SOUTHWESTERN ENERGY
COMPANY
2002 PERFORMANCE UNIT
PLAN
1. Purpose of the
Plan
This Southwestern Energy Company 2002
Performance Unit Plan is intended to promote the interests of the
Company and its shareholders by providing the employees of the
Company who are largely responsible for the management, growth and
protection of the business of the Company, with incentives and
rewards for their contribution to the increase in the value of the
Company and to encourage them to continue in the service of the
Company.
2. Definitions
Whenever used herein, the masculine
pronoun shall be deemed to include the feminine, the singular to
include the plural, unless the context clearly indicates otherwise,
and the following capitalized words and phrases are used herein
with the meaning thereafter ascribed:
(a)
“Account” shall mean a
bookkeeping account on the Company’s books established
pursuant to Section 5(b) of this Plan. The Account shall
initially reflect the number of Performance Units granted to a
Participant pursuant to Section 5(a) of this Plan.
(b)
“Board of Directors” shall
mean the Board of Directors of Southwestern.
(c)
"Cause", when used in connection with the
termination of a Participant's employment with the Company, shall
mean the termination of the Participant's employment by the Company
on account of:
(i)
the willful and continued failure by the
Participant to substantially perform his duties and obligations
(other than any such failure resulting from his incapacity due to
physical or mental illness), after a written demand for substantial
performance has been delivered to the Participant by the Company or
by the Participant's supervisor, which demand identifies in
reasonable detail the manner in which the Participant is believed
to have not substantially performed his or her
duties;
(ii)
the Participant's willful and serious
misconduct which has resulted in or could reasonably be expected to
result in material injury to the business, financial condition or
reputation of the Company;
(iii)
the Participant's conviction of, or
entering of a plea of nolo contendere to, a crime that constitutes
a felony or serious misdemeanor; or
(iv)
the breach by the Participant of any
written covenant or agreement with the Company not to disclose any
information pertaining to the Company or not to compete or
interfere with the Company.
(d)
"Change in Control" shall mean the
occurrence of any of the following:
(i)
any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), an "Acquiring Person") becomes the
"beneficial owner" (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of Southwestern representing 20% or more of the combined
voting power of Southwestern's then outstanding securities,
provided, however, that any acquisition by:
(A)
Southwestern or any of its subsidiaries,
or any employee benefit plan (or related trust) sponsored or
maintained by Southwestern or any of its subsidiaries;
or
(B)
any corporation with respect to which,
immediately following such acquisition, more than 60% of,
respectively, the then outstanding shares of Common Stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, in the aggregate by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the outstanding Southwestern Common Stock and
Southwestern voting securities immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the
outstanding Southwestern Common Stock and Southwestern voting
securities, as the case may be, shall not constitute a Change in
Control;
(ii)
consummation by Southwestern of a
reorganization, merger or consolidation (a "Business Combination"),
in each case, with respect to which all or substantially all of the
individuals and entities who were their respective beneficial
owners of the outstanding Southwestern Common Stock and
Southwestern voting securities immediately prior to such Business
Combination do not in the aggregate, immediately following such
Business Combination, beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of
Common Stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of
the outstanding Southwestern Common Stock and Southwestern voting
securities, as the case may be;
(iii)
any individual who is nominated by the
Board of Directors for election to the Board of Directors on any
date fails to be so elected as a direct or indirect result of any
proxy fight or contested election for positions on the Board of
Directors;
(iv)
a "change in control" of Southwestern of
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act occurs;
(v)
(A)
a complete liquidation or dissolution of
Southwestern, or
(B)
a sale or other disposition of all
or substantially all of the assets of both the Exploration and
Production and the Utility business segments of Southwestern
other than to a corporation with respect to which,
immediately following such sale or disposition, more than 80%
of, respectively, the then outstanding shares of Common Stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, in the
aggregate by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
outstanding Southwestern Common Stock and Southwestern voting
securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the
outstanding Southwestern Common Stock and Southwestern voting
securities, as the case may be, immediately prior to such sale or
disposition;
(vi)
other than with respect to a person who
is employed in the Utility business segment of Southwestern, the
sale or other disposition of all or substantially all the assets of
the Exploration and Production business segment other
than to a corporation with respect to which, immediately following
such sale or disposition, more than 80% of, respectively, the then
outstanding shares of Common Stock and the combined voting power of
the then outstanding voting securities entitled to vote generally
in the election of directors is then beneficially owned, directly
or indirectly, in the aggregate by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the outstanding Southwestern Common Stock and
Southwestern voting securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership
of the outstanding Southwestern Common Stock and Southwestern
voting securities, as the case may be, immediately prior to such
sale or disposition; or
(vii)
a majority of the Board of Directors
determines in its sole and absolute discretion that there has been
a Change in Control of Southwestern or that there will be a Change
in Control of Southwestern upon the occurrence of certain specified
events and such events occur.
(e)
“Commencement Date” shall
mean, with respect to a particular grant of Performance Units
hereunder, the first day of the Plan Year immediately following the
date of grant of such Performance Units.
(f)
“Company” shall mean
Southwestern and each of its Subsidiaries.
(g)
“Disability” shall mean a
condition entitling a Participant to benefits under the long-term
disability policy maintained by the Company and applicable to
him.
(h)
“Grant Agreement” shall mean
a written document issued to a Participant that shall specify the
grant of Performance Units to the Participant, the applicable
Performance Measures set by the Plan Administrator and conditions
to which the grant is subject.
(i)
“Participant” shall mean an
employee of the Company who is eligible to participate in the Plan
and to whom one or more Performance Units have been granted
pursuant to the Plan and, following the death of any such employee,
his or her successors, heirs, executors and administrators, as the
case may be.
(j)
“Payment Value” shall mean,
as of the end of each Performance Period, the value, expressed in
dollars, of each Performance Unit issued under the Plan. The
Payment Value will be determined by multiplying the target value by
the percentage or percentages assigned to the level of the
Company’s actual financial performance, based on the
Performance Measures and based on associated percentages assigned
to the various levels of performance of the Performance Measures at
the beginning of the Performance Period. If the attainment of
a Performance Measure occurs between the stated levels, the Payment
Value will be determined by linear extrapolation.
(k)
“Performance Measures” shall
mean the possible standards for measuring the Payment Value of the
Performance Units, as determined by the Plan Administrator on the
date of grant and as more particularly set forth in the Grant
Agreement.
Relative performance will be measured
against goals or against peers, as determined by the Plan
Administrator on the date of grant.
(l)
“Performance Period” shall
mean the time period over which the Performance Measures will be
analyzed for purposes of determining the Payment Value of the
Performance Units granted to a Participant. Unless otherwise
specified by the Plan Administrator, the Performance Period shall
be thirty-six months from the Commencement Date.
(m)
“Performance Unit” shall mean
a unit of interest under the Plan the value of which depends upon
the fina
