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EXHIBIT 10.AA.
EL PASO NATURAL GAS COMPANY
OMNIBUS PLAN FOR
MANAGEMENT EMPLOYEES
AMENDED AND RESTATED EFFECTIVE AS OF APRIL 12, 1996
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TABLE OF CONTENTS
Page
SECTION 1 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Good Reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Management Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 Permanent Disability or Permanently Disabled . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5 SHARES AVAILABLE FOR THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 6 STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 7 STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 9 RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 10 REGULATORY APPROVALS AND LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 11 EFFECTIVE DATE AND TERM OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 12 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 13 AMENDMENT, TERMINATION OR DISCONTINUANCE
OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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El Paso Natural Gas Company -i- Table of Contents
Omnibus Plan for Management Employees
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EL PASO NATURAL GAS COMPANY
OMNIBUS PLAN FOR MANAGEMENT EMPLOYEES
AMENDED AND RESTATED EFFECTIVE AS OF APRIL 12, 1996
SECTION 1 PURPOSE
The purpose of the El Paso Natural Gas Company Omnibus Plan for
Management Employees, formerly known as the El Paso Natural Gas Company Stock
Option Plan for Management Employees, (the "Plan") is to promote the interests
of El Paso Natural Gas Company (the "Company") and its stockholders by
strengthening its ability to attract and retain key employees in the employ of
the Company and its Subsidiaries (as defined below) by furnishing suitable
recognition of their ability and industry which materially contributes to the
success of the Company. The Plan provides for the grant of stock options,
limited stock appreciation rights, stock appreciation rights and restricted
stock in accordance with the terms and conditions set forth below.
SECTION 2 DEFINITIONS
Unless otherwise required by the context, the following terms when
used in the Plan shall have the meanings set forth in this Section 2:
2.1 BENEFICIARY
The person or persons designated by the Participant pursuant to
Section 6.2(f) to whom payments are to be paid pursuant to the terms of the
Plan in the event of the Participant's death.
2.2 BOARD OF DIRECTORS
The Board of Directors of the Company.
2.3 CAUSE
A termination for Cause is a termination evidenced by a statement
adopted in good faith by the Management Committee that the Participant (i)
willfully and continually failed to substantially perform the Participant's
duties with the Company (other than a failure resulting from the Participant's
incapacity due to physical or mental illness) which failure continued for a
period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Participant specifying the
manner in which the Participant has failed to substantially perform or (ii)
willfully engaged in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise; provided, however, that no termination of
the Participant's employment shall be for Cause as set forth in clause (ii)
above until (A) there shall have been delivered to the Participant a
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copy of a written notice setting forth that the Participant was guilty of the
conduct set forth in clause (ii) above and specifying the particulars thereof
in detail, and (B) the Participant shall have been provided an opportunity to
be heard by the Management Committee (with the assistance of the Participant's
counsel if the Participant so desires). No act, nor failure to act, on the
Participant's part shall be considered "willful" unless the Participant has
acted, or failed to act, with an absence of good faith and without a reasonable
belief that the Participant's action or failure to act was in the best interest
of the Company. Notwithstanding anything contained in the Plan to the
contrary, no failure to perform by the Participant after notice of termination
is given to the Participant shall constitute Cause.
2.4 CHANGE IN CONTROL
As used in the Plan, a Change in Control shall be deemed to occur (i)
if any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities, (ii) upon the first purchase of the
Common Stock pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company), (iii) upon the approval by the Company's
stockholders of a merger or consolidation, a sale or disposition of all or
substantially all the Company's assets or a plan of liquidation or dissolution
of the Company, or (iv) if, during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof,
unless the election or nomination for the election by the Company's
stockholders of each new director was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who were directors at the beginning
of the period. Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur if the Company either merges or consolidates with or into
another company or sells or disposes of all or substantially all of its assets
to another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least eighty percent (80%) of the combined voting power of
all outstanding classes of securities of the company resulting from such merger
or consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
2.5 CODE
The Internal Revenue Code of 1986, as amended and in effect from time
to time, and the temporary or final regulations of the Secretary of the U.S.
Treasury adopted pursuant to the Code.
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2.6 COMMON STOCK
The common stock of the Company, $3 par value per share, or such other
class of shares or other securities as may be applicable pursuant to the
provisions of Section 5.
2.7 EXCHANGE ACT
The Securities Exchange Act of 1934, as amended.
2.8 FAIR MARKET VALUE
As applied to a specific date, Fair Market Value shall be deemed to be
the mean between the highest and lowest quoted selling prices at which Common
Stock was sold on such date as reported in the NYSE-Composite Transactions by
The Wall Street Journal on such date, or if no Common Stock was traded on such
date, on the next preceding day on which Common Stock was so traded.
Notwithstanding the foregoing, upon the exercise,
(a) during the thirty (30) day period following a Change
in Control, of a limited stock appreciation right or stock
appreciation right granted in connection with an Option more than six
(6) months prior to a Change in Control, or
(b) during the seven (7) month period following a Change
in Control, of a limited stock appreciation right or of a stock
appreciation right granted in connection with an Option less than six
(6) months prior to a Change in Control,
On or after a Change in Control, Fair Market Value on the date of
exercise shall be deemed to be the greater of (i) the highest price
per share of Common Stock as reported in the NYSE-Composite
Transactions by The Wall Street Journal during the sixty (60) day
period ending on the day preceding the date of exercise of the stock
appreciation right or limited stock appreciation right, as the case
may be, and (ii) if the Change in Control is one described in clause
(ii) or (iii) of Section 2.4, the highest price per share paid for
Common Stock in connection with such Change in Control.
2.9 GOOD REASON
Good Reason shall mean the occurrence of any of the following events
or conditions, after a Change in Control:
(a) a change in the Participant's status, title, position
or responsibilities (including reporting responsibilities) which, in
the Participant's reasonable judgment, represents a substantial
reduction of the status, title, position or responsibilities as in
effect immediately prior thereto; the assignment to the
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Participant of any duties or responsibilities which, in the
Participant's reasonable judgment, are inconsistent with such status,
title, position or responsibilities; or any removal of the Participant
from or failure to reappoint or reelect the Participant to any of such
positions, except in connection with the termination of the
Participant's employment for Cause, for Permanent Disability, as a
result of his or her death, or by the Participant other than for Good
Reason;
(b) a reduction in the Participant's annual base salary;
(c) the Company requires the Participant (without the
consent of the Participant) to be based at any place outside a
thirty-five (35) mile radius of his or her place of employment prior
to a Change in Control, except for reasonably required travel due to
the Company's business which is not materially greater than such
travel requirements prior to the Change in Control;
(d) the failure by the Company to (i) continue in effect
any material compensation or benefit plan in which the Participant was
participating at the time of the Change in Control, including, but not
limited to, the Plan, the El Paso Natural Gas Company Pension Plan and
the El Paso Natural Gas Company Retirement Savings Plan; or (ii)
provide the Participant with compensation and benefits at least equal
(in terms of benefit levels and/or reward opportunities) to those
provided for under each employee benefit plan, program and practice as
in effect immediately prior to the Change in Control (or as in effect
following the Change in Control, if greater);
(e) any material breach by the Company of any provision
of the Plan; or
(f) any purported termination of the Participant's
employment for Cause by the Company which does not otherwise comply
with the terms of the Plan.
2.10 MANAGEMENT COMMITTEE
A committee consisting of the Chief Executive Officer of the Company
and such other officers as the Chief Executive Officer shall designate.
2.11 OPTION
A stock option which is not intended to meet the requirements of an
Incentive Stock Option, as defined in Section 422 of the Code.
2.12 OPTION PRICE
The price per share of Common Stock at which each Option is
exercisable.
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2.13 PARTICIPANT
An eligible employee to whom an Option, limited stock appreciation
right, stock appreciation right or Restricted Stock is granted under the Plan
as set forth in Section 4.
2.14 PERMANENT DISABILITY OR PERMANENTLY DISABLED
A Participant shall be deemed to have become Permanently Disabled for
purposes of the Plan if the Chief Executive Officer of the Company shall find
upon the basis of medical evidence satisfactory to the Chief Executive Officer
that the Participant is totally disabled, whether due to physical or mental
condition, so as to be prevented from engaging in further employment with the
Company or any of its Subsidiaries, and that such disability will be permanent
and continuous during the remainder of the Participant's life.
2.15 PLAN ADMINISTRATOR
The Management Committee shall, pursuant to Section 3, administer the
Plan.
2.16 RESTRICTED STOCK
Common Stock granted under the Plan that is subject to the
requirements of Section 9 and such other restrictions as the Plan Administrator
deems appropriate.
2.17 SUBSIDIARY
An entity that is designated by the Plan Administrator as a subsidiary
for purposes of the Plan and that is a corporation (or other form of business
association that is treated as a corporation for tax purposes) of which shares
(or other ownership interests) having more than fifty percent (50%) of the
voting power are owned or controlled, directly or indirectly, by the Company so
as to qualify as a "subsidiary corporation" within the meaning of Section
424(f) of the Code.
SECTION 3 ADMINISTRATION
3.1 The Plan shall be administered by the Management Committee,
unless the Board of Directors shall otherwise determine the administrator of
the Plan. The administrator of the Plan is referred to herein as the "Plan
Administrator."
3.2 The members of the Management Committee serving as Plan
Administrator shall be appointed by the Chief Executive Officer for such term
as the Chief Executive Officer may determine. The Chief Executive Officer may
from time to time remove members from, or add members to, the Management
Committee.
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3.3 Except for the terms and conditions explicitly set forth in
the Plan, the Plan Administrator shall have full authority to construe and
interpret the Plan, to establish, amend and rescind rules and regulations
relating to the Plan, to select persons eligible to participate in the Plan, to
grant Options, limited stock appreciation rights, stock appreciation rights and
Restricted Stock thereunder, to administer the Plan, to make recommendations to
the Board of Directors, to take all such steps and make all such determinations
in connection with the Plan and the Options, limited stock appreciation rights,
stock appreciation rights and Restricted Stock granted thereunder as it may
deem necessary or advisable, which determination shall be final and binding
upon all Participants. The Plan Administrator shall cause the Company at its
expense to take any action related to the Plan which may be required or
necessary to comply with the provisions of any federal or state law or any
regulations issued thereunder.
3.4 Each member of the Management Committee acting as Plan
Administrator, while serving as such, shall be considered to be acting in his
or her capacity as an officer of the Company. Members of the Management
Committee acting under the Plan shall be fully protected in relying in good
faith upon the advice of counsel and shall incur no liability except for gross
negligence or willful misconduct in the performance of their duties.
SECTION 4 ELIGIBILITY
To be eligible for selection by the Plan Administrator to participate
in the Plan, an individual must be a key employee of the Company, or of any
Subsidiary, as of the date on which the Plan Administrator grants to such
individual an Option, limited stock appreciation right, stock appreciation
right or Restricted Stock and who in the judgment of the Plan Administrator
holds a position of responsibility and is able to contribute substantially to
the Company's continued success.
SECTION 5 SHARES AVAILABLE FOR THE PLAN
5.1 Subject to Section 5.2, the maximum number of shares for which
Options, limited stock appreciation rights, stock appreciation rights and
Restricted Stock may at any time be granted under the Plan is two million five
hundred thousand (2,500,000) shares of Common Stock, from shares held in the
Company's treasury or out of the authorized but unissued shares of the Company,
or partly out of each, as shall be determined by the Plan Administrator. Upon
(i) the expiration or termination in whole or in part of unexercised Options,
(ii) the surrender of an Option, or portion thereof, upon exercise of a related
limited stock appreciation right or stock appreciation right for cash, or (iii)
the forfeiture of shares of Restricted Stock, shares of Common Stock which were
subject thereto shall again be available for grants of Options, limited stock
appreciation rights, stock appreciation rights and Restricted Stock under the
Plan, as the Plan Administrator may determine.
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5.2 In the event of a recapitalization, stock split, stock
dividend, exchange of shares, merger, reorganization, change in corporate
structure or shares of the Company or similar event, the Board of Directors,
upon the recommendation of the Plan Administrator, may make appropriate
adjustments in the number of shares authorized for the Plan and, with respect
to outstanding Options, limited stock appreciation rights, stock appreciation
rights and Restricted Stock, the Plan Administrator may make appropriate
adjustments in the number of shares and the Option Price.
SECTION 6 STOCK OPTIONS
6.1 Options may be granted to eligible employees in such number
and at such times during the term of the Plan as the Plan Administrator shall
determine. When determining a grant, the Plan Administrator may take into
account the duties of the respective employees, their present and potential
contributions to the success of the Company, and such other factors as the Plan
Administrator shall deem relevant in accomplishing the purpose of the Plan.
The granting of an Option shall take place when the Plan Administrator
determines to grant such an Option to a particular Participant at the Option
Price. Each Option shall be evidenced by a written instrument delivered by or
on behalf of the Company containing provisions not inconsistent with the Plan.
6.2 All Options under the Plan shall be granted subject to the
following terms and conditions:
(A) OPTION PRICE
The Option Price shall be the Fair Market Value of the Common
Stock on the date the Option is granted, unless otherwise specified by
the Plan Administrator.
(B) DURATION OF OPTIONS
Options shall be exercisable at such time and under such
conditions as set forth in the Option grant, but in no event shall any
Option be exercisable later than the tenth anniversary of the date of
its grant.
(C) EXERCISE OF OPTIONS
Subject to Section 6.2(j), a Participant may not exercise an
Option until the Participant has completed one (1) year of continuous
employment with the Company or any of its Subsidiaries immediately
following the date on which the Option is granted, or such other
shorter or longer period as the Plan Administrator may determine in a
particular case. This requirement is waived in the event of death or
Permanent Disability of a Participant before such period of continuous
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employment is completed and may be waived or modified in the agreement
evidencing the Option or by written notice to the Participant from the
Plan Administrator. Thereafter, shares of Common Stock covered by an
Option may be purchased at one time or in such installments over the
balance of the Option period as may be provided in the Option grant.
Any shares not purchased on the applicable installment date may be
purchased at one time or in such installments at any time prior to the
final expiration of the Option as may be provided in the Option grant.
To the extent that the right to purchase shares has accrued
thereunder, Options may be exercised from time to time by providing
written notice to the Company setting forth the number of shares to
which the Option is being exercised.
(D) PAYMENT
The product of the Option Price and the number of shares
purchased (the "Purchase Price") shall be paid in full to the Company
upon the exercise of an Option. The Purchase Price may be paid either
(i) in cash or (ii) at the discretion of the Plan Administrator, in
Common Stock already owned by the Participant for at least six (6)
months, or any combination of cash and Common Stock. The Fair Market
Value of such Common Stock as delivered shall be valued as of the day
prior to delivery. To the extent permitted by the Plan Administrator
and applicable laws and regulations (including, but not limited to,
federal tax and securities laws and regulations and state corporate
law), an Option may also be exercised by delivering a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan
proceeds to pay the Purchase Price. A Participant shall have none of
the rights of a stockholder until the shares of Common Stock are
issued to the Participant.
(E) RESTRICTIONS
The Plan Administrator shall determine, with respect to each
Option, the nature and extent of the restrictions, if any, to be
imposed on the shares of Common Stock which may be purchased
thereunder, including, but not limited to, restrictions on the
transferability of such shares acquired through the exercise of an
Option for such periods as the Plan Administrator may determine and,
further, that in the event a Participant's employment by the Company,
or a Subsidiary, terminates during the period in which such shares are
nontransferable, the Participant shall be required to sell such shares
back to the Company at such prices as the Plan Administrator may
specify in the Option.
(F) NONTRANSFERABILITY OF OPTIONS
During a Participant's lifetime, an Option may be exercisable
only by the Participant. Options granted under the Plan and the rights
and privileges conferred
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thereby shall not be subject to execution, attachment or similar
process and may not be transferred, assigned, pledged or hypothecated
in any manner (whether by operation of law or otherwise) other than by
will or by the applicable laws of descent and distribution, except
that to the extent permitted by applicable law, the Plan Administrator
may permit a recipient of an Option to designate in writing during the
Participant's lifetime a Beneficiary to receive and exercise Options
in the event of such Participant's death (as provided in Section
6.2(i)). Any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of any Option under the Plan or of any right or
privilege conferred thereby, contrary to the provisions of the Plan,
or the sale or levy or any attachment or similar process upon the
rights and privileges conferred hereby, shall be null and void.
(G) PURCHASE FOR INVESTMENT
The Plan Administrator shall have the right to require that
each Participant or other person who shall exercise an Option under
the Plan, and each person into whose name shares of Common Stock shall
be issued pursuant to the exercise of an Option, represent and agree
that any and all shares of Common Stock purchased pursuant to such
Option are being purchased for investment only and not with a view to
the distribution or resale thereof and that such shares will not be
sold except in accordance with such restrictions or limitations as may
be set forth in the Option. This Section 6.2(g) shall be inoperative
during any period of time when the Company has obtained all necessary
or advisable approvals from governmental agencies and has completed
all necessary or advisable registrations or other qualifications of
shares of Common Stock as to which Options may from time to time be
granted.
(H) TERMINATION OF EMPLOYMENT
Upon the termination of a Participant's employment for any
reason other than death or Permanent Disability, the Participant's
Option shall be exercisable only to the extent that it was then
exercisable and, unless the term of the Option expires sooner, such
Option shall expire according to the following schedule; provided,
that the Plan Administrator may at any time determine in a particular
case that specific limitations and restrictions under the Plan shall
not apply:
(I) RETIREMENT
The Option shall expire, unless exercised, thirty-six
(36) months after the Participant's retirement from the
Company or any Subsidiary.
(II) DISABILITY
The Option shall expire, unless exercised, thirty-six
(36) months after the Participant's Permanent Disability.
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(III) TERMINATION
Subject to subparagraph (iv) below, the Option shall
expire, unless exercised, thirty-six (36) months after a
Participant resigns or is terminated as an employee of the
Company or any of its Subsidiaries, unless the Plan
Administrator shall have determined in a specific case that
the Option should expire sooner or should terminate when the
Participant's employment status ceases.
(IV) TERMINATION FOLLOWING A CHANGE IN CONTROL
The Option shall expire, unless exercised, within
thirty-six (36) months of a Participant's termination of
employment (other than a termination by the Company for Cause
or a voluntary termination by the Participant other than for
Good Reason) following a Change in Control, provided that said
termination of employment occurs within two (2) years
following a Change in Control.
(V) ALL OTHER TERMINATIONS
Except as provided in subparagraphs (iii) and (iv)
above, the Option shall expire upon termination of employment.
(I) DEATH OF PARTICIPANT
Upon the death of a Participant, whether during the
Participant's period of employment or during the thirty-six (36) month
period referred to in Sections 6.2(h)(i), (ii) and (iii), the Option
shall expire, unless the term of the Option expires sooner, twelve
(12) months after the date of the Participant's death, unless the
Option is exercised within such twelve (12) month period by the
Participant's Beneficiary, legal representatives, estate or the person
or persons to whom the deceased's Option rights shall have passed by
will or the laws of descent and distribution; provided, that the Plan
Administrator may determine in a particular case that specific
limitations and restrictions under the Plan shall not apply.
(J) CHANGE IN CONTROL
Notwithstanding other Plan provisions pertaining to the times
at which Options may be exercised, all outstanding Options, to the
extent not then currently exercisable, shall become exercisable in
full upon the occurrence of a Change in Control. No Option shall be
exercisable at a time that would violate the maximum duration of
Section 6.2(b).
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SECTION 7 STOCK APPRECIATION RIGHTS
7.1 The Plan Administrator may grant stock appreciation rights to
Participants in connection with any Option granted under the Plan, either at
the time of the grant of such Option or at any time thereafter during the term
of the Option. Such stock appreciation rights shall cover the same shares
covered by the Options (or such lesser number of shares of Common Stock as the
Plan Administrator may determine) and shall, except as provided in Section 7.3,
be subject to the same terms and conditions as the related Options and such
further terms and conditions not inconsistent with the Plan as shall from time
to time be determined by the Plan Administrator.
7.2 Each stock appreciation right shall entitle the holder of the
related Option to surrender to the Company the related unexercised Option, or
any portion thereof, and to receive from the Company in exchange therefor an
amount equal to the excess of the Fair Market Value of one share of Common
Stock on the date the right is exercised over the Option Price per share times
the number of shares covered by the Option, or portion thereof, which is
surrendered. Payment shall be made in shares of Common Stock valued at Fair
Market Value as of the date the right is exercised, or in cash, or partly in
shares and partly in cash, at the discretion of the Plan Administrator;
provided, however, that payment shall be made solely in cash with respect to a
stock appreciation right which is exercised within seven (7) months following a
Change in Control. Stock appreciation rights may be exercised from time to
time upon actual receipt by the Company of written notice stating the number of
shares of Common Stock with respect to which the stock appreciation rights are
being exercised. The value of any fractional shares shall be paid in cash.
7.3 Stock appreciation rights are subject to the following
restrictions:
(a) Each stock appreciation right shall be exercisable at
such time or times that the Option to which they relate shall be
exercisable or at such other times as the Plan Administrator may
determine; provided, however, that such rights shall not be
exercisable until the Participant shall have completed six (6) months
of continuous employment with the Company or any of its Subsidiaries
immediately following the date on which the stock appreciation right
is granted. In the event of death or Permanent Disability of a
Participant during employment but before the Participant has completed
such period of continuous employment, such stock appreciation right
shall be exercisable only within the period specified in the related
Option. In the event of a Change in Control, the requirement that a
Participant shall have completed a six (6) month period of continuous
employment is waived with respect to a Participant who is employed by
the Company at the time of the Change in Control but who, within the
six (6) month period, voluntarily terminates employment for Good
Reason or is terminated by the Company other than for Cause.
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(b) Except in the event of a Change in Control, the Plan
Administrator in its sole discretion may approve or deny in whole or
in part a request to exercise a stock appreciation right. Denial or
approval of such request shall not require a subsequent request to be
similarly treated by the Plan Administrator.
(c) The right of a Participant to exercise a stock
appreciation right shall be canceled if and to the extent the related
Option is exercised. To the extent that a stock appreciation right is
exercised, the related Option shall be deemed to have been
surrendered, unexercised and canceled.
(d) A holder of stock appreciation rights shall have none
of the rights of a stockholder until shares of Common Stock, if any,
are issued to such holder pursuant to such holder's exercise of such
rights.
(e) The acquisition of Common Stock pursuant to the
exercise of a stock appreciation right shall be subject to the same
restrictions as would apply to the acquisition of Common Stock
acquired upon acquisition of the related Option, as set forth in
Section 6.2.
SECTION 8 LIMITED STOCK APPRECIATION RIGHTS
8.1 The Plan Administrator may grant limited stock appreciation
rights to Participants in connection with any Options granted under the Plan,
either at the time of the grant of such Option or at any time thereafter during
the term of the Option. Such limited stock appreciation rights shall cover the
same shares covered by the Options (or such lesser number of shares of Common
Stock as the Plan Administrator may determine) and shall, except as provided in
Section 8.3, be subject to the same terms and conditions as the related Options
and such further terms and conditions not inconsistent with the Plan as shall
from time to time be determined by the Plan Administrator.
8.2 Each limited stock appreciation right shall entitle the holder
of the related Option to surrender to the Company the unexercised portion of
the related Option and to receive from the Company in exchange therefor an
amount in cash equal to the excess of the Fair Market Value of one (1) share of
Common Stock on the date the right is exercised over the Option Price per share
times the number of shares covered by the Option, or portion thereof, which is
surrendered.
8.3 Limited stock appreciation rights are subject to the following
restrictions:
(a) Each limited stock appreciation right shall be
exercisable in full for a period of seven (7) months following the
date of a Change in Control, provided, however, that limited stock
appreciation rights may not be exercised under any circumstances until
the expiration of the six (6) month period following the date of
grant. Limited stock appreciation rights shall be exercisable only to
the same
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extent and subject to the same conditions as the Options related
thereto are exercisable, as provided in Section 6.2(j).
(b) The right of a Participant to exercise a limited
stock appreciation right shall be canceled if and to the extent the
related Option is exercised. To the extent that a limited stock
appreciation right is exercised, the related Option shall be deemed to
have been surrendered, unexercised and canceled.
SECTION 9 RESTRICTED STOCK
9.1 Restricted Stock may be granted to Participants in such number
and at such times during the term of the Plan as the Plan Administrator shall
determine, the Plan Administrator taking into account the duties of the
respective Participants, their present and potential contributions to the
success of the Company, and such other factors as the Plan Administrator shall
deem relevant in accomplishing the purposes of the Plan. The granting of
Restricted Stock shall take place when the Plan Administrator by resolution,
written consent or other appropriate action determines to grant such Restricted
Stock to a particular Participant. Each grant shall be evidenced by a written
instrument delivered by or on behalf of the Company containing provisions not
inconsistent with the Plan. The Participant receiving a grant of Restricted
Stock shall be recorded as a stockholder of the Company. Each Participant who
receives a grant of Restricted Stock shall have all the rights of a stockholder
with respect to such shares (except as provided in the restrictions on
transferability), including the right to vote the shares and receive dividends
and other distributions; provided, however, that no Participant awarded
Restricted Stock shall have any right as a stockholder with respect to any
shares subject to the Participant's Restricted Stock grant prior to the date of
issuance to the Participant of a certificate or certificates for such shares.
9.2 A grant of Restricted Stock shall entitle a Participant to
receive, on the date or dates designated by the Plan Administrator, upon
payment to the Company of the par value of the Common Stock in a manner
determined by the Plan Administrator, the number of shares of Common Stock
selected by the Plan Administrator. The Plan Administrator may require, under
such terms and conditions as it deems appropriate or desirable, that the
certificates for Restricted Stock delivered under the Plan may be held in
custody by a bank or other institution, or that the Company may itself hold
such shares in custody until the Restriction Period (as defined in Section 9.3)
expires or until restrictions thereon otherwise lapse, and may require, as a
condition of any issuance of Restricted Stock that the Participant shall have
delivered a stock power endorsed in blank relating to the shares of Restricted
Stock.
9.3 During a period of years following the date of grant, which
shall in no event be less than one (1) year and until required performance
targets are achieved, if applicable, as determined by the Plan Administrator
(the "Restriction Period"), the Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or
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otherwise encumbered or disposed of by the recipient, except in the event of
death or Permanent Disability, the transfer to the Company as provided under
the Plan or the Plan Administrator's waiver or modification of such
restrictions in the agreement evidencing the grant of Restricted Stock, or by
resolution of the Plan Administrator adopted at any time.
9.4 Except as provided in Section 9.5 or 9.6, if a Participant
terminates employment with the Company for any reason before the expiration of
the Restriction Period, all shares of Restricted Stock still subject to
restriction shall be forfeited by the Participant to the Company. In addition,
in the event of any attempt by the Participant to sell, exchange, transfer,
pledge or otherwise dispose of shares of Restricted Stock in violation of the
terms of the Plan, such shares shall be forfeited to the Company.
9.5 The Restriction Period for any Participant shall be deemed to
end and all restrictions on shares of Restricted Stock shall lapse, upon the
Participant's death, Permanent Disability, retirement or any termination of
employment determined by the Plan Administrator to end the Restriction Period.
9.6 The Restriction Period for any Participant shall be deemed to
end and all restrictions on shares of Restricted Stock shall terminate
immediately upon a Change in Control.
9.7 When the restrictions imposed by Section 9.3 expire or
otherwise lapse with respect to one or more shares of Restricted Stock, the
Company shall deliver to the Participant (or the Participant's legal
representative, Beneficiary or heir) one (1) share of Common Stock for each
share of Restricted Stock. At that time, the agreement referred to in Section
9.1, as it relates to such shares, shall be terminated.
9.8 Subject to Section 9.2, a Participant entitled to receive
Restricted Stock under the Plan shall be issued a certificate for such shares.
Such certificate shall be registered in the name of the Participant, and shall
bear an appropriate legend reciting the terms, conditions and restrictions, if
any, applicable to such shares and shall be subject to appropriate
stop-transfer orders.
SECTION 10 REGULATORY APPROVALS AND LISTING
10.1 The Company shall not be required to issue any certificate for
shares of Common Stock upon the exercise of an Option or a stock appreciation
right granted under the Plan, or with respect to a grant of Restricted Stock
prior to:
(a) the obtaining of any approval or ruling from the
Securities and Exchange Commission, the Internal Revenue Service or
any other governmental agency which the Company, in its sole
discretion, shall determine to be necessary or advisable;
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(b) the listing of such shares on any stock exchange on
which the Common Stock may then be listed; or
(c) the completion of any registration or other
qualification of such shares under any federal or state laws, rulings
or regulations of any governmental body which the Company, in its sole
discretion, shall determine to be necessary or advisable.
SECTION 11 EFFECTIVE DATE AND TERM OF THE PLAN
The Plan was originally adopted by the Board of Directors as of
December 14, 1993, and was amended and restated by the Board of Directors
effective April 12, 1996. Options, limited stock appreciation rights, stock
appreciation rights and Restricted Stock may be granted pursuant to the Plan
from time to time as the Plan Administrator shall determine. The Plan shall
terminate on December 14, 2003. However, Options, limited stock appreciation
rights, stock appreciation rights and Restricted Stock granted prior to the
expiration of the Plan may extend beyond that date and the terms and conditions
of the Plan shall continue to apply thereto and to shares of Common Stock
acquired hereunder.
SECTION 12 GENERAL PROVISIONS
12.1 Nothing contained in the Plan, or in any Option, limited stock
appreciation right, stock appreciation right or Restricted Stock granted
pursuant to the Plan, shall confer upon any employee any right with respect to
continuance of employment by the Company or a Subsidiary, nor interfere in any
way with the right of the Company or a Subsidiary to terminate the employment
of such employee at any time with or without assigning any reason therefor.
12.2 Grants, vesting or payment of Options, limited stock
appreciation rights, stock appreciation rights or Restricted Stock shall not be
considered as part of a Participant's salary or used for the calculation of any
other pay, allowance, pension or other benefit unless otherwise permitted by
other benefit plans provided by the Company or its Subsidiaries, or required by
law or by contractual obligations of the Company or its Subsidiaries.
12.3 The right of a Participant or Beneficiary to the payment of
any compensation under the Plan may not be assigned, transferred, pledged or
encumbered, nor shall such right or other interests be subject to attachment,
garnishment, execution or other legal process.
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12.4 Leaves of absence for such periods and purposes conforming to
the personnel policy of the Company, or of its Subsidiaries, as applicable,
shall not be deemed terminations or interruptions of employment.
12.5 In the event a Participant is transferred from the Company to
a Subsidiary, or vice versa, or is promoted or given different
responsibilities, the Options, limited stock appreciation rights, stock
appreciation rights and Restricted Stock granted to the Participant prior to
such date shall not be affected. Notwithstanding the foregoing or any other
provision in this Plan, in the event a Participant becomes an officer or
director of the Company subject to Section 16(b) of the Exchange Act, the Plan
Administrator may take any and all action necessary to prevent any violation of
Section 16(b), including, but not limited to, accelerating the vesting of
Options, rights or Restricted Stock, canceling any unvested Options, rights or
Restricted Stock and/or requiring the Participant to exercise any and all
vested Options or rights at such times as the Plan Administrator may determine.
12.6 Each grant to a Participant of an Option, limited stock
appreciation right, stock appreciation right and Restricted Stock hereunder
shall make reference to this Plan by title and date to confirm the
applicability of the Plan and the source of shares and rights covered by the
grant.
12.7 The Plan shall be construed and governed in accordance with
the laws of the State of Texas, except that it shall be construed and governed
in accordance with applicable federal law in the event that such federal law
preempts state law.
12.8 Appropriate provision shall be made for all taxes required to
be withheld in connection with the exercise, grant or other taxable event with
respect to Options, limited stock appreciation rights, stock appreciation
rights and Restricted Stock under the applicable laws or regulations of any
governmental authority, whether federal, state or local and whether domestic or
foreign. Unless otherwise provided in the grant, a Participant is permitted to
deliver shares of Common Stock for payment of withholding taxes on the exercise
of an option, stock appreciation right, or limited stock appreciation right or
upon the grant or vesting of Restricted Stock. At the election of the Plan
Administrator or, subject to approval of the Plan Administrator at its sole
discretion, at the election of a Participant, shares of Common Stock may be
withheld from the shares issuable to the Participant upon the exercise of an
option or stock appreciation right or upon the vesting of the Restricted Stock
to satisfy tax withholding obligations. The Fair Market Value of Common Stock
as delivered pursuant to this Section 12.8 shall be valued as of the day prior
to delivery, and shall be calculated in accordance with Section 2.8.
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Any Participant that makes a Section 83(b) election under the Code
shall, within ten (10) days of making such election, notify the Company in
writing of such election and shall provide the Company with a copy of such
election form filed with the Internal Revenue Service.
Tax advice should be obtained by the Participant prior to the
Participant's (i) entering into any transaction under or with respect to the
Plan, (ii) designating or choosing the times of distributions under the Plan,
or (iii) disposing of any shares of Common Stock issued under the Plan.
SECTION 13 AMENDMENT, TERMINATION OR DISCONTINUANCE OF THE PLAN
13.1 Subject to Section 13.2, the Plan Administrator may from time
to time make such amendments to the Plan as it may deem proper and in the best
interest of the Company without further approval of the Board of Directors,
including, but not limited to, any amendment necessary to ensure that the
Company may obtain any regulatory approval referred to in Section 10; provided,
however, that no change in any Option, limited stock appreciation right, stock
appreciation right or Restricted Stock theretofore granted may be made without
the consent of the Participant which would impair the right of the Participant
to acquire or retain Common Stock or cash that the Participant may have
acquired as a result of the Plan.
13.2 The Plan Administrator may not amend the Plan without the
approval of the Board of Directors to:
(a) increase the number of shares or rights that may be
issued under the Plan; or
(b) otherwise materially increase the benefits accruing
to the Participants under the Plan.
13.3 The Plan Administrator may at any time suspend the operation
of or terminate the Plan with respect to any shares of Common Stock not subject
to Option, limited stock appreciation right, stock appreciation right or
Restricted Stock at the time.
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