-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AdcCUjWWAnWr3NrAfDAQ20YF/ErXXESBec6zOUZmrmmUhb+V+wimqzvfxGdDBsaI G6G7XAbz43MUtNDDBG9v/w== 0000899243-97-000548.txt : 19970401 0000899243-97-000548.hdr.sgml : 19970401 ACCESSION NUMBER: 0000899243-97-000548 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970331 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NGC CORP CENTRAL INDEX KEY: 0000879215 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 943248415 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-46541 FILM NUMBER: 97569979 BUSINESS ADDRESS: STREET 1: 13430 NORTHWEST FREEWAY STREET 2: SUITE 1200 CITY: HOUSTON STATE: TX ZIP: 77040 BUSINESS PHONE: 7133677600 MAIL ADDRESS: STREET 1: 13430 NORTHWEST FREEWAY STREET 2: SUITE 1200 CITY: HOUSTON STATE: TX ZIP: 77040-6095 FORMER COMPANY: FORMER CONFORMED NAME: TRIDENT NGL HOLDING INC DATE OF NAME CHANGE: 19930916 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WATSON C L CENTRAL INDEX KEY: 0001011194 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 13430 NORTHWEST FREEWAY STREET 2: SUITE 1200 CITY: HOUSTON STATE: TX ZIP: 77040-6095 BUSINESS PHONE: 7135076400 MAIL ADDRESS: STREET 1: 13430 NORTHWEST FREEWAY STREET 2: SUITE 1200 CITY: HOUSTON STATE: TX ZIP: 77040-6095 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 NGC Corporation ----------------------------------------------------------------- (Name of Issuer) Common Stock, $0.01 Par Value ----------------------------------------------------------------- (Title of Class of Securities) 629121 10 4 ----------------------------------------------------------------- (CUSIP Number) C. L. Watson NGC Corporation 1000 Louisiana Suite 5800 Houston, Texas 77002 (713) 507-6400 ----------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 20, 1997 ----------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes.) CUSIP NO. 629121 10 4 (1) Names of Reporting Persons. S.S. or I.R.S. C. L. Watson Identification Nos. of Above Persons (2) Check the Appropriate Box if (a) a Member of a Group (See Instructions)/1/ (b) (3) SEC Use Only (4) Source of Funds (See Instructions) PF (See Item 3) (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) (6) Citizenship or Place of Organization United States Number of Shares (7) Sole Voting Power See Item 5 Beneficially Owned by Each (8) Shared Voting Power See Item 5 Reporting Person With (9) Sole Dispositive Power See Item 5 (10) Shared Dispositive Power See Item 5 (11) Aggregate Amount Beneficially 8,907,575 Owned by Each Reporting Person (See Item 5) (12) Check if the Aggregate Amount x in Row (11) Excludes Certain (See Item 5) Shares (See Instructions) (13) Percent of Class Represented 5.85% by Amount in Row (11) (See Item 5) (14) Type of Reporting Person (See Instructions) IN ________________________ /1/ The reporting person expressly disclaims the existence of any group. 2 CUSIP NO. 629121 10 4 (1) Names of Reporting Persons. S.S. or I.R.S. C. L. Watson, Trustee fbo Identification Nos. of Above Persons Charles L. Watson Grantor Retained Annuity Trust (2) Check the Appropriate Box if (a) a Member of a Group (See Instructions)/1/ (b) (3) SEC Use Only (4) Source of Funds (See Instructions) PF (See Item 3) (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) (6) Citizenship or Place of Organization See Item 2 Number of Shares (7) Sole Voting Power See Item 5 Beneficially Owned by Each (8) Shared Voting Power See Item 5 Reporting Person With (9) Sole Dispositive Power See Item 5 (10) Shared Dispositive Power See Item 5 (11) Aggregate Amount Beneficially 8,907,575 Owned by Each Reporting Person (See Item 5) (12) Check if the Aggregate Amount x in Row (11) Excludes Certain (See Item 5) Shares (See Instructions) (13) Percent of Class Represented 5.85% by Amount in Row (11) (See Item 5) (14) Type of Reporting Person (See Instructions) OO (See Item 2) _______________________ /1/ The reporting person expressly disclaims the existence of any group. 3 CUSIP NO. 629121 10 4 (1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo Identification Nos. of Above Persons Kim R. Watson Grantor Retained Annuity Trust (2) Check the Appropriate Box if (a) a Member of a Group (See Instructions)/1/ (b) (3) SEC Use Only (4) Source of Funds (See Instructions) PF(See Item 3) (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) (6) Citizenship or Place of Organization See Item 2 Number of Shares (7) Sole Voting Power See Item 5 Beneficially Owned by Each (8) Shared Voting Power See Item 5 Reporting Person With (9) Sole Dispositive Power See Item 5 (10) Shared Dispositive Power See Item 5 (11) Aggregate Amount Beneficially 8,907,575 Owned by Each Reporting Person (See Item 5) (12) Check if the Aggregate Amount x in Row (11) Excludes Certain (See Item 5) Shares (See Instructions) (13) Percent of Class Represented 5.85% by Amount in Row (11) (See Item 5) (14) Type of Reporting Person (See Instructions) OO (See Item 2) ___________________ /1/ The reporting person expressly disclaims the existence of any group. 4 CUSIP NO. 629121 10 4 (1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo Identification Nos. of Above Persons Keri M. Watson Trust (2) Check the Appropriate Box if (a) a Member of a Group (See Instructions)/1/ (b) (3) SEC Use Only (4) Source of Funds (See Instructions) PF (See Item 3) (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) (6) Citizenship or Place of Organization See Item 2 Number of Shares (7) Sole Voting Power See Item 5 Beneficially Owned by Each (8) Shared Voting Power See Item 5 Reporting Person With (9) Sole Dispositive Power See Item 5 (10)Shared Dispositive Power See Item 5 (11) Aggregate Amount Beneficially 8,907,575 Owned by Each Reporting Person (See Item 5) (12) Check if the Aggregate Amount x in Row (11) Excludes Certain (See Item 5) Shares (See Instructions) (13) Percent of Class Represented 5.85% by Amount in Row (11) (See Item 5) (14) Type of Reporting Person (See Instructions) OO (See Item 2) _____________________ /1/ The reporting person expressly disclaims the existence of any group. 5 CUSIP NO. 629121 10 4 (1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo Identification Nos. of Above Persons Brian J. Watson Trust (2) Check the Appropriate Box if (a) a Member of a Group (See Instructions)/1/ (b) (3) SEC Use Only (4) Source of Funds (See Instructions) PF (See Item 3) (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) (6) Citizenship or Place of Organization See Item 2 Number of Shares (7) Sole Voting Power See Item 5 Beneficially Owned by Each (8) Shared Voting Power See Item 5 Reporting Person With (9) Sole Dispositive Power See Item 5 (10) Shared Dispositive Power See Item 5 (11) Aggregate Amount Beneficially 8,907,575 Owned by Each Reporting Person (See Item 5) (12) Check if the Aggregate Amount x in Row (11) Excludes Certain (See Item 5) Shares (See Instructions) (13) Percent of Class Represented 5.85% by Amount in Row (11) (See Item 5) (14) Type of Reporting Person (See Instructions) OO (See Item 2) _____________________ /1/ The reporting person expressly disclaims the existence of any group. 6 CUSIP NO. 629121 10 4 (1) Names of Reporting Persons. S.S. or I.R.S. C.L. Watson, Trustee fbo Identification Nos. of Above Persons Carly R. Watson Trust (2) Check the Appropriate Box if (a) a Member of a Group (See Instructions)/1/ (b) (3) SEC Use Only (4) Source of Funds (See Instructions) PF (See Item 3) (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) (6) Citizenship or Place of Organization See Item 2 Number of Shares (7) Sole Voting Power See Item 5 Beneficially Owned by Each (8) Shared Voting Power See Item 5 Reporting Person With (9) Sole Dispositive Power See Item 5 (10) Shared Dispositive Power See Item 5 (11) Aggregate Amount Beneficially 8,907,575 Owned by Each Reporting Person (See Item 5) (12) Check if the Aggregate Amount x in Row (11) Excludes Certain (See Item 5) Shares (See Instructions) (13) Percent of Class Represented 5.85% by Amount in Row (11) (See Item 5) (14Type of Reporting Person (See Instructions) OO (See Item 2) ________________________ /1/ The reporting person expressly disclaims the existence of any group. 7 CUSIP NO. 629121 10 4 Item 1. Security and Issuer. This statement relates to the common stock, par value $0.01 per share (the "Common Stock"), of NGC Corporation, a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 1000 Louisiana, Suite 5800, Houston, Texas 77002. Item 2. Identity and Background. (a) This statement is filed by Mr. C. L. Watson, in his individual capacity and in his capacity as trustee (in such capacity, the "Trustee") of the Charles L. Watson Grantor Retained Annuity Trust, Kim R. Watson Grantor Retained Annuity Trust, Keri M. Watson Trust, Brian J. Watson Trust and Carly R. Watson Trust (collectively, the "Trusts"). Mr. Watson, in both his individual capacity and in his capacity as the Trustee, may hereinafter be referred to as the Reporting Person. Ms. Kim R. Watson, beneficiary of the Kim R. Watson Grantor Retained Annuity Trust, is the wife of C. L. Watson and Ms. Keri M. Watson, beneficiary of the Keri M. Watson Trust, Mr. Brian J. Watson, beneficiary of the Brian J. Watson Trust, and Ms. Carly R. Watson, beneficiary of the Carly R.Watson Trust, are the minor children of C. L. Watson (collectively, the "Beneficiaries"). (b) The Reporting Person has his principal business office at 1000 Louisiana, Suite 5800, Houston, Texas 77002. (c) The Reporting Person serves as the Chairman of the Board, Chief Executive Officer and a Director of the Issuer. The Issuer is a leading gatherer, processor, transporter and marketer of energy products and services in North America and the United Kingdom. The address of the principal executive offices of the Issuer is set forth in Item 1 above. (d) Neither the Reporting Person, nor any of the Beneficiaries, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Neither the Reporting Person, nor any of the Beneficiaries, has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) The Reporting Person and each of the Beneficiaries is a United States citizen and each of the Trusts was established under the laws of the State of Texas and the United States. 8 CUSIP NO. 629121 10 4 Item 3. Source and Amount of Funds or Other Consideration. C. L. Watson has the right to acquire the beneficial ownership of 1,738,718 shares of Common Stock on May 19, 1997, through the exercise of certain employee stock options that become fully exercisable on such date. It is anticipated that Mr. Watson will use personal funds to acquire the shares of Common Stock issuable upon the exercise of such options. The options have an exercise price of $2.028 per share and expire on May 19, 2002. The Reporting Person previously filed a Schedule 13D on March 22, 1995, to report his initial acquisition of more than 5 percent of the outstanding Common Stock of the Issuer. The source and amount of funds or other consideration used in making the Reporting Person's initial acquisition was previously reported pursuant to Rule 13d-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") in the Reporting Person's initial statement on Schedule 13D. Item 4. Purpose of Transaction. Acquisition of Shares of Common Stock. The 1,738,718 shares of Common Stock that may be acquired by C. L. Watson on May 19, 1997, will be held by Mr. Watson for investment purposes. The Reporting Person acquired the shares of Common Stock held of record prior to March 20, 1997 set forth in Item 5(a) in connection with the Trident Combination (defined herein) and is holding such shares for investment purposes. Intent to Dispose of Shares of Common Stock. The Reporting Person intends to sell shares of Common Stock from time to time as market conditions allow to diversify his personal investment portfolio and the investment portfolio of his wife's and children's trusts. Except as set forth above, the Reporting Person does not have any present plans or proposals which relate to, or would result in: the acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer, an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; a change in the present board of directors or management of the Issuer, including plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; a material change in the present capitalization or dividend policy of the Issuer or any other material change in the Issuer's business or corporate structure; a change in the Issuer's Certificate of Incorporation or Bylaws or other actions which might impede the acquisition of control of the Issuer by any person; causing a class of securities of the Issuer being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or any action similar to any of those enumerated above. 9 CUSIP NO. 629121 10 4 Item 5. Interest in Securities of the Issuer. (a) Mr. Watson and the Trusts beneficially own the number of shares of Common Stock set forth in the table below.
Number of Shares Total Number Number of That May be of Shares Percentage Shares Held Acquired Within Beneficially of of Record as of 60 Days of Owned as of Common Stock Name March 20, 1997 March 20, 1997 March 20, 1997 Owned/1/ - -------------- --------------- ----------------- --------------- ------------ C. L. Watson 4,214,495 1,738,718 5,953,213 3.91% Trusts 2,954,362 -0- 2,954,362 1.94% --------- --------- --------- ------ Totals 7,168,857 1,738,718 8,907,575 5.85% ========= ========= ========= ======
Background. The Reporting Person acquired the shares of Common Stock beneficially owned by him, in his individual capacity and in his capacity as the Trustee of the Trusts prior to March 20, 1997, the date of the event which requires the filing of this Statement on Schedule 13D, as of March 14, 1995 (the "Effective Time"), upon the consummation of the transactions (the "Trident Combination") contemplated by that certain Combination Agreement and Plan of Merger, dated as of October 21, 1994, among Trident NGL Holding, Inc. ("Trident"), Natural Gas Clearinghouse ("Clearinghouse"), and certain other parties thereto. Pursuant to the Trident Combination, Trident, as the surviving corporation in the Trident Combination, became the owner of all of the outstanding equity interests in Clearinghouse and changed its name to NGC Corporation. NGC Corporation is the Issuer of the Common Stock. Upon consummation of the Trident Combination, the Reporting Person acquired 7,038,326 shares of Common Stock or approximately 6.4% of the Common Stock outstanding as of the Effective Time. The Reporting Person filed a Statement Schedule 13D relating to the acquisition of Common Stock pursuant to the Trident Combination on March 22, 1995. On February 29, 1996, a determination was made with respect to certain contingent shares issued in connection with the Trident Combination. The Reporting Person acquired an additional 355,529 shares of Common Stock as a result of such determination. _______________________ /1/ Based upon 152,097,356 shares of Common Stock deemed to be outstanding at the close of business on March 20, 1997 pursuant to Rule 13d-3 of the Securities Exchange Act of 1934 (150,358,638 shares outstanding on March 20, 1997 plus 1,738,718 shares that may be acquired by Mr. Watson within 60 days of March 20, 1997). 10 CUSIP NO. 629121 10 4 On May 22, 1996, the Issuer, Chevron U.S.A. Inc. ("Chevron"), and Midstream Combination Corp., a wholly-owned subsidiary of Chevron, entered into a Combination Agreement and Plan of Merger providing for a combination of the Issuer with substantially all of Chevron's midstream assets and certain strategic alliances (the "Chevron Combination"). Pursuant to the Chevron Combination, the Issuer was merged with and into Midstream Combination Corp., which was renamed "NGC Corporation," as the successor-in-interest to the Issuer. As part of such transaction, an additional 38,623,211 shares of Common Stock of the Issuer were issued to Chevron. As a result of such increase in the number of outstanding shares of Common Stock, the Reporting Person's ownership dropped to approximately 4.9% of the Common Stock of the Issuer outstanding as of August 31, 1996, the effective date of the Chevron Combination. The Reporting Person filed an Amendment to Schedule 13D on September 11, 1996, to reflect the Reporting Person's beneficial ownership of five percent or less of the Common Stock of the Issuer. (b) The Reporting Person has the sole power to vote and the sole power to dispose of the shares of Common Stock which he owns of record in his own name, as indicated in the table above. As Trustee of the Trusts, the Reporting Person has the sole power to vote and the sole power to dispose of all shares of Common Stock owned of record by each of the Trusts, as reflected in the table above. In addition, the Reporting Person will have the sole power to vote and the sole power to dispose of all of the shares of Common Stock which the Reporting Person, in his individual capacity, may acquire upon the exercise of certain employee stock options that become exercisable on May 19, 1997, as reflected in the table above. (c) None. (d) With respect to the shares of Common Stock owned of record in the name of Mr. C. L. Watson, C. L. Watson has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities. With respect to the shares of Common Stock owned of record by the Trusts (and the C. L. Watson Grantor Retained Annuity Trust), the Reporting Person, in his capacity as Trustee, has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities on behalf of the Trusts. With respect to the shares of Common Stock that Mr. Watson has the right to acquire upon the exercise of certain employee stock options that become fully exercisable on May 19, 1997, C. L. Watson will have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Set forth below is a brief description of certain agreements concerning the shares of Common Stock and other securities of the Issuer held by the Reporting Person. Such agreements 11 CUSIP NO. 629121 10 4 are attached as exhibits hereto and are incorporated herein by reference in their entirety for all purposes. NGC Corporation Amended and Restated Employee Equity Option Plan. The NGC Corporation Amended and Restated Employee Equity Option Plan (the "EEP") provides for the grant of options to purchase shares of Common Stock. Each option under the EEP vests on the fifth anniversary of the date of grant and terminates on the tenth anniversary of the date of grant, subject to certain exceptions. C. L. Watson currently holds the following options granted under the EEP: (i) options to purchase 1,738,717 shares of Common Stock at an exercise price of $2.028 per share, which will vest on May 19, 1997 and expire on May 19, 2002, (ii) options to purchase 125,000 shares of Common Stock at an exercise price of $2.028 per share, which will vest on July 9, 2001 and will expire on July 9, 2006 and (iii) options to purchase 220,008 shares of Common Stock at an exercise price of $2.028 per share, which will vest on November 19, 2001 and expire on November 19, 2006. NGC Corporation Amended and Restated 1991 Stock Option Plan. The NGC Corporation Amended and Restated 1991 Stock Option Plan (the "Stock Option Plan") provides for the grant of options to purchase shares of Common Stock. Each option under the Stock Option Plan vests and becomes exercisable ratably over a three-year period following date of grant and terminates on the tenth anniversary of the date of grant. C. L. Watson currently holds options to purchase 111,740 shares of Common Stock at an exercise price $18.75 per share, which will vest and become exercisable ratably in one-third increments on November 19, 1997, November 19, 1998 and November 19, 1999, respectively, and will expire on May 19, 2006. At the present, there are no other contracts, arrangements, understandings, or relationships with respect to securities of the Issuer involving C. L. Watson and the Trusts. Item 7. Materials to be Filed as Exhibits. 1. NGC Corporation Amended and Restated Employee Equity Option Plan. 2. NGC Corporation Amended and Restated 1991 Stock Option Plan. 3. Agreement of Joint Filing. 12 CUSIP NO. 629121 10 4 SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct. Dated: March 31, 1997 By: /s/ C. L. WATSON ----------------------- Name: C. L. Watson CHARLES L. WATSON GRANTOR RETAINED ANNUITY TRUST KIM R. WATSON GRANTOR RETAINED ANNUITY TRUST KERI M. WATSON TRUST BRIAN J. WATSON TRUST CARLY R. WATSON TRUST By: /s/ C. L. WATSON ----------------------- C. L. Watson Trustee 13 CUSIP NO. 629121 10 4 INDEX TO EXHIBITS SEQUENTIALLY NUMBERED NUMBER EXHIBIT PAGE ------ ------- ------------- 1. NGC Corporation Amended and Restated Employee Equity Option Plan. 2. NGC Corporation Amended and Restated 1991 Stock Option Plan. 3. Agreement of Joint Filing. EX-99.1 2 AMENDED AND RESTATED EMPLOYEE EQUITY OPTION PLAN EXHIBIT 1 NGC CORPORATION EMPLOYEE EQUITY OPTION PLAN [AS AMENDED AND RESTATED EFFECTIVE AS OF MARCH 14, 1995] I. PURPOSE OF THE PLAN (a) The NGC CORPORATION EMPLOYEE EQUITY OPTION PLAN (the "Plan") is intended to provide a means whereby certain employees of NGC CORPORATION, a Delaware corporation (the "Company"), and its affiliates may develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to remain with and devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its shareholders. Accordingly, the Company may grant to certain employees ("Optionees") the option ("Option") to purchase shares of the common stock of the Company ("Stock"), as hereinafter set forth. Options granted under the Plan shall not constitute incentive stock options, within the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code"). (b) The Plan as set forth herein constitutes an amendment and restatement of the Natural Gas Clearinghouse Employee Equity Option Plan (the "Predecessor Plan"), as previously adopted by Natural Gas Clearinghouse ("NGC"), and shall supersede and replace in its entirety such previously adopted plan. The Predecessor Plan has been amended and restated in the form of the Plan in connection with the consummation of the transactions contemplated in that certain Combination Agreement and Plan of Merger (the "Combination Agreement") dated October 21, 1994, among NGC, Trident NGL Holding, Inc., and certain other parties, pursuant to which NGC agreed, subject to certain conditions, to combine with and into the Company (as the surviving corporation in the combination). The amendment and restatement of the Predecessor Plan into the form of the Plan shall be effective as of the closing of the Merger and the Tender Offer as such terms are defined in the Combination Agreement (the "Restatement Effective Date"). As contemplated in the Predecessor Plan and to reflect the consummation of the transactions described in the Combination Agreement, each outstanding option under the Predecessor Plan to acquire one one-thousandth of a partnership unit in NGC shall be automatically converted on the Restatement Effective Date into an Option under the Plan to purchase 246.15 shares of Stock (subject to adjustment as provided in Paragraph IX hereof). If such option under the Predecessor Plan had an exercise price of $1,465.54 per one one-thousandth of a partnership unit in NGC, then the purchase price of the Stock under the corresponding Option under the Plan shall be $5.95 per share of Stock (subject to adjustment as provided in Paragraph IX hereof). If such option under the Predecessor Plan had an exercise price of $523.33 per one one-thousandth of a partnership unit in NGC, then the purchase price of the Stock under the corresponding Option under the Plan shall be $2.13 per share of Stock (subject to adjustment as provided in Paragraph IX hereof). (c) Notwithstanding any provision herein to the contrary, if the Merger and Tender Offer contemplated in the Combination Agreement are not consummated, then (i) the Plan shall be void and of no further force and effect, and (ii) the Predecessor Plan shall not be amended and restated in the form of the Plan, but, rather, shall continue in full force and effect. II. ADMINISTRATION The Plan shall be administered by a committee (the "Committee") of, and appointed by, the Board of Directors of the Company (the "Board"), and the Committee shall be (a) comprised solely of two or more outside directors (within the meaning of section 162(m) of the Code and applicable interpretive authority thereunder), and (b) constituted so as to permit the Plan to comply with Rule 16b-3, as currently in effect or as hereinafter modified or amended ("Rule 16b- 3"), promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act"). The Committee shall have sole authority to select the Optionees from among those individuals eligible hereunder and to establish the number of shares which may be issued under each Option; provided, however, that, notwithstanding any provision in the Plan to the contrary, the maximum number of shares that may be subject to Options granted under the Plan to an individual Optionee during any calendar year beginning on or after January 1, 1994, may not exceed 2,110,739 (subject to adjustment in the same manner as provided in Paragraph IX hereof (including, without limitation, Paragraph IX(a) hereof) with respect to shares of Stock subject to Options then outstanding). The limitation set forth in the preceding sentence shall be applied in a manner that will permit compensation generated under the Plan to constitute "performance-based" compensation for purposes of section 162(m) of the Code, including, without limitation, counting against such maximum number of shares, to the extent required under section 162(m) of the Code and applicable interpretive authority thereunder, any shares subject to Options that are canceled or repriced. In selecting the Optionees from among individuals eligible hereunder and in establishing the number of shares that may be issued under each Option, the Committee may take into account the nature of the services rendered by such individuals, their present and potential contributions to the Company's success and such other factors as the Committee in its discretion shall deem relevant. The Committee is authorized to interpret the Plan and may from time to time adopt such rules and regulations, consistent with the provisions of the Plan, as it may deem advisable to carry out the Plan. All decisions made by the Committee in selecting the Optionees and in establishing the number of shares which may be issued under each Option shall be final. III ELIGIBILITY OF OPTIONEE (a) Options may be granted only to individuals who are employees (including officers and directors who are also employees) of the Company or any affiliate of the Company at the time the Option is granted. Options may be granted to the same individual on more than one occasion. (b) For all purposes under the Plan, an affiliate of the Company shall mean (i) Novagas Clearinghouse Ltd., (ii) Accord Energy Ltd., and (iii) any corporation, partnership, limited liability company or partnership, association, trust or other organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (1) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (2) to direct or cause the -2- direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. IV. SHARES SUBJECT TO THE PLAN The aggregate number of shares which may be issued under Options granted under the Plan shall not exceed 14,043,371 shares of Stock, which shall include the 11,932,632 shares of Stock subject to Options granted prior to the Restatement Effective Date. Such shares may consist of authorized but unissued shares of Stock or previously issued shares of Stock reacquired by the Company. Any of such shares which remain unissued and which are not subject to outstanding Options at the termination of the Plan shall cease to be subject to the Plan, but, until termination of the Plan, the Company shall at all times make available a sufficient number of shares to meet the requirements of the Plan. The Committee shall issue Options covering all shares of Stock subject to the Plan on or before the date which is three years after the Restatement Effective Date. Should any Option hereunder expire or terminate prior to its exercise in full, the shares theretofore subject to such Option may again be subject to an Option granted under the Plan to the extent permitted under Rule 16b-3, and the purchase price of Stock issued under such Option shall be determined in accordance with the provisions of Paragraph V hereof. The aggregate number of shares which may be issued under the Plan shall be subject to adjustment in the same manner as provided in Paragraph IX hereof (including, without limitation, Paragraph IX(a) hereof) with respect to shares of Stock subject to Options then outstanding. Exercise of an Option in any manner shall result in a decrease in the number of shares of Stock which may thereafter be available, both for purposes of the Plan and for sale to any one individual, by the number of shares as to which the Option is exercised. V. OPTION PRICE The purchase price of Stock issued under each Option shall be determined by the Committee, but such purchase price shall not be less than $5.95 per share of Stock except as hereinafter provided. As of the Restatement Effective Date, Options with respect to 6,969,994 shares of Stock are outstanding with a purchase price of $2.13 per share of Stock (an "Original Option"). If any Original Option expires or terminates prior to its exercise in full and the shares theretofore subject to such Original Option are again made subject to an Option (the "Replacement Option") pursuant to Paragraph IV hereof, then the purchase price of Stock issued under such Replacement Option shall be determined by the Committee, but such purchase price shall not be less than $2.13 per share of Stock. The purchase prices set forth in this Paragraph V shall be subject to adjustment by the Committee applying the principles set forth in Paragraphs IX(a) and IX(c) hereof. VI. OPTION AGREEMENTS; TRANSFERABILITY; WITHHOLDING (a) Each Option shall be evidenced by a written agreement between the Company and the Optionee ("Option Agreement") which shall contain such terms and conditions as may be approved by the Committee and are not inconsistent with the provisions of the Plan. The terms and conditions of the respective Option Agreements need not be identical. In the event of a conflict or inconsistency between the provisions of the Plan and the terms of any Option Agreement, the provisions of the Plan shall govern and control. -3- (b) Each Option and all rights granted thereunder shall not be transferable other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, and shall be exercisable during the Optionee's lifetime only by the Optionee or the Optionee's guardian or legal representative. (c) To the extent that the exercise of an Option granted under the Plan or the disposition of shares of Stock acquired by exercise of an Option granted under the Plan results in compensation income to an Optionee for federal, state or local income tax purposes, such Optionee shall pay to the Company at the time of such exercise or disposition such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if such Optionee fails to do so, the Company is authorized to withhold from any remuneration then or thereafter payable to such Optionee any tax required to be withheld by reason of such resulting compensation income. Upon an exercise by an Optionee of an Option granted under the Plan, the Company is further authorized in its discretion to satisfy any such withholding requirement out of any cash or shares of Stock distributable to such Optionee upon such exercise. VII VESTING AND CANCELLATION OF OPTIONS (a) Each Option granted under the Plan shall vest and become immediately exercisable in accordance with the terms hereof on the fifth anniversary of the date of grant of such Option. (b) Subsequent to the vesting of an Option granted hereunder, the unexercised portion thereof shall automatically and without notice terminate and become null and void on the earliest to occur of the following: (i) the tenth anniversary of the date of grant of such Option; (ii) the expiration of 95 days from the date of termination of the Optionee's employment with the Company for any reason (other than a termination described in clauses (iii) or (iv) below); provided, that if the Optionee shall die during such 95-day period, the time of termination of the unexercised portion of such Option shall be determined pursuant to clause (iii) below; (iii) the expiration of 12 months after an Optionee's death or the date such Optionee's employment with the Company terminates by reason of disability (within the meaning of subparagraph (e)(ii) below); and (iv) the termination of the Optionee's employment with the Company in the event such termination results from the discharge for cause of such Optionee. For purposes of the Plan, "discharge for cause" shall have the meaning set forth in each Optionee's employment agreement with the Company. If an Optionee does not have an employment agreement with the Company, the term "discharge for cause" shall mean the involuntary termination of an Optionee's employment with the Company as a result of dishonesty or similar serious misconduct, directly related to the performance of duties for the Company which results from a willful act or omission and which is materially injurious to the operations, financial condition -4- or business reputation of the Company or any of its affiliates, including but not limited to (1) refusal to follow the instructions of the President of the Company, the Board, or the Optionee's superior officer in the performance of the Optionee's duties, or (2) impairment of the discharge of the Optionee's duties due to adverse consequences resulting from becoming a defendant in any criminal proceeding or due to drug or alcohol abuse. (c) Any Option granted hereunder which is not vested pursuant to subparagraph (a) above shall automatically and without notice terminate and become null and void as hereinafter set forth: (i) In the event an Optionee's employment with the Company terminates by reason of death or disability (within the meaning of subparagraph (e)(ii) below), each Option held by such Optionee shall immediately terminate with respect to the percentage of shares of Stock subject to such Option as set forth below directly opposite the period during which the death or disability of such Optionee occurs: Percentage Date of Death or Disability Terminated --------------------------- ---------- Date of grant - 1st anniversary of 80% date of grant - 1 day 1st anniversary - 2nd anniversary of 60% date of grant - 1 day 2nd anniversary - 3rd anniversary of 40% date of grant - 1 day 3rd anniversary - 4th anniversary of 20% date of grant - 1 day 4th anniversary - 5th anniversary 10% of date of grant - 1 day The portion of an Option that is not terminated shall immediately vest and shall be subject to the termination provisions of clauses (i) and (iii) of subparagraph (b) above. (ii) In the event an Optionee voluntarily resigns his employment with the Company prior to attaining age 62 or is discharged for cause, all of such Optionee's Options shall be terminated immediately upon notice of such resignation or discharge. (ii) In the event an Optionee voluntarily retires from employment with the Company on or after attaining age 62 or his employment with the Company is involuntarily terminated by the Company (or one of its affiliates) other than pursuant to a discharge for cause, each Option held by such Optionee shall immediately terminate with respect to the percentage of -5- shares of Stock subject to such Option set forth below directly opposite the period during which such termination occurs: Percentage Date of Termination Terminated ------------------- ---------- Date of grant 1st anniversary of 100% date of grant - 1 day 1st anniversary 2nd anniversary of 80% date of grant - 1 day 2nd anniversary 3rd anniversary of 60% date of grant - 1 day 3rd anniversary 4th anniversary of 40% date of grant - 1 day 4th anniversary 5th anniversary of 20% date of grant - 1 day The portion of an Option that is not terminated shall immediately vest and shall be subject to the termination provisions of clauses (i) and (ii) of subparagraph (b) above. (d) The preceding provisions of this Paragraph VII to the contrary notwithstanding, if an Optionee's employment with the Company has terminated under the circumstances described in clauses (i) or (iii) of subparagraph (c) above, and if the period during which such Optionee could exercise the vested portion of his Options pursuant to subparagraph (b) above has expired prior to any required adjustment to such Options pursuant to Paragraph IX(a) hereof, then such Optionee shall be entitled to exercise such Options with respect to his vested percentage (determined under clause (i) or (iii), as applicable, of subparagraph (c) above) of any additional shares allocated thereto pursuant to Paragraph IX(a) hereof during the 95-day period beginning on the date the Committee provides such Optionee with written notice of such additional share allocation. Further, if an Optionee has purchased Stock pursuant to an Option prior to any required adjustment to such Option pursuant to Paragraph IX(a) hereof, and if such adjustment would have resulted in a reduction in the purchase price of such Stock under such Option, then the Company shall refund such excess amount paid by such Optionee as soon as administratively feasible after the computations required pursuant to Paragraph IX(a) hereof have been completed. (e) For all purposes of the Plan, (i) an Optionee shall be considered to be in the employment of the Company as long as such Optionee remains an employee of either the Company or any affiliate of the Company, or a corporation or any affiliate of such corporation assuming or substituting a new option for the Option granted to such Optionee, and (ii) an Optionee shall be considered to be disabled if such Optionee is eligible to receive disability benefits under the Company's long term disability plan or Social Security disability benefits if such Optionee's employment with the Company terminates at a time when the Company does not maintain a long term disability plan or such plan does not provide coverage to such Optionee. (f) The Committee may, in its sole discretion, (i) extend the 95-day period referred to in clause (ii) of subparagraph (b) above, and/or (ii) accelerate the vesting of all or any portion of an Option that would otherwise terminate pursuant to clause (i) or (iii) of subparagraph (c) above. Any -6- action by the Committee pursuant to this subparagraph (f) may vary among individual Optionees and may vary among Options held by an individual Optionee. VII TERM OF PLAN The Plan originally became effective on May 19, 1992. This restatement of the Plan shall be effective as of the Restatement Effective Date, provided this restatement of the Plan is approved by the shareholders of the Company within twelve months after the date this restatement of the Plan has been adopted by the Board. Notwithstanding any provision in this Plan or in any Option Agreement, no Option granted on or after the Restatement Effective Date shall be exercisable prior to such shareholder approval. Except with respect to Options then outstanding, if not sooner terminated under the provisions of Paragraph X, the Plan shall terminate upon and no further Options shall be granted after May 18, 2002. IX. CONTINGENT STOCK RIGHT ADJUSTMENT; RECAPITALIZATION OR REORGANIZATION (a) Pursuant to the terms of Exhibit 3.5(B) of the Combination Agreement, additional shares of Stock (the "NGC Shares") may be issued to the NGC Parties (as such term is defined in such Exhibit). If any NGC Shares are so issued to the NGC Parties, then each Option outstanding as of the effective date of such issuance shall be adjusted by the Committee as follows: (i) the number of shares of Stock which shall thereafter be covered by such Option shall be equal to the number of shares of Stock determined under the following formula: O multiplied by (A divided by B), ------------- ---------- where (x) "O" equals the number of shares of Stock subject to such Option on the date such Option initially became subject to the Plan and prior to any adjustment pursuant to this subparagraph, (y) "A" equals the sum of (1) the number of NGC Shares so issued to the NGC Parties, and (2) the number of shares of Stock held by the NGC Parties immediately following the Effective Time as such term is defined in the Combination Agreement (the "Effective Time"), and (z) "B" equals the number of shares of Stock held by the NGC Parties immediately following the Effective Time; and (ii) the purchase price per share of Stock thereafter covered by such Option shall be equal to the amount determined under the following formula: P multiplied by (B divided by A), ------------- ---------- where (x) "P" equals the purchase price per share of Stock under such Option on the date such Option initially became subject to the Plan and prior to any adjustment pursuant to this subparagraph, and (y) "A" and "B" have the meanings provided in clause (i) above. All computations required to be made under this subparagraph shall be appropriately adjusted by the Committee to take into account any stock dividend, stock split, combination of shares, or reclassification, or any merger, consolidation, spinoff, or partial or complete liquidation of the -7- Company occurring during the period commencing on the Restatement Effective Date and terminating on the effective date of the issuance of the NGC Shares to the NGC Parties. (b) The existence of the Plan and the Options granted hereunder shall not affect in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. (c) The shares with respect to which Options may be granted are shares of Stock as presently constituted, but if, and whenever, prior to the expiration of an Option theretofore granted, the Company shall effect a subdivision or consolidation of shares of Stock or the payment of a stock dividend on Stock without receipt of consideration by the Company, the number of shares of Stock with respect to which such Option may thereafter be exercised (i) in the event of an increase in the number of outstanding shares shall be proportionately increased, and the purchase price per share shall be proportionately reduced, and (ii) in the event of a reduction in the number of outstanding shares shall be proportionately reduced, and the purchase price per share shall be proportionately increased. (d) If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its capital structure (a "recapitalization"), the number and class of shares of Stock covered by an Option theretofore granted shall be adjusted so that such Option shall thereafter cover the number and class of shares of stock and securities to which the Optionee would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the Optionee had been the holder of record of the number of shares of Stock then covered by such Option. If (i) the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company), (ii) the Company sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary of the Company), (iii) the Company is to be dissolved and liquidated, (iv) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of the Company's voting stock (based upon voting power), or (v) as a result of or in connection with a contested election of directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board (each such event is referred to herein as a "Corporate Change"), no later than (a) ten days after the approval by the shareholders of the Company of such merger, consolidation, reorganization, sale, lease or exchange of assets or dissolution or such election of directors or (b) thirty days after a change of control of the type described in Clause (iv), the Committee, acting in its sole discretion without the consent or approval of any Optionee, shall act to effect one or more of the following alternatives, which may vary among individual Optionees and which may vary among Options held by any individual Optionee: (1) accelerate the time at which Options then outstanding may be exercised so that such Options may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all unexercised Options and all rights of Optionees thereunder shall terminate, (2) require the mandatory surrender to the Company by selected Optionees of some or all of the outstanding Options held by such Optionees (irrespective of whether such Options are then exercisable under the provisions of the Plan) as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee shall -8- thereupon cancel such Options and the Company shall pay to each Optionee an amount of cash per share equal to the excess, if any, of the amount calculated in Subparagraph (e) below (the "Change of Control Value") of the shares subject to such Option over the exercise price(s) under such Options for such shares, (3) make such adjustments to Options then outstanding as the Committee deems appropriate to reflect such Corporate Change and to keep the holders of such Options in as nearly the same position as possible to that which they were in prior to such Corporate Change (provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to Options then outstanding) or (4) provide that the number and class of shares of Stock covered by an Option theretofore granted shall be adjusted so that such Option shall thereafter cover the number and class of shares of stock or other securities or property (including, without limitation, cash) to which the Optionee would have been entitled pursuant to the terms of the agreement of merger, consolidation or sale of assets and dissolution if, immediately prior to such merger, consolidation or sale of assets and dissolution, the Optionee had been the holder of record of the number of shares of Stock then covered by such Option. (e) For the purposes of clause (2) in Subparagraph (d) above, the "Change of Control Value" shall equal the amount determined in clause (i), (ii) or (iii), whichever is applicable, as follows: (i) the per share price offered to shareholders of the Company in any such merger, consolidation, reorganization, sale of assets or dissolution transaction, (ii) the price per share offered to shareholders of the Company in any tender offer or exchange offer whereby a Corporate Change takes place, or (iii) if such Corporate Change occurs other than pursuant to a tender or exchange offer, the fair market value per share of the shares into which such Options being surrendered are exercisable, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Options. In the event that the consideration offered to shareholders of the Company in any transaction described in this Subparagraph (e) or Subparagraph (d) above consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash. (f) Any adjustment provided for in Subparagraphs (c) or (d) above shall be subject to any required shareholder action. (g) Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Options theretofore granted or the purchase price per share. X. AMENDMENT OR TERMINATION OF THE PLAN The Board in its discretion may terminate the Plan at any time with respect to any shares for which Options have not theretofore been granted. The Board shall have the right to alter or amend the Plan or any part thereof from time to time; provided, that no change in any Option theretofore granted may be made which would impair the rights of the Optionee without the consent of such Optionee; and provided, further, that (i) the Board may not make any alteration or amendment which would decrease -9- any authority granted to the Committee hereunder in contravention of Rule 16b-3 and (ii) the Board may not make any alteration or amendment which would materially increase the benefits accruing to participants under the Plan, increase the aggregate number of shares which may be issued pursuant to the provisions of the Plan, change the class of individuals eligible to receive Options under the Plan or extend the term of the Plan, without the approval of the shareholders of the Company. XI. SECURITIES LAWS (a) The Company shall not be obligated to issue any Stock pursuant to any Option granted under the Plan at any time when the offering of the shares covered by such Option have not been registered under the Securities Act of 1933 and such other state and federal laws, rules or regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel for the Company, there is no exemption from the registration requirements of such laws, rules or regulations available for the offering and sale of such shares. (b) It is intended that the Plan and any grant of an Option made to a person subject to Section 16 of the 1934 Act meet all of the requirements of Rule 16b-3. If any provision of the Plan or any such Option would disqualify the Plan or such Option under, or would otherwise not comply with, Rule 16b-3, such provision or Option shall be construed or deemed amended to conform to Rule 16b-3. XII MISCELLANEOUS (a) The Plan and all actions taken pursuant to the Plan shall be governed by, and construed in accordance with, the laws of the State of Texas, applied without regard to conflict of laws principles thereof. (b) The invalidity or unenforceability of any one or more provisions of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect. -10- EX-99.2 3 AMENDED AND RESTATED 1991 STOCK OPTION PLAN EXHIBIT 2 NGC CORPORATION AMENDED AND RESTATED 1991 STOCK OPTION PLAN I. PURPOSES NGC Corporation, a Delaware corporation (the "Company"), desires to afford certain of its directors and key employees (herein, "Key Persons") and the Key Persons of any Related Entity (as defined below) who are responsible for the continued growth of the Company an opportunity to acquire a proprietary interest in the Company, and thus to create in such Key Persons an increased interest in and a greater concern for the welfare of the Company and its stockholders. From and after December 8, 1995, for all purposes under the Plan, the term "Related Entity" shall mean (i) Novagas Clearinghouse Ltd., (ii) Accord Energy Ltd., and (iii) any corporation, partnership, limited liability company or partnership, association, trust or other organization now existing or hereafter formed or acquired which, directly or indirectly, controls, is controlled by, or is under common control with, the Company; provided, however, that (1) for purposes of Articles V, VI, and VIII of the Plan and (2) with respect to Incentive Options (as defined below) granted prior to May 10, 1996, for purposes of Article XII of the Plan, the term "Related Entity" shall mean a subsidiary corporation or parent corporation of the Company now existing or hereafter formed or acquired. For purposes of the preceding sentence, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (A) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (B) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. As used in the Plan, the terms "subsidiary corporation" and "parent corporation" shall mean, respectively, a corporation coming within the definition of such terms contained in Sections 424(f) and 424(e) of the Internal Revenue Code of 1986, as amended (the "Code"). The stock options ("Options") offered pursuant to this Amended and Restated 1991 Stock Option Plan (the "Plan") are a matter of separate inducement and are not in lieu of any salary or other compensation for services of any Key Person. The Company, by means of the Plan, seeks to retain the services of persons now holding key positions and to secure the services of persons capable of filling such positions. The Options granted under the Plan are intended to be either incentive stock options ("Incentive Options") within the meaning of Section 422 of the Code, or options that do not meet the requirements for Incentive Options ("Non- Qualified Options"), but the Company makes no warranty as to the qualification of any Option as an Incentive Option. II. AMOUNT OF STOCK SUBJECT TO THE PLAN Subject to the adjustments provided in Article XIII hereof, the total number of shares of capital stock of the Company that may be purchased pursuant to the exercise of Options granted under the Plan shall not exceed, in the aggregate, 9,892,610 shares of authorized voting common stock, par value $0.01 per share, of the Company (the "Shares"); provided, however, that notwithstanding any provision in the Plan to the contrary, the Committee (as defined below) may not grant Options under the Plan that could result in more than 6,692,610 Shares (subject to adjustment in the same manner as provided in Article XIII hereof with respect to the maximum number of Shares subject to the Plan) being issued upon the exercise of such Options unless the proposed transaction with Chevron U.S.A. Inc. ("Chevron") to combine substantially all of Chevron's gas gathering, processing and marketing operations with the Company is consummated. As used herein, the authorized common stock of the Company shall be referred to as "Company Stock." Shares that may be acquired under the Plan may be authorized but unissued Shares, Shares of issued stock held in the Company's treasury, issued Shares reacquired by the Company, or a combination thereof, in each case as the Committee may determine from time to time at its sole option. If and to the extent that Options granted under the Plan expire or terminate without having been exercised, new Options may be granted with respect to the Shares covered by such expired or terminated Options, provided that the grant and the terms of such new Options shall in all respects comply with the provisions of the Plan; provided, however, that no Option shall be granted under the Plan after the Termination Date (as defined below). The Company may from time to time grant to certain Key Persons of the Company or a Related Entity Options under the terms hereinafter set forth; provided, however, that, except with respect to Options then outstanding, if not sooner terminated under the provisions of Article XX, the Plan shall terminate upon and no further Options shall be granted after May 9, 2006 (the "Termination Date"). Notwithstanding any provision in the Plan to the contrary, Incentive Options may be granted only to Key Persons who are employed by the Company or a Related Entity that is a subsidiary corporation or parent corporation of the Company on the date of grant of any such Option. III. ADMINISTRATION The Plan shall be administered by the Option committee, or any successor thereto, of the Board of Directors of the Company (the "Board of Directors"), or by any other committee appointed by the Board of Directors to administer this Plan (the "Committee"). The number of individuals that shall constitute the Committee shall be no less than two individuals. A majority of the Committee shall constitute a quorum (or if the Committee consists of only two members, then both members shall constitute a quorum), and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be the acts of the Committee. The Committee shall be comprised exclusively -2- of "outside directors", as such term is used pursuant to Section 162(m) of the Code and any rules and regulations promulgated thereunder. At any time that the Company shall have a class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (i) each member of the Committee shall be required to also be a "disinterested person" to administer the Plan within the meaning of Rule 16b-3, as amended (herein so called), or other applicable rules under Section 16(b) of the Exchange Act, and the Committee shall administer the Plan so as to comply at all times with the Exchange Act and (ii) no member of the Committee shall be eligible for grants or awards hereunder. The members of the Committee shall serve at the pleasure of the Board of Directors, which shall have the power, at any time and from time to time, to remove members from or add members to the Committee. Removal from the Committee may be with or without cause. Any individual serving as a member of the Committee shall have the right to resign from membership in the Committee by written notice to the Board of Directors. The Board of Directors, and not the remaining members of the Committee, shall have the power and authority to fill vacancies on the Committee, however caused. The Board of Directors shall promptly fill any vacancy that causes the number of members of the Committee to be below two or any other number that Rule 16b-3 or Section 162(m) of the Code (or other applicable rules or regulations) may require from time to time. Subject to the express provisions of the Plan, the Committee shall have authority, in its discretion, to determine the Key Persons to whom Options shall be granted, the time when such Options shall be granted to Key Persons, the number of Shares which shall be subject to each Option, the purchase price of each Share which shall be subject to each Option, the period(s) during which such Options shall be exercisable (whether in whole or in part), and the other terms and provisions thereof. In determining the Key Persons to whom Options shall be granted and the number of Shares for which Options shall be granted to each Key Person, the Committee shall consider the length of service, the contributions to the Company, its parents and subsidiaries taken as a whole, and the responsibilities and duties of each Key Person. Subject to the express provisions of the Plan, the Committee also shall have authority to construe the Plan and Options granted thereunder, to amend, or in the case of material amendments to the Plan, to recommend to the Board of Directors and the stockholders of the Company the amendment of, the Plan, to amend Options granted thereunder, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the respective Options (which need not be identical) and to make all other determinations necessary or advisable for administering the Plan. The Committee also shall have the authority to require, in its discretion, as a condition of the granting of any such Option, that an employee recipient agree (i) not to sell or otherwise dispose of Shares acquired pursuant to the exercise of an Incentive Option for a period of two (2) years from the grant of such Incentive Option nor within one (1) year from the date of the acquisition of such Shares pursuant to the exercise of such Incentive Option and (ii) that in the event of termination of employment of such employee, other than as a result of dismissal without cause, such employee will not, for a period to be fixed at the -3- time of the grant of the Option, enter into any other employment or participate directly or indirectly in any other business or enterprise which is competitive with the business of the Company or any Related Entity, or enter into any employment in which such employee will be called upon to utilize special knowledge obtained through employment with the Company or any Related Entity. The Committee shall also have the authority to require, as a condition to the granting of any Option, that the person receiving such Option agree not to sell or otherwise dispose of such Option, any Company Stock acquired pursuant to such Option or any other "derivative security" (as defined by Rule 16a-l(c) under the Exchange Act) for a period of six (6) months following the later of (i) the date of the grant of such Option or (ii) the date when the exercise price of such Option is fixed if such exercise price is not fixed at the date of grant of such Option. Subject to and consistent with the express provisions of the Code and Rule 16b-3 promulgated under the Exchange Act, the Committee shall have plenary authority, in lieu of requiring a cash payment from the Key Person upon the exercise of an Option, to: (a) provide the establishment of procedures for a Key Person (1) to have withheld from the total number of Shares to be acquired upon the exercise of an Option that number of Shares having a fair market value (as defined herein) which, together with such cash as shall be paid in respect of fractional Shares, shall equal the Option exercise price, (2) to exercise an Option by delivering that number of Shares of Company Stock already owned by such Key Person having a fair market value which shall equal the Option exercise price, (3) to exercise a portion of an Option by delivering that number of Shares or Share of Company Stock already owned by such Key Person having a fair market value which shall equal the partial Option exercise price and to deliver the Shares thus acquired by such Key Person in payment of Shares to be received pursuant to the exercise of additional portions of such Option, the effect of which shall be that such Key Person can in sequence utilize such newly acquired Shares in payment of the exercise price of the entire Option, together with such cash as shall be paid in respect of fractional Shares, if any, or (4) to utilize a combination of the methods stated in clauses (1) and (3) above, or of cash and one or both of such methods, in payment of the exercise price of all or a portion of such Option; provided, however, that in the case of an Incentive Option, no Shares shall be used to pay the exercise price unless such Shares were not acquired through the exercise of an Incentive Option or, if so acquired, have been held for more than two years since the grant of such Option and for more than one year since the exercise of such Option; and (b) if appropriate, to provide an arrangement through registered broker-dealers whereby temporary financing may be made available by the broker-dealer to a Key Person who wishes to deliver Shares of the Company in partial or full payment of the exercise price of such Key Person's Option, under the rules and regulations of the Board of Governors of the Federal Reserve, for the purpose of assisting the Key Person in the -4- exercise of an Option, such authority to include the payment by the Company of the commissions of the broker-dealer. The determination of the Committee on matters referred to in this Article III shall be conclusive. The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company. No member or former member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted hereunder. IV. ELIGIBILITY Grants of Incentive Options and Non-Qualified Options may be made under the Plan, subject to and in accordance with the terms of the Plan, to Key Employees. As used herein, the term "Key Employee" shall mean any employee of the Company or any Related Entity, including officers and directors of the Company or any Related Entity who are also employees of the Company or any Related Entity, who are regularly employed on a salaried basis and who are so employed on the date of such grant, whom the Committee identifies as having a direct and significant effect on the performance of the Company or any Related Entity. Notwithstanding the preceding provisions of this Article IV, Incentive Options may be granted only to Key Employees who are employed by the Company or a Related Entity that is a subsidiary corporation or parent corporation of the Company on the date of grant of any such Option. Grants of Non-Qualified Options shall be made, subject to and in accordance with the terms hereof, to individuals not regularly employed by the Company who serve as directors of the Company ("Outside Director Participants"). The adoption of this Plan shall not be deemed to give any person a right to be granted any Options. Subject to the adjustment provisions contained in Article XIII, the aggregate number of Shares with respect to which Options granted to any Key Employee (which for purposes of this sentence shall include the Chairman of the Board, whether or not such person would otherwise be considered an Key Employee) are exercisable shall not exceed 1,063,083. V. LIMITATION ON EXERCISE OF INCENTIVE OPTIONS Except as otherwise provided under the Code, to the extent that the aggregate fair market value of stock with respect to which Incentive Options are exercisable for the first time by an employee during any calendar year (under all stock Option plans of the Company and any Related -5- Entity) exceeds $100,000, such Options shall be treated as Non-Qualified Options. For purposes of this limitation (i) the fair market value of stock is determined as of the time the Option is granted, and (ii) the limitation will be applied by taking into account Options in the order in which they were granted. VI. OPTION PRICE AND PAYMENT The price ("Exercise Price") for each Share purchasable under any Option granted hereunder shall be such amount as the Committee shall, in its best judgment made in good faith, determine on the basis of facts and circumstances and the requirements, if any, of Section 162(m) of the Code and any rules or regulations promulgated thereunder to be not less than one hundred percent (100%) of the fair market value per Share at the date such Option is granted; provided, however, that in the case of an Incentive Option granted to a person who, at the time such Incentive Option is granted, owns shares of the Company or any Related Entity which possesses more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or of any Related Entity, the Exercise Price for each Share purchasable thereunder shall be such amount as the Committee, in its best judgment, shall determine to be not less than one hundred ten percent (110%) of the fair market value per Share at the date the Incentive Option is granted. In determining stock ownership of a Key Employee for any purposes under the Plan, the rules of Section 424(d) of the Code shall be applied, and the Committee may rely on representations of fact made to it by the Key Employee and believed by it to be true. If the Shares are listed on a national securities exchange in the United States on the date any Option is granted, the fair market value per share shall be deemed to be the average of the high and low quotations at which such Shares are sold on such national securities exchange on the date such Option is granted. If the Shares are listed on a national securities exchange in the United States on such date but the Shares are not traded on such date, or such national securities exchange is not open for business on such date, the fair market value per Share shall be determined as of the closest preceding date on which such exchange shall have been open for business and the Shares were traded. If the Shares are listed on more than one national securities exchange in the United States on the date any such Option is granted, the Committee shall determine which national securities exchange shall be used for the purpose of determining the fair market value per Share. If the Shares are not listed on a national securities exchange on such date, the last reported bid price in the over-the-counter market shall be the fair market value per share, or if the Shares are not traded on the over-the-counter market on such date, the fair market value per share shall be determined by the Committee in good faith. Notwithstanding the prior provisions of this paragraph, to the extent that Section 162(m) of the Code or any rule or regulation promulgated thereunder provides a different or inconsistent definition of "fair market value," such definition shall be applied in determining the fair market value per share of Options issued hereunder. For purposes of establishing the fair market value of Shares or underlying Options, the fair market value shall be determined without regard to any restriction on transfer thereof. -6- For purposes of this Plan, the determination by the Committee of the fair market value of a Share shall be conclusive. Upon the exercise of an Option granted hereunder, the Company shall cause the purchased Shares to be issued only when it shall have received the full purchase price for the Shares in cash or by certified check, except as otherwise provided in Article III hereof. VII. USE OF PROCEEDS The cash proceeds of the sale of Shares subject to the Options granted hereunder are to be added to the general funds of the Company and used for its general corporate purposes as the Board of Directors shall determine. VIII. TERMS OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE Subject to Article V, any Incentive Option granted hereunder shall be exercisable during a period of not more than ten (10) years from the date of grant of such Option at such times and in such amounts as the Committee shall determine at such date of grant; provided, however, that in the case of an Incentive Option granted to a person who, at the time the Incentive Option is granted, owns shares in the Company or in any Related Entity which possesses more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or of any Related Entity, such Option shall expire not more than five (5) years from the date of grant. Any Non-Qualified Option granted hereunder shall be exercisable at such times, in such amounts and during such period or periods as the Committee shall determine at the date of the grant of such Option. The Committee shall have the right to accelerate, in whole or in part, from time to time, conditionally or unconditionally, rights to exercise any Option granted hereunder. To the extent that an Option is not exercised within the period of exercisability specified therein, it shall expire as to the then unexercised part. If any Option granted hereunder shall terminate prior to the Termination Date, the Committee shall have the right to use the Shares as to which such Option shall not have been exercised to grant one or more additional Options to any eligible Key Person, but any such grant of an additional Option shall be made prior to the close of business on the Termination Date. In no event shall an Option granted hereunder be exercised for a fraction of a share. IX. EXERCISE OF OPTIONS Options granted under the Plan shall be exercised by the optionee as to all or part of the Shares covered thereby by the giving of written notice of the exercise thereof to the Corporate -7- Secretary of the Company at the principal business office of the Company, specifying the number of Shares to be purchased and specifying a business day not more than fifteen (15) days from the date such notice is given, for the payment of the purchase price against delivery of the Shares being purchased. Subject to the terms of Articles III, XV, XVII and XVIII, the Company shall cause certificates for the Shares so purchased to be delivered to the Optionee at the principal business office of the Company, against payment of the full purchase price in cash or by certified check except as otherwise provided in Article III. X. STOCK APPRECIATION RIGHTS [DELETED] XI. NONTRANSFERABILITY OF OPTIONS An Option granted hereunder shall not be transferable, whether by operation of law or otherwise, other than by will or the laws of descent and distribution, and any Option granted hereunder shall be exercisable, during the lifetime of the holder, only by such holder. XII. TERMINATION OF EMPLOYMENT AND SERVICE Upon termination of a Key Person's service with the Company and all Related Entities, any Option previously granted hereunder, unless otherwise specified by the Committee in the Option, shall, to the extent not theretofore exercised, terminate and become null and void, provided that: (a) if the recipient shall die while in the service of the Company or a Related Entity or during either the three (3) month or one (1) year period, whichever is applicable, specified in clause (b) below and at a time when such recipient was entitled to exercise an Option as herein provided, the legal representative of such recipient, or such person who acquired such Option by bequest or inheritance or by reason of the death of the recipient, may, not later than one (1) year from the date of death, exercise such Option, to the extent not theretofore exercised, in respect of any or all of such number of Shares as specified by the Committee in such Option; and (b) if the service of any recipient to whom such Option shall have been granted shall terminate by reason of the recipient's retirement (at such age or upon such conditions as shall be specified by the Committee), disability (as described in Section 22(e)(3) of the Code) or dismissal by the Company or a Related Entity other than for cause (as defined below), and while such recipient is entitled to exercise such Option as herein provided, such recipient shall have the right to exercise such Option so granted, to the extent not theretofore exercised, in respect of any or all of such number of Shares as specified by the Committee in such Option, at any time up to and including (i) three (3) months after the date of such termination in the case of termination by reason of -8- retirement or dismissal other than for cause and (ii) one (1) year after the date of termination in the case of termination by reason of disability. If a recipient voluntarily terminates his or her employment or service as an Outside Director Participant, or is discharged for cause, any Option granted hereunder shall, unless otherwise specified by the Committee in the Option, forthwith terminate with respect to any unexercised portion thereof. Each Incentive Option by its terms shall require the recipient to remain in the continuous employ of the Company or any subsidiary corporation or parent corporation of the Company from the date of grant of the Incentive Option until no more than three (3) months prior to the date of exercise of the Incentive Option (except as otherwise provided herein in the event of death or disability). Notwithstanding the preceding paragraphs of this Article XII, if the service of any recipient with the Company and all Related Entities is terminated, whether voluntarily or involuntarily, within a one-year period following a change in control of the Company (as defined in Article XIII), other than a termination of such service for cause, such recipient shall have the right to exercise all or any portion of the Option, whether vested or unvested, at any time up and to and including three (3) months after the date of such termination, at which time such Option shall cease to be exercisable. Notwithstanding the immediately preceding paragraphs of this Article XII, no Option may be exercised after the expiration of the period of exercisability provided for in such Option. If an Option granted hereunder shall be exercised by the legal representative of a deceased recipient or former recipient, or by a person who acquired an Option granted hereunder by bequest or inheritance or by reason of the death of any recipient or former recipient, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or equivalent proof of the right of such legal representative or other person to exercise such Option. For the purposes of the Plan, the term "for cause" shall mean (i) with respect to an employee who is a party to a written agreement with, or alternatively, participates in a compensation or benefit plan of the Company or a Related Entity, which agreement or plan contains a definition of "for cause" or "cause" (or words of like import) for purposes of termination of employment thereunder by the Company or such Related Entity, "for cause" or "cause" as defined in the most recent of such agreements or plans, or (ii) in all other cases, as determined by the Committee, in its sole discretion, (a) the willful commission by an employee of a criminal or other act that causes or will probably cause substantial economic damage to the Company or a Related Entity or substantial injury to the business reputation of the Company or a Related Entity; (b) the continuing willful failure of an employee to perform the duties of such employee to the Company or a Related Entity (other than such failure resulting from the employee's incapacity due to physical or mental illness) after written notice thereof (specifying the -9- particulars thereof in reasonable detail) and a reasonable opportunity to be heard and cure such failure are given to the employee by the Committee; (c) the order of a court of competent jurisdiction requiring the termination of the employee's employment; or (d) in the case of an Outside Director Participant, the failure of such Outside Director Participant to act in good faith or the taking of any action that constitutes a material breach of such person's fiduciary duty to the Company. For purposes of the Plan, no act, or failure to act, on the employee's part shall be considered "willful" unless done or omitted to be done by the employee not in good faith and without reasonable belief that the employee's action or omission was in the best interest of the Company or a Related Entity. For the purposes of the Plan, an employment relationship shall be deemed to exist between an individual and the Company or a Related Entity if, at the time of the determination, the individual was an "employee" of the Company or such Related Entity. If an individual is on military, sick leave or other bona fide leave of absence such individual shall be considered an "employee" for purposes of the exercise of an Option and shall be entitled to exercise such Option during such leave if the period of such leave does not exceed 90 days, or, if longer, so long as the individual's right to reemployment with the Company (or a Related Entity) is guaranteed either by statute or by contract. If the period of leave exceeds ninety (90) days, the employment relationship shall be deemed to have terminated on the ninety-first (91) day of such leave, unless the individuals right to reemployment is guaranteed by statute or contract. A termination of employment shall not be deemed to occur by reason of (i) the transfer of an employee from employment by the Company to employment by a Related Entity or (ii) the transfer of an employee from employment by a Related Entity to employment by the Company or by another Related Entity. XIII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTION In the event of any change in the outstanding Shares through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or other like change in capital structure of the Company, an adjustment shall be made to each outstanding Option such that each such Option shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect of the Shares subject to such Option had such Option been exercised in full immediately prior to such change, and such an adjustment shall be made successively each time any such change shall occur. The term "Shares" shall after any such change refer to the securities, cash and/or property then receivable upon exercise of an Option. In addition, in the event of any such change, the Committee shall make any further adjustment as may be appropriate to the maximum number of Shares subject to the Plan, the maximum number of Shares of which Options may be granted to any one recipient, and the number of Shares and price per Share subject to outstanding Options as shall be equitable to prevent dilution or enlargement of rights under such Options, and the determination of the Committee as to these matters shall be conclusive. Notwithstanding the foregoing, (i) each such adjustment with respect to an Incentive Option shall -10- comply with the rules of Section 424(a) of the Code, and (ii) in no event shall any adjustment be made which would render any Incentive Option granted hereunder other than an incentive stock option for purposes of Section 422 of the Code. In the event of a change in control of the Company, all then outstanding vested Options shall immediately become exercisable. For purposes of the Plan, a "change in control" of the Company occurs if: (a) any "person" (defined as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, as amended), other than a stockholder of the Company as of the date of the adoption of the Plan by the Board of Directors or any affiliate of any such stockholder, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing fifty percent or more of the combined voting power of the Company's outstanding securities then entitled to vote for the election of directors; (b) the Board of Directors shall approve the sale of all or substantially all of the assets of the Company; or (c) the Board of Directors shall approve any merger, consolidation, issuance of securities or purchase of assets, the result of which would be the occurrence of any event described in clause (a) above. The Committee in its discretion may determine that, upon the occurrence of a transaction described in the preceding paragraph, each Option outstanding hereunder shall terminate within a specified number of days after notice to the holder, and such holder shall receive, with respect to each Share subject to such Option, cash in an amount equal to the excess of the fair market value of such Share immediately prior to the occurrence of such transaction over the exercise price per Share of such Option immediately prior to the occurrence of such transaction. The provisions contained in the preceding sentence shall be inapplicable to an Option granted within six (6) months before the occurrence of a transaction described above if the holder of such Option is subject to the reporting requirements of Section 16(a) of the Exchange Act. XIV. RIGHT TO TERMINATE EMPLOYMENT The Plan shall not impose any obligation on the Company or on any Related Entity thereof to continue the employment of any holder of an Option; and it shall not impose any obligation on the part of any holder of an Option to remain in the employ of the Company or of any Related Entity. XV. PURCHASE FOR INVESTMENT Except as hereafter provided, the holder of an Option granted hereunder shall, upon any exercise thereof, execute and deliver to the Company a written statement, in form satisfactory to the Company, in which such holder represents and warrants that such holder is purchasing or acquiring the Shares acquired thereunder for such holder's own account, for investment only and not with a view to the resale or distribution thereof, and agrees that any subsequent offer for sale or sale or distribution of any of such Shares shall be made pursuant to either (a) a Registration Statement on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), which Registration Statement has become effective and is current with regard to the Shares -11- being offered or sold, or (b) a specific exemption from the registration requirements of the Securities Act and any applicable state securities law or regulation, but in claiming such exemption the holder shall, prior to any offer for sale or sale of such Shares, obtain a prior favorable written opinion, in form and substance satisfactory to the Company, from counsel for or approved by the Company, as to the applicability of such exemption thereto. Notwithstanding the prior sentence, no exercise of an Option shall be deemed to be effective if the Company, in its sole discretion, determines that a violation of any federal or state securities law, or rule or regulation promulgated thereunder, would result therefrom. The foregoing restrictions shall not apply to (i) issuances by the Company so long as the Shares being issued are registered under the Securities Act and a prospectus in respect thereof is current or (ii) reofferings of Shares by affiliates of the Company (as defined in Rule 405 or any successor rule or regulation promulgated under the Securities Act) if the Shares being reoffered are registered under the Securities Act and a prospectus in respect thereof is current. XVI. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES Subject to the provisions of Articles III, XV and XVIII hereof, upon any exercise of an Option which may be granted hereunder and payment of the purchase price in full in cash or by certified check, a certificate or certificates for the Shares as to which the Option has been exercised shall be issued by the Company in the name of the person exercising the Option and shall be delivered to or upon the order of such person. The Company may endorse such legend or legends upon the certificates for Shares issued upon exercise of an Option granted hereunder and may issue such "stop transfer" instructions to its transfer agent in respect of such Shares as, in its discretion, it determines to be necessary or appropriate to (i) prevent a violation of, or to perfect an exemption from, the registration requirements of the Securities Act or any state "blue sky" law or regulation, (ii) implement the provisions of the Plan and any agreement between the Company and the optionee or grantee with respect to such Shares, or (iii) permit the Company to determine the occurrence of a disqualifying disposition, as described in Section 421(b) of the Code, of Shares transferred upon exercise of an Incentive Option granted under the Plan. The Company shall pay all issue taxes with respect to the issuance of Shares to the person exercising the Option, as well as all fees and expenses necessarily incurred by the Company in connection with such issuance. All Shares issued as provided herein shall be fully paid and non- assessable to the extent permitted by law. XVII. WITHHOLDING TAXES The Company may require a Key Person exercising a Non-Qualified Option granted hereunder, or disposing of Shares acquired pursuant to the exercise of an Incentive Option in a -12- disqualifying disposition (within the meaning of Section 421(b) of the Code), to reimburse the Company or Related Entity, as appropriate, for any taxes required by any governmental authority to be withheld or otherwise deducted and paid by such corporation in respect of the issuance or disposition of Shares. In lieu thereof, the Company or Related Entity, as appropriate, shall have the right to withhold the amount of such taxes from any other sums due or to become due from such Corporation to the Key Person upon such terms and conditions as the Committee shall prescribe. At any time that the Company or a Related Entity becomes subject to a withholding obligation under applicable law with respect to the exercise of a Non-Qualified Option except as set forth below, a Key Person may elect to satisfy, in whole or in part, the Key Person's related personal tax liabilities (an "Election") by (i) the payment of cash, (ii) electing to have such amount withheld from sums otherwise due to the Key Person, (iii) subject to the other requirements of this Section XVII, directing the Company or the subsidiary to withhold from Shares issuable in the related exercise either a specified number of Shares or Shares having a specified value in each case with a value not in excess of such tax liabilities, (iv) subject to the requirements of Section 16(b) of the Exchange Act and the rules promulgated thereunder, tendering Shares previously issued pursuant to an exercise or other shares of the Company's common stock owned by the Key Person or (v) combining any or all of the foregoing options; provided, that the Company will not be required to redeem any Shares or shares of nonvoting or other common stock in violation of applicable laws. An Election shall be irrevocable. The withheld Shares and other shares tendered in payment should be valued at their fair market value on the date that the withholding obligation arises (the "Tax Date"). The Committee may disapprove of any Election, suspend, or terminate the right to make Elections or provide that the right to make Elections shall not apply to particular grants, Shares or exercises. If a Key Person is a person subject to Section 16 of the Exchange Act and such Key Person intends to satisfy all or any portion of such withholding obligation by directing the withholding of Shares issuable or tendering Shares, then (1) any Election by such Key Person must be made (i) at least six months prior to the relevant Tax Date or (ii) on or prior to the relevant Tax Date and during a period that begins on the third business day following the date of release for publication of the Company's quarterly or annual summary statements of sales and earnings and that ends on the twelfth business day following such date and (2) the Election may not be made with respect to an exercise, or the withholding obligation arising thereon, if the relevant Non-Qualified Option was granted six months or less prior to the date of Election. The Committee may impose any other conditions or restrictions on the right to make an Election as it shall deem appropriate. If the Key Person has informed the Company in writing that such withholding would subject such Key Person to liability under Section 16(b) of the Exchange Act, the Company shall not be authorized to effect any such withholding without the prior written consent of the Key Person. The Committee may prescribe such rules as it determines with respect to Key Persons subject to the reporting requirements of Section 16(a) of the Exchange Act to effect such tax withholding in compliance with the Rules established by the Securities and Exchange Commission (the "Commission") under Section 16 of the Exchange Act and the positions of the staff of the Commission thereunder expressed in no-action letters exempting such tax withholding from liability under Section 16(b) of the Exchange Act. XVIII. LISTING OF SHARES AND RELATED MATTERS -13- Upon the consummation of a public offering of voting common stock of the Company which is underwritten on a firm commitment basis by a nationally- recognized investment banking firm, (i) each granted but unexercised Option shall be deemed from the date thereof to be an option to purchase voting common stock of the Company instead of an option to purchase nonvoting common stock of the Company, and (ii) all Options granted after the date thereof shall be options to purchase voting common stock of the Company and not nonvoting common stock of the Company. If at any time the Board of Directors shall determine in its discretion that the listing, registration or qualification of the Shares covered by the Plan upon any national securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the sale or purchase of Shares under the Plan, no Shares shall be issued unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to the Board of Directors. During such suspension of the issuance of Shares, neither the Company nor its parents or subsidiaries shall be liable for any payment of interest or fees of any kind on Shares not yet issued. Under no circumstances shall the Company be required to effect any registration or qualification of any Shares under any federal or state securities laws. XIX. AMENDMENT OF THE PLAN The Board of Directors or the Committee, as the case may be, may, from time to time, amend the Plan, provided that no amendment shall be made, without the approval of the stockholders of the Company, that will (i) increase the total number of Shares reserved for Options under the Plan (other than an increase resulting from an adjustment provided for in Article XIII), (ii) reduce the exercise price of any Option granted hereunder below the price required by Article VI, (iii) modify the provisions of the Plan relating to eligibility, (iv) materially increase the benefits accruing to participants under the Plan, (v) increase the number of Shares which may be granted to an individual Key Employee under the Plan, (vi) adversely affect the Plan's qualification under Section 162(m)(4)(C) of the Code, (vii) adversely affect the qualification of Incentive Options under Section 422 of the Code or (viii) otherwise materially modify the Plan. The Committee shall be authorized to amend the Plan and the Options granted thereunder to permit the Incentive Options granted thereunder to qualify as incentive stock Options within the meaning of Section 422 of the Code and to qualify the Plan under Section 162(m)(4)(C) of the Code. The rights and obligations under any Option granted before amendment of the Plan or any unexercised portion of such Option shall not be adversely affected by amendment of the Plan or the Option without the consent of the holder of the Option. XX. TERMINATION OR SUSPENSION OF THE PLAN The Board of Directors may at any time suspend or terminate the Plan. The Plan, unless sooner terminated by action of the Board of Directors, shall terminate at the close of business on -14- the Termination Date. An Option may not be granted while the Plan is suspended or after it is terminated. Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except upon the consent of the person to whom the Option was granted. The power of the Committee to construe and administer any Options granted prior to the termination or suspension of the Plan under Article III nevertheless shall continue after such termination or during such suspension. XXI. SAVINGS PROVISION With respect to persons subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. XXII. GOVERNING LAW The Plan, such Options as may be granted thereunder and all related matters shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware from time to time obtaining. XXIII. PARTIAL INVALIDITY The invalidity or illegality of any provision herein shall not be deemed to affect the validity of any other provision. XXIV. EFFECTIVE DATE OF AMENDMENT AND RESTATEMENT OF THE PLAN The Plan as set forth herein constitutes an amendment and restatement of the Trident NGL Holding, Inc. Amended and Restated 1991 Stock Option Plan, as previously adopted by Trident NGL Holding, Inc. (a predecessor to the Company). This amendment and restatement of the Plan shall be effective as of May 10, 1996, provided this amendment and restatement of the Plan is approved by the stockholders of the Company on such date at the Company's 1996 Annual Meeting of Stockholders. -15- EX-99.3 4 AGREEMENT OF JOINT FILING EXHIBIT 3 CUSIP NO. 629121 10 4 AGREEMENT OF JOINT FILING The undersigned, C. L. Watson, in his individual capacity and in his capacity as the trustee of the Charles L. Watson Grantor Retained Annuity Trust, Kim R. Watson Grantor Retained Annuity Trust, Keri M. Watson Trust, Brian J. Watson Trust and Carly R. Watson Trust, hereby agrees and consents to the filing of a single statement on Schedule 13D and any amendments thereto, in accordance with the provisions of Reg. (S) 240.13d-1(f)(iii) adopted under the Securities Exchange Act of 1934, as amended. Dated: March 31, 1997. By: /s/ C. L. WATSON ----------------------- Name: C. L. Watson CHARLES L. WATSON GRANTOR RETAINED ANNUITY TRUST KIM R. WATSON GRANTOR RETAINED ANNUITY TRUST KERI M. WATSON TRUST BRIAN J. WATSON TRUST CARLY R. WATSON TRUST By: /s/ C. L. WATSON ----------------------- Name: C. L. Watson Title: Trustee -----END PRIVACY-ENHANCED MESSAGE-----