<PAGE>
As filed with the Securities and Exchange Commission on May 20, 1994
Registration No. 33-
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Securities and Exchange Commission
Washington, D.C. 20549
______________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
TRANSCO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-1758039
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2800 Post Oak Boulevard
P. O. Box 1396, Houston, Texas 77251
(Address of Principal Executive Offices) (Zip Code)
TRANSCO ENERGY COMPANY 1991 INCENTIVE STOCK PLAN
(Full title of the plan)
David E. Varner
Senior Vice President, General Counsel and Secretary
Transco Energy Company
2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas 77251
(Name and address of agent for service)
(713) 439-2000
(Telephone number, including area code, of agent for service)
<PAGE>
<TABLE>
<CAPTION>
______________________________
CALCULATION OF REGISTRATION FEE
____________________________________________________________________________________________________
____________________________________________________________________________________________________
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities to be Price Per Offering Registration
to be Registered Registered(1) Share(2) Price(2) Fee
____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Common Stock, par value
$0.50 per share, of 2,000,000 $15.4375 $30,875,000 $10,646.55
Transco Energy Company
Common Stock Purchase
Rights (3) __________ __________ __________ __________
____________________________________________________________________________________________________
____________________________________________________________________________________________________
</TABLE>
(1) The number of shares of Common Stock registered herein is subject
to adjustment to prevent dilution resulting from stock splits,
stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the registration
fee, based on the average of the high and low prices of a share
of Common Stock published in The Wall Street Journal reports
of New York Stock Exchange Composite Transactions for May 17,
1994 which is within 5 business days prior to the date of filing
of this registration statement.
(3) Each share of Common Stock offered hereby includes one common
stock purchase right which is exercisable upon the occurrence of
certain specified events.
<PAGE>
REGISTRATION STATEMENT
FOR
REGISTRATION OF ADDITIONAL SECURITIES
ON FORM S-8
Incorporation by Reference
_________________________
Hereby incorporated by reference is the Registrant's Registration
Statement on Form S-8 (No. 33-40495) filed on May 9, 1991 with the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on the
17th day of May, 1994.
TRANSCO ENERGY COMPANY
By: /s/ Larry J. Dagley
__________________________________
Larry J. Dagley, Senior Vice
President, Chief Financial Officer
and Controller
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints JOHN P. DESBARRES, LARRY J. DAGLEY
AND DAVID E. VARNER, and each of them his true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitutions of
him and in his name, place and stead in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
_________ _____ ____
/s/ Gordon F. Ahalt
__________________________
Gordon F. Ahalt Director May 17, 1994
__________________________
Benjamin F. Bailar Director May __, 1994
/s/ J. P. Desbarres
__________________________
J. P. DesBarres Chairman of the Board, May 17, 1994
President and Chief
Executive Officer
(principal executive
officer)
Signature Title Date
_________ _____ ____
/s/ Robert W. Fri
__________________________
Robert W. Fri Director May 17, 1994
/s/ J. David Grissom
__________________________
J. David Grissom Director May 17, 1994
/s/ William H. Luers
__________________________
William H. Luers Director May 17, 1994
/s/ Frederick H. Schultz
__________________________
Frederick H. Schultz Director May 17, 1994
/s/ Larry J. Dagley
__________________________
Larry J. Dagley Senior Vice President, May 17, 1994
Chief Financial
Officer and Controller
(principal accounting
officer and principal
financial officer)
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 and
the Prospectus related thereto of our reports dated February 18, 1994,
included and incorporated by reference in Transco Energy Company's Annual
Report on Form 10-K for the year ended December 31, 1993 and to all
references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN & CO
Houston, Texas
May 19, 1994
<PAGE>
__________________________________________________________________________
__________________________________________________________________________
Securities and Exchange Commission
Washington, D.C. 20549
______________________________
EXHIBITS TO
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
TRANSCO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-1758039
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2800 Post Oak Boulevard
P. O. Box 1396, Houston, Texas 77251
(Address of Principal Executive Offices) (Zip Code)
TRANSCO ENERGY COMPANY 1991 INCENTIVE STOCK PLAN
(Full title of the plan)
David E. Varner
Senior Vice President, General Counsel and Secretary
Transco Energy Company
2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas 77251
(Name and address of agent for service)
(713) 439-2000
(Telephone number, including area code, of agent for service)
______________________________
<PAGE>
INDEX TO EXHIBITS
Exhibit Number
______________
4-1 Second Restated Certificate of Incorporation of Transco Energy
Company (Exhibit (3)-1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1989 Commission File Number 1-7513).
4-2 Bylaws of Transco Energy Company (Exhibit (3)-2 to the
Registrant's Form 10-K for the year ended December 31, 1991
Commission File Number 1-7513).
4-3 Rights Agreement, dated as of January 13, 1986, between Transco
and Morgan Guaranty Trust Company of New York. (Transco Form 8-A
dated January 14, 1986).
(a) Amendment No. 1 to Rights Agreement, dated as of June 1,
1988, between Transco and Morgan Shareholder Services Trust
Company. (Transco Form 8, Amendment No. 1, dated March 30,
1989)
(b) Amendment No. 2 to Rights Agreement, dated as of March 30,
1989, between Transco and Morgan Shareholders Services
Trust Company. (Transco Form 8, Amendment No. 2, dated
March 30, 1989)
(c) Amendment No. 3 to Rights Agreement, dated as of January
1991, between Transco and First Chicago Trust Company.
(Transco Form 8, Amendment No. 3, dated July 1, 1991)
5. Opinion of David E. Varner, Senior Vice President, General
Counsel and Secretary of the Company.
10. Transco Energy Company Amended and Restated 1991 Incentive Stock
Plan.
23-1 Consent of David E. Varner, is contained in his opinion filed as
Exhibit 5 hereto.
23-2 Consent of Arthur Andersen & Co. is set forth in the Registration
Statement.
24. Power of Attorney is set forth on signature page of the
Registration Statement.
March 17, 1994
Board of Directors
Transco Energy Company
2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas 77251
Gentlemen:
I am Senior Vice President, General Counsel and Secretary of Transco
Energy Company (the "Company") and have acted as counsel for the Company
in connection with its Registration Statement on Form S-8 (the
"Registration Statement") relating to the registration under the
Securities Act of 1933, as amended, of 2,000,000 shares of common stock,
$.50 par value (the "Common Stock") of the Company issuable pursuant to
the Transco Energy Company 1991 Incentive Stock Plan (the "Plan").
As the basis for the opinion hereinafter expressed, I have examined
such statutes, regulations, records and documents, certificates of
corporate and public officials and other instruments as I have deemed
necessary or advisable for the purposes of this opinion. In such
examination I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals and the
conformity with the original documents of all documents submitted to me as
copies.
Based on the foregoing and on such legal considerations as I deem
relevant, I am of the opinion that the shares of Common Stock to be issued
by the Company pursuant to the Plan have been authorized, and that the
Common Stock, when issued in accordance with the terms of the Plan, will
be validly issued, fully paid and nonassessable.
I am licensed to practice law in the State of Texas and the opinions
set forth above are based upon and limited to the laws of the State of
Texas and the United States and a reading of the General Corporation Law
of the State of Delaware.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ David E. Varner
TRANSCO ENERGY COMPANY
AMENDED AND RESTATED
1991 INCENTIVE STOCK PLAN
1. PURPOSE
The purpose of the Transco Energy Company Amended and Restated 1991
Incentive Stock Plan (the "Plan") is to advance the interests of Transco
Energy Company ("Transco" or the "Company") and its Affiliates by
providing incentive awards and stock ownership opportunities to employees
of the Company (including officers and directors who are employees) who
contribute significantly to the performance of Transco and its Affiliates.
In addition, the Plan provides stock ownership opportunities to the
members of the Board of Directors of Transco who are not employees of
Transco and its Affiliates ("Directors"). The Plan is intended to enhance
the ability of Transco and its Affiliates to attract and retain
individuals of superior ability and to motivate such employees and
Directors to exert their best efforts on behalf of the Company and its
Affiliates and thereby increase stockholder value.
For purposes of the Plan, an Affiliate shall be any corporation or
other entity in which Transco has a direct or indirect ownership interest
of 20% or more of the total combined voting power of all classes of stock
or ownership interests in such corporation or entity, which meets the
definition of "subsidiary" as defined in Rule 405 promulgated under the
Securities Act of 1933, and which shall be designated an Affiliate by the
Committee.
2. ADMINISTRATION AND INTERPRETATION
a. Administration. The Plan shall be administered by a committee
(the "Committee") consisting of not less than two members of the Board of
Directors of Transco appointed by and serving at the pleasure of the
Board, provided that each member shall be (i) a disinterested person
within the meaning of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), as such rule or its equivalent
is in effect from time to time and (ii) an "outside director," as defined
in Internal Revenue Code (the "Code") Section 162(m) and the regulations
promulgated thereunder or their equivalent as in effect from time to time.
The Board may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may
fill vacancies, however caused, in the Committee. A majority of the
members of the Committee shall constitute a quorum and the acts of a
majority of the members present at a meeting at which a quorum is present
or the acts of a majority of the members evidenced in writing shall be the
acts of the Committee.
Except as provided in Sections 5f and 7d hereof, the Committee shall
have the full and exclusive right to make all grants and awards under the
Plan. In making grants and awards, the Committee shall take into
consideration the contribution the individual has made or may make to the
success of Transco or its Affiliates and such other considerations as the
Committee shall determine. The Committee shall also have the authority to
consult with and receive recommendations from the Chief Executive Officer
and other officers and employees of Transco and its Affiliates with regard
to these matters. In no event shall any individual participating in the
Plan, his or her legal representatives, heirs, legatees, distributees, or
successors have any right to participate in the Plan, except to such
extent, if any, as the Committee shall determine. The Committee may
correct any defect or any omission or reconcile any inconsistency in the
Plan or in any award or grant made hereunder in the manner and to the
extent it shall deem desirable.
The Committee may from time to time, with respect to grants and
awards under the Plan, prescribe such terms and conditions as it deems
appropriate, including, without limitation, causing grants and awards to
be subject to the achievement of such specific goals as may be established
by the Committee from time to time, provided that such terms and
conditions are not more favorable to a Participant than those expressly
set forth in the Plan.
The day-to-day administration of the Plan may be carried out by such
officers and employees of Transco or its Affiliates as shall be designated
from time to time by the Committee.
b. Interpretation. The Committee may prescribe, amend and rescind
rules and regulations for administration of the Plan and shall have full
power and authority to construe and interpret the Plan. The interpretation
and construction by the Committee of any provisions of the Plan or of any
grant or award under the Plan and any determination by the Committee under
any provision of the Plan or any such grant or award shall be final and
conclusive on all persons, including, Transco, its Affiliates and all
persons participating in the Plan for all purposes.
c. Limitation on Liability. Neither the Committee nor any member
thereof, nor any other person performing ministerial or other duties under
the Plan on behalf of the Committee shall be liable for any act, omission,
interpretation, construction or determination made in connection with the
Plan in good faith, and the members of the Committee and such other
persons shall be entitled to indemnification and reimbursement by Transco
in respect of any claim, loss, damage or expense (including counsel fees)
arising therefrom to the full extent permitted by law and under any
insurance coverage that may be in effect from time to time.
3. SHARES SUBJECT TO AWARDS UNDER THE PLAN
a. Limitation on Number of Shares. The shares subject to grants of
Options and Stock Appreciation Rights (as defined in Section 5 hereof),
the shares subject to awards of Restricted Stock and Restricted Stock
Units (as defined in Section 6 hereof) and the shares authorized for
issuance in payment of Deferred Stock Units (as defined in Section 7
hereof) shall be shares of Transco's authorized but unissued common stock,
par value $.50 per share ("Common Stock"), and shares of such Common Stock
that are issued but not outstanding and are held as treasury stock by
Transco. Subject to adjustment as hereinafter provided, the aggregate
number of shares of Common Stock (i) as to which Options and Stock
Appreciation Rights may be granted under the Plan, (ii) that may be
subject to awards of Restricted Stock, and (iii) that may be distributed
in payment of Restricted Stock Units and Deferred Stock Units shall not
exceed 3,250,000 shares; provided, however, that of such shares the
aggregate number of shares of Common Stock that may be subject to awards
of Restricted Stock and that may be distributed in payment of Restricted
Stock Units and Deferred Stock Units shall not exceed 1,137,500 shares.
Shares of Common Stock ceasing to be subject to an Option, Stock
Appreciation Right, Restricted Stock Unit or Deferred Stock Unit because
of the exercise of such Option or Stock Appreciation Right when exercised
for shares of Common Stock or because a Restricted Stock Unit or Deferred
Stock Unit is paid in shares of Common Stock, or shares of Restricted
Stock as to which all restrictions have been removed, shall no longer be
subject to any further grant, award or payment under the Plan. If any
outstanding Option or Stock Appreciation Right, in whole or in part,
expires or terminates unexercised or is cancelled or any Stock
Appreciation Right is exercised for cash or any Restricted Stock Unit or
Deferred Stock Unit, in whole or in part, expires or is terminated or
forfeited for any reason, the shares of Common Stock allocable to the
unexercised, terminated, cancelled or forfeited portion of such Option,
Stock Appreciation Right, Restricted Stock Unit or Deferred Stock Unit
award may again be made the subject of grants, awards or payments under
the Plan. Terminated or forfeited Restricted Stock may not be made the
subject of grants, awards or payments under the Plan, unless by order,
rule, decision or interpretation of the Securities and Exchange Commission
or court of competent jurisdiction or under applicable law such terminated
or forfeited Restricted Stock may be made the subject of further grants,
awards or payments under the Plan without jeopardizing the status of the
Plan or such grants, awards or payments under Rule 16b-3 promulgated under
the 1934 Act.
b. Adjustments of Aggregate Number of Shares. The aggregate number
of shares of Common Stock stated in Section 3a shall be subject to
appropriate adjustment, from time to time, in accordance with the
provisions of Section 8 hereof. In the event of a change in the Common
Stock of Transco that is limited to a change in the designation thereof to
"Capital Stock" or other similar designation, or to a change in the par
value thereof, or from par value to no par value, without increase or
decrease in the number of issued shares, the shares resulting from any
such change shall be deemed to be Common Stock within the meaning of the
Plan.
4. ELIGIBILITY
The individuals who shall be eligible to receive Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units and/or
Deferred Stock Units under the Plan shall be such employees (including
officers and directors who are employees) of Transco or of any Affiliate
as the Committee from time to time shall determine. Directors shall only
be eligible to receive Options and Deferred Stock Units as provided in
Sections 5f and 7d hereof. Such employees and Directors shall hereafter be
referred to collectively as "Participants" and individually as a
"Participant."
5. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
a. Grants of Options.
(1)In General. Stock options granted under the Plan may be either
"Incentive Stock Options" or "Non-qualified Stock Options" (both as
defined below and collectively referred to as "Options"). Options
granted under the Plan shall be of such type, for such number of shares
of Common Stock and subject to such terms and conditions as the
Committee shall designate. The Committee may grant Non-qualified Stock
Options at any time and from time to time before May 8, 2001 to such
employees as it shall determine. The Committee may grant Incentive
Stock Options at any time and from time to time before March 20, 2001
to such employees as it shall determine. No individual may be granted
Options under this Plan during any five year period entitling him or
her to receive in the aggregate more than 500,000 shares of Common
Stock as adjusted in accordance with the provisions of Section 8
hereof.
(2)Incentive Stock Options. The term "Incentive Stock Option" shall
mean an Option, or portion thereof, that is intended to qualify as an
incentive stock option under Section 422 of the Code. The aggregate
Market Value Per Share (as defined in Section 5c(4) hereof, calculated
as of the date of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time in any
calendar year by any individual under the Plan (and any other incentive
stock options that may be issued under any stock option plan that may
be maintained by Transco or an Affiliate) may not exceed the sum of
$100,000 or such greater or lesser limit which may hereafter be imposed
by law. Incentive Stock Options may only be granted to employees of the
Company and such Affiliates of the Company in which the Company has
direct or indirect ownership of 50% or more of the total combined
voting power of all classes of stock.
(3)Non-qualified Stock Options. The term "Non-qualified Stock
Option" shall mean any Option or portion thereof that is not an
Incentive Stock Option. Except as specifically provided herein, the
provisions of this Plan shall apply in the same manner to Incentive
Stock Options and to Non-qualified Stock Options.
b. Grants of Stock Appreciation Rights.
(1)In General. The term "Stock Appreciation Right" or "SAR" shall
mean the right to receive from Transco an amount equal to the Market
Value Per Share on the exercise date, minus the Market Value Per Share
on the date of grant (or, in the discretion of the Committee, the
Market Value Per Share on the date of the grant of the Option to which
the SAR relates if the SAR is attached to an Option after the Option
has been granted), multiplied by the total number of shares of Common
Stock for which the SAR is exercised. The amount payable by Transco
upon the exercise of an SAR may be paid in cash or in shares of Common
Stock or in any combination thereof as the Committee in its sole
discretion shall determine, but no fractional shares shall be issuable
pursuant to any SAR. The Committee may grant SARs to employees at any
time and from time to time before May 8, 2001. SARs may be granted
independently of or in conjunction with an Option granted under the
Plan. In the case of a Non-qualified Stock Option, such rights may be
granted either at or after the time of grant of such Option. In the
case of an Incentive Stock Option, such rights may be granted only at
the time of grant of such Option. In the case of an SAR granted with a
related Option, the SAR shall terminate and no longer be exercisable
upon the termination or exercise of the related Option.
(2)Limitations on SARs. Each SAR granted hereunder shall be
exercisable only upon the consent of the Committee.
c. Terms of Options and SARs. Options and SARs granted pursuant to this
Plan shall be evidenced by stock option (and/or, if applicable, SAR)
agreements (referred to herein as an "agreement") that shall comply with
and be subject to the following terms and conditions and may contain such
other provisions, consistent with this Plan, as the Committee shall deem
advisable.
(1)Payment of Option Exercise Price. Upon exercise of an Option, the
full option purchase price for the shares with respect to which the
Option is being exercised shall be payable to Transco (i) in cash or by
check payable and acceptable to Transco, or (ii) subject to the
approval of the Committee, (a) by tendering to Transco such number of
shares of Common Stock owned by the optionee having an aggregate Market
Value Per Share as of the date of exercise and tender that is not
greater than the full option purchase price for the shares with respect
to which the Option is being exercised and by paying any remaining
amount of the option purchase price as provided in (i) above (provided
that the Committee may, upon confirming that the optionee owns the
number of additional shares being tendered, authorize the issuance of
a new certificate for the number of shares being acquired pursuant to
the exercise of the Option less the number of shares being tendered
upon the exercise and return to the optionee (or not require surrender
of) the certificate for the shares being tendered upon the exercise),
(b) by the optionee delivering to Transco a properly executed exercise
notice together with irrevocable instructions to a broker to promptly
deliver to Transco cash or a check payable and acceptable to Transco to
pay the option purchase price, or (c) by the withholding of shares that
otherwise would be issued upon the exercise having an aggregate Market
Value Per Share as of the date of exercise equal to the full option
purchase price; provided that in the event the optionee chooses to pay
the option purchase price as provided in (ii)(b) above, the optionee
and the broker shall comply with such procedures and enter into such
indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure. Payment instruments will be
received subject to collection.
(2)Number of Shares. Each agreement shall state the total number of
shares of Common Stock that are subject to the Option and/or, if
applicable, SAR.
(3)Exercise Price. The exercise price for each Option and SAR shall
be fixed by the Committee at the date of grant, but in no event may
such exercise price per share be less than the Market Value Per Share
(as defined below) on the date of the grant of the Option or SAR,
except as provided in 5b(1).
(4)Market Value Per Share. The Market Value Per Share as of any
particular date shall be determined by any fair and reasonable means
selected by the Committee, which may include, if the Common Stock is
listed for trading on the New York Stock Exchange, the closing price on
such date quoted in Network A of the consolidated transaction reporting
system, which is published in The Wall Street Journal reports of New
York Stock Exchange-Composite Transactions, or if no trade of the
Common Stock shall have been reported for such date, the closing price
quoted in Network A of the consolidated transaction reporting system,
which is published in The Wall Street Journal reports of the New York
Stock Exchange-Composite Transactions for the next day prior thereto on
which a trade of the Common Stock was so reported.
(5)Term. The term of each Option and/or, if applicable, SAR shall be
determined by the Committee at the date of grant; provided, however,
that each Option and/or, if applicable, SAR shall, notwithstanding
anything in the Plan or an agreement to the contrary (including but not
limited to any extension of the post-retirement or post-termination
exercise period pursuant to subsection (7) below), expire not more than
ten years from the date the Option or SAR is granted or, if earlier,
the date specified in the agreement with respect to the grant of such
Option or SAR.
(6)Date of Exercise. In the discretion of the Committee, each
agreement may contain a provision stating when the Option and/or, if
applicable, SAR granted therein may be exercised in whole or in part.
The Committee may, however, at any time, in its sole discretion, amend
any outstanding Option or SAR to accelerate the time that such Option
or SAR shall be exercisable or to provide that the time for exercising
such Option or SAR shall be accelerated upon the occurrence of a
specified event. Notwithstanding the foregoing, however, no Option or
SAR, or any portion thereof, may be exercisable until at least six
months after the date of grant of such Option or SAR.
(7)Termination of Employment. In the event that an individual's
employment with Transco and its Affiliates shall terminate for reasons
other than (i) retirement pursuant to a retirement plan of Transco or
one of its Affiliates ("Retirement"), (ii) disability (as hereafter
defined) or (iii) death, the individual's Options and/or, if
applicable, SARs, shall be exercisable by him or her, subject to
subsections (5) and (6) above, only within three months after such
termination, and only to the extent the Option and/or, if applicable,
SAR, was exercisable immediately prior to such termination of
employment; provided, however, that, notwithstanding the foregoing, to
the extent the Option and/or, if applicable, SAR, was exercisable
immediately prior to such termination of employment, the Committee may,
subject to subsections (5) and (6) above, in its discretion, extend
such three-month period up to but not to exceed in the aggregate 36
months. "Disability" as used herein shall mean sickness or injury that
causes an individual to be unable to perform the duties of his regular
job and termination or placement by the Company or its Affiliates of
the individual on medical leave of absence pursuant to a disability
plan or program sponsored or maintained by the Company or an Affiliate.
If, however, any termination of employment is due to Retirement or
Disability, the individual shall have the right, subject to the
provisions of subsections (5) and (6) above, to exercise any Option
and/or, if applicable, SAR, at any time within the 36-month period
commencing on the day next following such termination of employment to
the extent that the individual was entitled to exercise the same on the
day immediately prior to such termination; provided, however, if an
individual's employment shall terminate due to Retirement but such
individual continues to serve on the Board of Directors of the Company,
such individual shall have the right, subject to the provisions of
subsections (5) and (6) above, to exercise any Option and/or, if
applicable, SAR, within 36 months after such individual ceases to serve
on the Board of Directors of the Company to the extent that the Option
and/or, if applicable, SAR, was exercisable immediately prior to such
cessation of service on the Board of Directors. Service on the Board of
Directors after termination of employment from the Company shall be
credited towards any vesting requirements relating to Options and/or,
if applicable, SARs granted while an employee of the Company. Whether
any termination of employment is due to Retirement or Disability and
whether an authorized leave of absence or absence on military or
government service or for other reasons shall constitute a termination
of employment for the purposes of the Plan shall be determined by the
Committee.
If an individual shall die while entitled to exercise an Option
and/or, if applicable, SAR, the individual's estate, personal
representative or beneficiary, as the case may be, shall have the
right, subject to the provisions of subsections (5) and (6) above, to
exercise the Option and/or, if applicable, SAR, at any time within 12
months from the date of the optionee's death, to the extent that the
optionee was entitled to exercise the same on the day immediately prior
to the optionee's death; provided, however, that, notwithstanding the
foregoing, to the extent the Option and/or, if applicable, SAR, was
exercisable immediately prior to death, the Committee may, subject to
subsections (5) and (6) above, in its discretion, extend such
twelve-month period up to but not to exceed in the aggregate 36 months.
d. Effect of Exercise of Options and SARs. The right of an individual
to exercise an Option or SAR shall terminate to the extent that such
Option or SAR is exercised and, to the extent that an SAR relates to a
specific Option, the exercise of the SAR shall terminate a corresponding
portion of the related Option and, conversely, to the extent that such
optionee exercises the related Option, a corresponding portion of such SAR
shall terminate.
e. Options and SARs Granted by Other Corporations. Notwithstanding
anything to the contrary in Section 5c(3) hereof, Options and SARs may be
granted under the Plan from time to time in substitution for stock options
and stock appreciation rights held by employees of corporations who become
employees of Transco or of any Affiliate as a result of a merger or
consolidation of the employer corporation with Transco or such Affiliate,
or the acquisition by Transco or an Affiliate of the assets of the
employer corporation or the acquisition by Transco or an Affiliate of
stock of the employer corporation, with the result that such employer
corporation becomes an Affiliate.
f. Options Granted to Directors. Options granted to Directors shall be
subject to all provisions and terms of this Plan otherwise applicable
thereto, except that notwithstanding such other provisions and terms of
this Plan to the contrary, all Options granted to Directors shall be
subject and may be granted only pursuant to the following provisions:
(1)Granting of Awards. Commencing with the Annual Meeting in 1991,
each Director shall be granted Options with respect to 1,000 shares of
Common Stock effective as of the date of each Annual Meeting at which
he or she is elected or continues to serve as a Director. Individuals
who become Directors for the first time on or after the 1991 Annual
Meeting of Stockholders shall be granted Options with respect to 5,000
shares of Common Stock effective as of the date on which they become a
member of the Board of Directors of Transco.
(2)Type and Terms of Awards. Each Option granted to a Director shall
be a Non-qualified Stock Option. All Options granted to Directors shall
have an exercise price equal to the Market Value Per Share on the date
of grant, shall become exercisable for the first time one year after
the date of grant (except as provided by or permitted pursuant to
Section 9) and shall have a term of ten years unless earlier terminated
as provided in (3) below.
(3)Termination of Service. In the event that a Director ceases to be
a member of the Board of Directors of Transco after five years of
service on the Board ("Retirement Date"), Options received by such
Director pursuant to this Section 5f shall be exercisable only until
the earlier of the tenth anniversary of the date of grant or the third
anniversary of such Retirement Date and only to the extent that such
Options were exercisable on such Retirement Date. In the event that a
Director ceases to be a member of the Board of Directors of Transco
prior to completing five years of service on the Board, Options
received by such Director pursuant to this Section 5f shall be
exercisable only until the earlier of the tenth anniversary of the date
of grant or the first anniversary of such termination of service and
only to the extent that such Options were exercisable on the date of
such termination. In the event that a Director shall die while serving
as a Director, all Options held by such person for six months or more
shall be deemed to be exercisable as of the date of death and such
options shall be exercisable until the earlier of the tenth anniversary
of the date of grant or the third anniversary of the date of death.
6. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
a. Awards of Restricted Stock and Restricted Stock Units. Awards under
this Section 6 may be made by the Committee at any time and from time to
time before May 8, 2001 to such employees as it shall determine. An award
may be (i) Common Stock issued contemporaneously with the award subject to
such terms, conditions and restrictions for such periods as the Committee
may determine ("Restricted Stock"), or (ii) restricted stock units
representing shares of Common Stock to be issued to the employee in the
future after the satisfaction of the terms, conditions and restrictions of
the award set by the Committee at the time of the award ("Restricted Stock
Units"). All awards of Restricted Stock and Restricted Stock Units shall
be subject to the condition that they and, in the case of Restricted Stock
Units, the Common Stock issued in payment thereof, may not be sold,
pledged, transferred, assigned or otherwise encumbered or disposed of
until at least six months after the date of grant.
The grantee of Restricted Stock shall be the record owner of such
shares and shall have all the rights of a stockholder with respect to such
shares including the right to vote and the right to receive dividends or
other distributions paid or made with respect to such shares. Any
certificate or certificates representing shares of Restricted Stock shall
bear a legend similar to the following:
The shares represented by this certificate have been issued pursuant
to the terms of the Transco Energy Company Amended and Restated 1991
Incentive Stock Plan and may not be sold, pledged, transferred,
assigned or otherwise encumbered or disposed of in any manner except as
is set forth in the Plan or the agreement relating to such award dated
_____________.
After the satisfaction of all of the terms, conditions and restrictions
set by the Committee with respect to an award of Restricted Stock, a
certificate, without the legend set forth above, for the number of shares
that are no longer subject to such terms, conditions and restrictions
shall be delivered to the employee. The remaining outstanding unearned
shares of Restricted Stock issued with respect to such award, if any,
shall either be forfeited and surrendered to Transco or, if appropriate
under the terms of the award applicable to such Restricted Stock, shall
continue to be subject to the terms, conditions and restrictions set by
the Committee. The Committee may, however, at any time, in its sole
discretion, amend any outstanding award of Restricted Stock to accelerate
the time such award is earned or to provide that the time for earning such
award shall be accelerated upon the occurrence of a specified event.
After the satisfaction of all of the terms, conditions and restrictions
set by the Committee with respect to an award of Restricted Stock Units,
Transco shall issue to the employee the number of shares earned pursuant
to such award. Any remaining portion of Restricted Stock Units which are
unearned shall either be cancelled or, if appropriate under the terms of
the award applicable to such Restricted Stock Units, shall continue to be
subject to the terms, conditions and restrictions set by the Committee.
The Committee may, however, at any time, in its sole discretion, amend any
outstanding award of Restricted Stock Units to accelerate the time such
award is earned or to provide that the time for earning such award shall
be accelerated upon the occurrence of a specified event.
b. Termination of Employment. The delivery of a certificate, without
the legend set forth above, for the portion of such award that is no
longer subject to such terms, conditions and restrictions set by the
Committee is hereinafter referred to as the "payment" of such portion of
the award. If the employment with Transco and its Affiliates of an
employee to whom an award of Restricted Stock or Restricted Stock Units
has been made is terminated for any reason before satisfaction of the
terms, conditions and restrictions for the payment of all or a portion of
the award, then only such portion of the award, if any, that is payable
pursuant to its terms and conditions as of the date of the employee's
termination shall be paid and the remaining portion of such award shall be
reacquired by Transco or cancelled, as applicable, and all of such
employee's rights thereto shall be forfeited; provided, however, upon any
termination, regardless of the reason, the Committee may, in its sole
discretion, deem the terms and conditions have been met for all or part of
such remaining portion.
7. DEFERRED STOCK UNITS
a. Deferred Stock Units and Dividend Equivalent Reinvestment. A
Deferred Stock Unit shall represent a right to one share of Common Stock.
Each time the Company shall declare a dividend on its Common Stock, a
corresponding dividend shall be deemed to be credited to each outstanding
Deferred Stock Unit and shall be deemed reinvested in additional Deferred
Stock Units or fractions thereof at the Market Value Per Share (as defined
in Section 5c(4)) of Common Stock on the day on which the dividend is
paid. All Deferred Stock Units shall be subject to the condition that they
or the Common Stock issued in payment thereof may not be sold, pledged,
transferred or assigned or otherwise encumbered or disposed of until at
least six months after the date of grant of the Deferred Stock Unit.
b. Grants. Deferred Stock Units may be awarded by the Committee at any
time and from time to time prior to May 8, 2001 and shall be subject to
such terms, conditions and restrictions (including but not limited to
vesting requirements) for such periods as the Committee may determine.
c. Voluntary Deferrals.
(1) Incentive Compensation Deferrals. Subject to the approval by the
Committee, any employee may make an irrevocable election to defer the
payment of all or a portion of any cash incentive compensation payable
by the Company or its Affiliates to such employee as, when and if
payable. If an employee has made a deferral election, which has been
approved by the Committee, the Committee shall grant to him or her as
of the date such incentive compensation was payable, such number of
Deferred Stock Units as is equal to the dollar amount of incentive
compensation which the employee has elected to defer divided by the
Market Value Per Share (as defined in Section 5c(4)) of Common Stock on
such date. The employee shall be immediately vested in such Deferred
Stock Units. The irrevocable election shall be made at such time prior
to the date the incentive compensation is payable as the Committee
shall determine. No deferrals may be made after May 8, 2001.
(2) Restricted Stock and Restricted Stock Unit Deferrals. Subject to
approval by the Committee, an employee who has received an award of
Restricted Stock or Restricted Stock Units may make an irrevocable
election to defer the payment of all or a portion of such award as,
when and if such award vests or is payable. If an employee has made a
deferral election which has been approved by the Committee, upon
surrender to the Company of the Restricted Stock and/or Restricted
Stock Units to which the election relates, such number of Deferred
Stock Units shall be granted to him or her as of the date of the
vesting or payment, as applicable, of such Restricted Stock or
Restricted Stock Units, as is equal to the number of shares of Common
Stock that would have vested and/or been received by the employee on
such date. The employee shall be immediately vested in such Deferred
Stock Units. The irrevocable election shall be made at such period of
time prior to the vesting of such Restricted Stock or payment of such
Restricted Stock Units as the Committee shall determine. No deferrals
may be made after May 8, 2001.
d. Deferred Stock Units Granted to Directors. Effective with the 1994
Annual Meeting of Stockholders, each Director shall be granted 2500
Deferred Stock Units in recognition of his past service on the Board of
Directors. Commencing with the 1994 Annual Meeting of Stockholders and
continuing thereafter during the term of the Plan, each Director shall be
granted 500 Deferred Stock Units effective as of the date of each Annual
Meeting at which he is elected or continues to serve as a Director.
Deferred Stock Units granted to Directors shall vest after completion of
five continuous years of service on the Board of Directors; provided,
however, that all Deferred Stock Units held by a Director for six months
or more shall be fully vested upon the death of a Director.
e. Payment of Deferred Stock Units. Deferred Stock Units shall be
payable only in shares of Common Stock, except for Deferred Stock Units
representing fractional shares of Common Stock which will be paid in cash.
Payments of vested Deferred Stock Units shall be made only after an
employee's employment with the Company or its Affiliates has terminated.
Payment shall be made no later than the first day of April in the year
next following the employee's termination of employment in the case of
Retirement or as soon as practicable following the employee's termination
of employment for any other reason; provided, however, that if an
individual's employment shall terminate due to Retirement or otherwise but
such individual continues to serve on the Board of Directors, payment
shall be made as provided for Directors. Payments of vested Deferred Stock
Units to a member of the Board of Directors shall be made no later than
the April 1 in the year next following the date such Director ceases, for
any reason, to be a member of the Board of Directors. All nonvested
Deferred Stock Units shall be forfeited upon termination. Service on the
Board of Directors after termination of employment from the Company shall
be credited towards any vesting requirements relating to Deferred Stock
Units granted while an employee of the Company.
8. RECAPITALIZATION
The aggregate number of shares stated in Section 3a, the number of
shares of Common Stock to which each outstanding Option and SAR relates,
including Options granted to Directors under Section 5f hereof, the
exercise price in respect of any such Option and SAR, the number of shares
of Restricted Stock awarded or outstanding, the number of Restricted Stock
Units awarded or outstanding and the number Deferred Stock Units awarded
or outstanding, including Deferred Stock Units granted to Directors under
Section 7d hereof, may be adjusted in such equitable manner as determined
by the Committee, in its sole discretion and without liability to any
person, in the event of (i) a subdivision or consolidation of shares of
Common Stock or other capital adjustments, (ii) the payment of a stock
dividend or a recapitalization, or (iii) a "corporate transaction", as
such term is defined in Treasury Regulation 1.425-1(a)(1)(ii), or any
other transaction which, in the opinion of the Committee, is similar to a
"corporate transaction", as defined by the said Treasury Regulations as in
effect on March 1, 1991, including without limitation any spin-off or
other distribution to the security holders of the Company of securities or
property of the Company or an Affiliate thereof. The Committee may
exercise its discretion to make any such adjustments on an
optionee-by-optionee (or with respect to SARs, Restricted Stock,
Restricted Stock Units, or Deferred Stock Units, employee-by-employee)
basis and with respect to all or only some of the Options, SARs,
Restricted Stock, Restricted Stock Units or Deferred Stock Units held by
an optionee or employee.
9. CHANGE IN CONTROL
a. Definition. As used in this Plan, a "Change in Control" shall be
deemed to have occurred upon, and shall mean (A) the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the 1934 Act) (an "Acquiring Person"), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 25%
or more of either (i) the then outstanding shares of Common Stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change in Control: (w) any acquisition
directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (x) any acquisition by the Company,
(y) any acquisition by any employee benefit plan(s) (or related trust(s))
sponsored or maintained by the Company or any corporation controlled by
the Company or (z) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, immediately following such
reorganization, merger or consolidation the conditions described in
clauses (i), (ii) and (iii) of clause B of this Section 9a are satisfied;
or (B) the approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, unless immediately
following such reorganization, merger or consolidation (i) more than 60%
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan(s) (or related trust(s))
of the Company or any corporation controlled by the Company or such
corporation resulting from such reorganization, merger or consolidation
and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 25% or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
25% or more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board (as defined below) at
the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation. The "Incumbent Board" shall mean
individuals who as of May 17, 1994, constitute the Company's Board of
Directors; provided, however, that any individual becoming a director
subsequent to such date whose election, or nomination for election, by the
Company's stockholders, was approved by a vote of at least a majority of
the directors comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of either (i) an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the 1934 Act), or an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Company's Board of
Directors or (ii) a plan or agreement to replace a majority of the members
of the Company's Board of Directors then comprising the Incumbent Board.
b. Effect of Change in Control. Upon a Change in Control,
notwithstanding the terms of this Plan or any agreement to the contrary,
any and all outstanding Options and SARs held by the individual for six
months or more and not fully vested will vest in full and be immediately
exercisable, and any other restrictions on such Options and SARs,
including, without limitation, requirements concerning the achievement of
specific goals shall terminate. The date on which such accelerated vesting
and immediate exercisability shall occur (the "Acceleration Date") shall
be on the date of the Change in Control. All Options and SARs not held by
an individual for six months or more as of the date of the Change in
Control shall expire on the date of the Change in Control; provided,
however, that in the discretion of the Committee (which may be exercised
before the Change in Control on a prospective basis), Options and SARs
which on the date of the Change in Control have been held for less than
six months may be determined to vest in full and no longer be subject to
any restriction (other than the requirement that the Committee consent to
the exercise of an SAR) as of the date they shall have been held for six
months and such date shall be the "Acceleration Date" as to such shares.
Notwithstanding the terms of this Plan or any agreement to the
contrary, a holder of an SAR granted under the Plan may, for a period of
30 days following the Acceleration Date (but not to exceed the remaining
term of such SAR), elect to exercise an SAR without the consent of the
Committee as provided in Section 5 of the Plan. In the event a holder of
an SAR elects during such 30-day period (or the remaining term of such
SAR, whichever is less) to exercise an SAR, such exercise shall be for
cash in an aggregate amount equal to (A) the "Fair Market Value" (as
hereinafter defined), less the exercise price of such SAR, times "X",
where:
X = in the event a Change in Control occurs pursuant to any tender
offer subject to Section 14(d)(1) of the 1934 Act, or exchange
offer subject to the Securities Act of 1933 or any other offer or
series of offers to purchase Common Stock for cash or securities
of another person ("Tender Offer"), the number of shares subject
to the SAR that would have been purchased (or exchanged for the
offeror's securities in the event of an exchange offer) by the
Acquiring Person (as hereinafter defined) had the optionee
tendered all of the shares subject to the SAR in response to the
Tender Offer (or accepted the exchange with respect to all of
such shares);
plus (B) the difference between the Fair Market Value and the exercise
price of the SAR, times the "remaining portion of the SAR" (as defined
hereafter), if any. For purposes of the preceding sentence, the "remaining
portion of the SAR" shall be defined to mean the number of shares of
Common Stock subject to exercise of the SAR, minus "X", as defined above.
In the event of the exercise of an SAR in accordance with the terms of
this Section 9, which SAR is not in tandem with an Incentive Stock Option,
"Fair Market Value" as used in (A) above shall be defined to mean the
greater of (i) the highest price per share of the Common Stock (a) offered
pursuant to the Tender Offer or (b) paid by the Acquiring Person to effect
the Change in Control or (ii) the amount calculated as provided below.
"Fair Market Value" for purposes of (ii) of the preceding sentence, for
purposes of the exercise of an SAR in tandem with an Incentive Stock
Option, and for purposes of (B) above, shall be defined to mean the
closing price of the Common Stock quoted in Network A of the consolidated
transaction reporting system, which is published in The Wall Street
Journal reports of New York Stock Exchange-Composite Transactions for the
next day prior to such exercise on which a trade of the Common Stock was
so reported, or on any other national securities exchange on which such
securities are listed, or the average bid and ask prices of such
securities if traded in the over-the-counter market or, if not so listed
or traded in the over-the-counter market, at the value determined in
accordance with such fair and reasonable means as the Committee shall
specify. Any consideration other than cash forming part or all of the
consideration to be paid for the Common Stock pursuant to a Change in
Control shall be valued for purposes hereof, if such other consideration
is securities, at the mean of the high and low sales prices of such
securities on the business day immediately preceding the Acceleration Date
on any national securities exchange on which such securities are listed,
or the average bid and ask prices of such securities if traded in the
over-the-counter market or if not so listed or traded in the
over-the-counter market or if such other consideration is not securities,
at the value determined in accordance with such fair and reasonable means
as the Committee shall specify.
With respect to Restricted Stock, Restricted Stock Units and Deferred
Stock Units, the Committee may, in the agreements in which such grants or
awards are made or in amendments to such agreements or in any other
agreement, upon a Change in Control or thereafter, immediately vest such
grant or award, or accelerate the time such grant or award is earned, or
provide that the time for earning such award shall be accelerated upon the
occurrence of a specified event, or deem any terms, conditions and/or
restrictions to have been met for all or part of such remaining portion of
the applicable period or upon the occurrence of a specified event.
The Committee may modify or amend this Section 9 to provide for other
benefits in the event of a Change in Control or may provide other benefits
upon a Change in Control in the agreement pursuant to which such award was
made or a subsequent amendment thereto, notwithstanding that such
amendment or agreement conflicts with this Section 9. However, such
modifications or amendments shall affect an outstanding grant or award
only if the consent of the holder of such grant or award is obtained.
Anything herein to the contrary notwithstanding, if any right granted
pursuant to this Section 9 would make a Change in Control transaction
intended to qualify for pooling of interests accounting under APB No. 16
ineligible for such accounting treatment that but for this Section 9 would
otherwise be eligible for such accounting treatment, the Committee may
substitute Common Stock with a Market Value Per Share equal to the cash
that would otherwise be payable pursuant to this Section 9.
10. INVESTMENT AGREEMENT
If, at the time of the exercise of any Option or SAR, the award of
Restricted Stock or Restricted Stock Unit or a payment of a Restricted
Stock Unit in shares of Common Stock or the issuance of Deferred Stock
Units or payment thereof in shares of Common Stock, in the opinion of
counsel for Transco, it is necessary or desirable, in order to comply with
any then applicable laws or regulations relating to the sale of
securities, for the individual exercising the Option or SAR or receiving
awards of Restricted Stock, Restricted Stock Units, or Deferred Stock
Units or Common Stock in payment of a Restricted Stock Unit or Deferred
Stock Unit to agree to hold any shares issued to the individual for
investment and without intention to resell or distribute the same and for
the individual to agree to dispose of such shares only in compliance with
such laws and regulations, the individual will, upon the request of
Transco, execute and deliver to Transco a further agreement to such
effect.
11. WITHHOLDING FOR TAXES
Any cash payment under the Plan shall be reduced by any amounts
required to be withheld or paid with respect thereto under all present or
future federal, state and local taxes and other laws and regulations that
may be in effect as of the date of each such payment ("Tax Amounts"). Any
issuance of Common Stock pursuant to the Plan shall not be made until
appropriate arrangements have been made for the payment of any amounts
that may be required to be withheld or paid with respect thereto. Such
arrangements may, in the discretion of the Committee, include allowing the
individual to tender to Transco shares of Common Stock owned by the
individual, or to request Transco to withhold a portion of the shares of
Common Stock being distributed to the individual, which have a Market
Value Per Share as of the date of such tender or withholding that is not
greater than the sum of all Tax Amounts, together with payment of any
remaining portion of all Tax Amounts in cash or by check payable and
acceptable to Transco.
12. DESIGNATION OF BENEFICIARY
Each Participant, to whom an award of Restricted Stock, Restricted
Stock Units or Deferred Stock Units has been made under this Plan may
designate a beneficiary or beneficiaries (which beneficiary may be an
entity other than a natural person) to receive any payment that under the
terms of such award or awards may become payable on or after the
Participant's death. At any time, and from time to time, any such
designation may be changed or cancelled by the Participant without the
consent of any such beneficiary. Any such designation, change or
cancellation must be on a form provided for that purpose by the Committee
and shall not be effective until received by the Committee. If no
beneficiary has been named by a deceased Participant, or the designated
beneficiaries have predeceased the individual, the beneficiary shall be
the Participant's estate. If an individual designates more than one
beneficiary, any payments under this Plan to such beneficiaries shall be
made in equal shares unless the Participant has designated otherwise, in
which case the payments shall be made in the shares designated by the
Participant.
13. TERMINATION OF AUTHORITY TO GRANT AWARDS
No grants or awards shall be made under this Plan after May 8, 2001.
14. AMENDMENT AND TERMINATION
The Board of Directors of Transco may from time to time and at any time
alter, amend, suspend, discontinue or terminate this Plan and any awards
and grants hereunder; provided, however, that no such action of the Board
of Directors of Transco may, without the approval of the stockholders of
Transco, alter the provisions of the Plan so as to (i) increase the
maximum number of shares of Common Stock that may be subject to awards and
grants and distributed in the payment of awards and exercises under the
Plan (except as provided in Section 3b and 8); (ii) materially modify the
class of individuals eligible to receive awards and grants under the Plan;
(iii) extend beyond ten years the maximum terms of Options or SARs granted
under the Plan or extend the term of the Plan; (iv) decrease the option
price applicable to any Option and/or SAR; provided, however, that the
provisions of this clause (iv) shall not prevent the granting to any
person holding an Option or SAR of an additional Option and/or SAR
exercisable at a lower price; (v) withdraw the administration of the Plan
from the Committee; (vi) permit any member of the Committee to be eligible
to receive an award or grant pursuant to the terms of the Plan (except
pursuant to Sections 5f and 7d hereof); or (vii) materially increase the
benefits accruing to Participants under the Plan, except as permitted by
Rule 16b-3 promulgated under the 1934 Act. Notwithstanding the above, any
amendment may be made to conform the Plan and any award made hereunder to
the requirements of Rule 16b-3 promulgated under the 1934 Act, as now in
effect or as may hereafter be amended. Further, the provisions of Sections
5f and 7d may not be amended more than once every six months or such
greater or lesser period as permitted by Rule 16b-3, as in effect from
time to time, other than to comply with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended or the rules
promulgated thereunder.
15. PREEMPTION BY APPLICABLE LAWS AND REGULATIONS
Anything in the Plan or any agreement entered into pursuant to the Plan
to the contrary notwithstanding, if, at any time specified herein or
therein for the making of any determination, the grant of Options or SARs,
the award of Restricted Stock, Restricted Stock Units or Deferred Stock
Units, the issuance or other distribution of shares of Common Stock, the
payment of consideration to an individual as a result of the exercise of
any SAR, or the payment of any Restricted Stock Units or Deferred Stock
Units, as the case may be, any law, regulation or requirement of any
governmental authority having jurisdiction in the premises shall require
either Transco or the Participant (or the Participant's beneficiary), as
the case may be, to take any action in connection with any such
determination grant, award, issuance or distribution, the shares then to
be issued or distributed, or such payment or the making of such
determination grant, award, issuance or distribution or the issuance or
distribution of such shares or such payment, as the case may be, shall be
deferred until such action shall have been taken. It is the intent of the
Company that no grant or award or the vesting or payment thereof under
this Plan shall subject the recipient to liability for short-swing trading
profit under Section 16 of the 1934 Act and any grant or award which
subjects the recipient to such liability shall be void ab initio and any
vesting or payment which subjects the recipient to such liability shall be
automatically delayed for such time as is necessary to avoid such
liability.
16. MISCELLANEOUS
a. No Employment Contract. Nothing contained in this Plan or any
agreement made pursuant to this Plan shall be construed as conferring upon
any employee the right to continue in the employ of Transco or any
Affiliate.
b. Employment with Affiliates. Employment by Transco for the purpose of
this Plan shall be deemed to include employment by, and to continue during
any period in which an employee is in the employment of, any Affiliate.
c. No Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to shares covered by such Participant's Option or
SAR or Restricted Stock Unit award until the date of the issuance of
shares to the Participant pursuant thereto and no adjustment will be made
for dividends or other distributions or rights for which the record date
is prior to the date of such issuance except as specifically provided in
this Plan. A Participant shall have no rights as a stockholder with
respect to shares covered by such Participant's Deferred Stock Units until
the date of the issuance of the shares to the individual account thereto,
provided that such Participant shall be entitled to dividend equivalents
as set forth in Section 7a.
d. No Right to Corporate Assets. Nothing contained in the Plan shall be
construed as giving any Participant, such Participant's beneficiaries or
any other person any equity or other interest of any kind in any assets of
Transco or any Affiliate or creating a trust of any kind or a fiduciary
relationship of any kind between Transco or an Affiliate and any such
person.
e. No Restriction on Corporate Action. Nothing contained in the Plan
shall be construed to prevent Transco or any Affiliate from taking any
corporate action that is deemed by Transco or such Affiliate to be
appropriate or in its best interest, whether or not such action would have
an adverse effect on the Plan or any award made under the Plan. No
Participant, beneficiary or other person shall have any claim against
Transco or any Subsidiary as a result of any such action.
f. Non-assignability. Neither a Participant nor a Participant's
beneficiary shall have the power or right to sell, pledge, transfer,
assign or otherwise encumber or dispose of such Participant's or
beneficiary's interest arising under the Plan or in any Option, SAR,
Restricted Stock, Restricted Stock Unit, Deferred Stock Unit, or other
award received under the Plan; nor shall such interest be subject to
seizure for the payment of a Participant's or beneficiary's debts,
judgments, alimony, or separate maintenance or be transferable by
operation of law in the event of a Participant's or beneficiary's
bankruptcy or insolvency and to the extent any such interest arising under
the Plan or agreement relating to any Option, SAR, Restricted Stock,
Restricted Stock Unit, Deferred Stock Units, or other award received under
the Plan is assigned to a spouse pursuant to any divorce proceeding, such
assignment shall be deemed to be null and void and of no force and effect
notwithstanding any vesting provisions or other terms herein or in the
agreement evidencing such award.
g. Application of Funds. The proceeds received by Transco from the sale
of shares pursuant to the Plan will be used for general corporate
purposes.
h. Governing Law; Construction. All rights and obligations under the
Plan shall be governed by, and the Plan shall be construed in accordance
with, the laws of the State of Texas without regard to the principles of
conflicts of laws and the laws of the United States of America. Titles and
headings to Sections herein are for purposes of reference only, and shall
in no way limit, define or otherwise affect the meaning or interpretation
of any provisions of the Plan.
