SWIFT ENERGY COMPANY
1990 NONQUALIFIED STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF MAY 13, 1997)
1. PURPOSE OF THE PLAN.
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This Swift Energy Company 1990 Nonqualified Stock Option Plan (the
"Plan") is intended as an incentive to retain as independent directors on the
Board of Directors (the "Board") of Swift Energy Company, a Texas corporation
(the "Company"), persons of training, experience and ability, to encourage the
sense of proprietorship of such persons and to stimulate the active interests of
such persons in the development and financial success of the Company. It is
further intended that options issued pursuant to this Plant (the "Options")
shall constitute nonqualified stock options within the meaning of Section 83 of
the Internal Revenue Code of 1986, as amended ("Code").
2. SHARES AND OPTIONS.
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Subject to adjustments in Paragraph 8 hereof, a total of 450,000 shares
(the "Shares") of Common Stock, $.01 par value ("Stock"), of the Company shall
be subject to the Plan. The Shares subject to the Plan shall consist of unissued
shares or previously issued shares reacquired and held by the Company, or any
corporation or entity in which the Company directly or indirectly controls 50%
or more of the total combined voting power of all classes of its stock having
voting power (any such corporation or entity, a "Subsidiary"), and such number
of Shares shall be and hereby is reserved for sale for such purpose. Any of such
Shares that may remain unsold and that are not subject to outstanding Options at
the termination of the Plan shall cease to be reserved for the purpose of the
Plan, but until termination of the Plan the Company shall at all times reserve a
sufficient number of Shares to meet the requirements of the Plan. Should any
Option expire or be cancelled prior to its exercise in full, the Shares
theretofore subject to such Option may not again be subjected to an Option under
the Plan.
3. FORMULA FOR AUTOMATIC GRANT OF OPTIONS.
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(a) Options automatically shall be granted to those persons
who, as of the dates set forth in Section 3(b) below, are (i) directors of the
Company, (ii) are not employees of the Company or a Subsidiary, and (iii) are
not eligible, and have not been eligible for at least one year prior to becoming
a nonemployee director of the Company, to receive any award under the Company's
1987 Incentive Stock Option Plan, the Company's 1990 Stock Compensation Plan or
any other stock option plan of the Company that is administered by any person
having discretion with respect to the selection of participants and/or the
amount of awards (any person satisfying all three requirements is hereinafter
referred to as a "Director"). Each person to whom an Option is granted under
this Plan, or any successor to the rights of such person under this Plan by
reason of transfer from the original grantee, hereafter shall be referred to as
an "Optionee." Each Option shall be evidenced by an option agreement, in a form
specified by the Board, containing terms and conditions that are not
inconsistent with this Plan or applicable laws ("Option Agreement"). The Options
automatically granted to Directors under this Plan shall be in addition to
regular director's fees or other benefits with respect to any Director's
position with the Company or its Subsidiaries. Neither the Plan nor any Option
granted under the Plan shall confer upon any person any right to continue to
serve as a Director.
(b) Subject to Section 3(c) below, on the date (any such date,
an "Eligibility Date") on which an individual first becomes a Director for
purposes of this Plan (but in no event earlier than April 1, 1991, unless on an
earlier date the Company determines, through an administrative regulation or
position or based upon an opinion of counsel to the Company, that each Director
is a "disinterested person" within the meaning of Rule 16b-3 or any successor
rule ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act")), such Director shall automatically receive an Option with
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respect to 10,000 Shares. Thereafter, each individual who is a Director on the
date after any subsequent annual meeting of shareholders of the Company
occurring more than eleven (11) months after his or her Eligibility Date (any
such date, an "Option Date"), on the day following such annual meeting shall
automatically receive an Option with respect to 5,000 Shares, subject to the
Option Maximum set forth in Section 3(c) below. Options automatically granted
pursuant to this Section 3(b) are exercisable in installments as provided in
Section 6(a) below.
(c) Notwithstanding any provision herein to the contrary, no
Director shall be automatically granted any Option which, if considered together
with all other outstanding and unexercised options granted by the Company
hereunder or pursuant to any other Company plan ("Outstanding Options"), would
entitle such Director to purchase more than 60,000 shares of the Company's
common stock ("Option Maximum"). On any Eligibility Date or Option Date on which
the automatic grant of Options pursuant to Section 3(b) above would exceed the
Option Maximum for a Director, the number of Shares in respect of which Options
shall be automatically granted hereunder shall be reduced (or eliminated) so
that the Director's shares of all Company stock covered by Outstanding Options
shall not exceed the Option Maximum. In the event that any such Director
subsequently exercises any of his or her Outstanding Options to purchase shares
of the Company's stock, the shares purchased thereby shall no longer be
considered to be Outstanding Options for purposes of the Option Maximum.
4. OPTION PRICE.
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(a) Each Option shall have an exercise price for the related
Shares that is equal to the fair market value of such Shares (determined as set
forth in Section 4(b) below) on the date the Option is granted.
(b) The fair market value of a Share on a particular date
("Fair Market Value") shall be (i) the highest closing price of the Stock on any
established national exchange or exchanges or, if no sale of Stock is made on
such day, the next preceding day on which there was a sale of such stock, or
(ii) if the Stock is not listed on an established stock exchange, the mean
between the closing high bid and low asked quotations of the Stock in the New
York over-the-counter market as reported by the National Association of
Securities Dealers, Inc. for such date.
5. OPTION PERIOD.
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The Options granted under this Plan shall be for a term of ten
(10) years from the date of granting of each Option.
6. EXERCISE OF OPTIONS; CERTAIN CONDITIONS TO GRANT.
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(a) An Option shall be exercisable in installments as provided
in the Option Agreement; provided, however, no Options shall be exercisable
prior to the first anniversary date of the date of grant (hereinafter,
"Anniversary Date"). An Option may be exercised as to twenty percent (20%) of
the Shares covered thereby beginning on the first Anniversary Date; thereafter,
an additional twenty percent (20%) of Shares subject to the Option shall be
exercisable as of the Anniversary Date in each of the following four years
except as otherwise provided in Sections 6(f), 6(g), 6(h) and 9 below.
(b) Subject to applicable exercise restrictions set forth
herein, Options may be exercised, in whole or in part, by giving written notice
of exercise to the Company specifying the number of Shares to be purchased. The
notice shall be accompanied by payment in full of the purchase price. The
purchase price may be paid by any of the following methods, subject to the
restrictions set forth in Section 6(c) hereof:
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(i) in cash, by certified or cashier's check, by money order or by
personal check (if approved by the Board) of an amount equal to the
aggregate purchase price of the Shares to which such exercise relates;
(ii) if acceptable to the Board, by delivery of shares of Stock
already owned by the Optionee, which shares, including any cash
tendered therewith, have an aggregate Fair Market Value (determined as
of the date preceding the Company's receipt of the exercise notice)
equal to the aggregate purchase price of the Shares to which such
exercise relates; or
(iii) if acceptable to the Board, by delivery to the Company of an
exercise notice that requests the Company to issue to the Optionee the
full number of Shares as to which the Option is then exercisable, less
the number of Shares that have an aggregate Fair Market Value
(determined as of the date preceding the Company's receipt of the
exercise notice) equal to the aggregate purchase price of the Shares to
which such exercise relates.
(c) Notwithstanding the foregoing payment provisions, the
Board may refuse to recognize the method of exercise selected by the Optionee
(other than the method of exercise set forth in Section 6(b)(i)), if, in the
opinion of counsel to the Company, (i) the Optionee is, or within the six (6)
months preceding such exercise was, subject to reporting under Section 16(a) of
the Exchange Act, and (ii) there is a substantial likelihood that the method of
exercise selected by the Optionee would subject the Optionee to substantial risk
of liability under Section 16 of the Exchange Act.
(d) In addition to the alternative methods of exercise set
forth in Section 6(b) above, either the Optionee or the Company may elect to
have the Company withhold from the Shares to be delivered upon exercise of the
Option the number of Shares (Based on the Fair Market Value of such Shares as of
the date preceding the Company's receipt of the exercise notice) that is
necessary to satisfy any withholding taxes attributable to the exercise of the
Option. Such election shall be made by the Optionee, if at all, at or prior to
the time the exercise notice is delivered to the Company and by the Company, if
at all, within 10 days after receipt of the exercise notice. If withholding is
made in Shares pursuant to the method set forth above, the Company may grant
"Reload Option(s)" (as defined in Section 6(e) below) on the terms specified in
Section 6(e) below for the number of Shares withheld. Notwithstanding the
foregoing provisions, an Optionee may not elect to satisfy his or her
withholding tax obligation in respect of any exercise as contemplated above if,
in the opinion of counsel to the Company, (i) the Optionee is, or within the six
(6) months preceding such exercise was, subject to reporting under Section 16(a)
of the Exchange Act, (ii) there is a substantial likelihood that the election or
timing of the election would subject the holder to a substantial risk of
liability under Section 16 of the Exchange Act, and (iii) such withholding would
have an adverse tax or accounting effect to the Company.
(e) Whenever the Optionee holding any Option (the "Original
Option") outstanding under this Plan (including any "Reload Options" granted
under the provisions of this Section 6(e)) exercises the Original Option and
makes payment of the option price by tendering Shares previously held by him or
her pursuant to Section 6(b)(ii) hereof, or by taking delivery of a net number
of shares of common stock upon exercise of an option pursuant to Section
6(b)(iii) hereof, then the Company may grant a new option (the "Reload Option")
for the number of additional Shares that is equal to the number of shares
tendered by the Optionee (or credited on behalf of the Optionee) in payment of
the option price for the Original Option being exercised. All such Reload
Options granted hereunder shall be on the following terms and conditions:
(i) The Reload Option exercise price per share shall be an amount
equal to the then current Fair Market Value per share of the Company's
Common Stock, determined as of the date of the Company's receipt of the
exercise notice for the Original Option;
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(ii) The option exercise period shall expire, and the Reload Option
shall no longer be exercisable, on the expiration of the option period
of the Original Option or two (2) years from the date of the grant of
the Reload Option, whichever is later;
(iii) Any Reload Option granted under this Section 6(e) shall vest
and first become exercisable one (1) year following the date of
exercise of the Original Option; and
(iv) All other terms of Reload Options granted hereunder shall be
identical to the terms and conditions of the Original Option, the
exercise of which gives rise to the grant of the Reload Option.
(f) Notwithstanding any provision herein to the contrary, in
the event a Director is unable to continue as a Director with the Company as a
result of his or her total and permanent "disability" (as defined in Section
22(e)(3) of the Code), he or she may, but only within the period of time one
year from the date he or she becomes disabled (but not later than the expiration
of the term of the Option), exercise his or her Option (including any Reload
Option) to the extent he or she was entitled to exercise it at the date of such
termination. To the extent the Optionee was not entitled to exercise the Option
at the date of the termination, or if he or she does not exercise such Option
(which he or she was entitled to exercise) within the time specified herein, the
Option shall terminate.
(g) In the event of the death of an Optionee during his or her
term of service as a Director of the Company, to the extent the Optionee was
entitled to exercise the Option at the time of his or her death the Option may
be exercised within a one-year period following the date of death (but not later
than the expiration of the term of the Option) by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance.
To the extent the Optionee was not entitled to exercise the Option at the date
of his or her death, the Option shall terminate.
(h) Upon termination of an Optionee's service as a Director of
the Company (for any reason other than death or disability), Options not
theretofore vested and exercisable shall be forfeited; provided, however, that
if the Company terminates the Optionee's service as a Director one-half of the
Shares subject to the Option that were not theretofore exercisable shall be
immediately exercisable as of the date of termination of such service.
7. TRANSFERABILITY.
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The Board may, in its discretion, authorize all or a portion of any
Option to be on terms which permit transfer by the Optionee to (i) a retirement
or pension plan for the benefit of the Optionee, (ii) the spouse, children or
grandchildren of the Optionee ("Immediate Family Members"), (iii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, (iv) a
charitable trust or trusts created or controlled by the Optionee, or (v) a
partnership in which such Immediate Family Members are the only partners,
provided that (x) there may be no consideration for any such transfer, (y) the
Option Agreement must be approved by the Board, and the Option Agreement or an
amendment thereto must expressly provide for transferability in a manner
consistent with this Section, and (z) subsequent transfers of transferred
Options shall be prohibited except to a transferee to whom the Optionee could
have transferred the Option pursuant to this Section 7 or by will or the laws of
descent and distribution. Following transfer, any such Options shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer, provided that for all purposes hereof the term "Optionee" shall be
deemed to refer to the transferee.
8. ADJUSTMENTS.
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(a) The existence of the Plan and the Options granted hereunder shall
not affect or restrict in any way the right or power of the Board or the
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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 bonds, debentures, preferred or prior preference stocks ahead of or affecting
the Company's Stock or the rights thereof, the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding.
(b) In the event of any change in capitalization affecting the Stock of
the Company, such as a stock dividend, stock split, recapitalization, merger,
consolidation, split-up, combination, exchange of shares, other form of
reorganization, or any other change affecting the Stock, the Board, in its
discretion, may make proportionate adjustments it deems appropriate to reflect
such change with respect to (i) the maximum number of shares of Stock which may
be sold or awarded to any Optionee, (ii) the number of shares of Stock covered
by each outstanding Option, and (iii) the price per share in respect of the
outstanding Options. Notwithstanding the foregoing, the Board may only increase
the aggregate number of shares of Stock for which Options may be granted under
the Plan solely to reflect the change, if any, of the capitalization of the
Company.
9. CHANGE OF CONTROL.
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(a) In the event of a Change of Control (as defined in Section
9(b) below) of the Company, and except as the Board may expressly provide
otherwise in resolutions adopted prior to the Change of Control, all Options
then outstanding shall become fully exercisable as of the date of the Change of
Control; provided, however, that no Option which has been outstanding less than
one (1) year on the date of the Change of Control shall be afforded such
treatment.
(b) A "Change of Control" shall be deemed to have occurred
upon the occurrence of any one (or more) of the following events, other than a
transaction with another person controlled by the Company or its officers and
directors, or a benefit plan or trust established by the Company for its
employees:
(i) Any person, including a group as defined in Section 13(d)(3) of
the Exchange Act, becomes the beneficial owner of shares of the Company
with respect to which 40% or more of the total number of votes for the
election of the Board may be cast;
(ii) As a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election, or combination of the above, persons who were
directors of the Company immediately prior to such event shall cease to
constitute a majority of the Board;
(iii) The stockholders of the Company shall approve an agreement
providing either for a transaction in which the Company will cease to
be an independent publicly owned corporation or for a sale or other
disposition of all or substantially all the assets of the Company; or
(iv) A tender offer or exchange offer is made for shares of the
Company's Stock (other than one made by the Company), and forty percent
(40%) of the Company's outstanding shares of Stock are acquired
thereunder.
10. SECURITIES LAWS RESTRICTIONS.
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Whether or not the Options and Shares covered by the Plan have been
registered under the Securities Act of 1933, as amended, each person exercising
an Option under the Plan may be required by the Company to give a representation
in writing that he or she is acquiring Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof. As a condition of any transfer of the
certificate evidencing Shares, the Board may obtain such other agreements of
undertakings, if any, that it may deem necessary or appropriate to assume
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compliance with any provisions of the Plan or any law or regulation.
Certificates for Shares delivered under the Plan may be subject to such
stock-transfer orders and other restrictions as the Board may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Stock is then listed, and
any applicable Federal or state securities laws. The Board may cause a legend or
legends to be put on any such certificates to refer to those restrictions.
11. AMENDMENT, MODIFICATIONS, SUSPENSION OR DISCONTINUANCE OF THIS
PLAN.
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(a) Except as set forth in Sections 11(b), 11(c) and 11(d)
below, without shareholder approval the Board may amend, suspend or terminate
the Plan for the purpose of meeting or addressing any changes in legal
requirements or for any other purpose it deems to be in the best interests of
the Company if permitted by law.
(b) Without the approval of the shareholders, the board may
not make any amendment to the Plan for which shareholder approval is required by
(i) any rules for listed companies promulgated by any national stock exchange on
which the Company's stock is traded or (ii) any other applicable law.
(c) Notwithstanding Sections 11(a) and 11(b) under no
circumstances may the Board amend, alter, discontinue or terminate the Plan so
as to impair the vested rights of Optionees under any Option theretofore granted
under the Plan.
(d) Notwithstanding Sections 11(a) and 11(b), the provisions
in Sections 3(a) and 3(b) regarding eligibility and automatic grants of options
under the Plan shall not be amended more than once every six (6) months, except
for such amendments as may be necessary to comply with applicable provisions of
the Code or the rules and regulations promulgated thereunder.
12. GOVERNMENT REGULATIONS.
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The Plan, and the granting and exercise of Options thereunder, and the
obligation of the Company to sell and deliver Shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approval
by any governmental agencies or national securities exchanges as may be
required.
13. COSTS OF PLAN.
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The costs and expenses of administering the Plan shall be borne by the
Company.
14. GOVERNING LAW.
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The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Texas.
15. EFFECTIVE DATE.
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The Plan shall be effective if, and when, approved by a majority of the
Company's shareholders at the 1990 annual meeting of shareholders or any
adjournment thereof.
16. INTERPRETATION.
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(a) If any provision of the Plan is held invalid for any
reason, such holding shall not affect the remaining provisions hereof, but
instead the Plan shall be construed and enforced as if such provision had never
been included in the Plan.
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(b) Headings contained in this Agreement are for convenience
only and shall in no manner be construed as part of this Plan.
(c) Any reference to the masculine, feminine, or neuter
gender shall be a reference to such other gender as is appropriate.
17. SECTION 83(B) ELECTION.
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If as a result of exercising an Option, an Optionee receives Shares
that are subject to a "substantial risk of forfeiture" and are not
"transferable" as those terms are defined for purposes of section 83(a) of the
code, then such Optionee may elect under Section 83(b) of the Code to include in
his gross income, for his taxable year in which the Shares are transferred to
him, the excess of the fair market value of such Shares at the time of transfer
(determined without regard to any restriction other than one which by its terms
will never lapse), over the amount paid for the Shares. If the Optionee makes
the section 83(b) election described above, the Optionee shall (i) make such
election in a manner that is satisfactory to the Board, (ii) provide the Company
with a copy of such election, (iii) agree to promptly notify the Company if an
Internal Revenue Service or state tax agent, on adult or otherwise, questions
the validity or correctness of such election or of the amount of income
reportable on account of such election, and (iv) agree to such withholding as
the Board may reasonably require.
SWIFT ENERGY COMPANY,
A TEXAS CORPORATION
/s/ A. Earl Swift
A. Earl Swift, Chairman of the Board
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