the Plan; provided, however, that (i) no amendment that would
materially increase the cost of the Plan to the Company may be made without the
approval of the shareholders of the Company and (ii) no
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amendment, suspension or termination of the Plan shall deprive any Participant
of any rights to Awards previously made under the Plan without such
Participant's written consent. Subject to earlier termination pursuant to the
provisions of this Section 5.11, no Incentive Stock Options shall be granted
under the Plan after May 10, 2003.
5.12 SPECIAL SIX-MONTH HOLDING REQUIREMENT
In the case of any Participant who is subject to Section 16 of
the Securities Exchange Act of 1934, any equity security (including a derivative
security) of the Company granted under the Plan to such Participant shall not be
disposed of until six months have elapsed from the date of grant of the equity
security (or, if later, the date the Plan is approved by the Company's
shareholders as provided in Section 5.14) or, in the case of a derivative
security, the date of acquisition of the derivative security (or, if later, the
date the Plan is approved by the Company's shareholders as provided in Section
5.14) to the date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security. The Committee shall
be authorized to impose such restrictions or take such action as it deems
appropriate in order to ensure compliance with the six-month holding requirement
described in this Section 5.12.
5.13 GOVERNING LAW
The Plan shall be governed by and construed in accordance with
the laws of the State of New York, without reference to the principles of
conflicts of law thereof.
5.14 EFFECTIVE DATE
The Plan is effective as of November 1, 1994 subject to
approval by the holders of a majority of the shares of Common Stock present or
represented and entitled to vote at an annual or special meeting of the
Company's stockholders. Notwithstanding the foregoing, if the Plan shall have
been approved by the Board prior to such shareholder approval, Awards may be
made by the Committee as provided herein subject to such subsequent shareholder
approval. In the event that such shareholder approval is not obtained, any such
Awards shall be cancelled and all rights of Participants with respect to such
Awards shall thereupon cease.
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Exhibit 5.1
[Letterhead of Patterson, Belknap, Webb & Tyler]
May 10, 1996
American Exploration Company
1331 Lamar, Suite 900
Houston, Texas 77010-3088
Dear Sirs:
We have acted as counsel to American Exploration Company, a
Delaware corporation (the "Company"), in connection with the proposed
registration by the Company under the Securities Act of 1933, as amended (the
"Act"), of 900,000 shares (the "Shares") of the Company's Common Stock, par
value $.05 per share (the "Common Stock"), pursuant to the Company's
registration statement on Form S-8 (the "Registration Statement").
In rendering this opinion we have examined the Company's
Restated Certificate of Incorporation and Bylaws, each as amended to date, and
the minutes of the corporate proceedings taken by the Company in connection with
the authorization of the Shares. We have also examined the originals, or copies
certified or otherwise identified to us, of the corporate records of the
Company, certificates of public officials and representatives of the Company,
and such other documents and records, and have made such investigations of law,
as we have deemed necessary for purposes of this opinion. We have assumed the
genuineness of all signatures, the conformity to the original of all copies and
the factual accuracy of all certificates submitted to us.
On the basis of the foregoing, we are of the opinion that:
1. The Company is a corporation organized and validly existing
under the laws of the State of Delaware.
2. The Shares have been duly authorized by all necessary
corporate action on the part of the Company and when sold and delivered as
contemplated by the Registration
<PAGE>
Statement will constitute duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, and no personal liability for debts of the
Company attaches to the holders of the Shares solely by reason of their
ownership thereof.
We express no opinion as to laws other than the corporate laws
of the State of Delaware and the laws of the United States of America.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission (the "Commission") as an exhibit to the
Registration Statement. In furnishing this opinion and giving this 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
thereunder.
PATTERSON, BELKNAP, WEBB & TYLER LLP
By: /s/ JOHN E. SCHMELTZER, III
A Member of the Firm
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
March 22, 1996, included in American Exploration Company's Annual Report on Form
10-K for the year ended December 31, 1995, and to all references to our Firm
included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
May 14, 1996
