As filed with the Securities and Exchange Commission on September 30, 1998.
Registration No.333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SOUTHWESTERN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Arkansas 71-0205415
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
1083 Sain Street
Fayetteville, Arkansas 72703
(Address of principal executive offices including zip code)
Southwestern Energy Company 1993 Stock Incentive Plan
Employee Stock Option and Restricted Stock Agreements
(Full title of the plan)
Charles E. Scharlau
Chief Executive Officer
1083 Sain Street
Fayetteville, Arkansas 72703
(501) 521-1141
(Name, address and telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of securities Amount to be offering aggregate Amount of
to be registered registered price per offering registration
share price fee
Common Stock, 616,480
$.10 par value shares(1)(2) (3) $6,000,449(3) $1,771
=================== ============ ========= ============== ==================
(1) Pursuant to Rule 416, this Registration Statement also covers such
indeterminable number of additional shares as may become issuable pursuant to
terms designed to prevent dilution resulting from stock splits, stock dividends,
merger or combination or similar events.
(2) Each share is accompanied by a common stock purchase right pursuant to the
Registrant's Shareholder Rights Agreement, dated May 5, 1989, with the First
National Bank of Chicago, as Rights Agent.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457. The Proposed Maximum Aggregate Offering Price is based
on an aggregate of (a) 100,000 shares presently subject to stock options at an
exercise price of $11.9375 per share, (b) 9,500 shares presently subject to
stock options at an exercise price of $11.5625 per share, (c) 1,500 shares
presently subject to stock options at an exercise price of $11.375 per share,
(d) 20,000 shares presently subject to stock options at an exercise price of
$11.25 per share, (e) 5,000 shares presently subject to stock options at an
exercise price of $11.00 per share, (f) 1,400 shares presently subject to stock
options at an exercise price of $10.8125 per share, (g) 3,000 shares presently
subject to stock options at an exercise price of $10.625 per share, (h) 2,400
shares presently subject to stock options at an exercise price of $10.5625 per
share, (i) 6,000 shares presently subject to stock options at an exercise price
of $9.1875 per share, (j) 7,000 shares presently subject to stock options at an
exercise price of $9.4375 per share, (k) 400 shares presently subject to stock
options at an exercise price of $8.75 per share, (l) 5,000 shares presently
subject to stock options at an exercise price of $6.8125 per share, and (m) the
average of the high and low prices reported on the New York Stock Exchange on
September 28, 1998, of $9.1563 per share with respect to up to 425,000 shares
issuable in connection with stock options and shares of restricted stock awarded
or to be awarded under the Southwestern Energy Company 1993 Stock Incentive Plan
and with respect to the reofferings or resales of 30,280 shares of restricted
stock previously awarded under certain restricted stock agreements.
<PAGE>
STATEMENT OF INCORPORATION BY REFERENCE AND EXPLANATORY NOTE
This Registration Statement on Form S-8 incorporates by reference the
contents of the Registration Statement on Form S-8, File No. 333-89914, filed by
Southwestern Energy Company (the "Company") with the Securities and Exchange
Commission on May 15, 1996, relating to the Company's 1993 Stock Incentive Plan.
This Registration Statement on Form S-8 registers an additional 425,000 shares
of the Company's Common Stock, together with related Common Stock purchase
rights, which may be issued under the terms of the Company's 1993 Stock
Incentive Plan, 161,200 shares of the Company's Common Stock, together with
related Common Stock purchase rights, which may be issued under the terms of
certain stock options agreements granted by the Company and 30,280 shares of the
Company's Common Stock, together with related Common Stock purchase rights,
previously issued to certain employees pursuant to restricted stock agreements
and which may be resold by such employees pursuant to the Prospectus filed as a
part of the Registration Statement.
The information required by Part I of Form S-8 to be contained in the
Section 10(a) Prospectus to be used for offers and sales of the Company's Common
Stock covered by this Registration Statement has been omitted in accordance with
Rule 428 under the Securities Act of 1933, as amended, and the Note to Part I of
Form S-8. The Prospectus filed as a part of this Registration Statement (the
"Reoffer Prospectus") has been prepared in accordance with the requirements of
Part I of Form S-3 pursuant to the Instructions to Form S-8, and the Reoffer
Prospectus may be used for reofferings and resales of the Company's Common Stock
described therein.
<PAGE>
PROSPECTUS
Southwestern Energy Company
Common Stock ($.10 Par Value)
(and attached common stock purchase rights)
This Prospectus relates to up to 1,830,280 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, an
Arkansas corporation (the "Company"), which may be offered for resale by certain
officers and employees of the Company (the "Selling Shareholders"). The Selling
Shareholders have acquired and/or may in the future acquire the Shares under the
Southwestern Energy Company 1993 Stock Incentive Plan (the "1993 Plan") and
certain stock option and restricted stock agreements (the "Agreements").
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 may acquire the Shares. All expenses of
registration incurred in connection herewith are being borne by the Company,
however, all selling commissions and other expenses incurred by any Selling
Shareholder in connection with the sale of Shares 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 Securities Act, in which case any commissions received by any
such broker may be deemed to be underwriting commissions under the Securities
Act of 1933, as amended (the "Securities Act").
The Company's Common Stock is listed on the New York Stock Exchange
under the symbol "SWN." The last reported sale price of the Company's Common
Stock on the New York Stock Exchange on September 28, 1998, was $9.00.
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 September 30, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy and information statements and other information can be inspected
and copied at prescribed rates at the public reference facilities maintained by
the Commission at its principal office located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, the Chicago Regional Office located at Suite 1400, 500
West Madison Street, Chicago, Illinois 60661, and the New York Regional Office
located at Suite 1300, Seven World Trade Center, New York, New York 10048. The
Commission also maintains a site on the World Wide Web that contains reports,
proxy and information statements and other information filed electronically by
the Company with the Commission which can be accessed over the Internet at
http://www.sec.gov. In addition, such material can 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 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, 1997;
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998, and June 30, 1998;
3. The Company's Current Reports on Form 8-K dated May 22, 1998,
and May 27, 1998;
4. 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
5. 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 post-effective 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.
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.
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<PAGE>
TABLE OF CONTENTS
Page
Use of Proceeds................................................................3
Selling Shareholders...........................................................3
Plan of Distribution...........................................................5
Experts........................................................................6
Legal Opinion..................................................................6
Indemnification................................................................6
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 1993 Plan and the Agreements. The Company will
add any such funds to its general funds and use them for working capital and
general corporate purposes.
SELLING SHAREHOLDERS
The Shares are being registered for reoffers and resales by Selling
Shareholders who may acquire or have acquired such Shares pursuant to grants of
such Shares or pursuant to the exercise of stock options granted to them under
the 1993 Plan or the Agreements. The purchase price for any Shares which may be
acquired under an option granted under the 1993 Plan or the Agreements is equal
to the fair market value of the Company's Common Stock on the date the option
was granted. The Selling Shareholders named on the following table may resell
all, a portion of, or none of the Shares they acquire pursuant to the 1993 Plan
or the Agreements. Key employees deemed to be "affiliates" of the Company within
the meaning of Rule 405 under the Securities Act who acquire Shares or options
to acquire Shares may be added to the Selling Shareholders listed below from
time to time, and the number of Shares eligible to be reoffered by the Selling
Shareholders listed below may be adjusted, either by means of a post-effective
amendment hereto or by use of a prospectus supplement filed pursuant to Rule
424(b) under the Securities Act.
The individuals currently holding options and/or shares of restricted
stock under the 1993 Plan or the Agreements and who may be eligible to resell
Shares under this Prospectus, and the amounts of Shares eligible to be resold,
are as follows:
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Eligible to
Selling Shareholder Position with the Company be Reoffered
- ------------------- ------------------------- ------------
Charles E. Scharlau................ Chief Executive Officer and Chairman of the Board 414,996(1)
Harold M. Korell................... President and Chief Operating Officer 210,882(1)
Gregory D. Kerley.................. Senior Vice President and Chief Financial 101,273(1)
Officer
Debbie J. Branch................... Senior Vice President, Southwestern Energy Services 38,920(1)
Company and Southwestern Energy
Pipeline Company
Charles V. Stevens................. Senior Vice President, Arkansas Western Gas 54,643(1)
Company
Alan H. Stevens.................... Senior Vice President, Southwestern Energy 138,000(2)
Production Company and SEECO, Inc.
Teresa L. Baker.................... Senior Landman, Southwestern Energy Production 240(3)
Company
John W. Batson..................... Staff Geophysicist, Southwestern Energy 1,000(3)
Production Company
William K. Butler.................. Senior Production Engineer, Southwestern Energy 420(3)
Production Company
Alan R. Clemens.................... Staff Geophysicist, Southwestern Energy 1,000(3)
Production Company
Jimmy R. Dewbre.................... Land Manager, Southwestern Energy Production 1,000(3)
Company
Patrick T. Gordon.................. Senior Production Geologist, Southwestern Energy 590(3)
Production Company
Dale J. Kardash.................... District Engineer, Southwestern Energy Production 590(3)
Company
Karl A. Knudson.................... Senior Reservoir Engineer, Southwestern Energy 1,000(3)
Production Company
Richard F. Lane.................... Exploration Manager, Southwestern Energy 1,820(3)
Production Company
Richard C. Merrill................. Staff Exploration Geologist, Southwestern Energy 750(3)
Production Company
Freda R. O'Brien................... Staff Reservoir Engineer, Southwestern Energy 750(3)
Production Company
Robert C. Pace Staff Geologist, Southwestern Energy Production 1,000(3)
Company
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<PAGE>
Shares Eligible to
Selling Shareholder Position with the Company be Reoffered
- ------------------- ------------------------- ------------
Phillip R. Shelby.................. Senior Production Geologist, Southwestern Energy 420(3)
Production Company
Joe A. Stubblefield................ Drilling Manager, Southwestern Energy Production 1,500(3)
Company
Elsie C. Sullivan.................. Staff Geologist, Southwestern Energy Production 1,000(3)
Company
Ricardo Vasquez.................... Staff Geologist, Southwestern Energy Production 600(3)
Company
Matt B. Williams................... Senior Geologist, Southwestern Energy Production 600(3)
Company
Daniel R. Zebrowski................ Staff Geophysicist, Southwestern Energy 1,000(3)
Production Company
</TABLE>
(1) Represents shares of Common Stock which may be acquired upon the exercise of
options granted under the 1993 Plan and shares of restricted Common Stock issued
under the 1993 Plan.
(2) Includes 20,000 shares of Common Stock which may be acquired upon the
exercise of options granted under the 1993 Plan, 3,000 shares of restricted
Common Stock issued under the 1993 Plan, 100,000 shares of Common Stock which
may be acquired upon the exercise of options granted pursuant to a non-qualified
stock option and limited stock appreciation right agreement and 15,000 shares of
restricted Common Stock issued pursuant to a restricted stock agreement.
(3) Represents shares of restricted Common Stock issued pursuant to restricted
stock agreements.
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 customary 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
-5-
<PAGE>
Section 2(11) of the Securities 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 Securities Act. Shares covered by this
Prospectus also may be sold under Rule 144 or another exemption under the
Securities Act rather than pursuant to this Prospectus.
There can be no assurance that the Selling Shareholders will sell any
or all of the Shares offered by them hereby.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997, and for each of the three years in the period ended December 31, 1997,
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997, incorporated by reference herein, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.
LEGAL OPINION
Jeffrey L. Dangeau, Esq. has opined as to the validity of the Shares.
As of September 30, 1998, Mr. Dangeau beneficially owned 62,226 shares of Common
Stock, including 4,653 shares granted under the 1993 Plan as restricted stock
and options to purchase 51,109 shares granted under the 1993 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
Plan.
INDEMNIFICATION
Section 4-27-850 of the Arkansas Code Annotated provides that the
Company 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 or
proceeding (other than an action by or in the right of the Company) by reason of
the fact that he is or was a director, officer, employee or agent of the
Company, against expenses, judgments, fines and amounts paid in settlements
reasonably incurred by him in connection with such action or proceeding if he
acted in good faith in a manner reasonably believed to be in or not opposed to
the best interests of the Company. In addition, the Company 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 or suit by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the Company against expenses
actually reasonably incurred by him in connection with the defense or settlement
of such action if he acted in good faith in a manner reasonably believed to be
in or not opposed to the best interests of the Company and except that no
indemnification shall be made in respect of any claim as to which such person
shall have been adjudged to be liable for negligence or misconduct unless and
only to the extent the court in which
-6-
<PAGE>
such action was brought shall determine that, despite the adjudication of
liability, but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the court shall
deem proper.
Article VII, Section 6, of the Company's Bylaws provides that the
Company's officers and directors shall be indemnified to the fullest extent
permitted by law in connection with any actual or threatened action or
proceeding arising out of their service to the Company (including service to a
subsidiary of the Company) or to any other organization at the Company's
request.
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 costs resulting from
their service to the Company. The Company also maintains directors' and
officers' liability insurance.
Section 4 of the 1993 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 Securities
Act may be permitted to directors, officers or controlling persons of 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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents heretofore filed by the Company with the
Securities and Exchange Commission are incorporated by reference in this
Registration Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998, and June 30, 1998;
(3) The Company's Current Reports on Form 8-K dated May 22, 1998,
and May 27, 1998;
(4) 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
(5) The Company's Registration Statement on Form 8-A dated
May 10, 1989.
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities offered hereby then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from their respective dates of filing. Any statement contained in
this Registration Statement, or in a document 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 in any other subsequently
filed incorporated document 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.
Item 5. Interests of Named Experts and Counsel.
Jeffrey L. Dangeau, Esq. has opined as to the validity of the Shares.
As of September 30, 1998, Mr. Dangeau beneficially owned 62,226 shares of Common
Stock, including 4,653 shares
II-1
<PAGE>
granted under the Company's 1993 Stock Incentive Plan (the "1993 Plan") as
restricted stock and options to purchase 51,109 shares granted under the 1993
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 Plan.
Item 6. Indemnification of Directors and Officers.
Section 4-27-850 of the Arkansas Code Annotated provides that Company
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 or
proceeding (other than an action by or in the right of the Company) by reason of
the fact that he is or was a director, officer, employee or agent of the
Company, against expenses, judgments, fines and amounts paid in settlements
reasonably incurred by him in connection with such action or proceeding if he
acted in good faith in a manner reasonably believed to be in or not opposed to
the best interests of the Company. In addition, the Company 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 or suit by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the Company against expenses
actually reasonably incurred by him in connection with the defense or settlement
of such action if he acted in good faith in a manner reasonably believed to be
in or not opposed to the best interests of the Company and except that no
indemnification shall be made in respect of any claim as to which such person
shall have been adjudged to be liable for negligence or misconduct unless and
only to the extent the court in which such action was brought shall determine
that, despite the adjudication of liability, but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Article VII, Section 6, of the Company's Bylaws provides that the
Company's officers and directors shall be indemnified to the fullest extent
permitted by law in connection with any actual or threatened action or
proceeding arising out of their service to the Company (including service to a
subsidiary of the Company) or to any other organization at the Company's
request.
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 costs resulting from
their service to the Company. The Company also maintains directors' and
officers' liability insurance.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of 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 Securities 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
II-2
<PAGE>
of the Company in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Item 7. Exemption from Registration Claimed.
Prior to the effectiveness of the initial filing of this Registration
Statement, options to purchase 161,200 shares of the Company's Common Stock and
30,280 restricted shares of Common Stock were awarded pursuant to the certain
stock option and restricted stock agreements in connection with the commencement
of employment with the Company. Registration of the shares of Common Stock was
not required because the awards of such options and shares did not constitute a
"sale" for purposes of the Securities Act because no cash or other tangible or
definable consideration was paid for such awards. See SEC Release 33-6188, SEC
Docket Volume 19, No. 7 at 482 (February 19, 1980). In addition, such
transactions did not involve a public offering and were therefore exempt
pursuant to the provisions of Section 4(2) under the Act.
Item 8. Exhibits.
Exhibit Number Description
5.1 Opinion of Jeffrey L. Dangeau, Esq.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Jeffrey L. Dangeau, Esq. (contained in the
opinion included in Exhibit 5.1).
24 Power of Attorney (included on page II-6 of this
Registration Statement).
99.1 Southwestern Energy Company 1993 Stock Incentive Plan,
as amended and restated as of February 18, 1998.
99.2 Restricted Stock Agreement dated January 2, 1998,
between Southwestern Energy Company and Alan H.
Stevens.
99.3 Non-qualified Stock Option and Limited Stock
Appreciation Right Certificate dated January 2, 1998,
between Southwestern Energy Company and Alan H.
Stevens.
II-3
<PAGE>
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of a prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in the volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in this Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(a)(1)(i) and (a)(1)(ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated
by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) 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.
II-4
<PAGE>
(b) The undersigned Registrant hereby further 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 Section 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 this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) 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 Securities and Exchange
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.
II-5
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, 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 Fayetteville, State of Arkansas on the 30th of
September, 1998.
SOUTHWESTERN ENERGY COMPANY
By: /s/ Charles E. Scharlau
-----------------------------
Charles E. Scharlau
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Charles E. Scharlau and Gregory D.
Kerley, each of them, his true and lawful attorneys-in-fact and agents with full
power of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or their substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/ Charles E. Scharlau Chairman of the Board and September 30, 1998
- -------------------------- Chief Executive Officer
Charles E. Scharlau (Principal Executive Officer)
/s/ Gregory D. Kerley
- -------------------------- Senior Vice President-- September 30, 1998
Gregory D. Kerley Finance and Chief Financial
Officer (Principal Financial Officer)
/s/Stanley T. Wilson Controller and Chief Accounting September 30, 1998
- ------------------------- Officer (Principal Accounting Officer)
Stanley T. Wilson
II-6
<PAGE>
Signature Title Date
/s/ Lewis E. Epley, Jr. Director September 30, 1998
- ---------------------------------
Lewis E. Epley, Jr.
/s/ John Paul Hammerschmidt Director September 30, 1998
- ---------------------------
John Paul Hammerschmidt
/s/ Robert L. Howard Director September 30, 1998
- -------------------------------
Robert L. Howard
/s/ Kenneth R. Mourton Director September 30, 1998
- ------------------------------
Kenneth R. Mourton
</TABLE>
II-7
September 30, 1998
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 assisted the Company in connection
with the preparation and filing with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), of a Registration Statement on Form S-8 (the "Registration Statement"),
relating to 616,480 shares of the Company's common stock, par value $.10 per
share, including related common stock purchase rights (the "Shares"), issuable
under the Company's 1993 Stock Incentive Plan and under stock option and
restricted stock agreements (collectively, the "Plans").
I 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 the Shares have been duly
authorized by all necessary corporate action of the Company, and the Shares,
when issued and paid for in accordance with the terms of the Plans and at a
price per share in excess of the par value per share for such Shares, will be
legally issued, fully paid, and nonassessable.
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 constituting a part of the Registration Statement
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
-1-
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 of
Southwestern Energy Company (the "Company") of our report dated February 4,
1998, relating to the consolidated financial statements of the Company,
incorporated by reference in Southwestern Energy Company's Annual Report on Form
10-K for the year ended December 31, 1997, and to all references to our firm
included in such Registration Statement.
/s/ Arthur Andersen LLP
Tulsa, Oklahoma
September 30, 1998
-1-
APPENDIX
SOUTHWESTERN ENERGY COMPANY
1993 STOCK INCENTIVE PLAN
(As Amended and Restated as of February 18, 1998)
1. Purpose of the Plan
This Southwestern Energy Company 1993 Stock Incentive Plan is intended to
promote the interests of the Company and its shareholders by providing the
Company's key employees on whose judgment, initiative and efforts the successful
conduct of the business of the Company largely depends and who are largely
responsible for the management, growth and protection of the business of the
Company, with appropriate incentives and rewards to encourage them to continue
in the employ of the Company and to maximize their performance.
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) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination of
the Participant's employment by the Company on account of (i) the willful
and continued failure by the Participant substantially to perform his
duties and obligations to the Company (other than any such failure
resulting from his incapacity due to physical or mental illness) or (ii)
the willful engaging by the Participant in misconduct which is materially
injurious to the Company. For purposes of this Section 2(b), no act, or
failure to act, on a Participant's part shall be considered "willful"
unless done, or omitted to be done, by the Participant in bad faith and
without reasonable belief that his action or omission was in the best
interests of the Company
(c) "Cash Bonus" shall mean an award of a bonus payable in cash
pursuant to Section 13 hereof.
(d) "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; or
(v) a majority of the Board determines in its sole and absolute
discretion that there has been a Change in Control of the Company or
that there will be a Change in Control of the Company upon the
occurrence of certain specified events and such events occur.
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(e) "Code" shall mean the Internal Revenue Code of 1986.
(f) "Committee" shall mean the Compensation Committee of the Board of
Directors 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.
(g) "Company" shall mean Southwestern Energy Company, an Arkansas
corporation, and each of its Subsidiaries.
(h) "Company Stock" shall mean the common stock of the Company.
(i) "Disability" shall mean any physical or mental condition that
would qualify a Participant for a disability benefit under the long-term
disability plan maintained by the Company and applicable to him.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) 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.
(1) "Incentive Award" shall mean an Option, LSAR, Tandem SAR,
Stand-Alone SAR, share of Restricted Stock, share of Phantom Stock, Stock
Bonus or Cash Bonus granted pursuant to the terms of the Plan.
(m) "Incentive Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of Section 422 of the Code and
that is identified as an Incentive Stock Option in the agreement by which
it is evidenced.
(n) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued
by the Company pursuant to the terms of Section 10(d) hereof.
(o) "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.
(p) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(q) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof. Each Option shall be identified as
either an Incentive Stock Option or a Non-Qualified Stock Option in the
agreement by which it is evidenced.
(r) "Participant" shall mean an employee of the Company who is
eligible to participate in the Plan 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.
(s) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(t) "Phantom Stock" shall mean the right to receive in cash the Fair
Market Value of a share of Company
2
<PAGE>
Stock, which right is granted pursuant to Section 11 hereof and subject
to the terms and conditions contained therein.
(u) "Plan" shall mean the Southwestern Energy Company 1993 Stock
Incentive Plan, as it may be amended from time to time.
(v) "Restricted Stock" shall mean a share of Company Stock which is
granted pursuant to the terms of Section 10 hereof and which is subject to
the restrictions set forth in Section 10(c) hereof for so long as such
restrictions continue to apply to such share.
(w) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(x) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 hereof which is not related to any Option.
(y) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Company Stock pursuant to Section 12 hereof.
(z) "Subsidiary" shall mean any corporation in which, at the time of
reference, the Company owns, directly or indirectly, stock comprising more
than fifty percent of the total combined voting power of all classes of
stock of such corporation.
(aa) "Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 8 hereof which is related to an Option. Each Tandem
SAR shall be exercisable only to the extent its related Option is
exercisable and only in the alternative to the exercise of its related
Option.
(bb) "Vesting Date" shall mean the date established by the Committee
on which a share of Restricted Stock or Phantom Stock may vest.
3. Stock Subject to the Plan
Under the Plan, the Committee may grant to Participants (i) Options, (ii)
LSARs, (iii) Tandem SARs, (iv) Stand-Alone SARs, (v) shares of Restricted Stock,
(vi) shares of Phantom Stock, (vii) Stock Bonuses and (viii) Cash Bonuses.
Subject to adjustment as provided in Section 14 hereof, the Committee may
grant: (a) Options, shares of Restricted Stock, and Stock Bonuses under the Plan
with respect to a number of shares of Company Stock that in the aggregate, does
not exceed 1,700,000 shares; and (b) Stand-Alone SARs, shares of Phantom Stock
and Cash Awards with respect to a number of shares of Company Stock that in the
aggregate does not exceed 1,700,000 shares.
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, Stand-Alone SARs or Tandem SARs exercised for cash, new Incentive
Awards may be made with respect to the shares covered thereby. In the event that
any shares of Restricted Stock or Phantom Stock, or any shares of Company Stock
granted in a Stock Bonus are forfeited or cancelled for any reason, such shares
(together with any related Cash Bonuses) shall again be available for grants
under the Plan; provided that, if and to the extent required under Rule 16b-3
promulgated under Section 16(b) of the Exchange Act, no shares of Company Stock
in respect of a forfeited Stock Bonus or grant of Restricted Stock shall again
be available for grant to the extent that, prior to such forfeiture, the
Participant had any benefits of ownership such as the present right to receive
dividends distributed with respect thereto.
Shares of Company Stock issued under the Plan may be either newly issued
shares or treasury shares, at the discretion of the Committee.
3
<PAGE>
4. Administration of the Plan
The Plan shall be administered by the Committee. The Committee shall from
time to time designate the key employees of the Company who shall be granted
Incentive Awards and the amount and type of such Incentive Awards.
The Committee 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.
The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or Stand-Alone SAR granted
under the Plan becomes exercisable or otherwise adjust, to the extent consistent
with other provisions of the Plan, any of the terms of such Option or
Stand-Alone SAR other than a downward adjustment to the exercise price, (ii)
accelerate the Vesting Date or Issue Date, or waive any condition imposed
hereunder, with respect to any share of Restricted Stock granted under the Plan
or otherwise adjust any of the terms of such Restricted Stock and (iii)
accelerate the Vesting Date or waive any condition imposed hereunder, with
respect to any share of Phantom Stock granted under the Plan or otherwise adjust
any of the terms of such Phantom Stock.
In addition, the Committee may, in its absolute discretion and without
amendment to the Plan, grant Incentive Awards of any type to Participants on the
condition that such Participants surrender to the Committee for cancellation
such other Incentive Awards of the same or any other type as the Committee
specifies. Notwithstanding Section 3 herein, prior to the surrender of such
other Incentive Awards, Incentive Awards granted pursuant to the preceding
sentence of this Section 4 shall not count against the limits set forth in such
Section 3. However, stock options and stock appreciation rights may not be
surrendered for other stock options or stock appreciation rights with a lower
exercise price unless both count towards the aggregate limitations under the
Stock Plan.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee subject to applicable law.
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 such key employees of the Company who are largely responsible
for the management, growth and protection of the business of the Company
(including officers of the Company, whether or not they are directors of the
Company) as the Committee shall select from time to time. Directors who are not
employees or officers of the Company shall not be eligible to receive Incentive
Awards under the Plan.
6. Options
The Committee may grant Options pursuant to the Plan. Such Options shall
be evidenced by agreements in such form as the Committee shall from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:
(a) Identification of Options
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.
(b) Exercise Price
4
<PAGE>
The exercise price of any Option granted under the Plan shall be not less
than 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 be exercisable on such date or dates, during such
period and for such number of shares of Company Stock as shall be determined by
the Committee on the day on which such Option is granted and set forth in the
Option agreement with respect to such Option; provided, however; that no Option
shall be exercisable after the expiration of ten years from the date such Option
was granted; and, provided, further; that each Option shall be subject to
earlier termination, expiration or cancellation as provided in the Plan.
(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 and Tandem SARs, 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)(5) 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 and
Tandem SARs, 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 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 the
Participant shall be exercisable only by the Participant. No Option shall be
assignable or transferrable otherwise than by will or by the laws of descent or
distribution, nor shall any Option be permitted to be pledged in any manner.
However, any Non-Qualified Stock Option, including the right to exercise such
option, may also be transferred by a Participant or a subsequent transferee,
during the Participant's lifetime, only to: (i) one or more of a Participant's
spouse or natural or adopted lineal descendants; or (ii) a trust, partnership,
corporation or other similar entity which is owned solely by one or more of the
Participant's spouse or natural or adopted lineal descendants or which will hold
such Non-Qualified Stock Options solely for the benefit of one or more of such
persons.
(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) Limitations on Grant of Options
(1) The maximum number of common shares of stock underlying Options which
may be awarded to any single Participant under the Plan is 425,000.
(2) The aggregate Fair Market Value of shares of Company Stock with
respect to which Incentive Stock Options granted hereunder are exercisable for
the first time by a Participant during any calendar year under the Plan and any
other stock option plan of the Company (or any "subsidiary corporation" of the
Company within the meaning of Section 424 of the Code) shall not exceed
$100,000. Such Fair Market Value shall be determined as of the date on which
each such Incentive Stock Option is granted. In the event that the aggregate
Fair Market Value of shares of
5
<PAGE>
Company Stock with respect to such Incentive Stock Options exceeds $100,000,
then Incentive Stock Options granted hereunder to such Participant shall, to the
extent and in the order in which they were granted, automatically be deemed to
be Non-Qualified Stock Options, but all other terms and provisions of such
Incentive Stock Options shall remain unchanged.
(3) No Incentive Stock Option may be granted to an individual if, at the
time of the proposed grant, such individual owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company or any of its "subsidiary corporations" (within the meaning of Section
424 of the Code), unless (i) the exercise price of such Incentive Stock Option
is at least one hundred and ten percent of the Fair Market Value of a share of
Company Stock at the time such Incentive Stock Option is granted and (ii) such
Incentive Stock Option is not exercisable after the expiration of five years
from the date such Incentive Stock Option is granted.
(e) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the Company
shall terminate for any reason other than Cause, 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 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 employment of a Participant with the Company
shall terminate on account of the Disability or death of the Participant (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 of the termination of a Participant's employment for
Cause, all outstanding Options granted to such Participant shall expire at the
commencement of business on the date of such termination.
(4) Notwithstanding anything to the contrary contained herein, in the
event that the employment of a Participant with the Company shall terminate for
death, disability or retirement, the Committee may waive the accelerated
expiration provisions of subsection 6(e) as they apply to any or all
Non-Qualified Stock Options or any or all stand alone SARs granted to the
Participant, to the extent that they were exercisable at the time of such
termination, so that they shall remain exercisable until the expiration of their
term. Non-Qualified Stock Options or stand alone SARs 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 a Non-Qualified Stock Option and a stand
alone SAR shall not be exercisable after the expiration of its term.
(f) 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. Limited SARs
The Committee may grant in connection with any Option granted hereunder
one or more LSARs relating to a number of shares of Company Stock less than or
equal to the number of shares of Company Stock subject to the related Option. An
LSAR may be granted at the same time as, or; in the case of a Non-Qualified
Stock Option, subsequent to the time that, its related Option is granted. Each
LSAR shall be evidenced by an agreement in such form as the Committee shall from
time to time approve. Each LSAR granted hereunder shall be subject to the
following terms and conditions:
(a) Benefit Upon Exercise
(1) The exercise of an LSAR relating to a Non-Qualified Stock Option with
respect to any number of shares
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<PAGE>
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.
(2) The exercise of an LSAR relating to an Incentive Stock 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 Fair
Market Value of a share of Company Stock on the effective date of such exercise
over (ii) the exercise price of the related Option. Such payment shall be made
as soon as practical, 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 held by any Participant who is
or may be subject to the provisions of Section 16(b) of the Exchange Act 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 relating to an Incentive Stock
Option may be exercised with respect to a share of Company Stock only if the
Fair Market Value of such share on the effective date of such exercise exceeds
the exercise price relating to such share. 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 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 agreements evidencing the LSAR, the related Option and
any Tandem SARs related to such 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)(1) or (2) hereof, as applicable.
(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, the related
Option and any Tandem SARs relating to such 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. Tandem SARs
The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARs relating to a number of shares of Company Stock less
than or equal to the number of shares of Company Stock subject to the related
Option. A Tandem SAR may be granted at the same time as, or subsequent to the
time that, its related Option is granted. Each Tandem SAR shall be evidenced by
an agreement in such form as the Committee shall from time
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to time approve. Tandem SARs shall comply with and be subject to the following
terms and conditions:
(a) Benefit Upon Exercise
The exercise of a Tandem SAR with respect to any number of shares of
Company Stock shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (i) the Fair Market Value of a share of Company
Stock on the effective date of such exercise 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 Tandem SAR
(1) A Tandem SAR shall be exercisable at the same time and to the same
extent (on a proportional basis, with any fractional amount being rounded down
to the immediately preceding whole number) as its related Option.
Notwithstanding the first sentence of this Section 8(b)(1), (i) a Tandem SAR
shall not be exercisable at any time that an LSAR related to the Option to which
the Tandem SAR is related is exercisable and (ii) a Tandem SAR relating to an
Incentive Stock Option may be exercised with respect to a share of Company Stock
only if the Fair Market Value of such share on the effective date of such
exercise exceeds the exercise price relating to such share.
(2) The exercise of a Tandem SAR with respect to a number of shares of
Company Stock shall cause the immediate and automatic cancellation of its
related Option 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 automatic and immediate cancellation of its related Tandem
SARs to the extent that the number of shares of Company Stock subject to such
Option after such exercise, cancellation, termination or expiration is less than
the number of shares subject to such Tandem SARs. Such Tandem SARs shall be
cancelled in the order in which they became exercisable.
(3) Each Tandem SAR shall be exercisable in whole or in part; provided,
that no partial exercise of a Tandem SAR shall be for an aggregate exercise
price of less than $1,000. The partial exercise of a Tandem SAR shall not cause
the expiration, termination or cancellation of the remaining portion thereof.
Upon the partial exercise of a Tandem SAR, the agreements evidencing such Tandem
SAR, its related Option and LSARs relating to such Option, marked with such
notations as the Committee may deem appropriate to evidence such partial
exercise, shall be returned to the Participant exercising such Tandem SAR
together with the payment described in Section 8(a) hereof.
(4) During the lifetime of a Participant, each Tandem SAR granted to him
shall be exercisable only by him. No Tandem SAR 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 Tandem SAR be
permitted to be pledged in any manner.
(5) A Tandem SAR 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 Tandem SAR, its
related Option and any LSARs related to such Option, shall specify the number of
shares of Company Stock with respect to which the Tandem SAR 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.
9. Stand-Alone SARs
The Committee may grant Stand-Alone SARs pursuant to the Plan, which
Stand-Alone SARs shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Stand-Alone SARs shall comply with and be
subject to the following terms and conditions:
(a) Exercise Price
The exercise price of any Stand-Alone SAR granted under the Plan shall be
not less than 100% of the Fair Market Value of a share of Company Stock on the
date on which such Stand Alone SAR is granted.
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(b) Benefit Upon Exercise
(1) The exercise of a Stand-Alone SAR with respect to any number of shares
of Company Stock prior to the occurrence of a Change in Control shall entitle a
Participant to a cash payment., for each such share, equal to the excess of (i)
the Fair Market Value of a share of Company Stock on the exercise date over (ii)
the exercise price of the Stand-Alone SAR.
(2) The exercise of a Stand-Alone SAR with respect to any number of shares
of Company Stock on or after the occurrence of a Change in Control shall entitle
a 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
connection with such Change in Control 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 Stand-Alone SAR.
(3) All payments under this Section 9(b) shall be made as soon as
practicable, but in no event later than five business days, after the effective
date of the exercise.
(c) Term and Exercise of Stand-Alone SARs
(1) Each Stand-Alone SAR shall be exercisable on such date or dates,
during such period and for such number of shares of Company Stock as shall be
determined by the Committee and set forth in the Stand-Alone SAR agreement with
respect to such Stand-Alone SAR; provided, however, that no Stand-Alone SAR
shall be exercisable after the expiration often years from the date such
Stand-Alone SAR was granted; and, provided, further; that each Stand-Alone SAR
shall be subject to earlier termination, expiration or cancellation as provided
in the Plan.
(2) Each Stand-Alone SAR may be exercised in whole or in part; provided,
that no partial exercise of a Stand-Alone SAR shall be for an aggregate exercise
price of less than $1,000~ The partial exercise of a Stand-Alone SAR shall not
cause the expiration, termination or cancellation of the remaining portion
thereof. Upon the partial exercise of a Stand-Alone SAR, the agreement
evidencing such Stand-Alone SAR, marked with such notations as the Committee may
deem appropriate to evidence such partial exercise, shall be returned to the
Participant exercising such Stand-Alone SAR together with the payment described
in Section 9(b)(1) or 9(b)(2) hereof.
(3) A Stand-Alone SAR 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 agreement evidencing the
Stand-Alone SAR, shall specify the number of shares of Company Stock with
respect to which the Stand-Alone SAR 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 the agreement evidencing the Stand-Alone SAR shall be returned to
him.
(4) During the lifetime of a Participant, each Stand-Alone SAR granted to
him shall be exercisable only by him. No Stand-Alone SAR shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution,
nor shall any Stand-Alone SARs be permitted to be pledged in any manner.
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the Company
shall terminate for any reason other than Cause, Disability or death (i)
Stand-Alone SARs 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) Stand-Alone SARs 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 Stand-Alone SAR shall be exercisable after the expiration of its term.
(2) In the event that the employment of a Participant with the Company
shall terminate on account of the Disability or death of the Participant (i)
Stand-Alone SARs 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) Stand-Alone SARs 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
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termination; provided, however; that no Stand-Alone SAR shall be exercisable
after the expiration of its term.
(3) In the event of the termination of a Participant's employment for
Cause, all outstanding Stand-Alone SARs granted to such Participant shall expire
at the commencement of business on the date of such termination.
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, any Stand-Alone SAR 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.
10. Restricted Stock
The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of shares
of Restricted Stock shall comply with and be subject to the following terms and
conditions:
(a) Issue Date and Vesting Date
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares. The Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for each class. Except as
provided in Sections 10(c) and 10(f) hereof, upon the occurrence of the Issue
Date with respect to a share of Restricted Stock, a share of Restricted Stock
shall be issued in accordance with the provisions of Section 10(d) hereof.
Provided that all conditions to the vesting of a share of Restricted Stock
imposed pursuant to Section 10(b) hereof are satisfied, and except as provided
in Sections 10(c) and 10(f) hereof, upon the occurrence of the Vesting Date with
respect to a share of Restricted Stock, such share shall vest and the
restrictions of Section 10(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting
At the time of the grant of shares of Restricted Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any class or classes of shares of
Restricted Stock, that the Participant or the Company achieve such performance
criteria as the Committee may specify at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately upon any
attempt to transfer such rights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(d) Issuance of Certificates
(1) Except as provided in Sections 10(c) or 10(f) hereof, reasonably
promptly after the Issue Date with respect to shares of Restricted Stock, the
Company shall cause to be issued a stock certificate, registered in the name of
the Participant to whom such shares were granted, evidencing such shares;
provided, that the Company shall not cause to be issued such a stock certificate
unless it has received a stock power duly endorsed in blank with respect
to such shares. Each such stock certificate shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions
against transfer) contained in the Southwestern Energy Company
1993 Stock Incentive Plan and an Agreement entered into between
the registered owner of such shares and Southwestern Energy
Company A copy of the Plan and Agreement is on file in the
office of the Secretary of Southwestern Energy Company, 1083 Sam
Street, Fayetteville, Arkansas 72702-1408.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the
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terms hereof.
(2) Each certificate issued pursuant to Section 10(d)(1) hereof, together
with the stock powers relating to the shares of Restricted Stock evidenced by
such certificate, shall be deposited by the Company with a custodian designated
by the Company. The Company shall cause such custodian to issue to the
Participant a receipt evidencing the certificates held by it which are
registered in the name of the Participant.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 10(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Section 10(d)(1) hereof together with any
other property of the Participant held by the custodian pursuant to Section
14(b) hereof.
(f) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the Company
shall terminate for any reason other than Cause prior to the vesting of shares
of Restricted Stock granted to such Participant, a proportion of such shares, to
the extent not forfeited or cancelled on or prior to such termination pursuant
to any provision hereof, shall vest on the date of such termination. The
proportion referred to in the preceding sentence shall initially be determined
by the Committee at the time of the grant of such shares of Restricted Stock and
may be based on the achievement of any conditions imposed by the Committee with
respect to such shares pursuant to Section 10(b). Such proportion may be equal
to zero.
(2) In the event of the termination of a Participant's employment for
Cause, all shares of Restricted Stock granted to such Participant which have not
vested as of the date of such termination shall immediately be forfeited.
(g) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of Restricted Stock
which have not theretofore vested (including those with respect to which the
Issue Date has not yet occurred), or been cancelled or forfeited pursuant to any
provision hereof, shall immediately vest.
11. Phantom Stock
The Committee may grant shares of Phantom Stock pursuant to the Plan. Each
grant of shares of Phantom Stock shall be evidenced by an agreement in such form
as the Committee shall from time to time approve. Each grant of shares of
Phantom Stock shall comply with and be subject to the following terms and
conditions:
(a) Vesting Date
At the time of the grant of shares of Phantom Stock, the Committee shall
establish a Vesting Date or Vesting Dates with respect to such shares. The
Committee may divide such shares into classes and assign a different Vesting
Date for each class. Provided that all conditions to the vesting of a share of
Phantom Stock imposed pursuant to Section 11(c) hereof are satisfied, and except
as provided in Section 11(d) hereof, upon the occurrence of the Vesting Date
with respect to a share of Phantom Stock, such share shall vest.
(b) Benefit Upon Vesting
Upon the vesting of a share of Phantom Stock, a Participant shall be
entitled to receive in cash, within 30 days of the date on which such share
vests, an amount in cash in a lump sum equal to the sum of (i) the Fair Market
Value of a share of Company Stock on the date on which such share of Phantom
Stock vests and (ii) the aggregate amount of cash dividends paid with respect to
a share of Company Stock during the period commencing on the date on which the
share of Phantom Stock was granted and terminating on the date on which such
share vests.
(c) Conditions to Vesting
At the time of the grant of shares of Phantom Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the
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vesting of any class or classes of shares of Phantom Stock, that the Participant
or the Company achieve such performance criteria as the Committee may specify at
the time of the grant of such shares of Phantom Stock.
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the Company
shall terminate for any reason other than Cause prior to the vesting of shares
of Phantom Stock granted to such Participant, a proportion of such shares, to
the extent not forfeited or cancelled on or prior to such termination pursuant
to any provision hereof, shall vest on the date of such termination. The
proportion referred to in the preceding sentence initially shall be determined
by the Committee at the time of the grant of such shares of Phantom Stock and
may be based on the achievement of any conditions imposed by the Committee with
respect to such shares pursuant to Section 11(c). Such proportion may be equal
to zero.
(2) In the event of the termination of a Participant's employment for
Cause, all shares of Phantom Stock granted to such Participant which have not
vested as of the date of such termination shall immediately be forfeited.
(e) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of Phantom Stock
which have not theretofore vested, or been cancelled or forfeited pursuant to
any provision hereof, shall immediately vest.
12. Stock Bonuses
The Committee may grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time and
subject to such conditions as the Committee shall determine at the time of the
grant of such Stock Bonus. Certificates for shares of Company Stock granted as a
Stock Bonus shall be issued in the name of the Participant to whom such grant
was made and delivered to such Participant as soon as practicable after the date
on which such Stock Bonus is required to be paid.
13. Cash Bonuses
The Committee may, in its absolute discretion, in connection with any
grant of Restricted Stock or Stock Bonus or at any time thereafter; grant a cash
bonus, payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such grant
of Restricted Stock or Stock Bonus, in such amounts as the Committee shall
determine from time to time; provided, however; that in no event shall the
amount of a Cash Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Stock Bonus on such date. A Cash Bonus shall be subject to
such conditions as the Committee shall determine at the time of the grant of
such Cash Bonus.
14. 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 maximum aggregate number of shares of Company
Stock with respect to which the Committee may grant Options, Stand-Alone SARs,
shares of Restricted Stock, shares of Phantom Stock, Stock Bonuses and Cash
Bonuses shall be appropriately adjusted by the Committee. In the event of any
change in the number of shares of Company Stock outstanding by reason of any
other event or transaction, the Committee may, but need not, make such
adjustments in the number and class of shares of Company Stock with respect to
which Options, Stand-Alone SARs, shares of Restricted Stock, shares of Phantom
Stock, Stock Bonuses and Cash Bonuses may be granted as the Committee may deem
appropriate.
(b) Outstanding Restricted Stock and Phantom Stock
Unless the Committee in its absolute discretion otherwise determines, any
securities or other property (including dividends paid in cash) received by a
Participant with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested as of the
date of such event, as a result of any dividend, stock split, reverse stock
split, recapitalization, merger; consolidation, combination, exchange of shares
or otherwise will not vest until such share of Restricted Stock vests, and shall
be promptly deposited with the custodian
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designated pursuant to Paragraph 10(d)(2) hereof.
The Committee may, in its absolute discretion, adjust any grant of shares
of Restricted Stock, the Issue Date with respect to which has not occurred as of
the date of the occurrence of any of the following events, or any grant of
shares of Phantom Stock, to reflect any dividend, stock split, reverse stock
split, recapitalization, merger; consolidation, combination, exchange of shares
or similar corporate change as the Committee may deem appropriate to prevent the
enlargement or dilution of rights of Participants under the grant.
(c) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs -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 Committee shall proportionally
adjust the number of shares of Company Stock subject to each outstanding Option,
LSAR, Tandem SAR and Stand-Alone SAR, and the exercise price per share of
Company Stock of each such Option, LSAR, Tandem SAR and Stand-Alone SAR.
(d) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs - Certain
Mergers
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, LSAR, Tandem SAR and Stand-Alone SAR 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, LSAR,
Tandem SAR or Stand-Alone SAR would have received in such merger or
consolidation.
(e) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs - 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,
the Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each Option (including each LSAR and Tandem-SAR related thereto)
and Stand-Alone SAR outstanding immediately prior to such event (whether
or not then exercisable), and, in full consideration of such cancellation,
pay to the Participant to whom such Option or Stand-Alone SAR was granted
an amount in cash, for each share of Company Stock subject to such Option
or Stand-Alone SAR, respectively, equal to the excess of (A) the value, as
determined by the Committee in its absolute discretion, 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 or
Stand-Alone SAR; or
(ii) provide for the exchange of each Option (including any related
LSAR or Tandem SAR) and Stand-Alone SAR outstanding immediately prior to
such event (whether or not then exercisable) for an option on or stock
appreciation right with respect to, as appropriate, some or all of the
property for which such Option or Stand-Alone SAR is exchanged and,
incident thereto, make an equitable adjustment as determined by the
Committee in its absolute discretion in the exercise price of the option
or stock appreciation right, or the number of shares or amount of property
subject to the option or stock appreciation right or; if appropriate,
provide for a cash payment to the Participant to whom such Option or
Stand-Alone SAR was granted in partial consideration for the exchange of
the Option or Stand-Alone SAR.
(f) Outstanding Options, LSARs, Tandem SARs and Stand-Alone SARs - Other
Changes
In the event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in Sections 14(c),
(d) or (e) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options, LSARs, Tandem
SARs or Stand-Alone SARs
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outstanding on the date on which such change occurs and in the per-share
exercise price of each such Option, LSAR, Tandem SAR and Stand-Alone SAR as the
Committee may consider appropriate to prevent dilution or enlargement of rights.
(g) 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, LSAR, Tandem SAR or Stand-Alone SAR.
15. 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 14
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.
16. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
17. 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. The Committee may require,
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 such covenants, agreements and representations, and that such certificates
bear such legends, as the Committee, in its sole discretion, deems necessary or
desirable.
(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 Committee may, in its
sole discretion, defer the effectiveness of any exercise of an Option granted
hereunder 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 Committee shall inform the Participant in writing of its decision to defer
the effectiveness of the exercise of an Option granted hereunder. 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.
14
<PAGE>
18. Withholding Taxes
(a) Cash Remittance
Whenever shares of Company Stock are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a share
of Restricted Stock or the payment of a Stock Bonus, 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, Tandem SAR or Stand-Alone SAR, the grant of a Cash Bonus or
the making of a payment with respect to a share of Phantom Stock, 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 18(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, the occurrence of the Issue Date or the
Vesting Date with respect to a share of Restricted Stock or the grant of a Stock
Bonus, in lieu of the remittance required by Section 18(a) hereof, the
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, the occurrence of the Issue Date or the
Vesting Date with respect to a share of Restricted Stock or the grant of a Stock
Bonus, in lieu of requiring the remittance required by Section 18(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 who is
subject to Section 16(b) of the Exchange Act may not make the election described
in Section 18(b) hereof prior to the expiration of six months after the date on
which the applicable Option, share of Restricted Stock or Stock Bonus was
granted, except in the event of the death or Disability of the Participant. A
Participant who is subject to Section 16(b) of the Exchange Act 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 such election is made. Such elections 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.
19. 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 no
amendment shall be effective without the approval of the shareholders of the
Company, that (i) except as provided in Section 14 hereof, 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, (iii)
materially modifies the requirements as to eligibility for participation in the
Plan, or (iv) would otherwise materially alter the Plan. Nothing herein shall
restrict the Committee's ability to exercise its discretionary authority
hereunder pursuant to Section 4 hereof, which discretion may be exercised
without amendment to the Plan. No action hereunder may, without the consent of a
Participant, reduce the Participant's rights under any previously granted and
outstanding Incentive Award. Nothing herein shall limit the right of the Company
to pay compensation of any kind outside the terms of the Plan.
15
<PAGE>
20. No Obligation to Exercise
The grant to a Participant of an Option, LSAR, Tandem SAR or Stand-Alone
SAR shall impose no obligation upon such Participant to exercise such Option,
LSAR, Tandem SAR or Stand-Alone SAR.
21. 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 acknowledgments made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 21, no Incentive Award
shall be transferable, and shall be exercisable only by a Participant during the
Participant's lifetime.
22. 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.
23. 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, as the Committee, in
its absolute discretion, may determine.
24. 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, the requirements of Section 422 of
the Code and the requirements of Rule 16b-3 promulgated under Section 16(b) of
the Exchange Act. Incentive Awards maybe 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, LSAR, Tandem SAR or Stand-Alone SAR may be exercised prior
to the receipt of such approval, no share certificate shall be issued pursuant
to a grant of Restricted Stock or Stock Bonus prior to the receipt of such
approval and no Cash Bonus or payment with respect to a share of Phantom Stock
shall be paid 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.
25. Term of the Plan
The right to grant Incentive Awards under the Plan will terminate upon the
expiration of 10 years after the Effective Date of the Plan.
26. 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.
16
<PAGE>
RESTRICTED STOCK AGREEMENT
1993 STOCK INCENTIVE PLAN
THIS AGREEMENT, made as of this 2nd day of January, 1998, by and
between Southwestern Energy Company, a corporation (the "Company") and Alan H.
Stevens (the "Grantee").
WITNESSETH:
WHEREAS, the Grantee is now serving as an officer or key employee of
the Company and the Company desires to afford him the opportunity to acquire, or
enlarge, his stock ownership in the Company so that he may have a direct
proprietary interest in the Company's success;
NOW, THEREFORE, in consideration of the covenants and agreement herein
contained, the parties hereto hereby agree as follows:
1. Grant of Restricted Stock
The Company hereby grants to the Grantee, subject to the terms and
conditions herein set forth, the right to receive from the Company 15,000 shares
of Restricted Stock ($.10 par value) of the Company to be issued from treasury
shares separate and apart from the Southwestern Energy Company 1993 Stock
Incentive Plan.
2. Definitions
a. "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);
<PAGE>
(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; or
(v) a majority of the Board determines in its sole
and absolute discretion that there has been a Change
in Control of the Company or that there will be a
Change in Control of the Company upon the occurrence
of certain specified events and such events occur.
b. "Committee" shall mean the Compensation Committee of the
Board of Directors 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.
c. "Company" shall mean Southwestern Energy Company, an
Arkansas corporation, and each of its Subsidiaries.
d. "Company Stock" shall mean the common stock of the Company.
e. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
f. "Issue Date" shall mean the date established by the
Committee on which certificates representing shares of
Restricted Stock shall be issued by the Company pursuant
to the terms hereof.
g. "Person" shall mean a "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act.
h. "Restricted Stock" shall mean a share of Company Stock
which is granted pursuant to the terms hereof and which
is subject to the restrictions set forth herein for so
long as such restrictions continue to apply to such share.
i. "Securities Act" shall mean the Securities Act of 1933, as
amended.
j. "Vesting Date" shall mean the date established by the
Committee on which a share of Restricted Stock or Phantom
Stock may vest.
2
<PAGE>
3. Term and Restrictions
(a) Issue Date and Vesting Date
The Issue Date of the Restricted Stock granted hereunder shall be the
effective date of this agreement. Except as provided in Sections 3(c) and 3(f),
stock certificates representing the shares of Restricted Stock granted hereunder
shall be issued in accordance with Section 3(d) hereof. Such shares shall vest
ratably over a three year period from the date hereof (the "Vesting Date").
Except as provided in Sections 3(c) and 3(f), and provided that all conditions
to the vesting of a share of Restricted Stock imposed pursuant to Section 3(b)
hereof are satisfied, upon the occurrence of the Vesting Date with respect to a
share of Restricted Stock, such share shall vest and the restrictions of Section
3(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting
Except for continuation of employment with the Company as provided in
Section 3(f) hereof, there are no conditions to the vesting of the shares of
Restricted Stock granted hereunder.
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no transfer of
Grantee's rights with respect to such share, whether voluntary or involuntary,
by operation of law or otherwise, shall vest the transferee with any interest or
right in or with respect to such share, but immediately upon any attempt to
transfer such rights, such share, and all of the rights related thereto, shall
be forfeited by the Grantee, and the transfer shall be of no force or effect.
(d) Issuance of Certificates
(1) Except as provided in Sections 3(c) or 3(f) hereof, reasonably
promptly after the Issue Date with respect to shares of Restricted Stock, the
Company shall cause to be issued a stock certificate, registered in the name of
the Grantee to whom such shares were granted, evidencing such shares; provided,
that the Company shall not cause to be issued such a stock certificate unless it
has received a stock power duly endorsed in blank with respect to such shares.
Each such stock certificates shall bear the following legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions, terms
and conditions (including forfeiture provisions and restrictions
against transfer) contained in an Agreement entered into
between the registered owner of such shares and Southwestern
Energy Company. A copy of the Agreement is on file in the office
of the Secretary of Southwestern Energy Company, 1083 Sain
Street, Fayetteville, Arkansas 72703.
3
<PAGE>
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(2) Each certificate issued pursuant to Section 3(d)(1) hereof,
together with the stock powers relating to the shares of Restricted Stock
evidenced by such certificate, shall be deposited by the Company with a
custodian designated by the Company. The Company shall cause such custodian to
issue to the Grantee a receipt evidencing the certificates held by it which are
registered in the name of the Grantee.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 3(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Grantee, a certificate evidencing such share, free of the legend set forth in
Section 3(d)(1) hereof, together with any other property of the Grantee held by
the custodian pursuant to Section 4(b) hereof.
(f) Effect of Termination of Employment
In the event that the employment of the Grantee with the Company shall
terminate for any reason prior to the vesting of shares of the Restricted Stock,
all shares of Restricted Stock granted to the Grantee hereunder which have not
vested as of the date of such termination shall immediately be forfeited.
(g) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of Restricted
Stock granted hereunder which have not theretofore vested, or been canceled or
forfeited pursuant to any provision hereof or of the Plan, shall immediately
vest.
4. Adjustment Upon Changes in Company Stock
(a) Outstanding Restricted Stock
Unless the Committee in its absolute discretion otherwise determines,
any securities or other property (including dividends paid in cash) received by
Grantee with respect to a share of Restricted Stock, the Issue Date with respect
to which occurs prior to such event, but which has not vested as of the date of
such event, as a result of any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
otherwise will not vest until such share of Restricted Stock vests, and shall be
promptly deposited with the custodian designated pursuant to Paragraph 3(d)(2)
hereof. The Committee has determined that
4
<PAGE>
the right to receive cash dividends paid on the shares of Restricted Stock shall
vest on the Issue Date.
The Committee may, in its absolute discretion, adjust the grant of
shares of Restricted Stock made hereunder, provided the Issue Date has not
occurred as of the date of the occurrence of any of the following events, to
reflect any dividend, stock split, reverse stock split, recapitalization,
merger, consolidation, combination, exchange of shares or similar corporate
change as the Committee may deem appropriate to prevent the enlargement or
dilution of rights of Grantee under the grant.
(b) No Other Rights
Except as expressly provided herein, the Grantee shall have no 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 herein, 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 the Restricted Stock granted hereunder.
5. Rights as a Shareholder
The Grantee shall have no rights as a stockholder with respect to any
shares of Company Stock covered by or relating to the Restricted Stock granted
hereunder until the date of the issuance of a stock certificate with respect to
such shares. Except as otherwise expressly provided in Section 4 hereof, no
adjustment to the Restricted Stock shall be made for dividends or other rights
for which the record date occurs prior to the date such stock certificate is
issued.
6. No Special Employment Rights; No Right To Restricted Stock
Nothing contained herein shall confer upon Grantee any right with
respect to continuation of his employment by the Company or interfere in any way
with the right of the Company, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to
increase or decrease the compensation of Grantee from the rate in existence on
the date hereof. The grant of the Restricted Stock hereunder shall neither
require or prevent the granting of any subsequent Restricted Stock to Grantee or
any other person.
5
<PAGE>
7. 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 this Agreement 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 this Agreement
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. The Committee may require, as a condition of the issuance and delivery
of certificates evidencing shares of Company Stock pursuant to the terms hereof,
that the recipient of shares make such agreements and representations, and that
such certificates bear such legends as the Committee, in its sole discretion,
deems necessary or desirable.
8. Withholding Taxes
(a) Cash Remittance
Whenever shares of Company Stock are to be issued upon the occurrence
of the Issue Date or the Vesting Date and whenever dividends are paid in respect
of non-vested shares of restricted stock, the Company shall have the right to
require the Grantee to remit to the Company in cash an amount sufficient to
satisfy federal, state and local withholding tax requirements, if any,
attributable to such occurrence prior to the delivery of any certificate or
certificates for such shares.
(b) Stock Remittance
Subject to Section 8(d) hereof, at the election of the Grantee, subject
to the approval of the Committee, when shares of Company Stock are to be issued
upon the occurrence of the Issue Date or the Vesting Date, in lieu of the
remittance required by Section 8(a) hereof, the Grantee may tender to the
Company a number of shares of Company Stock determined by such Grantee, 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 and not greater than the Grantee's
estimated total federal, state and local tax obligations associated with such
exercise.
(c) Stock Withholding
The Company shall have the right, when shares of Company Stock are to
be issued upon the occurrence of the Issue Date or the Vesting Date, in lieu of
requiring the remittance required by Section 8(a) hereof, to withhold a number
of such shares, the Fair Market Value of which
6
<PAGE>
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 occurrence and is not greater than the Grantee's estimated total federal,
state and local tax obligations associated with such exercise.
(d) Timing and Method of Elections
Notwithstanding any other provisions hereof, if the Grantee is subject
to Section 16(b) of the Exchange Act, the Grantee may not make the election
described in Section 8(b) hereof prior to the expiration of six months after the
date of this Agreement, except in the event of the death or Disability of the
Grantee. If the Grantee is subject to Section 16(b) of the Exchange Act, the
Grantee 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 such election is made. 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
Grantee.
9. Transfers Upon Death
No transfer by will or the laws of descent and distribution of the
Restricted Stock granted hereunder, 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 this Agreement that
are or would have been applicable to the Grantee and to be bound by the
acknowledgments made by the Grantee in connection with the grant of the
Restricted Stock.
10. Failure to Comply
In addition to the remedies of the Company elsewhere provided for
herein, failure by the Grantee (or beneficiary) to comply with any of the terms
and conditions of this Agreement, unless such failure is remedied by the Grantee
(or beneficiary) within ten days after having been notified of such failure by
the Committee, shall be grounds for the cancellation and forfeiture of the
Restricted Stock, in whole or in part as the Committee, in its absolute
discretion, may determine.
7
<PAGE>
11. Applicable Law
Except to the extent preempted by any applicable federal law, this
Agreement will be construed and administered in accordance with the laws of the
State of Arkansas, without reference to the principles of conflicts of law.
12. Notices
Any notice hereunder to the Company shall be addressed to it at its
office, P. O. Box 1408, Fayetteville, AR 72702-1408: Attention: Treasurer, and
any notice hereunder to Grantee shall be addressed to him at
__________________________________________. Either party may designate at any
time hereafter in writing some other address.
IN WITNESS WHEREOF, Southwestern Energy Company has caused this
Agreement to be executed by its undersigned duly authorized officer as of the
6th day of January, 1998.
SOUTHWESTERN ENERGY COMPANY
ATTEST: (Seal) By: s/s Charles Scharlau
---------------------------------
Chairman and Chief Executive Officer
By:s/s Greg D. Kerley
-------------------------------
Senior Vice President - Treasurer and Secretary s/s Al Stevens
------------------------------
(Grantee)
8
SOUTHWESTERN ENERGY COMPANY
NON-QUALIFIED STOCK OPTION
AND
LIMITED STOCK APPRECIATION RIGHT CERTIFICATE
(Not Transferable)
THIS CERTIFIES, that SOUTHWESTERN ENERGY COMPANY, an Arkansas
corporation (the "Company"), has, as of the 2nd day of January, 1998, granted to
Alan H. Stevens (the "Grantee"), (1) a Non-Qualified Stock Option to purchase
100,000 shares (the "Optioned Shares") of the Company's Common Stock ($.10 par
value) ("Company Stock") and (2) a Limited Stock Appreciation Right (the "LSAR")
with respect to 100,000 shares of Company Stock (the "LSAR Shares"), in each
case, on the terms and conditions of the NQO/LSAR Terms and Conditions attached
hereto and made a part hereof ("T & C").
This Non-Qualified Stock Option and LSAR is granted separate and
apart from the Southwestern Energy Company 1993 Stock Incentive Plan, and any
shares issued to Grantee upon exercise of this option shall be issued from
treasury shares.
This Non-Qualified Stock Option and LSAR shall be exercisable
only in accordance with the provisions of this Certificate and the T & C.
The exercise price of the Optioned Shares and LSAR Shares shall
be $11.9375 per share.
The exercise of this LSAR with respect to a number of LSAR
Shares shall cause the immediate and automatic cancellation of this
Non-Qualified Stock Option with respect to an equal number of Optioned Shares.
The exercise of this Non-Qualified Stock Option, or the cancellation,
termination or expiration of this Non-Qualified Stock Option (other than
pursuant to Section 4(b)(2) of the T & C), with respect to a number of Optioned
Shares, shall cause the cancellation of this LSAR with respect to an equal
number of LSAR Shares.
This Non-Qualified Stock Option and LSAR is not transferable
except by will or the laws of descent and distribution.
This Non-Qualified Stock Option and LSAR shall be exercisable in
whole or in part; provided, that no partial exercise shall be for an aggregate
exercise price of less than $1,000. The partial exercise of this Non-Qualified
Stock Option or LSAR shall not cause the expiration, termination or cancellation
of the remaining portion hereof.
<PAGE>
This Non-Qualified Stock Option and 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 this Certificate, shall
specify the number of Optioned Shares and/or LSAR Shares with respect to which
this Non-Qualified Stock Option and LSAR is being exercised and the effective
date of the proposed exercise and shall be signed by the Grantee. The Grantee
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.
Payment for Optioned Shares purchased upon the exercise of this
Non-Qualified Stock Option shall be made on the effective date of such exercise
in accordance with the T & C.
THIS NON-QUALIFIED STOCK OPTION SHALL FIRST BECOME EXERCISABLE
WITH RESPECT TO THE FOLLOWING PERCENTAGE OF THE TOTAL SHARES SUBJECT HERETO ON
THE FOLLOWING DATES:
First Date on Which Such Percentage
Percentage of Total Shares of Total Shares Becomes Exercisable
33-1/3% January 2, 1999
33-1/3% January 2, 2000
33-1/3% January 2, 2001
THIS NON-QUALIFIED STOCK OPTION SHALL BECOME FULLY VESTED AT THE
EARLIER OF JANUARY 2, 2001 OR UPON GRANTEE'S RETIREMENT PROVIDED GRANTEE HAS
REACHED NORMAL RETIREMENT AGE (SIXTY-FIVE (65)), AS DEFINED IN THE SOUTHWESTERN
ENERGY COMPANY PENSION PLAN. PROVIDED, HOWEVER, UPON THE OCCURRENCE OF A CHANGE
IN CONTROL, IF AND TO THE EXTENT IT STILL IS OUTSTANDING, THIS NON-QUALIFIED
STOCK OPTION SHALL BECOME FULLY AND IMMEDIATELY EXERCISABLE AND SHALL REMAIN
EXERCISABLE UNTIL ITS EXPIRATION, TERMINATION OR CANCELLATION PURSUANT TO THE T
& C.
THIS 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; PROVIDED, THAT IF
2
<PAGE>
GRANTEE IS OR MAY BE SUBJECT TO THE PROVISIONS OF SECTION 16(b) OF THE EXCHANGE
ACT AND 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.
THIS NON-QUALIFIED STOCK OPTION AND LSAR SHALL EXPIRE AND BE
VOID AND SHALL NOT BE EXERCISABLE AFTER THE EXPIRATION OF TEN (10) YEARS FROM
THE DATE AS OF WHICH IT WAS GRANTED AND MAY BE EXERCISED ONLY IN THE MANNER
PROVIDED IN THE T & C. THIS NON-QUALIFIED STOCK OPTION AND LSAR SHALL BE SUBJECT
TO EARLIER TERMINATION, EXPIRATION OR CANCELLATION AS PROVIDED IN THE T & C.
IN WITNESS WHEREOF, the Company has issued this Non-Qualified
Stock Option and Limited Stock Appreciation Right Certificate by its undersigned
duly authorized officer as of the 2nd day of January, 1998.
SOUTHWESTERN ENERGY COMPANY
ATTEST: (Seal) By:s/s Charles Scharlau
---------------------------------
Chairman and Chief Executive Officer
By:s/s Greg D. Kerley
----------------------------------------
Senior Vice President - Treasurer and Secretary s/s Al Stevens
------------------------------
(Grantee)
3
<PAGE>
NQO/LSAR TERMS AND CONDITIONS
1. Definitions
As used herein, the following definitions apply to the terms indicated
below:
(a) "Cause," when used in connection with the termination of
the Grantee's employment with the Company, shall mean the termination
of the Grantee's employment by the Company on account of (i) the
willful and continued failure by the Grantee substantially to perform
his duties and obligations to the Company (other than any such failure
resulting from his incapacity due to physical or mental illness) or
(ii) the willful engaging by the Grantee in misconduct which is
materially injurious to the Company. For purposes of this Section 1(a),
no act, or failure to act, on a Grantee's part shall be considered
"willful" unless done, or omitted to be done, by the Grantee in bad
faith and without reasonable belief that his action or omission was in
the best interests 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, and "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; or
(v) a majority of the Board determines in its sole
and absolute discretion that there has been a Change in
Control of the Company or that there will be a Change in
Control of the Company upon the occurrence of certain
specified events and such events occur.
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(c) "Code" shall mean the Internal Revenue Code of 1986.
(d) "Committee" shall mean the Compensation Committee of the
Board of Directors or such other committee as the Board of Directors
shall appoint from time to time to administer this agreement 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, and each of its Subsidiaries.
(f) "Company Stock" shall mean the common stock of the
Company.
(g) "Disability" shall mean any physical or mental condition
that would qualify a participant for a disability benefit under the
long-term disability plan maintained by the Company and applicable to
him.
(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 of (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 Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of Section 422 of the Code.
(k) "LSAR" shall mean a limited stock appreciation right that
is granted pursuant to the provisions of Section 4 hereof and which
related 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) "Non-Qualified Stock Option" shall mean an Option that is
not an Incentive Stock Option.
(m) "Option" shall mean an option to purchase shares of
Company Stock granted pursuant to Section 3 hereof.
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(n) "Person" shall mean a "person," as such term is used in
sections 13(d) and 14(d) of the Exchange Act.
(o) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(p) "Subsidiary" shall mean any corporation in which, at the
time of reference, the Company owns, directly or indirectly, stock
comprising more than fifty percent of the total combined voting power
of all classes of stock of such corporation.
2. Administration
The Committee shall have full authority to administer this agreement,
including authority to interpret and construe any provision of this agreement.
Decisions of the committee shall be final and binding on all parties.
The Committee may, in its absolute discretion, without amendment to
this agreement, accelerate the date on which any Option granted hereunder
becomes exercisable or otherwise adjust any of the terms of such Option.
3. Options
(a) Term and Exercise of Options
(1) 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 Grantee together
with the delivery of the certificates described in Section 3(a)(4) hereof.
(2) 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 Grantee. The Grantee 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 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
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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.
(3) During the lifetime of Grantee, 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 off descent and distribution, nor shall any option
be permitted to be pledged in any manner.
(4) Certificates for shares of Company Stock purchased upon the
exercise of an Option shall be issued in the name of Grantee or his beneficiary,
as the case may be, and delivered to the Grantee or his beneficiary, as the case
may be, as soon as practicable following the effective date on which the Option
is exercised.
(b) Effect of Termination of Employment
(1) In the event that the employment of Grantee with the Company shall
terminate for any reason other than Cause, Disability or death (I) Options
granted to such Grantee, 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 Grantee, 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 employment of Grantee with the Company shall
terminate on account of the Disability or death of the Grantee (i) Options
granted to Grantee, 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
Grantee, 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 of the termination of Grantee's employment for Cause,
all outstanding Options granted to Grantee shall expire at the commencement of
business on the date of such termination.
(c) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted
hereunder 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 hereof.
4. Limited SARs
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(a) Benefit Upon Exercise
(1) The exercise of an LSAR relating to a Non-Qualified Stock Option
with respect to any number of shares of Company Stock shall entitle Grantee 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 4(b), in the event that an LSAR held by any Grantee who
is or may be subject to the provisions of Section 16(b) of the Exchange Act
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 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 agreements 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 Grantee exercising such LSAR
together with the payment described in Paragraph 4(a)(1) hereof.
(4) During the lifetime of Grantee, 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 an distribution and otherwise than
together with its related Option, nor shall any LSAR be permitted to be pledged
in any manner.
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(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 Grantee. The Grantee 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 agreement shall be returned to him.
5. Adjustment Upon Changes in Company Stock
(a) 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 Committee shall proportionally
adjust 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.
(b) Outstanding Options and LSARs - Certain Mergers
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.
(c) 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,
the Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of
such event, each Option (including each LSAR related thereto)
outstanding immediately prior to such event (whether or not then
exercisable), and, in full consideration of such cancellation, pay to
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Grantee 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 the
committee in its absolute discretion, 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; or
(ii) provide for the exchange of each Option (including any
related LSAR) outstanding immediately prior to such event (whether or
not then exercisable) for an option on or stock appreciation right with
respect to, as appropriate, some or all of the property for which such
Option is exchanged and, incident thereto, make an equitable adjustment
as determined by the Committee in its absolute discretion in the
exercise price of the option or stock appreciation right, or the number
of shares or amount of property subject to the option or stock
appreciation right or, if appropriate, provide for a cash payment to
Grantee in partial consideration for the exchange of the Option.
(d) Outstanding Options and LSARs - Other Changes
In the event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in Section 5(a), (b)
or (c) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options and LSARs
outstanding on the date on which such change occurs and in the per-share
exercise price of each such Option and LSAR, as the Committee may consider
appropriate to prevent dilution or enlargement of rights.
(e) No Other Rights
Except as expressly provided herein, Grantee 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 herein, 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 the exercise price of any Option or LSAR.
6. 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 Option or LSAR granted
hereunder until the date of the issuance of a stock certificate with respect to
such shares. Except as otherwise expressly provided in Section 5 hereof, no
adjustment to any Option or LSAR shall be made for dividends or other rights for
with the record date occurs prior to the date such stock certificate is issued.
7. No Special Employment Rights; No Right to Options or LSARs
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Nothing contained herein shall confer upon Grantee any right with
respect to the continuation of his employment by the Company or interfere in any
way with the right of the Company, subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of Grantee from the rate in
existence at the time of the grant hereunder.
Grantee shall have no claim or right to receive any additional Options
or LSARs hereunder. The Committee's granting of Options and LSARs to Grantee at
any time shall neither require the Committee to grant Options and LSARs to
Grantee at any time nor preclude the Committee from making subsequent grants to
Grantee.
8. Securities Matters
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in 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 this agreement 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. The Committee may require,
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 such covenants, agreements and representations, and that such certificates
bear such legends, as the Committee, in its sole discretion, deems necessary or
desirable.
(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 Committee may, in its
sole discretion, defer the effectiveness of any exercise of an Option granted
hereunder 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 Committee shall inform Grantee in writing of its decision to defer the
effectiveness of the exercise of an Option granted hereunder. During the period
that the effectiveness of the exercise of an Option has been deferred, Grantee
may, by written notice, withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
9. Withholding Taxes
(a) Cash Remittance
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Whenever shares of Company Stock are to be issued upon the exercise of
an Option, the Company shall have the right to require Grantee 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, 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.
(b) Stock Remittance
Subject to Section 9(d) hereof at the election of Grantee, 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
9(a) hereof, the Grantee may tender to the Company a number of shares of Company
Stock determined by Grantee, 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, and
not greater than Grantee's estimated total federal, state and local tax
obligations associated with such exercise.
(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 9(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, and is not greater than Grantee's
estimated total federal, state and local tax obligations associated with such
exercise.
(d) Timing and Method of Elections
Notwithstanding any other provisions of the Plan, Grantee who is
subject to Section 16(b) of the Exchange Act may not make the election described
in Section 9(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 Grantee. If Grantee is subject to Section 16(b) of the Exchange
Act, Grantee 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 such election is made. Such elections
shall be irrevocable and shall be made by the delivery to the Company's
principal office, to the attention of its Secretary, of written notice signed by
Grantee.
10. No Obligation to Exercise
The grant to Grantee of an Option and LSAR, shall impose no obligation
upon such Grantee to exercise such Option or LSAR.
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11. Transfers Upon Death
Upon the death of Grantee, outstanding Options and LSARs may be
exercised only by the executors or administrators of Grantee's estate of 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 Option or LSAR, or the right to exercise any Option or
LSAR, 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 this agreement that are or would have been
applicable to Grantee and to be bound by the acknowledgments made by Grantee in
connection with the grant of the Option and LSAR. Except as provided in this
Section 11, no Option or LSAR shall be transferable, and shall be exercisable
only by a Grantee during the Grantee's lifetime.
12. Failure to Comply
In addition to the remedies of the Company elsewhere provided for
herein, failure by Grantee (or beneficiary) to comply with any of the terms and
conditions hereof, unless such failure is remedied by Grantee (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 Option and LSAR, in
whole or in part, as the Committee, in its absolute discretion, may determine.
13. Applicable Law
Except to the extent preempted by any applicable federal law, this
agreement will be construed and administered in accordance with the laws of the
State of Arkansas, without reference to the principles of conflicts of law.
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