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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
NGC Corporation
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(Name of Issuer)
Common Stock, $0.01 Par Value
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(Title of Class of Securities)
629121 10 4
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(CUSIP Number)
C. L. Watson
NGC Corporation
1000 Louisiana
Suite 5800
Houston, Texas 77002
(713) 507-6400
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 20, 1997
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934, as amended (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes.)
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CUSIP NO. 629121 10 4
(1) Names of Reporting Persons. S.S. or I.R.S. C. L. Watson
Identification Nos. of Above Persons
(2) Check the Appropriate Box if (a)
a Member of a Group (See Instructions)/1/ (b)
(3) SEC Use Only
(4) Source of Funds (See Instructions) PF (See Item 3)
(5) Check if Disclosure of Legal
Proceedings is Required
Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization United States
Number of Shares (7) Sole Voting Power See Item 5
Beneficially
Owned by Each (8) Shared Voting Power See Item 5
Reporting
Person With (9) Sole Dispositive Power See Item 5
(10) Shared Dispositive Power See Item 5
(11) Aggregate Amount Beneficially 8,907,575
Owned by Each Reporting Person (See Item 5)
(12) Check if the Aggregate Amount x
in Row (11) Excludes Certain (See Item 5)
Shares (See Instructions)
(13) Percent of Class Represented 5.85%
by Amount in Row (11) (See Item 5)
(14) Type of Reporting Person (See Instructions) IN
________________________
/1/ The reporting person expressly disclaims the existence of any group.
2
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CUSIP NO. 629121 10 4
(1) Names of Reporting Persons. S.S. or I.R.S. C. L. Watson, Trustee fbo
Identification Nos. of Above Persons Charles L. Watson Grantor
Retained Annuity Trust
(2) Check the Appropriate Box if (a)
a Member of a Group (See Instructions)/1/ (b)
(3) SEC Use Only
(4) Source of Funds (See Instructions) PF (See Item 3)
(5) Check if Disclosure of Legal
Proceedings is Required
Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization See Item 2
Number of Shares (7) Sole Voting Power See Item 5
Beneficially
Owned by Each (8) Shared Voting Power See Item 5
Reporting
Person With (9) Sole Dispositive Power See Item 5
(10) Shared Dispositive Power See Item 5
(11) Aggregate Amount Beneficially 8,907,575
Owned by Each Reporting Person (See Item 5)
(12) Check if the Aggregate Amount x
in Row (11) Excludes Certain (See Item 5)
Shares (See Instructions)
(13) Percent of Class Represented 5.85%
by Amount in Row (11) (See Item 5)
(14) Type of Reporting Person (See Instructions) OO (See Item 2)
_______________________
/1/ The reporting person expressly disclaims the existence of any group.
3
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CUSIP NO. 629121 10 4
(1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo
Identification Nos. of Above Persons Kim R. Watson Grantor
Retained Annuity Trust
(2) Check the Appropriate Box if (a)
a Member of a Group (See Instructions)/1/ (b)
(3) SEC Use Only
(4) Source of Funds (See Instructions) PF(See Item 3)
(5) Check if Disclosure of Legal
Proceedings is Required
Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization See Item 2
Number of Shares (7) Sole Voting Power See Item 5
Beneficially
Owned by Each (8) Shared Voting Power See Item 5
Reporting
Person With (9) Sole Dispositive Power See Item 5
(10) Shared Dispositive Power See Item 5
(11) Aggregate Amount Beneficially 8,907,575
Owned by Each Reporting Person (See Item 5)
(12) Check if the Aggregate Amount x
in Row (11) Excludes Certain (See Item 5)
Shares (See Instructions)
(13) Percent of Class Represented 5.85%
by Amount in Row (11) (See Item 5)
(14) Type of Reporting Person (See Instructions) OO (See Item 2)
___________________
/1/ The reporting person expressly disclaims the existence of any group.
4
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CUSIP NO. 629121 10 4
(1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo
Identification Nos. of Above Persons Keri M. Watson Trust
(2) Check the Appropriate Box if (a)
a Member of a Group (See Instructions)/1/ (b)
(3) SEC Use Only
(4) Source of Funds (See Instructions) PF (See Item 3)
(5) Check if Disclosure of Legal
Proceedings is Required
Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization See Item 2
Number of Shares (7) Sole Voting Power See Item 5
Beneficially
Owned by Each (8) Shared Voting Power See Item 5
Reporting
Person With (9) Sole Dispositive Power See Item 5
(10)Shared Dispositive Power See Item 5
(11) Aggregate Amount Beneficially 8,907,575
Owned by Each Reporting Person (See Item 5)
(12) Check if the Aggregate Amount x
in Row (11) Excludes Certain (See Item 5)
Shares (See Instructions)
(13) Percent of Class Represented 5.85%
by Amount in Row (11) (See Item 5)
(14) Type of Reporting Person (See Instructions) OO (See Item 2)
_____________________
/1/ The reporting person expressly disclaims the existence of any group.
5
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CUSIP NO. 629121 10 4
(1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo
Identification Nos. of Above Persons Brian J. Watson Trust
(2) Check the Appropriate Box if (a)
a Member of a Group (See Instructions)/1/ (b)
(3) SEC Use Only
(4) Source of Funds (See Instructions) PF (See Item 3)
(5) Check if Disclosure of Legal
Proceedings is Required
Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization See Item 2
Number of Shares (7) Sole Voting Power See Item 5
Beneficially
Owned by Each (8) Shared Voting Power See Item 5
Reporting
Person With (9) Sole Dispositive Power See Item 5
(10) Shared Dispositive Power See Item 5
(11) Aggregate Amount Beneficially 8,907,575
Owned by Each Reporting Person (See Item 5)
(12) Check if the Aggregate Amount x
in Row (11) Excludes Certain (See Item 5)
Shares (See Instructions)
(13) Percent of Class Represented 5.85%
by Amount in Row (11) (See Item 5)
(14) Type of Reporting Person (See Instructions) OO (See Item 2)
_____________________
/1/ The reporting person expressly disclaims the existence of any group.
6
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CUSIP NO. 629121 10 4
(1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo
Identification Nos. of Above Persons Carly R. Watson Trust
(2) Check the Appropriate Box if (a)
a Member of a Group (See Instructions)/1/ (b)
(3) SEC Use Only
(4) Source of Funds (See Instructions) PF (See Item 3)
(5) Check if Disclosure of Legal
Proceedings is Required
Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization See Item 2
Number of Shares (7) Sole Voting Power See Item 5
Beneficially
Owned by Each (8) Shared Voting Power See Item 5
Reporting
Person With (9) Sole Dispositive Power See Item 5
(10) Shared Dispositive Power See Item 5
(11) Aggregate Amount Beneficially 8,907,575
Owned by Each Reporting Person (See Item 5)
(12) Check if the Aggregate Amount x
in Row (11) Excludes Certain (See Item 5)
Shares (See Instructions)
(13) Percent of Class Represented 5.85%
by Amount in Row (11) (See Item 5)
(14Type of Reporting Person (See Instructions) OO (See Item 2)
________________________
/1/ The reporting person expressly disclaims the existence of any group.
7
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CUSIP NO. 629121 10 4
Item 1. Security and Issuer.
This statement relates to the common stock, par value $0.01 per share (the
"Common Stock"), of NGC Corporation, a Delaware corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 1000 Louisiana, Suite
5800, Houston, Texas 77002.
Item 2. Identity and Background.
(a) This statement is filed by Mr. C. L. Watson, in his individual
capacity and in his capacity as trustee (in such capacity, the "Trustee") of the
Charles L. Watson Grantor Retained Annuity Trust, Kim R. Watson Grantor Retained
Annuity Trust, Keri M. Watson Trust, Brian J. Watson Trust and Carly R. Watson
Trust (collectively, the "Trusts"). Mr. Watson, in both his individual capacity
and in his capacity as the Trustee, may hereinafter be referred to as the
Reporting Person. Ms. Kim R. Watson, beneficiary of the Kim R. Watson Grantor
Retained Annuity Trust, is the wife of C. L. Watson and Ms. Keri M. Watson,
beneficiary of the Keri M. Watson Trust, Mr. Brian J. Watson, beneficiary of the
Brian J. Watson Trust, and Ms. Carly R. Watson, beneficiary of the Carly
R.Watson Trust, are the minor children of C. L. Watson (collectively, the
"Beneficiaries").
(b) The Reporting Person has his principal business office at 1000
Louisiana, Suite 5800, Houston, Texas 77002.
(c) The Reporting Person serves as the Chairman of the Board, Chief
Executive Officer and a Director of the Issuer. The Issuer is a leading
gatherer, processor, transporter and marketer of energy products and services in
North America and the United Kingdom. The address of the principal executive
offices of the Issuer is set forth in Item 1 above.
(d) Neither the Reporting Person, nor any of the Beneficiaries, has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) Neither the Reporting Person, nor any of the Beneficiaries, has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) The Reporting Person and each of the Beneficiaries is a United States
citizen and each of the Trusts was established under the laws of the State of
Texas and the United States.
8
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CUSIP NO. 629121 10 4
Item 3. Source and Amount of Funds or Other Consideration.
C. L. Watson has the right to acquire the beneficial ownership of
1,738,718 shares of Common Stock on May 19, 1997, through the exercise of
certain employee stock options that become fully exercisable on such date. It
is anticipated that Mr. Watson will use personal funds to acquire the shares of
Common Stock issuable upon the exercise of such options. The options have an
exercise price of $2.028 per share and expire on May 19, 2002.
The Reporting Person previously filed a Schedule 13D on March 22, 1995, to
report his initial acquisition of more than 5 percent of the outstanding Common
Stock of the Issuer. The source and amount of funds or other consideration used
in making the Reporting Person's initial acquisition was previously reported
pursuant to Rule 13d-1 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") in the Reporting Person's initial statement on Schedule 13D.
Item 4. Purpose of Transaction.
Acquisition of Shares of Common Stock. The 1,738,718 shares of Common
Stock that may be acquired by C. L. Watson on May 19, 1997, will be held by Mr.
Watson for investment purposes. The Reporting Person acquired the shares of
Common Stock held of record prior to March 20, 1997 set forth in Item 5(a) in
connection with the Trident Combination (defined herein) and is holding such
shares for investment purposes.
Intent to Dispose of Shares of Common Stock. The Reporting Person intends
to sell shares of Common Stock from time to time as market conditions allow to
diversify his personal investment portfolio and the investment portfolio of his
wife's and children's trusts.
Except as set forth above, the Reporting Person does not have any present
plans or proposals which relate to, or would result in: the acquisition by any
person of additional securities of the Issuer, or the disposition of securities
of the Issuer, an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
a sale or transfer of a material amount of assets of the Issuer or any of its
subsidiaries; a change in the present board of directors or management of the
Issuer, including plans or proposals to change the number or term of directors
or to fill any existing vacancies on the board; a material change in the present
capitalization or dividend policy of the Issuer or any other material change in
the Issuer's business or corporate structure; a change in the Issuer's
Certificate of Incorporation or Bylaws or other actions which might impede the
acquisition of control of the Issuer by any person; causing a class of
securities of the Issuer being delisted from a national securities exchange or
ceasing to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; a class of equity securities of the
Issuer becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934; or any action similar to any of
those enumerated above.
9
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CUSIP NO. 629121 10 4
Item 5. Interest in Securities of the Issuer.
(a) Mr. Watson and the Trusts beneficially own the number of shares of
Common Stock set forth in the table below.
<TABLE>
<CAPTION>
Number of Shares Total Number
Number of That May be of Shares Percentage
Shares Held Acquired Within Beneficially of
of Record as of 60 Days of Owned as of Common Stock
Name March 20, 1997 March 20, 1997 March 20, 1997 Owned/1/
- -------------- --------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
C. L. Watson 4,214,495 1,738,718 5,953,213 3.91%
Trusts 2,954,362 -0- 2,954,362 1.94%
--------- --------- --------- ------
Totals
7,168,857 1,738,718 8,907,575 5.85%
========= ========= ========= ======
</TABLE>
Background. The Reporting Person acquired the shares of Common Stock
beneficially owned by him, in his individual capacity and in his capacity as the
Trustee of the Trusts prior to March 20, 1997, the date of the event which
requires the filing of this Statement on Schedule 13D, as of March 14, 1995 (the
"Effective Time"), upon the consummation of the transactions (the "Trident
Combination") contemplated by that certain Combination Agreement and Plan of
Merger, dated as of October 21, 1994, among Trident NGL Holding, Inc.
("Trident"), Natural Gas Clearinghouse ("Clearinghouse"), and certain other
parties thereto. Pursuant to the Trident Combination, Trident, as the surviving
corporation in the Trident Combination, became the owner of all of the
outstanding equity interests in Clearinghouse and changed its name to NGC
Corporation. NGC Corporation is the Issuer of the Common Stock.
Upon consummation of the Trident Combination, the Reporting Person
acquired 7,038,326 shares of Common Stock or approximately 6.4% of the Common
Stock outstanding as of the Effective Time. The Reporting Person filed a
Statement Schedule 13D relating to the acquisition of Common Stock pursuant to
the Trident Combination on March 22, 1995. On February 29, 1996, a
determination was made with respect to certain contingent shares issued in
connection with the Trident Combination. The Reporting Person acquired an
additional 355,529 shares of Common Stock as a result of such determination.
_______________________
/1/ Based upon 152,097,356 shares of Common Stock deemed to be outstanding
at the close of business on March 20, 1997 pursuant to Rule 13d-3 of the
Securities Exchange Act of 1934 (150,358,638 shares outstanding on March 20,
1997 plus 1,738,718 shares that may be acquired by Mr. Watson within 60 days of
March 20, 1997).
10
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CUSIP NO. 629121 10 4
On May 22, 1996, the Issuer, Chevron U.S.A. Inc. ("Chevron"), and
Midstream Combination Corp., a wholly-owned subsidiary of Chevron, entered into
a Combination Agreement and Plan of Merger providing for a combination of the
Issuer with substantially all of Chevron's midstream assets and certain
strategic alliances (the "Chevron Combination"). Pursuant to the Chevron
Combination, the Issuer was merged with and into Midstream Combination Corp.,
which was renamed "NGC Corporation," as the successor-in-interest to the Issuer.
As part of such transaction, an additional 38,623,211 shares of Common Stock of
the Issuer were issued to Chevron. As a result of such increase in the number
of outstanding shares of Common Stock, the Reporting Person's ownership dropped
to approximately 4.9% of the Common Stock of the Issuer outstanding as of August
31, 1996, the effective date of the Chevron Combination. The Reporting Person
filed an Amendment to Schedule 13D on September 11, 1996, to reflect the
Reporting Person's beneficial ownership of five percent or less of the Common
Stock of the Issuer.
(b) The Reporting Person has the sole power to vote and the sole power to
dispose of the shares of Common Stock which he owns of record in his own name,
as indicated in the table above. As Trustee of the Trusts, the Reporting Person
has the sole power to vote and the sole power to dispose of all shares of Common
Stock owned of record by each of the Trusts, as reflected in the table above.
In addition, the Reporting Person will have the sole power to vote and the sole
power to dispose of all of the shares of Common Stock which the Reporting
Person, in his individual capacity, may acquire upon the exercise of certain
employee stock options that become exercisable on May 19, 1997, as reflected in
the table above.
(c) None.
(d) With respect to the shares of Common Stock owned of record in the name
of Mr. C. L. Watson, C. L. Watson has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, such
securities. With respect to the shares of Common Stock owned of record by the
Trusts (and the C. L. Watson Grantor Retained Annuity Trust), the Reporting
Person, in his capacity as Trustee, has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, such
securities on behalf of the Trusts. With respect to the shares of Common Stock
that Mr. Watson has the right to acquire upon the exercise of certain employee
stock options that become fully exercisable on May 19, 1997, C. L. Watson will
have the right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, such securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Set forth below is a brief description of certain agreements concerning
the shares of Common Stock and other securities of the Issuer held by the
Reporting Person. Such agreements
11
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CUSIP NO. 629121 10 4
are attached as exhibits hereto and are incorporated herein by reference in
their entirety for all purposes.
NGC Corporation Amended and Restated Employee Equity Option Plan. The NGC
Corporation Amended and Restated Employee Equity Option Plan (the "EEP")
provides for the grant of options to purchase shares of Common Stock. Each
option under the EEP vests on the fifth anniversary of the date of grant and
terminates on the tenth anniversary of the date of grant, subject to certain
exceptions. C. L. Watson currently holds the following options granted under the
EEP: (i) options to purchase 1,738,717 shares of Common Stock at an exercise
price of $2.028 per share, which will vest on May 19, 1997 and expire on May 19,
2002, (ii) options to purchase 125,000 shares of Common Stock at an exercise
price of $2.028 per share, which will vest on July 9, 2001 and will expire on
July 9, 2006 and (iii) options to purchase 220,008 shares of Common Stock at an
exercise price of $2.028 per share, which will vest on November 19, 2001 and
expire on November 19, 2006.
NGC Corporation Amended and Restated 1991 Stock Option Plan. The NGC
Corporation Amended and Restated 1991 Stock Option Plan (the "Stock Option
Plan") provides for the grant of options to purchase shares of Common Stock.
Each option under the Stock Option Plan vests and becomes exercisable ratably
over a three-year period following date of grant and terminates on the tenth
anniversary of the date of grant. C. L. Watson currently holds options to
purchase 111,740 shares of Common Stock at an exercise price $18.75 per share,
which will vest and become exercisable ratably in one-third increments on
November 19, 1997, November 19, 1998 and November 19, 1999, respectively, and
will expire on May 19, 2006.
At the present, there are no other contracts, arrangements,
understandings, or relationships with respect to securities of the Issuer
involving C. L. Watson and the Trusts.
Item 7. Materials to be Filed as Exhibits.
1. NGC Corporation Amended and Restated Employee Equity Option Plan.
2. NGC Corporation Amended and Restated 1991 Stock Option Plan.
3. Agreement of Joint Filing.
12
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CUSIP NO. 629121 10 4
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certify that the information set forth in this Statement is true,
complete and correct.
Dated: March 31, 1997 By: /s/ C. L. WATSON
-----------------------
Name: C. L. Watson
CHARLES L. WATSON GRANTOR
RETAINED ANNUITY TRUST
KIM R. WATSON GRANTOR
RETAINED ANNUITY TRUST
KERI M. WATSON TRUST
BRIAN J. WATSON TRUST
CARLY R. WATSON TRUST
By: /s/ C. L. WATSON
-----------------------
C. L. Watson
Trustee
13
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CUSIP NO. 629121 10 4
INDEX TO EXHIBITS
SEQUENTIALLY
NUMBERED
NUMBER EXHIBIT PAGE
------ ------- -------------
1. NGC Corporation Amended and Restated Employee Equity
Option Plan.
2. NGC Corporation Amended and Restated 1991 Stock Option
Plan.
3. Agreement of Joint Filing.
<PAGE>
EXHIBIT 1
NGC CORPORATION
EMPLOYEE EQUITY OPTION PLAN
[AS AMENDED AND RESTATED EFFECTIVE AS OF MARCH 14, 1995]
I. PURPOSE OF THE PLAN
(a) The NGC CORPORATION EMPLOYEE EQUITY OPTION PLAN (the "Plan") is
intended to provide a means whereby certain employees of NGC CORPORATION, a
Delaware corporation (the "Company"), and its affiliates may develop a sense of
proprietorship and personal involvement in the development and financial success
of the Company, and to encourage them to remain with and devote their best
efforts to the business of the Company, thereby advancing the interests of the
Company and its shareholders. Accordingly, the Company may grant to certain
employees ("Optionees") the option ("Option") to purchase shares of the common
stock of the Company ("Stock"), as hereinafter set forth. Options granted under
the Plan shall not constitute incentive stock options, within the meaning of
section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
(b) The Plan as set forth herein constitutes an amendment and restatement
of the Natural Gas Clearinghouse Employee Equity Option Plan (the "Predecessor
Plan"), as previously adopted by Natural Gas Clearinghouse ("NGC"), and shall
supersede and replace in its entirety such previously adopted plan. The
Predecessor Plan has been amended and restated in the form of the Plan in
connection with the consummation of the transactions contemplated in that
certain Combination Agreement and Plan of Merger (the "Combination Agreement")
dated October 21, 1994, among NGC, Trident NGL Holding, Inc., and certain other
parties, pursuant to which NGC agreed, subject to certain conditions, to combine
with and into the Company (as the surviving corporation in the combination).
The amendment and restatement of the Predecessor Plan into the form of the Plan
shall be effective as of the closing of the Merger and the Tender Offer as such
terms are defined in the Combination Agreement (the "Restatement Effective
Date"). As contemplated in the Predecessor Plan and to reflect the consummation
of the transactions described in the Combination Agreement, each outstanding
option under the Predecessor Plan to acquire one one-thousandth of a partnership
unit in NGC shall be automatically converted on the Restatement Effective Date
into an Option under the Plan to purchase 246.15 shares of Stock (subject to
adjustment as provided in Paragraph IX hereof). If such option under the
Predecessor Plan had an exercise price of $1,465.54 per one one-thousandth of a
partnership unit in NGC, then the purchase price of the Stock under the
corresponding Option under the Plan shall be $5.95 per share of Stock (subject
to adjustment as provided in Paragraph IX hereof). If such option under the
Predecessor Plan had an exercise price of $523.33 per one one-thousandth of a
partnership unit in NGC, then the purchase price of the Stock under the
corresponding Option under the Plan shall be $2.13 per share of Stock (subject
to adjustment as provided in Paragraph IX hereof).
(c) Notwithstanding any provision herein to the contrary, if the Merger and
Tender Offer contemplated in the Combination Agreement are not consummated, then
(i) the Plan shall be void and
<PAGE>
of no further force and effect, and (ii) the Predecessor Plan shall not be
amended and restated in the form of the Plan, but, rather, shall continue in
full force and effect.
II. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of, and
appointed by, the Board of Directors of the Company (the "Board"), and the
Committee shall be (a) comprised solely of two or more outside directors (within
the meaning of section 162(m) of the Code and applicable interpretive authority
thereunder), and (b) constituted so as to permit the Plan to comply with Rule
16b-3, as currently in effect or as hereinafter modified or amended ("Rule 16b-
3"), promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act"). The Committee shall have sole authority to select the Optionees
from among those individuals eligible hereunder and to establish the number of
shares which may be issued under each Option; provided, however, that,
notwithstanding any provision in the Plan to the contrary, the maximum number of
shares that may be subject to Options granted under the Plan to an individual
Optionee during any calendar year beginning on or after January 1, 1994, may not
exceed 2,110,739 (subject to adjustment in the same manner as provided in
Paragraph IX hereof (including, without limitation, Paragraph IX(a) hereof) with
respect to shares of Stock subject to Options then outstanding). The limitation
set forth in the preceding sentence shall be applied in a manner that will
permit compensation generated under the Plan to constitute "performance-based"
compensation for purposes of section 162(m) of the Code, including, without
limitation, counting against such maximum number of shares, to the extent
required under section 162(m) of the Code and applicable interpretive authority
thereunder, any shares subject to Options that are canceled or repriced. In
selecting the Optionees from among individuals eligible hereunder and in
establishing the number of shares that may be issued under each Option, the
Committee may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the Company's success
and such other factors as the Committee in its discretion shall deem relevant.
The Committee is authorized to interpret the Plan and may from time to time
adopt such rules and regulations, consistent with the provisions of the Plan, as
it may deem advisable to carry out the Plan. All decisions made by the
Committee in selecting the Optionees and in establishing the number of shares
which may be issued under each Option shall be final.
III ELIGIBILITY OF OPTIONEE
(a) Options may be granted only to individuals who are employees (including
officers and directors who are also employees) of the Company or any affiliate
of the Company at the time the Option is granted. Options may be granted to the
same individual on more than one occasion.
(b) For all purposes under the Plan, an affiliate of the Company shall mean
(i) Novagas Clearinghouse Ltd., (ii) Accord Energy Ltd., and (iii) any
corporation, partnership, limited liability company or partnership, association,
trust or other organization which, directly or indirectly, controls, is
controlled by, or is under common control with, the Company. For purposes of
the preceding sentence, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any entity or organization, shall mean the possession, directly or indirectly,
of the power (1) to vote more than 50% of the securities having ordinary voting
power for the election of directors of the controlled entity or organization, or
(2) to direct or cause the
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direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract
or otherwise.
IV. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 14,043,371 shares of Stock, which shall include
the 11,932,632 shares of Stock subject to Options granted prior to the
Restatement Effective Date. Such shares may consist of authorized but unissued
shares of Stock or previously issued shares of Stock reacquired by the Company.
Any of such shares which remain unissued and which are not subject to
outstanding Options at the termination of the Plan shall cease to be subject to
the Plan, but, until termination of the Plan, the Company shall at all times
make available a sufficient number of shares to meet the requirements of the
Plan. The Committee shall issue Options covering all shares of Stock subject to
the Plan on or before the date which is three years after the Restatement
Effective Date. Should any Option hereunder expire or terminate prior to its
exercise in full, the shares theretofore subject to such Option may again be
subject to an Option granted under the Plan to the extent permitted under Rule
16b-3, and the purchase price of Stock issued under such Option shall be
determined in accordance with the provisions of Paragraph V hereof. The
aggregate number of shares which may be issued under the Plan shall be subject
to adjustment in the same manner as provided in Paragraph IX hereof (including,
without limitation, Paragraph IX(a) hereof) with respect to shares of Stock
subject to Options then outstanding. Exercise of an Option in any manner shall
result in a decrease in the number of shares of Stock which may thereafter be
available, both for purposes of the Plan and for sale to any one individual, by
the number of shares as to which the Option is exercised.
V. OPTION PRICE
The purchase price of Stock issued under each Option shall be determined by
the Committee, but such purchase price shall not be less than $5.95 per share of
Stock except as hereinafter provided. As of the Restatement Effective Date,
Options with respect to 6,969,994 shares of Stock are outstanding with a
purchase price of $2.13 per share of Stock (an "Original Option"). If any
Original Option expires or terminates prior to its exercise in full and the
shares theretofore subject to such Original Option are again made subject to an
Option (the "Replacement Option") pursuant to Paragraph IV hereof, then the
purchase price of Stock issued under such Replacement Option shall be determined
by the Committee, but such purchase price shall not be less than $2.13 per share
of Stock. The purchase prices set forth in this Paragraph V shall be subject to
adjustment by the Committee applying the principles set forth in Paragraphs
IX(a) and IX(c) hereof.
VI. OPTION AGREEMENTS; TRANSFERABILITY; WITHHOLDING
(a) Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("Option Agreement") which shall contain such terms and
conditions as may be approved by the Committee and are not inconsistent with the
provisions of the Plan. The terms and conditions of the respective Option
Agreements need not be identical. In the event of a conflict or inconsistency
between the provisions of the Plan and the terms of any Option Agreement, the
provisions of the Plan shall govern and control.
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(b) Each Option and all rights granted thereunder shall not be transferable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall be exercisable during the Optionee's lifetime only by the
Optionee or the Optionee's guardian or legal representative.
(c) To the extent that the exercise of an Option granted under the Plan or
the disposition of shares of Stock acquired by exercise of an Option granted
under the Plan results in compensation income to an Optionee for federal, state
or local income tax purposes, such Optionee shall pay to the Company at the time
of such exercise or disposition such amount of money as the Company may require
to meet its obligation under applicable tax laws or regulations, and, if such
Optionee fails to do so, the Company is authorized to withhold from any
remuneration then or thereafter payable to such Optionee any tax required to be
withheld by reason of such resulting compensation income. Upon an exercise by
an Optionee of an Option granted under the Plan, the Company is further
authorized in its discretion to satisfy any such withholding requirement out of
any cash or shares of Stock distributable to such Optionee upon such exercise.
VII VESTING AND CANCELLATION OF OPTIONS
(a) Each Option granted under the Plan shall vest and become immediately
exercisable in accordance with the terms hereof on the fifth anniversary of the
date of grant of such Option.
(b) Subsequent to the vesting of an Option granted hereunder, the
unexercised portion thereof shall automatically and without notice terminate and
become null and void on the earliest to occur of the following:
(i) the tenth anniversary of the date of grant of such Option;
(ii) the expiration of 95 days from the date of termination of the
Optionee's employment with the Company for any reason (other than a
termination described in clauses (iii) or (iv) below); provided, that if
the Optionee shall die during such 95-day period, the time of termination
of the unexercised portion of such Option shall be determined pursuant to
clause (iii) below;
(iii) the expiration of 12 months after an Optionee's death or the
date such Optionee's employment with the Company terminates by reason of
disability (within the meaning of subparagraph (e)(ii) below); and
(iv) the termination of the Optionee's employment with the Company in
the event such termination results from the discharge for cause of such
Optionee. For purposes of the Plan, "discharge for cause" shall have the
meaning set forth in each Optionee's employment agreement with the Company.
If an Optionee does not have an employment agreement with the Company, the
term "discharge for cause" shall mean the involuntary termination of an
Optionee's employment with the Company as a result of dishonesty or similar
serious misconduct, directly related to the performance of duties for the
Company which results from a willful act or omission and which is
materially injurious to the operations, financial condition
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or business reputation of the Company or any of its affiliates, including
but not limited to (1) refusal to follow the instructions of the President
of the Company, the Board, or the Optionee's superior officer in the
performance of the Optionee's duties, or (2) impairment of the discharge of
the Optionee's duties due to adverse consequences resulting from becoming a
defendant in any criminal proceeding or due to drug or alcohol abuse.
(c) Any Option granted hereunder which is not vested pursuant to
subparagraph (a) above shall automatically and without notice terminate and
become null and void as hereinafter set forth:
(i) In the event an Optionee's employment with the Company terminates
by reason of death or disability (within the meaning of subparagraph
(e)(ii) below), each Option held by such Optionee shall immediately
terminate with respect to the percentage of shares of Stock subject to such
Option as set forth below directly opposite the period during which the
death or disability of such Optionee occurs:
Percentage
Date of Death or Disability Terminated
--------------------------- ----------
Date of grant - 1st anniversary of 80%
date of grant - 1 day
1st anniversary - 2nd anniversary of 60%
date of grant - 1 day
2nd anniversary - 3rd anniversary of 40%
date of grant - 1 day
3rd anniversary - 4th anniversary of 20%
date of grant - 1 day
4th anniversary - 5th anniversary 10%
of date of grant - 1 day
The portion of an Option that is not terminated shall immediately vest
and shall be subject to the termination provisions of clauses (i) and (iii)
of subparagraph (b) above.
(ii) In the event an Optionee voluntarily resigns his employment with
the Company prior to attaining age 62 or is discharged for cause, all of
such Optionee's Options shall be terminated immediately upon notice of such
resignation or discharge.
(ii) In the event an Optionee voluntarily retires from employment with
the Company on or after attaining age 62 or his employment with the Company
is involuntarily terminated by the Company (or one of its affiliates) other
than pursuant to a discharge for cause, each Option held by such Optionee
shall immediately terminate with respect to the percentage of
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shares of Stock subject to such Option set forth below directly opposite
the period during which such termination occurs:
Percentage
Date of Termination Terminated
------------------- ----------
Date of grant 1st anniversary of 100%
date of grant - 1 day
1st anniversary 2nd anniversary of 80%
date of grant - 1 day
2nd anniversary 3rd anniversary of 60%
date of grant - 1 day
3rd anniversary 4th anniversary of 40%
date of grant - 1 day
4th anniversary 5th anniversary of 20%
date of grant - 1 day
The portion of an Option that is not terminated shall immediately vest
and shall be subject to the termination provisions of clauses (i) and (ii)
of subparagraph (b) above.
(d) The preceding provisions of this Paragraph VII to the contrary
notwithstanding, if an Optionee's employment with the Company has terminated
under the circumstances described in clauses (i) or (iii) of subparagraph (c)
above, and if the period during which such Optionee could exercise the vested
portion of his Options pursuant to subparagraph (b) above has expired prior to
any required adjustment to such Options pursuant to Paragraph IX(a) hereof, then
such Optionee shall be entitled to exercise such Options with respect to his
vested percentage (determined under clause (i) or (iii), as applicable, of
subparagraph (c) above) of any additional shares allocated thereto pursuant to
Paragraph IX(a) hereof during the 95-day period beginning on the date the
Committee provides such Optionee with written notice of such additional share
allocation. Further, if an Optionee has purchased Stock pursuant to an Option
prior to any required adjustment to such Option pursuant to Paragraph IX(a)
hereof, and if such adjustment would have resulted in a reduction in the
purchase price of such Stock under such Option, then the Company shall refund
such excess amount paid by such Optionee as soon as administratively feasible
after the computations required pursuant to Paragraph IX(a) hereof have been
completed.
(e) For all purposes of the Plan, (i) an Optionee shall be considered to be
in the employment of the Company as long as such Optionee remains an employee of
either the Company or any affiliate of the Company, or a corporation or any
affiliate of such corporation assuming or substituting a new option for the
Option granted to such Optionee, and (ii) an Optionee shall be considered to be
disabled if such Optionee is eligible to receive disability benefits under the
Company's long term disability plan or Social Security disability benefits if
such Optionee's employment with the Company terminates at a time when the
Company does not maintain a long term disability plan or such plan does not
provide coverage to such Optionee.
(f) The Committee may, in its sole discretion, (i) extend the 95-day period
referred to in clause (ii) of subparagraph (b) above, and/or (ii) accelerate the
vesting of all or any portion of an Option that would otherwise terminate
pursuant to clause (i) or (iii) of subparagraph (c) above. Any
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action by the Committee pursuant to this subparagraph (f) may vary among
individual Optionees and may vary among Options held by an individual Optionee.
VII TERM OF PLAN
The Plan originally became effective on May 19, 1992. This restatement of
the Plan shall be effective as of the Restatement Effective Date, provided this
restatement of the Plan is approved by the shareholders of the Company within
twelve months after the date this restatement of the Plan has been adopted by
the Board. Notwithstanding any provision in this Plan or in any Option
Agreement, no Option granted on or after the Restatement Effective Date shall be
exercisable prior to such shareholder approval. Except with respect to Options
then outstanding, if not sooner terminated under the provisions of Paragraph X,
the Plan shall terminate upon and no further Options shall be granted after May
18, 2002.
IX. CONTINGENT STOCK RIGHT ADJUSTMENT; RECAPITALIZATION OR REORGANIZATION
(a) Pursuant to the terms of Exhibit 3.5(B) of the Combination Agreement,
additional shares of Stock (the "NGC Shares") may be issued to the NGC Parties
(as such term is defined in such Exhibit). If any NGC Shares are so issued to
the NGC Parties, then each Option outstanding as of the effective date of such
issuance shall be adjusted by the Committee as follows:
(i) the number of shares of Stock which shall thereafter be covered by
such Option shall be equal to the number of shares of Stock determined
under the following formula:
O multiplied by (A divided by B),
------------- ----------
where (x) "O" equals the number of shares of Stock subject to such Option
on the date such Option initially became subject to the Plan and prior to
any adjustment pursuant to this subparagraph, (y) "A" equals the sum of (1)
the number of NGC Shares so issued to the NGC Parties, and (2) the number
of shares of Stock held by the NGC Parties immediately following the
Effective Time as such term is defined in the Combination Agreement (the
"Effective Time"), and (z) "B" equals the number of shares of Stock held by
the NGC Parties immediately following the Effective Time; and
(ii) the purchase price per share of Stock thereafter covered by such
Option shall be equal to the amount determined under the following formula:
P multiplied by (B divided by A),
------------- ----------
where (x) "P" equals the purchase price per share of Stock under such
Option on the date such Option initially became subject to the Plan and
prior to any adjustment pursuant to this subparagraph, and (y) "A" and "B"
have the meanings provided in clause (i) above.
All computations required to be made under this subparagraph shall be
appropriately adjusted by the Committee to take into account any stock dividend,
stock split, combination of shares, or reclassification, or any merger,
consolidation, spinoff, or partial or complete liquidation of the
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Company occurring during the period commencing on the Restatement Effective Date
and terminating on the effective date of the issuance of the NGC Shares to the
NGC Parties.
(b) The existence of the Plan and the Options granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
(c) The shares with respect to which Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (i) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
(d) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Optionee had been the holder of record of the number of
shares of Stock then covered by such Option. If (i) the Company shall not be
the surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company), (ii) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company), (iii) the Company is to be dissolved
and liquidated, (iv) any person or entity, including a "group" as contemplated
by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting power), or
(v) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board (each such event is referred to herein as a
"Corporate Change"), no later than (a) ten days after the approval by the
shareholders of the Company of such merger, consolidation, reorganization, sale,
lease or exchange of assets or dissolution or such election of directors or (b)
thirty days after a change of control of the type described in Clause (iv), the
Committee, acting in its sole discretion without the consent or approval of any
Optionee, shall act to effect one or more of the following alternatives, which
may vary among individual Optionees and which may vary among Options held by any
individual Optionee: (1) accelerate the time at which Options then outstanding
may be exercised so that such Options may be exercised in full for a limited
period of time on or before a specified date (before or after such Corporate
Change) fixed by the Committee, after which specified date all unexercised
Options and all rights of Optionees thereunder shall terminate, (2) require the
mandatory surrender to the Company by selected Optionees of some or all of the
outstanding Options held by such Optionees (irrespective of whether such Options
are then exercisable under the provisions of the Plan) as of a date, before or
after such Corporate Change, specified by the Committee, in which event the
Committee shall
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thereupon cancel such Options and the Company shall pay to each Optionee an
amount of cash per share equal to the excess, if any, of the amount calculated
in Subparagraph (e) below (the "Change of Control Value") of the shares subject
to such Option over the exercise price(s) under such Options for such shares,
(3) make such adjustments to Options then outstanding as the Committee deems
appropriate to reflect such Corporate Change and to keep the holders of such
Options in as nearly the same position as possible to that which they were in
prior to such Corporate Change (provided, however, that the Committee may
determine in its sole discretion that no adjustment is necessary to Options then
outstanding) or (4) provide that the number and class of shares of Stock covered
by an Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the Optionee would have
been entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution, the Optionee had been the
holder of record of the number of shares of Stock then covered by such Option.
(e) For the purposes of clause (2) in Subparagraph (d) above, the "Change
of Control Value" shall equal the amount determined in clause (i), (ii) or
(iii), whichever is applicable, as follows: (i) the per share price offered to
shareholders of the Company in any such merger, consolidation, reorganization,
sale of assets or dissolution transaction, (ii) the price per share offered to
shareholders of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) if such Corporate Change occurs other
than pursuant to a tender or exchange offer, the fair market value per share of
the shares into which such Options being surrendered are exercisable, as
determined by the Committee as of the date determined by the Committee to be the
date of cancellation and surrender of such Options. In the event that the
consideration offered to shareholders of the Company in any transaction
described in this Subparagraph (e) or Subparagraph (d) above consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered which is other than cash.
(f) Any adjustment provided for in Subparagraphs (c) or (d) above shall be
subject to any required shareholder action.
(g) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Options theretofore granted or the purchase price per
share.
X. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided, that no change in any Option theretofore granted may be made
which would impair the rights of the Optionee without the consent of such
Optionee; and provided, further, that (i) the Board may not make any alteration
or amendment which would decrease
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any authority granted to the Committee hereunder in contravention of Rule 16b-3
and (ii) the Board may not make any alteration or amendment which would
materially increase the benefits accruing to participants under the Plan,
increase the aggregate number of shares which may be issued pursuant to the
provisions of the Plan, change the class of individuals eligible to receive
Options under the Plan or extend the term of the Plan, without the approval of
the shareholders of the Company.
XI. SECURITIES LAWS
(a) The Company shall not be obligated to issue any Stock pursuant to any
Option granted under the Plan at any time when the offering of the shares
covered by such Option have not been registered under the Securities Act of 1933
and such other state and federal laws, rules or regulations as the Company or
the Committee deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the offering and sale of such shares.
(b) It is intended that the Plan and any grant of an Option made to a
person subject to Section 16 of the 1934 Act meet all of the requirements of
Rule 16b-3. If any provision of the Plan or any such Option would disqualify
the Plan or such Option under, or would otherwise not comply with, Rule 16b-3,
such provision or Option shall be construed or deemed amended to conform to Rule
16b-3.
XII MISCELLANEOUS
(a) The Plan and all actions taken pursuant to the Plan shall be governed
by, and construed in accordance with, the laws of the State of Texas, applied
without regard to conflict of laws principles thereof.
(b) The invalidity or unenforceability of any one or more provisions of the
Plan shall not affect the validity or enforceability of any other provision of
the Plan, which shall remain in full force and effect.
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EXHIBIT 2
NGC CORPORATION
AMENDED AND RESTATED 1991 STOCK OPTION PLAN
I. PURPOSES
NGC Corporation, a Delaware corporation (the "Company"), desires to afford
certain of its directors and key employees (herein, "Key Persons") and the Key
Persons of any Related Entity (as defined below) who are responsible for the
continued growth of the Company an opportunity to acquire a proprietary interest
in the Company, and thus to create in such Key Persons an increased interest in
and a greater concern for the welfare of the Company and its stockholders.
From and after December 8, 1995, for all purposes under the Plan, the term
"Related Entity" shall mean (i) Novagas Clearinghouse Ltd., (ii) Accord Energy
Ltd., and (iii) any corporation, partnership, limited liability company or
partnership, association, trust or other organization now existing or hereafter
formed or acquired which, directly or indirectly, controls, is controlled by, or
is under common control with, the Company; provided, however, that (1) for
purposes of Articles V, VI, and VIII of the Plan and (2) with respect to
Incentive Options (as defined below) granted prior to May 10, 1996, for purposes
of Article XII of the Plan, the term "Related Entity" shall mean a subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired. For purposes of the preceding sentence, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any entity or organization, shall
mean the possession, directly or indirectly, of the power (A) to vote more than
50% of the securities having ordinary voting power for the election of directors
of the controlled entity or organization, or (B) to direct or cause the
direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract
or otherwise. As used in the Plan, the terms "subsidiary corporation" and
"parent corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Internal
Revenue Code of 1986, as amended (the "Code").
The stock options ("Options") offered pursuant to this Amended and
Restated 1991 Stock Option Plan (the "Plan") are a matter of separate inducement
and are not in lieu of any salary or other compensation for services of any Key
Person.
The Company, by means of the Plan, seeks to retain the services of persons
now holding key positions and to secure the services of persons capable of
filling such positions.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Code, or options that do not meet the requirements for Incentive Options ("Non-
Qualified Options"), but the Company makes no warranty as to the qualification
of any Option as an Incentive Option.
<PAGE>
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
Subject to the adjustments provided in Article XIII hereof, the total
number of shares of capital stock of the Company that may be purchased pursuant
to the exercise of Options granted under the Plan shall not exceed, in the
aggregate, 9,892,610 shares of authorized voting common stock, par value $0.01
per share, of the Company (the "Shares"); provided, however, that
notwithstanding any provision in the Plan to the contrary, the Committee (as
defined below) may not grant Options under the Plan that could result in more
than 6,692,610 Shares (subject to adjustment in the same manner as provided in
Article XIII hereof with respect to the maximum number of Shares subject to the
Plan) being issued upon the exercise of such Options unless the proposed
transaction with Chevron U.S.A. Inc. ("Chevron") to combine substantially all of
Chevron's gas gathering, processing and marketing operations with the Company is
consummated. As used herein, the authorized common stock of the Company shall
be referred to as "Company Stock."
Shares that may be acquired under the Plan may be authorized but unissued
Shares, Shares of issued stock held in the Company's treasury, issued Shares
reacquired by the Company, or a combination thereof, in each case as the
Committee may determine from time to time at its sole option. If and to the
extent that Options granted under the Plan expire or terminate without having
been exercised, new Options may be granted with respect to the Shares covered by
such expired or terminated Options, provided that the grant and the terms of
such new Options shall in all respects comply with the provisions of the Plan;
provided, however, that no Option shall be granted under the Plan after the
Termination Date (as defined below).
The Company may from time to time grant to certain Key Persons of the
Company or a Related Entity Options under the terms hereinafter set forth;
provided, however, that, except with respect to Options then outstanding, if not
sooner terminated under the provisions of Article XX, the Plan shall terminate
upon and no further Options shall be granted after May 9, 2006 (the "Termination
Date"). Notwithstanding any provision in the Plan to the contrary, Incentive
Options may be granted only to Key Persons who are employed by the Company or a
Related Entity that is a subsidiary corporation or parent corporation of the
Company on the date of grant of any such Option.
III. ADMINISTRATION
The Plan shall be administered by the Option committee, or any successor
thereto, of the Board of Directors of the Company (the "Board of Directors"), or
by any other committee appointed by the Board of Directors to administer this
Plan (the "Committee"). The number of individuals that shall constitute the
Committee shall be no less than two individuals. A majority of the Committee
shall constitute a quorum (or if the Committee consists of only two members,
then both members shall constitute a quorum), and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee, shall be the acts of the Committee. The
Committee shall be comprised exclusively
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of "outside directors", as such term is used pursuant to Section 162(m) of the
Code and any rules and regulations promulgated thereunder. At any time that the
Company shall have a class of equity securities registered pursuant to Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (i)
each member of the Committee shall be required to also be a "disinterested
person" to administer the Plan within the meaning of Rule 16b-3, as amended
(herein so called), or other applicable rules under Section 16(b) of the
Exchange Act, and the Committee shall administer the Plan so as to comply at all
times with the Exchange Act and (ii) no member of the Committee shall be
eligible for grants or awards hereunder.
The members of the Committee shall serve at the pleasure of the Board of
Directors, which shall have the power, at any time and from time to time, to
remove members from or add members to the Committee. Removal from the Committee
may be with or without cause. Any individual serving as a member of the
Committee shall have the right to resign from membership in the Committee by
written notice to the Board of Directors. The Board of Directors, and not the
remaining members of the Committee, shall have the power and authority to fill
vacancies on the Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the number of members of the Committee to
be below two or any other number that Rule 16b-3 or Section 162(m) of the Code
(or other applicable rules or regulations) may require from time to time.
Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the Key Persons to whom Options shall
be granted, the time when such Options shall be granted to Key Persons, the
number of Shares which shall be subject to each Option, the purchase price of
each Share which shall be subject to each Option, the period(s) during which
such Options shall be exercisable (whether in whole or in part), and the other
terms and provisions thereof. In determining the Key Persons to whom Options
shall be granted and the number of Shares for which Options shall be granted to
each Key Person, the Committee shall consider the length of service, the
contributions to the Company, its parents and subsidiaries taken as a whole, and
the responsibilities and duties of each Key Person.
Subject to the express provisions of the Plan, the Committee also shall
have authority to construe the Plan and Options granted thereunder, to amend, or
in the case of material amendments to the Plan, to recommend to the Board of
Directors and the stockholders of the Company the amendment of, the Plan, to
amend Options granted thereunder, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and provisions of the
respective Options (which need not be identical) and to make all other
determinations necessary or advisable for administering the Plan. The Committee
also shall have the authority to require, in its discretion, as a condition of
the granting of any such Option, that an employee recipient agree (i) not to
sell or otherwise dispose of Shares acquired pursuant to the exercise of an
Incentive Option for a period of two (2) years from the grant of such Incentive
Option nor within one (1) year from the date of the acquisition of such Shares
pursuant to the exercise of such Incentive Option and (ii) that in the event of
termination of employment of such employee, other than as a result of dismissal
without cause, such employee will not, for a period to be fixed at the
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time of the grant of the Option, enter into any other employment or participate
directly or indirectly in any other business or enterprise which is competitive
with the business of the Company or any Related Entity, or enter into any
employment in which such employee will be called upon to utilize special
knowledge obtained through employment with the Company or any Related Entity.
The Committee shall also have the authority to require, as a condition to the
granting of any Option, that the person receiving such Option agree not to sell
or otherwise dispose of such Option, any Company Stock acquired pursuant to such
Option or any other "derivative security" (as defined by Rule 16a-l(c) under the
Exchange Act) for a period of six (6) months following the later of (i) the date
of the grant of such Option or (ii) the date when the exercise price of such
Option is fixed if such exercise price is not fixed at the date of grant of such
Option.
Subject to and consistent with the express provisions of the Code and Rule
16b-3 promulgated under the Exchange Act, the Committee shall have plenary
authority, in lieu of requiring a cash payment from the Key Person upon the
exercise of an Option, to:
(a) provide the establishment of procedures for a Key Person (1) to
have withheld from the total number of Shares to be acquired upon the
exercise of an Option that number of Shares having a fair market value (as
defined herein) which, together with such cash as shall be paid in respect
of fractional Shares, shall equal the Option exercise price, (2) to
exercise an Option by delivering that number of Shares of Company Stock
already owned by such Key Person having a fair market value which shall
equal the Option exercise price, (3) to exercise a portion of an Option by
delivering that number of Shares or Share of Company Stock already owned
by such Key Person having a fair market value which shall equal the
partial Option exercise price and to deliver the Shares thus acquired by
such Key Person in payment of Shares to be received pursuant to the
exercise of additional portions of such Option, the effect of which shall
be that such Key Person can in sequence utilize such newly acquired Shares
in payment of the exercise price of the entire Option, together with such
cash as shall be paid in respect of fractional Shares, if any, or (4) to
utilize a combination of the methods stated in clauses (1) and (3) above,
or of cash and one or both of such methods, in payment of the exercise
price of all or a portion of such Option; provided, however, that in the
case of an Incentive Option, no Shares shall be used to pay the exercise
price unless such Shares were not acquired through the exercise of an
Incentive Option or, if so acquired, have been held for more than two
years since the grant of such Option and for more than one year since the
exercise of such Option; and
(b) if appropriate, to provide an arrangement through registered
broker-dealers whereby temporary financing may be made available by the
broker-dealer to a Key Person who wishes to deliver Shares of the Company
in partial or full payment of the exercise price of such Key Person's
Option, under the rules and regulations of the Board of Governors of the
Federal Reserve, for the purpose of assisting the Key Person in the
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exercise of an Option, such authority to include the payment by the
Company of the commissions of the broker-dealer.
The determination of the Committee on matters referred to in this Article
III shall be conclusive.
The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
in the engagement of such counsel, consultant or agent shall be paid by the
Company. No member or former member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted hereunder.
IV. ELIGIBILITY
Grants of Incentive Options and Non-Qualified Options may be made under
the Plan, subject to and in accordance with the terms of the Plan, to Key
Employees. As used herein, the term "Key Employee" shall mean any employee of
the Company or any Related Entity, including officers and directors of the
Company or any Related Entity who are also employees of the Company or any
Related Entity, who are regularly employed on a salaried basis and who are so
employed on the date of such grant, whom the Committee identifies as having a
direct and significant effect on the performance of the Company or any Related
Entity. Notwithstanding the preceding provisions of this Article IV, Incentive
Options may be granted only to Key Employees who are employed by the Company or
a Related Entity that is a subsidiary corporation or parent corporation of the
Company on the date of grant of any such Option.
Grants of Non-Qualified Options shall be made, subject to and in
accordance with the terms hereof, to individuals not regularly employed by the
Company who serve as directors of the Company ("Outside Director Participants").
The adoption of this Plan shall not be deemed to give any person a right
to be granted any Options.
Subject to the adjustment provisions contained in Article XIII, the
aggregate number of Shares with respect to which Options granted to any Key
Employee (which for purposes of this sentence shall include the Chairman of the
Board, whether or not such person would otherwise be considered an Key Employee)
are exercisable shall not exceed 1,063,083.
V. LIMITATION ON EXERCISE OF INCENTIVE OPTIONS
Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of stock with respect to which Incentive Options are
exercisable for the first time by an employee during any calendar year (under
all stock Option plans of the Company and any Related
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Entity) exceeds $100,000, such Options shall be treated as Non-Qualified
Options. For purposes of this limitation (i) the fair market value of stock is
determined as of the time the Option is granted, and (ii) the limitation will be
applied by taking into account Options in the order in which they were granted.
VI. OPTION PRICE AND PAYMENT
The price ("Exercise Price") for each Share purchasable under any Option
granted hereunder shall be such amount as the Committee shall, in its best
judgment made in good faith, determine on the basis of facts and circumstances
and the requirements, if any, of Section 162(m) of the Code and any rules or
regulations promulgated thereunder to be not less than one hundred percent
(100%) of the fair market value per Share at the date such Option is granted;
provided, however, that in the case of an Incentive Option granted to a person
who, at the time such Incentive Option is granted, owns shares of the Company or
any Related Entity which possesses more than ten percent (10%) of the total
combined voting power of all classes of shares of the Company or of any Related
Entity, the Exercise Price for each Share purchasable thereunder shall be such
amount as the Committee, in its best judgment, shall determine to be not less
than one hundred ten percent (110%) of the fair market value per Share at the
date the Incentive Option is granted. In determining stock ownership of a Key
Employee for any purposes under the Plan, the rules of Section 424(d) of the
Code shall be applied, and the Committee may rely on representations of fact
made to it by the Key Employee and believed by it to be true.
If the Shares are listed on a national securities exchange in the United
States on the date any Option is granted, the fair market value per share shall
be deemed to be the average of the high and low quotations at which such Shares
are sold on such national securities exchange on the date such Option is
granted. If the Shares are listed on a national securities exchange in the
United States on such date but the Shares are not traded on such date, or such
national securities exchange is not open for business on such date, the fair
market value per Share shall be determined as of the closest preceding date on
which such exchange shall have been open for business and the Shares were
traded. If the Shares are listed on more than one national securities exchange
in the United States on the date any such Option is granted, the Committee shall
determine which national securities exchange shall be used for the purpose of
determining the fair market value per Share. If the Shares are not listed on a
national securities exchange on such date, the last reported bid price in the
over-the-counter market shall be the fair market value per share, or if the
Shares are not traded on the over-the-counter market on such date, the fair
market value per share shall be determined by the Committee in good faith.
Notwithstanding the prior provisions of this paragraph, to the extent that
Section 162(m) of the Code or any rule or regulation promulgated thereunder
provides a different or inconsistent definition of "fair market value," such
definition shall be applied in determining the fair market value per share of
Options issued hereunder. For purposes of establishing the fair market value of
Shares or underlying Options, the fair market value shall be determined without
regard to any restriction on transfer thereof.
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For purposes of this Plan, the determination by the Committee of the fair
market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall cause
the purchased Shares to be issued only when it shall have received the full
purchase price for the Shares in cash or by certified check, except as otherwise
provided in Article III hereof.
VII. USE OF PROCEEDS
The cash proceeds of the sale of Shares subject to the Options granted
hereunder are to be added to the general funds of the Company and used for its
general corporate purposes as the Board of Directors shall determine.
VIII. TERMS OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Subject to Article V, any Incentive Option granted hereunder shall be
exercisable during a period of not more than ten (10) years from the date of
grant of such Option at such times and in such amounts as the Committee shall
determine at such date of grant; provided, however, that in the case of an
Incentive Option granted to a person who, at the time the Incentive Option is
granted, owns shares in the Company or in any Related Entity which possesses
more than ten percent (10%) of the total combined voting power of all classes of
shares of the Company or of any Related Entity, such Option shall expire not
more than five (5) years from the date of grant.
Any Non-Qualified Option granted hereunder shall be exercisable at such
times, in such amounts and during such period or periods as the Committee shall
determine at the date of the grant of such Option.
The Committee shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, rights to exercise any
Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part. If any Option granted hereunder shall terminate prior to the Termination
Date, the Committee shall have the right to use the Shares as to which such
Option shall not have been exercised to grant one or more additional Options to
any eligible Key Person, but any such grant of an additional Option shall be
made prior to the close of business on the Termination Date.
In no event shall an Option granted hereunder be exercised for a fraction
of a share.
IX. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as to
all or part of the Shares covered thereby by the giving of written notice of the
exercise thereof to the Corporate
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Secretary of the Company at the principal business office of the Company,
specifying the number of Shares to be purchased and specifying a business day
not more than fifteen (15) days from the date such notice is given, for the
payment of the purchase price against delivery of the Shares being purchased.
Subject to the terms of Articles III, XV, XVII and XVIII, the Company shall
cause certificates for the Shares so purchased to be delivered to the Optionee
at the principal business office of the Company, against payment of the full
purchase price in cash or by certified check except as otherwise provided in
Article III.
X. STOCK APPRECIATION RIGHTS
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XI. NONTRANSFERABILITY OF OPTIONS
An Option granted hereunder shall not be transferable, whether by
operation of law or otherwise, other than by will or the laws of descent and
distribution, and any Option granted hereunder shall be exercisable, during the
lifetime of the holder, only by such holder.
XII. TERMINATION OF EMPLOYMENT AND SERVICE
Upon termination of a Key Person's service with the Company and all
Related Entities, any Option previously granted hereunder, unless otherwise
specified by the Committee in the Option, shall, to the extent not theretofore
exercised, terminate and become null and void, provided that:
(a) if the recipient shall die while in the service of the Company or
a Related Entity or during either the three (3) month or one (1) year
period, whichever is applicable, specified in clause (b) below and at a
time when such recipient was entitled to exercise an Option as herein
provided, the legal representative of such recipient, or such person who
acquired such Option by bequest or inheritance or by reason of the death
of the recipient, may, not later than one (1) year from the date of death,
exercise such Option, to the extent not theretofore exercised, in respect
of any or all of such number of Shares as specified by the Committee in
such Option; and
(b) if the service of any recipient to whom such Option shall have
been granted shall terminate by reason of the recipient's retirement (at
such age or upon such conditions as shall be specified by the Committee),
disability (as described in Section 22(e)(3) of the Code) or dismissal by
the Company or a Related Entity other than for cause (as defined below),
and while such recipient is entitled to exercise such Option as herein
provided, such recipient shall have the right to exercise such Option so
granted, to the extent not theretofore exercised, in respect of any or all
of such number of Shares as specified by the Committee in such Option, at
any time up to and including (i) three (3) months after the date of such
termination in the case of termination by reason of
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retirement or dismissal other than for cause and (ii) one (1) year after
the date of termination in the case of termination by reason of
disability.
If a recipient voluntarily terminates his or her employment or service as
an Outside Director Participant, or is discharged for cause, any Option granted
hereunder shall, unless otherwise specified by the Committee in the Option,
forthwith terminate with respect to any unexercised portion thereof.
Each Incentive Option by its terms shall require the recipient to remain
in the continuous employ of the Company or any subsidiary corporation or parent
corporation of the Company from the date of grant of the Incentive Option until
no more than three (3) months prior to the date of exercise of the Incentive
Option (except as otherwise provided herein in the event of death or
disability).
Notwithstanding the preceding paragraphs of this Article XII, if the
service of any recipient with the Company and all Related Entities is
terminated, whether voluntarily or involuntarily, within a one-year period
following a change in control of the Company (as defined in Article XIII), other
than a termination of such service for cause, such recipient shall have the
right to exercise all or any portion of the Option, whether vested or unvested,
at any time up and to and including three (3) months after the date of such
termination, at which time such Option shall cease to be exercisable.
Notwithstanding the immediately preceding paragraphs of this Article XII,
no Option may be exercised after the expiration of the period of exercisability
provided for in such Option.
If an Option granted hereunder shall be exercised by the legal
representative of a deceased recipient or former recipient, or by a person who
acquired an Option granted hereunder by bequest or inheritance or by reason of
the death of any recipient or former recipient, written notice of such exercise
shall be accompanied by a certified copy of letters testamentary or equivalent
proof of the right of such legal representative or other person to exercise such
Option.
For the purposes of the Plan, the term "for cause" shall mean (i) with
respect to an employee who is a party to a written agreement with, or
alternatively, participates in a compensation or benefit plan of the Company or
a Related Entity, which agreement or plan contains a definition of "for cause"
or "cause" (or words of like import) for purposes of termination of employment
thereunder by the Company or such Related Entity, "for cause" or "cause" as
defined in the most recent of such agreements or plans, or (ii) in all other
cases, as determined by the Committee, in its sole discretion, (a) the willful
commission by an employee of a criminal or other act that causes or will
probably cause substantial economic damage to the Company or a Related Entity or
substantial injury to the business reputation of the Company or a Related
Entity; (b) the continuing willful failure of an employee to perform the duties
of such employee to the Company or a Related Entity (other than such failure
resulting from the employee's incapacity due to physical or mental illness)
after written notice thereof (specifying the
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particulars thereof in reasonable detail) and a reasonable opportunity to be
heard and cure such failure are given to the employee by the Committee; (c) the
order of a court of competent jurisdiction requiring the termination of the
employee's employment; or (d) in the case of an Outside Director Participant,
the failure of such Outside Director Participant to act in good faith or the
taking of any action that constitutes a material breach of such person's
fiduciary duty to the Company. For purposes of the Plan, no act, or failure to
act, on the employee's part shall be considered "willful" unless done or omitted
to be done by the employee not in good faith and without reasonable belief that
the employee's action or omission was in the best interest of the Company or a
Related Entity.
For the purposes of the Plan, an employment relationship shall be deemed
to exist between an individual and the Company or a Related Entity if, at the
time of the determination, the individual was an "employee" of the Company or
such Related Entity. If an individual is on military, sick leave or other bona
fide leave of absence such individual shall be considered an "employee" for
purposes of the exercise of an Option and shall be entitled to exercise such
Option during such leave if the period of such leave does not exceed 90 days,
or, if longer, so long as the individual's right to reemployment with the
Company (or a Related Entity) is guaranteed either by statute or by contract.
If the period of leave exceeds ninety (90) days, the employment relationship
shall be deemed to have terminated on the ninety-first (91) day of such leave,
unless the individuals right to reemployment is guaranteed by statute or
contract.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of an employee from employment by the Company to employment by a
Related Entity or (ii) the transfer of an employee from employment by a Related
Entity to employment by the Company or by another Related Entity.
XIII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTION
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or
other like change in capital structure of the Company, an adjustment shall be
made to each outstanding Option such that each such Option shall thereafter be
exercisable for such securities, cash and/or other property as would have been
received in respect of the Shares subject to such Option had such Option been
exercised in full immediately prior to such change, and such an adjustment shall
be made successively each time any such change shall occur. The term "Shares"
shall after any such change refer to the securities, cash and/or property then
receivable upon exercise of an Option. In addition, in the event of any such
change, the Committee shall make any further adjustment as may be appropriate to
the maximum number of Shares subject to the Plan, the maximum number of Shares
of which Options may be granted to any one recipient, and the number of Shares
and price per Share subject to outstanding Options as shall be equitable to
prevent dilution or enlargement of rights under such Options, and the
determination of the Committee as to these matters shall be conclusive.
Notwithstanding the foregoing, (i) each such adjustment with respect to an
Incentive Option shall
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comply with the rules of Section 424(a) of the Code, and (ii) in no event shall
any adjustment be made which would render any Incentive Option granted hereunder
other than an incentive stock option for purposes of Section 422 of the Code.
In the event of a change in control of the Company, all then outstanding
vested Options shall immediately become exercisable. For purposes of the Plan,
a "change in control" of the Company occurs if: (a) any "person" (defined as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, as
amended), other than a stockholder of the Company as of the date of the adoption
of the Plan by the Board of Directors or any affiliate of any such stockholder,
is or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing fifty percent or more of the combined voting power of the
Company's outstanding securities then entitled to vote for the election of
directors; (b) the Board of Directors shall approve the sale of all or
substantially all of the assets of the Company; or (c) the Board of Directors
shall approve any merger, consolidation, issuance of securities or purchase of
assets, the result of which would be the occurrence of any event described in
clause (a) above.
The Committee in its discretion may determine that, upon the occurrence of
a transaction described in the preceding paragraph, each Option outstanding
hereunder shall terminate within a specified number of days after notice to the
holder, and such holder shall receive, with respect to each Share subject to
such Option, cash in an amount equal to the excess of the fair market value of
such Share immediately prior to the occurrence of such transaction over the
exercise price per Share of such Option immediately prior to the occurrence of
such transaction. The provisions contained in the preceding sentence shall be
inapplicable to an Option granted within six (6) months before the occurrence of
a transaction described above if the holder of such Option is subject to the
reporting requirements of Section 16(a) of the Exchange Act.
XIV. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any Related
Entity thereof to continue the employment of any holder of an Option; and it
shall not impose any obligation on the part of any holder of an Option to remain
in the employ of the Company or of any Related Entity.
XV. PURCHASE FOR INVESTMENT
Except as hereafter provided, the holder of an Option granted hereunder
shall, upon any exercise thereof, execute and deliver to the Company a written
statement, in form satisfactory to the Company, in which such holder represents
and warrants that such holder is purchasing or acquiring the Shares acquired
thereunder for such holder's own account, for investment only and not with a
view to the resale or distribution thereof, and agrees that any subsequent offer
for sale or sale or distribution of any of such Shares shall be made pursuant to
either (a) a Registration Statement on an appropriate form under the Securities
Act of 1933, as amended (the "Securities Act"), which Registration Statement has
become effective and is current with regard to the Shares
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being offered or sold, or (b) a specific exemption from the registration
requirements of the Securities Act and any applicable state securities law or
regulation, but in claiming such exemption the holder shall, prior to any offer
for sale or sale of such Shares, obtain a prior favorable written opinion, in
form and substance satisfactory to the Company, from counsel for or approved by
the Company, as to the applicability of such exemption thereto. Notwithstanding
the prior sentence, no exercise of an Option shall be deemed to be effective if
the Company, in its sole discretion, determines that a violation of any federal
or state securities law, or rule or regulation promulgated thereunder, would
result therefrom. The foregoing restrictions shall not apply to (i) issuances by
the Company so long as the Shares being issued are registered under the
Securities Act and a prospectus in respect thereof is current or (ii)
reofferings of Shares by affiliates of the Company (as defined in Rule 405 or
any successor rule or regulation promulgated under the Securities Act) if the
Shares being reoffered are registered under the Securities Act and a prospectus
in respect thereof is current.
XVI. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
Subject to the provisions of Articles III, XV and XVIII hereof, upon any
exercise of an Option which may be granted hereunder and payment of the purchase
price in full in cash or by certified check, a certificate or certificates for
the Shares as to which the Option has been exercised shall be issued by the
Company in the name of the person exercising the Option and shall be delivered
to or upon the order of such person.
The Company may endorse such legend or legends upon the certificates for
Shares issued upon exercise of an Option granted hereunder and may issue such
"stop transfer" instructions to its transfer agent in respect of such Shares as,
in its discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act or any state "blue sky" law or regulation, (ii) implement the
provisions of the Plan and any agreement between the Company and the optionee or
grantee with respect to such Shares, or (iii) permit the Company to determine
the occurrence of a disqualifying disposition, as described in Section 421(b) of
the Code, of Shares transferred upon exercise of an Incentive Option granted
under the Plan.
The Company shall pay all issue taxes with respect to the issuance of
Shares to the person exercising the Option, as well as all fees and expenses
necessarily incurred by the Company in connection with such issuance.
All Shares issued as provided herein shall be fully paid and non-
assessable to the extent permitted by law.
XVII. WITHHOLDING TAXES
The Company may require a Key Person exercising a Non-Qualified Option
granted hereunder, or disposing of Shares acquired pursuant to the exercise of
an Incentive Option in a
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disqualifying disposition (within the meaning of Section 421(b) of the Code), to
reimburse the Company or Related Entity, as appropriate, for any taxes required
by any governmental authority to be withheld or otherwise deducted and paid by
such corporation in respect of the issuance or disposition of Shares. In lieu
thereof, the Company or Related Entity, as appropriate, shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
such Corporation to the Key Person upon such terms and conditions as the
Committee shall prescribe. At any time that the Company or a Related Entity
becomes subject to a withholding obligation under applicable law with respect to
the exercise of a Non-Qualified Option except as set forth below, a Key Person
may elect to satisfy, in whole or in part, the Key Person's related personal tax
liabilities (an "Election") by (i) the payment of cash, (ii) electing to have
such amount withheld from sums otherwise due to the Key Person, (iii) subject to
the other requirements of this Section XVII, directing the Company or the
subsidiary to withhold from Shares issuable in the related exercise either a
specified number of Shares or Shares having a specified value in each case with
a value not in excess of such tax liabilities, (iv) subject to the requirements
of Section 16(b) of the Exchange Act and the rules promulgated thereunder,
tendering Shares previously issued pursuant to an exercise or other shares of
the Company's common stock owned by the Key Person or (v) combining any or all
of the foregoing options; provided, that the Company will not be required to
redeem any Shares or shares of nonvoting or other common stock in violation of
applicable laws. An Election shall be irrevocable. The withheld Shares and other
shares tendered in payment should be valued at their fair market value on the
date that the withholding obligation arises (the "Tax Date"). The Committee may
disapprove of any Election, suspend, or terminate the right to make Elections or
provide that the right to make Elections shall not apply to particular grants,
Shares or exercises. If a Key Person is a person subject to Section 16 of the
Exchange Act and such Key Person intends to satisfy all or any portion of such
withholding obligation by directing the withholding of Shares issuable or
tendering Shares, then (1) any Election by such Key Person must be made (i) at
least six months prior to the relevant Tax Date or (ii) on or prior to the
relevant Tax Date and during a period that begins on the third business day
following the date of release for publication of the Company's quarterly or
annual summary statements of sales and earnings and that ends on the twelfth
business day following such date and (2) the Election may not be made with
respect to an exercise, or the withholding obligation arising thereon, if the
relevant Non-Qualified Option was granted six months or less prior to the date
of Election. The Committee may impose any other conditions or restrictions on
the right to make an Election as it shall deem appropriate. If the Key Person
has informed the Company in writing that such withholding would subject such Key
Person to liability under Section 16(b) of the Exchange Act, the Company shall
not be authorized to effect any such withholding without the prior written
consent of the Key Person. The Committee may prescribe such rules as it
determines with respect to Key Persons subject to the reporting requirements of
Section 16(a) of the Exchange Act to effect such tax withholding in compliance
with the Rules established by the Securities and Exchange Commission (the
"Commission") under Section 16 of the Exchange Act and the positions of the
staff of the Commission thereunder expressed in no-action letters exempting such
tax withholding from liability under Section 16(b) of the Exchange Act.
XVIII. LISTING OF SHARES AND RELATED MATTERS
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Upon the consummation of a public offering of voting common stock of the
Company which is underwritten on a firm commitment basis by a nationally-
recognized investment banking firm, (i) each granted but unexercised Option
shall be deemed from the date thereof to be an option to purchase voting common
stock of the Company instead of an option to purchase nonvoting common stock of
the Company, and (ii) all Options granted after the date thereof shall be
options to purchase voting common stock of the Company and not nonvoting common
stock of the Company.
If at any time the Board of Directors shall determine in its discretion
that the listing, registration or qualification of the Shares covered by the
Plan upon any national securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, no Shares shall be issued unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board of Directors. During such suspension of the issuance of Shares,
neither the Company nor its parents or subsidiaries shall be liable for any
payment of interest or fees of any kind on Shares not yet issued. Under no
circumstances shall the Company be required to effect any registration or
qualification of any Shares under any federal or state securities laws.
XIX. AMENDMENT OF THE PLAN
The Board of Directors or the Committee, as the case may be, may, from
time to time, amend the Plan, provided that no amendment shall be made, without
the approval of the stockholders of the Company, that will (i) increase the
total number of Shares reserved for Options under the Plan (other than an
increase resulting from an adjustment provided for in Article XIII), (ii) reduce
the exercise price of any Option granted hereunder below the price required by
Article VI, (iii) modify the provisions of the Plan relating to eligibility,
(iv) materially increase the benefits accruing to participants under the Plan,
(v) increase the number of Shares which may be granted to an individual Key
Employee under the Plan, (vi) adversely affect the Plan's qualification under
Section 162(m)(4)(C) of the Code, (vii) adversely affect the qualification of
Incentive Options under Section 422 of the Code or (viii) otherwise materially
modify the Plan. The Committee shall be authorized to amend the Plan and the
Options granted thereunder to permit the Incentive Options granted thereunder to
qualify as incentive stock Options within the meaning of Section 422 of the Code
and to qualify the Plan under Section 162(m)(4)(C) of the Code. The rights and
obligations under any Option granted before amendment of the Plan or any
unexercised portion of such Option shall not be adversely affected by amendment
of the Plan or the Option without the consent of the holder of the Option.
XX. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on
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the Termination Date. An Option may not be granted while the Plan is suspended
or after it is terminated. Rights and obligations under any Option granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except upon the consent of the person to whom the
Option was granted. The power of the Committee to construe and administer any
Options granted prior to the termination or suspension of the Plan under Article
III nevertheless shall continue after such termination or during such
suspension.
XXI. SAVINGS PROVISION
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the Committee fails to comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
XXII. GOVERNING LAW
The Plan, such Options as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware from time to time obtaining.
XXIII. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be deemed
to affect the validity of any other provision.
XXIV. EFFECTIVE DATE OF AMENDMENT AND RESTATEMENT OF THE PLAN
The Plan as set forth herein constitutes an amendment and restatement of
the Trident NGL Holding, Inc. Amended and Restated 1991 Stock Option Plan, as
previously adopted by Trident NGL Holding, Inc. (a predecessor to the Company).
This amendment and restatement of the Plan shall be effective as of May 10,
1996, provided this amendment and restatement of the Plan is approved by the
stockholders of the Company on such date at the Company's 1996 Annual Meeting of
Stockholders.
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EXHIBIT 3
CUSIP NO. 629121 10 4
AGREEMENT OF JOINT FILING
The undersigned, C. L. Watson, in his individual capacity and in his
capacity as the trustee of the Charles L. Watson Grantor Retained Annuity Trust,
Kim R. Watson Grantor Retained Annuity Trust, Keri M. Watson Trust, Brian J.
Watson Trust and Carly R. Watson Trust, hereby agrees and consents to the filing
of a single statement on Schedule 13D and any amendments thereto, in accordance
with the provisions of Reg. (S) 240.13d-1(f)(iii) adopted under the Securities
Exchange Act of 1934, as amended.
Dated: March 31, 1997. By: /s/ C. L. WATSON
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Name: C. L. Watson
CHARLES L. WATSON GRANTOR
RETAINED ANNUITY TRUST
KIM R. WATSON GRANTOR
RETAINED ANNUITY TRUST
KERI M. WATSON TRUST
BRIAN J. WATSON TRUST
CARLY R. WATSON TRUST
By: /s/ C. L. WATSON
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Name: C. L. Watson
Title: Trustee
