As filed with the Securities and Exchange Commission on May 15, 1996
Registration No.
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------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Southwestern Energy Company
(Exact name of registrant as specified in its charter)
Arkansas 71-0205415
(State or other jurisdiction (I.R.S. employer
of incorporation or identification no.)
organization)
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1083 Sain Street
Fayetteville, Arkansas 72703
(Address of registrant's principal executive offices)
Southwestern Energy Company 1993 Stock Incentive Plan
For Outside Directors
(Full title of the plan)
Charles E. Scharlau
Chairman of the Board and Chief Executive Officer
Southwestern Energy Company
1083 Sain Street
Fayetteville, Arkansas 72703
(501) 521-1141
(Name, address and telephone number,
including area code, of agent for service)
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of each class
of securities to be Amount to be Proposed offering Proposed aggregate Amount of
registered(1) registered(2) price per share offering price registration fee
<S> <C> <C> <C> <C>
Common Stock, 141,000 shares(3) $13.9375(4) $1,965,187.50(4) $677.65(4)
$.10 par value per
share
99,000 shares(5) $14.5909(6) $1,444,500.00(6) $498.10(6)
------- -------- ------------ ---------
Totals 240,000 shares $14.2070 $3,409,687.50 $1,175.75
======= ======== ============= =========
<FN>
1 There are also being registered hereunder an equal number of common
stock purchase rights, which are currently attached to and transferable
only with the shares of Common Stock registered hereby.
2 Together with an indeterminate number of shares which may be necessary
to adjust the number of shares reserved for issuance pursuant to the
Southwestern Energy Company 1993 Stock Incentive Plan For Outside
Directors (the "Plan") as the result of a stock split, stock dividend
or similar adjustment of the outstanding Common Stock of the Company
pursuant to Rule 416 under the Securities Act of 1933, as amended (the
"1933 Act").
3 Represents the number of remaining shares with respect to which options
may be granted under the Plan.
4 Determined in accordance with Rule 457(h) under the 1933 Act on the
basis of the average of the high and low prices of shares of Common
Stock of the Company as reported on the New York Stock Exchange.
5 Represents the number of shares with respect to which options have been
granted pursuant to the Plan and which are currently outstanding.
6 Determined in accordance with Rule 457(h) under the 1933 Act on the
basis of the average price per share of Common Stock of the Company at
which options that have been granted under the Plan can be exercised.
</FN>
</TABLE>
This Registration Statement shall hereafter become effective upon filing in
accordance with Section 8(a) of the 1933 Act and Rule 462 thereunder.
<PAGE>
PROSPECTUS
Southwestern Energy Company
Common Stock ($.10 Par Value)
(and attached common stock purchase rights)
This Prospectus relates to up to 240,000 shares (the "Shares") of
Common Stock, par value $.10 per share, including attached common stock purchase
rights (collectively, the "Common Stock") of Southwestern Energy Company (the
"Company"), which are issuable pursuant to the Southwestern Energy Company 1993
Stock Incentive Plan for Outside Directors (the "Plan") to non-employee
directors of the Company ("Selling Shareholders") who may be deemed to be
"affiliates" of the Company within the meaning of Rule 405 under the Securities
Act of 1933, as amended (the "1933 Act"). This Prospectus may be used by Selling
Shareholders to sell Shares. It is anticipated that Selling Shareholders will
offer Shares for sale at prevailing prices on the New York Stock Exchange on the
date of sale. The Company will receive none of the proceeds from the sale of the
Shares that may be offered hereby, but may receive funds on the exercise of
options pursuant to which the Selling Shareholders will acquire the Shares. All
expenses of registration incurred in connection herewith are being borne by the
Company, but all selling and other expenses by any Selling Shareholder will be
borne by the Selling Shareholder.
The Selling Shareholders and any broker executing selling orders on
behalf of the Selling Shareholders may be deemed to be "underwriters" within the
meaning of the 1933 Act, in which case any commissions received by any such
broker may be deemed to be underwriting commissions under the 1933 Act.
The Company's Common Stock is listed on the New York Stock Exchange,
under the symbol SWN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
No person has been authorized to give any information or make any
representation not contained in this Prospectus, and, if given or made, such
information should not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security in any jurisdiction in which, or to any person to
which, such offer or solicitation would be unlawful. Neither the delivery of
this Prospectus nor any distribution of securities made under this Prospectus
shall under any circumstances create any implication that there has been no
change in the affairs of the Company or in any other information contained
herein since the date of this Prospectus.
The date of this Prospectus is May 15, 1996
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, District of
Columbia 20549, at Suite 1400, 500 West Madison Street, Chicago, Illinois 60661,
and at Suite 1300, Seven World Trade Center, New York, New York 10048, and
copied at prescribed rates. Such material can also be inspected and copied at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral requests of any such person, a copy of any or all of the documents
incorporated herein by reference (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents). Written requests to the Company for such copies should be directed
to: Southwestern Energy Company, P. O. Box 1408, Fayetteville, Arkansas
72702-1408, Attention: Corporate Secretary. Telephone requests to the Company
may be directed to (501) 521-1141.
The following documents are incorporated herein by reference and made a
part hereof:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1995;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
3. The Company's Registration Statement on Form 8-A dated October 23,
1981, as updated by the Company's Current Report on Form 8-K dated
July 8, 1993; and
4. The Company's Registration Statement on Form 8-A dated May 10, 1989.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act, prior to the filing of a posteffective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Prospectus and to be a part thereof from the
date of filing of such documents.
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TABLE OF CONTENTS
Page
Use of Proceeds...................................................... 3
Selling Shareholders ................................................ 3
Plan of Distribution................................................. 4
Experts.............................................................. 4
Legal Opinion........................................................ 4
Indemnification...................................................... 4
USE OF PROCEEDS
Shares sold pursuant to this Prospectus will be sold by Selling
Shareholders for their own accounts and they will receive all proceeds from any
such sale. The Company will receive none of the proceeds from any sale of Shares
offered hereby but may receive funds upon the exercise of options granted to
Selling Shareholders under the Plan, pursuant to which Selling Shareholders will
acquire the Shares. The Company will add any such funds to its general funds and
use them for corporate purposes.
SELLING SHAREHOLDERS
The Shares are being registered for reoffers and resales by Selling
Shareholders who may acquire such Shares pursuant to the exercise of stock
options granted to them under the Plan. The Selling Shareholders named on the
following table may resell all, a portion, or none of the Shares they acquire
pursuant to the Plan. Individuals deemed to be "affiliates" of the Company who
acquire Shares under the Plan may be added to the Selling Shareholders listed
below from time to time, and the number of Shares eligible to be reoffered by
Selling Shareholders listed below may be adjusted, either by means of a
posteffective amendment hereto or by use of a prospectus supplement filed
pursuant to Rule 424(b) under the 1933 Act.
The following lists all individuals who currently hold options under
the Plan and who may be eligible to resell under this Prospectus, and the
amounts of Shares eligible to be resold.
<TABLE>
<CAPTION>
Selling Shareholder Position with Company Shares Eligible to Be Resold
<S> <C> <C>
E. J. Ball Director Emeritus 3,000
John Paul Hammerschmidt Director 36,000
Robert L. Howard Director 12,000
Kenneth R. Mourton Director 12,000
Charles E. Sanders Director 36,000
</TABLE>
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<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders have not advised the Company of any specific
plans for the distribution of Shares covered by this Prospectus but, if and when
such Shares are sold, it is anticipated that the Shares will be sold from time
to time primarily in transactions on the New York Stock Exchange at the market
price then prevailing. Sales also may be made through negotiated transactions or
otherwise, at prices related to such prevailing market price or otherwise. If
Shares are sold through brokers, the Selling Shareholders may pay customary
brokerage commissions and charges. The Selling Shareholders may effect such
transactions by selling Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and or the purchaser of the Shares so
sold for whom such broker-dealers may act or to whom they may sell as principal
or both (which compensation, as to a particular broker-dealer, may be in excess
of customer commissions). The Selling Shareholders and any broker-dealers that
act in connection with any sale of Shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the 1933 Act, and any
commissions received by them and any profit on the resale of Shares as principal
may be deemed to be underwriting discounts and commissions under the 1933 Act.
Shares covered by this Prospectus also may be sold under Rule 144 or another
exemption under the 1933 Act rather than pursuant to this Prospectus.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1995, and for each of the three years in the period ended December 31, 1995,
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995, incorporated by reference herein have been audited by Arthur Andersen
LLP, independent public accounts, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
LEGAL OPINION
Jeffrey L. Dangeau, Esq. has passed upon the validity of the Shares. As
of May 15, 1996, Mr. Dangeau beneficially owned 39,830 shares of Common Stock,
including 1,371 shares granted under the 1993 Stock Incentive Plan as restricted
stock and options to purchase 31,997 shares granted under the Southwestern
Energy Company 1993 Stock Incentive Plan that are expected to become exercisable
at various times over a period not to exceed nine years beginning at the date of
each grant, but which would become exercisable immediately upon a "change in
control" of the Company, as defined in the 1993 Stock Incentive Plan.
4
<PAGE>
INDEMNIFICATION
The Company has entered into indemnification agreements with each of
its directors and officers under which the Company has agreed to indemnify its
directors and officers against liabilities and litigation expenses resulting
from their service to the Company. The Company also maintains Directors' and
Officers' Liability Insurance with limits of $30,000,000.
Article ELEVENTH of the Company's Articles of Incorporation, as amended
effective as of May 26, 1993, provides:
To the fullest extent permitted by the Arkansas Business
Corporation Act of 1987 as it now exists or may hereafter be amended, a
director of this Corporation shall not be liable to the Corporation or
its Shareholders for monetary damages for breach of fiduciary duty as a
director.
Sections 6 and 7 of Article VII of the By-laws of the Company provide
as follows:
SECTION 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS:
Directors and officers of the Company shall be indemnified to the
fullest extent now or hereafter permitted by law in connection with
any actual or threatened action or proceeding (including civil,
criminal, administrative or investigative proceedings) arising out of
their service to the Company or to any other organization at the
Company's request. Employees and agents of the Company who are not
directors or officers thereof may be similarly indemnified in respect
of such service to the extent authorized at any time by the Board of
Directors. The provisions of this Section shall be applicable to
actions or proceedings commenced after the adoption hereof, whether
arising from acts or omissions occurring before or after the adoption
hereof, and to persons who have ceased to be directors, officers or
employees and shall inure to the benefit of their heirs, executors,
and administrators. For the purposes of this Section, directors,
officers, trustees or employees of an organization shall be deemed to
be rendering service thereto at the Company's request if such
organization is, directly or indirectly, a wholly owned subsidiary of
the Company or is designated by the Board of Directors as an
organization service to which shall be deemed to be so rendered.
SECTION 7. ADVANCEMENT OF LITIGATION EXPENSES: Expenses
incurred by a director or officer of the Corporation in defending any
actual or threatened action, or proceeding (including civil, criminal,
administrative or investigative proceedings) arising out of their
service to the Company or to any other organization at the Company's
request shall be paid by the Company in advance of the final
disposition of such action or proceeding upon receipt of an
undertaking by, or on behalf of, such person to repay such amount if
it shall ultimately be determined that he is not entitled to be
indemnified by the Company as authorized by the relevant provisions of
the Arkansas Business Corporation Act as it now exists or as it may
hereafter be
5
<PAGE>
amended. Such expenses of employees and agents of the Company who are
not directors or officers may be similarly advanced to the extent
authorized at any time by the Board of Directors. The provisions of
this section shall be applicable to actions or proceedings commenced
after the adoption hereof, whether arisen from acts occurring before
or after the adoption hereof, and to persons who have ceased to be
directors, officers, and employees and shall inure to the benefit of
their heirs, executors, and administrators. For purposes of this
Section, directors, officers, trustees or employees of an organization
shall be deemed to be rendering service thereto at the Company's
request if such organization is, directly or indirectly, a wholly
owned subsidiary of the Company or is designated by the Board of
Directors as an organization service to which shall be deemed to be so
rendered.
Section 4-27-850 of the Arkansas 1987 Business Corporation Act provides
as follows:
4-27-850 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES,
AND AGENTS--INSURANCE.--A. A corporation shall have power to indemnify
any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceedings,
whether civil, criminal, administrative, or investigative (other than
an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as
a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
B. A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, or employee, or agent of
the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in
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<PAGE>
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or
matter as to which such person shall have been adjudged to be liable
to the corporation unless and only to the extent that the court of
chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which
the court of chancery or such other court shall deem proper.
C. To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in subsections
A. and B. of this section, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
D. Any indemnification under subsections A. and B. of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections A. and B. of this section. Such
determinations shall be made:
(1) By the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such
action, suit, or proceeding; or
(2) If such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion; or
(3) By the stockholders.
E. Expenses incurred by an officer or director in defending a
civil or criminal action, suit, or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit,
or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation
as authorized in this section. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
F. The indemnification and advancement of expenses provided by
or granted pursuant to the other subsections of this section shall not
be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of
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stockholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office.
G. A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent
of an other corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
H. For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee, or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other
enterprise, shall stand in the same position under the provisions of
this section with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its
separate existence had continued.
I. For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee, or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent
with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this section.
J. The indemnification and advancement of expenses provided by
or granted pursuant to this section shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
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<PAGE>
Section 4 of the Plan provides as follows:
No member of the Committee shall be liable for any action,
omission or determination relating to the Plan, and the Company shall
indemnify and hold harmless each member of the Committee and each other
director or employee of the Company to whom any duty or power relating
to the administration or interpretation of the Plan has been delegated
against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of
the Committee) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action, omission or
determination was taken or made by such member, director or employee in
bad faith and without reasonable belief that it was in the best
interests of the Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed or to be filed with the Securities and
Exchange Commission (the "SEC") are incorporated by reference in this
Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995, filed by the Company with the SEC on March 29, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, filed by the Company with the SEC on May 15, 1996;
(c) All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date hereof and prior to the filing of a
posteffective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold. Any
statement contained in this Registration Statement, or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for the purposes of this Registration Statement to
the extent that a statement contained herein, or in any other subsequently filed
document which also is incorporated or 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;
(d) The Company's Registration Statement on Form 8-A dated October 23,
1981, as updated by the Company's Current Report on Form 8-K dated July 8, 1993;
and
(e) The Company's Registration Statement on Form 8-A dated May 10,
1989.
Item 4. Description of Securities
The shares of the Company's Common Stock, $.10 par value per share as
well as the common stock purchase rights attached thereto (collectively, the
"Common Stock") to be offered pursuant to the Plan have been registered pursuant
to Section 12 of the Exchange Act. Accordingly, a description of the Common
Stock is not required herein.
Item 5. Interests of Named Experts and Counsel
The validity of the Common Stock offered hereby has been passed upon by
Jeffrey L. Dangeau, Esq., Southwestern Energy Company, 1083 Sain Street,
Fayetteville, Arkansas 72703. As of May 15, 1996, Mr. Dangeau beneficially owned
39,830 shares of Common Stock 1,371 shares granted under the 1993 Stock
Incentive Plan as restricted stock and including options to purchase 31,997
shares granted under the 1993 Stock Incentive Plan that are expected to become
exercisable at various times over a period not to exceed nine years
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<PAGE>
beginning at the date of each grant, but which would become exercisable
immediately upon a "change in control" of the Company, as defined in the 1993
Stock Incentive Plan.
The consolidated financial statements of the Company as of December 31,
1995, and for each of the three years in the period ended December 31, 1995,
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995, incorporated by reference herein have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said form as
experts in giving said reports.
Item 6. Indemnification of Directors and Officers
The Company has entered into indemnification agreements with each of
its directors and officers under which the Company has agreed to indemnify its
directors and officers against liabilities and litigation expenses resulting
from their service to the Company. The Company also maintains Directors' and
Officers' Liability Insurance with limits of $30,000,000.
Article ELEVENTH of the Company's Articles of Incorporation, as amended
effective as of May 26, 1993, provides as follows:
To the fullest extent permitted by the Arkansas Business Corporation
Act of 1987 as it now exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its
Shareholders for monetary damages for breach of fiduciary duty as a
director.
Section 6 and 7 of Article VII of the Company's By-laws provide as
follows:
SECTION 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS:
Directors and officers of the Company shall be indemnified to the
fullest extent now or hereafter permitted by law in connection with any
actual or threatened action or proceeding (including civil, criminal,
administrative or investigative proceedings) arising out of their
service to the Company or to any other organization at the Company's
request. Employees and agents of the Company who are not directors or
officers thereof may be similarly indemnified in respect of such
service to the extent authorized at any time by the Board of Directors.
The provisions of this Section shall be applicable to actions or
proceedings commenced after the adoption hereof, whether arising from
acts or omissions occurring before or after the adoption hereof, and to
persons who have ceased to be directors, officers or employees and
shall inure to the benefit of their heirs, executors, and
administrators. For the purposes of this Section, directors, officers,
trustees or employees of an organization shall be deemed to be
rendering service thereto at the Company's request if such organization
is, directly or indirectly, a wholly owned subsidiary of the Company or
is designated by the Board of Directors as an organization service to
which shall be deemed to be so rendered.
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SECTION 7. ADVANCEMENT OF LITIGATION EXPENSES:
Expenses incurred by a director or officer of the Corporation in
defending any actual or threatened action, or proceeding (including
civil, criminal, administrative or investigative proceedings) arising
out of their service to the Company or to any other organization at the
Company's request shall be paid by the Company in advance of the final
disposition of such action or proceeding upon receipt of an undertaking
by, or on behalf of, such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Company as authorized by the relevant provisions of the Arkansas
Business Corporation Act as it now exists or as it may hereafter be
amended. Such expenses of employees and agents of the Company who are
not directors or officers may be similarly advanced to the extent
authorized at any time by the Board of Directors. The provisions of
this section shall be applicable to actions or proceedings commenced
after the adoption hereof, whether arising from acts occurring before
or after the adoption hereof, and to persons who have ceased to be
directors, officers, and employees and shall inure to the benefit of
their heirs, executors, and administrators. For purposes of this
Section, directors, officers, trustees or employees of an organization
shall be deemed to be rendering service thereto at the Company's
request if such organization is, directly or indirectly, a wholly owned
subsidiary of the Company or is designated by the Board of Directors as
an organization service to which shall be deemed to be so rendered.
Section 4-27-850 of the Arkansas 1987 Business Corporation Act provides
as follows:
4-27-850 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES,
AND AGENTS--INSURANCE.--A. A corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending, or completed action, suit, or
proceedings, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation) by reason
of the fact that he is or was a director, officer, employee, or agent
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
12
<PAGE>
B. A corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, or employee, or agent of
the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court of chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court of chancery or
such other court shall deem proper.
C. To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in subsections
A. and B. of this section, or in defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
D. Any indemnification under subsections A. and B. of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections A. and B. of this section. Such
determinations shall be made:
(1) By the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such
action, suit, or proceeding; or
(2) If such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion; or
(3) By the stockholders.
E. Expenses incurred by an officer or director in defending a
civil or criminal action, suit, or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit,
or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if
13
<PAGE>
it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such
expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems
appropriate.
F. The indemnification and advancement of expenses provided by
or granted pursuant to the other subsections of this section shall not
be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
G. A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
H. For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee, or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other
enterprise, shall stand in the same position under the provisions of
this section with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its
separate existence had continued.
I. For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee, or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent
with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this section.
14
<PAGE>
J. The indemnification and advancement of expenses provided by
or granted pursuant to this section shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
Section 4 of the Plan provides as follows:
No member of the Committee shall be liable for any action,
omission, or determination relating to the Plan, and the Company shall
indemnify and hold harmless each member of the Committee and each other
director or employee of the Company to whom any duty or power relating
to the administration or interpretation of the Plan has been delegated
against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of
the Committee) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action, omission or
determination was taken or made by such member, director or employee in
bad faith and without reasonable belief that it was in the best
interests of the Company.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. List of Exhibits
The following exhibits are filed with or incorporated by
reference into this Registration Statement (numbering corresponds to the Exhibit
Table in Item 601 of Regulation S-K):
4.1 Southwestern Energy Company 1993 Stock Incentive Plan For
Outside Directors.
5.1 Opinion of Jeffrey L. Dangeau, Esq.
23.1 Consent of Jeffrey L Dangeau, Esq. (contained in the opinion
included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
Item 9. Undertakings
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with
15
<PAGE>
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement;
(2) That, for the purpose of determining any liability under the 1933
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; and
(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.
(4) That, for purposes of determining any liability under the 1933 Act,
each filing of the Company's Annual Report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of the 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.
(5) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fayetteville, State of Arkansas, on this 15th day of
May, 1996.
SOUTHWESTERN ENERGY COMPANY
By: /s/ CHARLES E. SCHARLAU
------------------------
Charles E. Scharlau
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Principal Executive Officers:
/s/ CHARLES E. SCHARLAU Date: May 15, 1996
- -------------------------------- -----------------
Charles E. Scharlau
Chairman of the Board and
Chief Executive Officer
/s/ DAN B. GRUBB Date: May 15, 1996
- ------------------------------- -----------------
Dan B. Grubb
President and Chief Operating Officer
Principal Financial Officer:
/s/ STANLEY D. GREEN Date: May 15, 1996
- ------------------------------- -----------------
Stanley D. Green
Executive Vice President -
Finance and Corporate Development
and Chief Financial Officer
Principal Accounting Officer:
/s/ GREGORY D. KERLEY Date: May 15, 1996
- ------------------------------ -----------------
Gregory D. Kerley
Vice President - Treasurer and Secretary
and Chief Accounting Officer
17
<PAGE>
Directors:
/s/ JOHN PAUL HAMMERSCHMIDT Date: May 15, 1996
- ------------------------------ -----------------
John Paul Hammerschmidt
/s/ ROBERT L. HOWARD Date: May 15, 1996
- ------------------------------ -----------------
Robert L. Howard
/s/ KENNETH R. MOURTON Date: May 15, 1996
- ------------------------------ -----------------
Kenneth R. Mourton
/s/ CHARLES E. SANDERS Date: May 15, 1996
- ------------------------------ -----------------
Charles E. Sanders
/s/ CHARLES E. SCHARLAU Date: May 15, 1996
- ------------------------------ -----------------
Charles E. Scharlau
18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
No. Description Method of Filing Location
- -------- ------------------------------------ ------------------------- --------------
<S> <C> <C>
4.1 Southwestern Energy Company Filed herewith
Company 1993 Stock Incentive
Plan For Outside Directors
5.1 Opinion of Jeffrey L. Dangeau, Esq. Filed herewith
23.1 Consent of Jeffrey L. Dangeau, Esq. Filed herewith (contained
in the opinion contained
in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP Filed herewith
</TABLE>
19
SOUTHWESTERN ENERGY COMPANY
1993 STOCK INCENTIVE PLAN FOR OUTSIDE DIRECTORS
(as adopted April 7, 1993)
1. Purpose of the Plan
This Southwestern Energy Company 1993 Stock Incentive Plan for Outside
Directors is intended to promote the interests of the Company and its
shareholders by providing the Company's non-employee directors with appropriate
incentives and rewards to encourage them to take a long-term outlook when
formulating Company policy, to encourage such individuals to remain on the Board
of Directors and to provide them with an equity interest in the Company.
2. Definitions
As used in the Plan, the following definitions apply to the terms indicated
below:
(a) "Board of Directors" shall mean the Board of Directors of the Company.
(b) "Change in Control" shall mean the occurrence of any of the following:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, an "Acquiring Person") becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities, excluding any employee benefit
plan sponsored or maintained by the Company (or any trustee of such
plan acting as trustee);
(ii) the Company's stockholders approve an agreement to merge
or consolidate the Company with another corporation (other than a
corporation 50% or more of which is controlled by, or is under common
control with, the Company);
(iii) any individual who is nominated by the Board of
Directors for election to the Board of Directors on any date fails to
be so elected as a direct or indirect result of any proxy fight or
contested election for positions on the Board;
(iv) a "change in control" of the Company of a nature that
would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Exchange Act occurs.
(c) "Code" shall mean the Internal Revenue Code of 1986.
(d) "Committee" shall mean the Compensation Committee of the Board of
Directors
<PAGE>
or such other committee as the Board of Directors shall appoint from time to
time to administer the Plan; provided, however, that the Committee shall at all
times consist of two or more persons, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 promulgated under Section 16 of the
Exchange Act.
(e) "Company" shall mean Southwestern Energy Company, an Arkansas
corporation.
(f) "Company Stock" shall mean the common stock of the Company.
(g) "Disability" shall mean any physical or mental condition that prevents
a Participant from being able to perform the Participant's duties as a director
for a period of twelve consecutive months.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) the "Fair Market Value" of a share of Company Stock with respect to any
day shall be (i) the closing sales price on the immediately preceding business
day of a share of Company Stock as reported on the principal securities exchange
on which shares of Company Stock are then listed or admitted to trading or (ii)
if not so reported, the average of the closing bid and ask prices on the
immediately preceding business day as reported on the National Association of
Securities Dealers Automated Quotation System or (iii) if not so reported, as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by the Committee. In the event that the price of a share of Company
Stock shall not be so reported, the Fair Market Value of a share of Company
Stock shall be determined by the Committee in its absolute discretion.
(j) "Incentive Award" shall mean an Option or LSAR granted pursuant to the
terms of the Plan.
(k) "LSAR" shall mean a limited stock appreciation right that is granted
pursuant to the provisions of Section 7 hereof and which relates to an Option.
Each LSAR shall be exercisable only upon the occurrence of a Change in Control
and only in the alternative to the exercise of its related Option.
(l) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof.
(m) "Participant" shall mean a member of the Board of Directors who is not
at the time of reference an employee of the Company or any of its affiliates and
to whom an Incentive Award is granted pursuant to the Plan, and, upon his death,
his successors, heirs, executors and administrators, as the case may be.
(n) "Person" shall mean a "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act.
(o) "Plan" shall mean the Southwestern Energy Company 1993 Stock Incentive
Plan
<PAGE>
For Outside Directors, as it may be amended from time to time.
(p) "Securities Act" shall mean the Securities Act of 1933, as amended.
3. Stock Subject to the Plan
Options shall be granted under the Plan with respect to a number of shares
of Company Stock set forth in Section 6 that in the aggregate does not exceed
80,000 shares. The grant of an LSAR shall not reduce the number of shares of
Company Stock with respect to which Options may be granted pursuant to the Plan.
To the extent Incentive Awards granted under the Plan are exercised, the
shares covered will be unavailable for future grants under the Plan. To the
extent that Options together with any related rights granted under the Plan
terminate, expire or are cancelled without having been exercised, or, in the
case of LSARs, exercised for cash, new Incentive Awards may be made with respect
to the shares covered thereby.
Shares of Common Stock issued under the Plan may be either newly issued
shares or treasury shares, at the discretion of the Committee.
4. Administration of the Plan
The Plan shall be administered by the Committee, which shall have full
authority to administer the Plan, including authority to interpret and construe
any provision of the Plan and the terms of any Incentive Award issued under it
and to adopt such rules and regulations for administering the Plan as it may
deem necessary or appropriate. Decisions of the Committee shall be final and
binding on all parties. Notwithstanding the foregoing, neither the Committee nor
any member thereof shall have any authority or discretion with respect to the
granting of awards hereunder that could cause any Participants to be
disqualified from acting as a "disinterested person" within the meaning of Rule
16b-3 promulgated under Section 16(b) of the Exchange Act.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be members of the Board of Directors who are not, at the time of
any grant hereunder,
<PAGE>
employees of the Company or its affiliates.
6. Formula Grant of Options
On the last business day of each fiscal year of the Company, each director
who is, on such date, eligible to participate in the Plan shall be granted an
Option with respect to 4,000 shares of Company Stock.
(a) Identification of Options
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as "non-qualified stock options."
(b) Exercise Price
The exercise price of any Option granted under the Plan shall be 100% of
the Fair Market Value of a share of Company Stock on the date on which such
Option is granted.
(c) Term and Exercise of Options
(1) Each Option shall become exercisable in installments at a rate of 25%
per year for each full twelve months of a Participant's service as a director
commencing on the date the Option is granted.
(2) Each Option shall be exercisable in whole or in part; provided, that no
partial exercise of an Option shall be for an aggregate exercise price of less
than $1,000. The partial exercise of an Option shall not cause the expiration,
termination or cancellation of the remaining portion thereof. Upon the partial
exercise of an Option, the agreements evidencing such Option and any related
LSARs, marked with such notations as the Committee may deem appropriate to
evidence such partial exercise, shall be returned to the Participant exercising
such Option together with the delivery of the certificates described in Section
6(c)(4) hereof.
(3) An Option shall be exercised by delivering notice to the Company's
principal office, to the attention of its Secretary, no less than one business
day in advance of the effective date of the proposed exercise. Such notice shall
be accompanied by the agreements evidencing the Option and any related LSARs,
shall specify the number of shares of Company Stock with respect to which the
Option is being exercised and the effective date of the proposed exercise and
shall be signed by the Participant. The Participant may withdraw such notice at
any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case such
agreements shall be returned to him. Payment for shares of Company Stock
purchased upon the exercise of an Option shall be made on the effective date of
such exercise either (i) in cash, by certified check, bank cashier's check or
wire transfer or (ii) subject to the approval of the Committee, in shares of
Company Stock owned by the Participant and valued at their Fair Market Value
<PAGE>
on the effective date of such exercise, or partly in shares of Company Stock
with the balance in cash, by certified check, bank cashier's check or wire
transfer. Any payment in shares of Company Stock shall be effected by the
delivery of such shares to the Secretary of the Company, duly endorsed in blank
or accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time.
(4) During the lifetime of a Participant, each Option granted to him shall
be exercisable only by him. No Option shall be assignable or transferable
otherwise than by will or by the laws of descent and distribution, nor shall any
Option be permitted to be pledged in any manner.
(5) Certificates for shares of Company Stock purchased upon the exercise of
an Option shall be issued in the name of the Participant or his beneficiary, as
the case may be, and delivered to the Participant or his beneficiary, as the
case may be, as soon as practicable following the effective date on which the
Option is exercised.
(d) Effect of Discontinuance of Director's Term
(1) In the event that the term of a Participant's membership on the Board
of Directors expires because the Participant (i) loses an election for a
position on the Board of Directors, (ii) resigns from the Board of Directors
prior to his completing ten years of service as a director or attaining age 72
or (iii) fails to seek election to the Board of Directors for a term commencing
prior to his completing ten years of service as a director or attaining age 72
(in any case, other than on account of death or Disability) (i) Options granted
to such Participant, to the extent that they were exercisable at the time of
such termination, shall remain exercisable until the expiration of three months
after such termination, on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that they were not exercisable at the
time of such termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be exercisable after
the expiration of its term.
(2) In the event that the term of a Participant's membership on the Board
of Directors expires (i) because of the Participant's resignation on or after
age 72 or after completing ten years of service, (ii) because of his failure to
seek election on or after age 72 or after completing ten years of service or
(iii) because of the Participant's disability or death (i) Options granted to
such Participant, to the extent that they were exercisable at the time of such
termination, shall remain exercisable until the expiration of one year after
such termination, on which date they shall expire, and (ii) Options granted to
such Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of such
termination; provided, however, that no Option shall be exercisable after the
expiration of its term.
(3) In the event that a Participant is removed from the Board of Directors
by the shareholders of the Company, all outstanding Options granted to such
Participant shall expire at the commencement of business on the date of such
removal.
<PAGE>
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted under the
Plan and outstanding at such time shall become fully and immediately exercisable
and shall remain exercisable until its expiration, termination or cancellation
pursuant to the terms of the Plan.
7. LSARs
Each Option granted hereunder shall include an LSAR relating to a number of
shares of Company Stock equal to the number of shares of Company Stock subject
to the related Option. An LSAR shall be granted at the same time as the time
that its related Option is granted. Each LSAR shall be evidenced by the
agreement evidencing the related Option. Each LSAR shall be subject to the
following terms and conditions:
(a) Benefit Upon Exercise
The exercise of an LSAR relating to an Option with respect to any number of
shares of Company Stock shall entitle the Participant to a cash payment, for
each such share, equal to the excess of (i) the greater of (A) the highest price
per share of Company Stock paid in the Change in Control in connection with
which such LSAR became exercisable and (B) the Fair Market Value of a share of
Company Stock on the date of such Change in Control over (ii) the exercise price
of the related Option. Such payment shall be made as soon as practicable, but in
no event later than the expiration of five business days after the effective
date of such exercise.
(b) Term and Exercise of LSARs
(1) An LSAR shall be exercisable only during the period commencing on the
first day following the occurrence of a Change in Control and terminating on the
expiration of sixty days after such date. Notwithstanding the preceding sentence
of this Section 7(b), in the event that an LSAR becomes exercisable prior to the
expiration of six months following the date on which it is granted, then the
LSAR shall also be exercisable during the period commencing on the first day
immediately following the expiration of such six month period and terminating on
the expiration of sixty days following such date. Notwithstanding anything else
herein, an LSAR may be exercised only if and to the extent that the Option to
which it relates is exercisable.
(2) The exercise of an LSAR with respect to a number of shares of Company
Stock shall cause the immediate and automatic cancellation of the Option to
which it relates with respect to an equal number of shares. The exercise of an
Option, or the cancellation, termination or expiration of an Option (other than
pursuant to this Paragraph (2)), with respect to a number of shares of Company
Stock, shall cause the cancellation of the LSAR related to it with respect to an
equal number of shares.
(3) Each LSAR shall be exercisable in whole or in part; provided, that no
partial exercise of an LSAR shall be for an aggregate exercise price of less
than $1,000. The
<PAGE>
partial exercise of an LSAR shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial exercise of an
LSAR, the agreement evidencing the LSAR and the related Option, marked with such
notations as the Committee may deem appropriate to evidence such partial
exercise, shall be returned to the Participant exercising such LSAR together
with the payment described in Paragraph 7(a) hereof.
(4) During the lifetime of a Participant, each LSAR granted to him shall be
exercisable only by him. No LSAR shall be assignable or transferable otherwise
than by will or by the laws of descent and distribution and otherwise than
together with its related Option, nor shall any LSAR be permitted to be pledged
in any manner.
(5) An LSAR shall be exercised by delivering notice to the Company's
principal office, to the attention of its Secretary, no less than one business
day in advance of the effective date of the proposed exercise. Such notice shall
be accompanied by the applicable agreements evidencing the LSAR and the related
Option shall specify the number of shares of Company Stock with respect to which
the LSAR is being exercised and the effective date of the proposed exercise and
shall be signed by the Participant. The Participant may withdraw such notice at
any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case such
agreements shall be returned to him.
8. Adjustment Upon Changes in Company Stock
(a) Shares Available for Grants
In the event of any change in the number of shares of Company Stock
outstanding by reason of any stock dividend or split, reverse stock split,
recapitalization, merger, consolidation, combination or exchange of shares or
similar corporate change, the number of shares of Company Stock with respect to
which Options and LSARs are to be granted under Section 6 or may be granted
under Section 3 hereunder shall be appropriately adjusted.
(b) Outstanding Options and LSARs -- Increase or
Decrease in Issued Shares Without Consideration
Subject to any required action by the shareholders of the Company, in the
event of any increase or decrease in the number of issued shares of Company
Stock resulting from a subdivision or consolidation of shares of Company Stock
or the payment of a stock dividend (but only on the shares of Company Stock), or
any other increase or decrease in the number of such shares effected without
receipt of consideration by the Company, the number of shares of Company Stock
subject to each outstanding Option and LSAR, and the exercise price per share of
Company Stock of each such Option and LSAR shall be appropriately adjusted.
(c) Outstanding Options and LSARs - Certain Mergers
<PAGE>
Subject to any required action by the shareholders of the Company, in the
event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Company Stock receive securities of another corporation), each
Option and LSAR outstanding on the date of such merger or consolidation shall
pertain to and apply to the securities which a holder of the number of shares of
Company Stock subject to such Option and LSAR would have received in such merger
or consolidation.
(d) Outstanding Options and LSARs - Certain Other Transactions
In the event of (i) a dissolution or liquidation of the Company, (ii) a
sale of all or substantially all of the Company's assets, (iii) a merger or
consolidation involving the Company in which the Company is not the surviving
corporation or (iv) a merger or consolidation involving the Company in which the
Company is the surviving corporation but the holders of shares of Company Stock
receive securities of another corporation and/or other property, including cash,
each Option (including each LSAR related thereto) outstanding immediately prior
to such event (whether or not then exercisable) shall be cancelled effective
immediately prior to the occurrence of such event, and, in full consideration of
such cancellation, the Participant to whom such Option was granted shall be paid
an amount in cash for each share of Company Stock subject to such Option, equal
to the excess of (A) the value, as determined by an independent appraisal of the
property (including cash) received by the holder of a share of Company Stock as
a result of such event over (B) the exercise price of such Option.
(e) No Other Rights
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Company Stock subject to an Incentive Award or the exercise
price of any Option or LSAR.
9. Rights as a Stockholder
No person shall have any rights as a stockholder with respect to any shares
of Company Stock covered by or relating to any Incentive Award granted pursuant
to this Plan until the date of the issuance of a stock certificate with respect
to such shares. Except as otherwise expressly provided in Section 8 hereof, no
adjustment to any Incentive Award shall be made for dividends or other rights
for which the record date occurs prior to the date such stock certificate is
issued.
<PAGE>
10. Securities Matters
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of
Company Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
shares of Company Stock pursuant to the Plan unless and until the Company is
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of the New York Stock Exchange and any other securities
exchange on which shares of Company Stock are traded. Each Participant may be
required, as a condition of the issuance and delivery of certificates evidencing
shares of Company Stock pursuant to the terms hereof, that the recipient of such
shares make appropriate covenants, agreements and representations, and that such
certificates bear appropriate legends.
(b) The exercise of any Option granted hereunder shall be effective only at
such time as counsel to the Company shall have determined that the issuance and
delivery of shares of Company Stock pursuant to such exercise is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of the New York Stock Exchange and any other securities exchange on
which shares of Company Stock are traded. The effectiveness of any exercise of
an Option granted hereunder may be deferred in order to allow the issuance of
shares of Company Stock pursuant thereto to be made pursuant to registration or
an exemption from registration or other methods for compliance available under
federal or state securities laws. The Participant shall be informed in writing
of any such deferral. During the period that the effectiveness of the exercise
of an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
11. Withholding Taxes
(a) Cash Remittance
Whenever shares of Company Stock are to be issued upon the exercise of an
Option, the Company shall have the right to require the Participant to remit to
the Company in cash an amount sufficient to satisfy federal, state and local
withholding tax requirements, if any, attributable to such exercise, occurrence
or payment prior to the delivery of any certificate or certificates for such
shares. In addition, upon the exercise of an LSAR, the Company shall have the
right to withhold from any cash payment required to be made pursuant thereto an
amount sufficient to satisfy the federal, state and local withholding tax
requirements, if any, attributable to such exercise or grant.
(b) Stock Remittance
Subject to Section 11(d) hereof, at the election of the Participant,
subject to the approval of the Committee, when shares of Company Stock are to be
issued upon the exercise of an Option, in lieu of the remittance required by
Section 11(a) hereof, the
<PAGE>
Participant may tender to the Company a number of shares of Company Stock
determined by such Participant, the Fair Market Value of which at the tender
date the Committee determines to be sufficient to satisfy the federal, state and
local withholding tax requirements, if any, attributable to such exercise,
occurrence or grant and not greater than the Participant's estimated total
federal, state and local tax obligations associated with such exercise,
occurrence or grant.
(c) Stock Withholding
The Company shall have the right, when shares of Company Stock are to be
issued upon the exercise of an Option, in lieu of requiring the remittance
required by Section 11(a) hereof, to withhold a number of such shares, the Fair
Market Value of which at the exercise date the Committee determines to be
sufficient to satisfy the federal, state and local withholding tax requirements,
if any, attributable to such exercise, occurrence or grant and is not greater
than the Participant's estimated total federal, state and local tax obligations
associated with such exercise, occurrence or grant.
(d) Timing and Method of Elections
Notwithstanding any other provisions of the Plan, a Participant may not
make the election described in Section 11(b) hereof prior to the expiration of
six months after the date on which the applicable Option, was granted, except in
the event of the death or Disability of the Participant. A Participant may not
make such election other than (i) during the 10-day window period beginning on
the third business day following the date of release for publication of the
Company's quarterly and annual summary statements of sales and earnings and
ending on the twelfth business day following such date or (ii) at least six
months prior to the date as of which the income attributable to the exercise of
such Option is recognized under the Code. Such election shall be irrevocable and
shall be made by the delivery to the Company's principal office, to the
attention of its Secretary, of a written notice signed by the Participant.
Further, with respect to any Participant who is also a member of the Committee,
such election shall be made in advance and shall apply to all Incentive Awards
granted to such Participant under the Plan in the future.
12. Amendment or Termination of the Plan
The Board of Directors may, at any time, suspend or discontinue the Plan or
revise or amend it in any respect whatsoever; provided, however, that if and to
the extent required by Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act or by any comparable or successor exemption under which the Board
of Directors believes it is appropriate for the Plan to qualify, no amendment
shall be effective without the approval of the shareholders of the Company, that
(i) except as provided in Section 8 hereof, materially increases the number of
shares of Company Stock that may be issued under the Plan, (ii) materially
increases the benefits accruing to individuals pursuant to the Plan or (iii)
materially modifies the
<PAGE>
requirements as to eligibility for participation in the Plan; and provided
further, however, the provisions of the Plan may not be amended more than once
every six months, other than to comply with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended or the rules thereunder. No
action hereunder may, without the consent of a Participant, reduce the
Participant's rights under any previously granted and outstanding Incentive
Award.
13. No Obligation to Exercise
The grant to a Participant of an Option and LSAR shall impose no obligation
upon such Participant to exercise such Option or LSAR.
14. Transfers Upon Death
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgements made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 14, no Incentive Award
shall be transferable, and shall be exercisable only by a Participant during the
Participant's lifetime.
15. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
16. Failure to Comply
In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant (or
beneficiary) evidencing an Incentive Award, unless such failure is remedied by
such Participant (or beneficiary) within ten days after having been notified of
such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part.
<PAGE>
17. Effective Date of Plan
The Plan was adopted by the Board of Directors on April 7, 1993, subject to
approval by the shareholders of the Company at their annual meeting on May 26,
1993 in accordance with applicable law, and the requirements of Rule 16b-3
promulgated under Section 16(b) of the Exchange Act. Incentive Awards may be
granted under the Plan at any time prior to the receipt of such shareholder
approval; provided, however, that each such grant shall be subject to such
approval. Without limitation on the foregoing, no Option or LSAR may be
exercised prior to the receipt of such approval. If the Plan is not so approved
prior to December 31, 1993, then the Plan and all Incentive Awards then
outstanding hereunder shall forthwith automatically terminate and be of no force
and effect.
18. Term of the Plan
The Plan will terminate automatically upon the earlier of the expiration of
10 years after the Effective Date of the Plan or the grant of incentive awards
with respect to the maximum number of shares that may be issued under the Plan.
19. Applicable Law
Except to the extent preempted by any applicable federal law, the Plan will
be construed and administered in accordance with the laws of the State of
Arkansas, without reference to the principles of conflicts of law.
May 15, 1996
Southwestern Energy Company
1083 Sain Street
Fayetteville, AR 72703
Ladies and Gentlemen:
I am Assistant Secretary of Southwestern Energy Company, an Arkansas
corporation (the "Company"), and as such have acted as the Company's advisor in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
of a Registration Statement on Form S-8, (the "Registration Statement") and the
related prospectus (the "Prospectus"), relating to the offering from time to
time up to 240,000 shares of the Company's common stock, including related
purchase rights (the Shares), to non-employee directors of the Company and its
subsidiaries pursuant to the Company's 1993 Stock Incentive Plan for Outside
Directors (the "Plan").
I have participated in the preparation of the Registration Statement and
the Prospectus and have reviewed the originals or copies certified or otherwise
identified to my satisfaction of all such corporate records of the Company and
such other instruments and other certificates of public officials, officers and
representatives of the Company and such other persons, and I have made such
investigations of law, as I have deemed appropriate as a basis for the opinions
expressed below. In rendering the opinions expressed below, I have assumed the
authenticity of all documents submitted to me as originals and the conformity to
the originals of all documents submitted to me as copies.
Based on the foregoing, it is my opinion that:
1. The Company is a corporation validly existing and in good standing under
the laws of the State of Arkansas.
2. The Shares have been duly authorized by all necessary corporate action
of the Company and validly reserved for issuance as provided by the Plan. There
are no preemptive rights of stockholders as such with respect to such issuance
of the Shares, and when such shares are issued pursuant to the Plan as described
in the Registration Statement, such shares will be legally issued, fully paid,
and nonassessable and will constitute legal, valid, binding and enforceable
obligations of the Company.
<PAGE>
Southwestern Energy Company
May 15, 1996
Page Two
In rendering this opinion, I express no opinion other than as to the law of
the State of Arkansas and the United States of America.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to my name under the heading "Legal
Opinion" in the Prospectus without admitting that I am an "expert" under the
Securities Act, or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this exhibit.
Very truly yours,
Jeffrey L. Dangeau
Attorney and Assistant Secretary
Southwestern Energy Company
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 February 5, 1996
incorporated by reference in Southwestern Energy Company's Form 10-K for the
year ended December 31, 1995 and to all references to our Firm included in this
registration statement dated May 15, 1996.
/s/ Arthur Andersen LLP
Tulsa, Oklahoma
May 15, 1996
