Document:

exv10w30

 

EXHIBIT 10.30

CITIZENS BANKING CORPORATION

MANAGEMENT INCENTIVE PLAN

2006

	I.	 	  PURPOSE:

	 	1.	 	Ensure achievement of strategic goals.
	 
	 	2.	 	Align management more closely with shareholder
	 
	 	3.	 	Strengthen links between pay and performance.

	II.	 	ELIGIBILITY:
	 
	 	 	Senior Vice Presidents and above and certain other officers based upon corporate
responsibility who are not participants in another established incentive plan with payment
amounts determined by performance in relation to goal. Awards will be pro-rated based on
months served for staff members with less than 12 months of service in a Plan Year. Staff
members become eligible to participate in the plan by virtue of promotion or new hire. A
staff member who terminates employment before the Plan Year is not eligible to receive an
award.
	 
	III.	 	PARTICIPATION RATE:
	 
	 	 	The participation rate for individual positions is benchmarked from market data research
provided by various surveys and consultants.
	 
	VI.	 	INCENTIVE COMPONENTS:
	 
	 	 	The Management Incentive Plan components consist of:

	 	•	 	Initial factors: Net Interest Income, Low Cost Deposits, Total Deposits, Fee
Income, Net Charge-Offs, Non-Performing Assets and Expense Management.
	 
	 	•	 	Secondary factors: A weighted EPS and ROE factor will be placed against the
initial factor weighted average to determine an adjusted weighted average payout.
	 
	 	•	 	Tertiary factors: An NII Peer Ranking vs. Peer Group factor may be used to
determine the FINAL weighted average factor for the Corporate Component portion of
the payout.

	V.	 	AWARD DETERMINATION:
	 
	 	 	Salary x Participation Rate x Service Factor = Pool

Pool is broken for the Leadership Group Members as follows:

	 	 	 	 	 	 
	75%	 	 
	Components	 	Percentage	 	 
	Net Interest Income
	 	 	25	%	 
	Low Cost Deposits
	 	 	20	%	 
	Total Deposits
	 	 	10	%	 
	Fee Income
	 	 	15	%	 
	Net Charge-Offs
	 	 	10	%	 
	Non Performing Assets
	 	 	10	%	 
	Expense Management
	 	 	10	%	 

	 	 	 	 	 
	25%	 
	Component	 	Percentage	 
	Discretionary
	 	 	100	%

     ü All independent components

 

 

Pool is broken for the Senior Management and other Participants as follows:

	 	 	 	 	 	 
	65%	 	 
	Components	 	Percentage	 	 
	Net Interest Income
	 	 	25	%	 
	Low Cost Deposits
	 	 	20	%	 
	Total Deposits
	 	 	10	%	 
	Fee Income
	 	 	15	%	 
	Net Charge-Offs
	 	 	10	%	 
	Non Performing Assets
	 	 	10	%	 
	Expense Management
	 	 	10	%	 

	 	 	 	 	 	 	 	 	 
	35%	 
	Component	 	 	 	 	 	Percentage	 
	Line of Business
	 	 	ü	 	 	 	 	 
	Market
	 	 	ý	 	 	 	100	%
	Discretionary
	 	 	þ	 	 	 	 	 

     üAll independent components

	VI.	 	PERFORMANCE FACTOR:
	 
	 	 	For the discretionary component, a performance indicator of 0% to 150% will be applied.
Goals should be set at levels that are challenging to reach at 100% — Achievement should be
based on meeting all expectations in every way. It is possible to exceed 100% performance
but this type of evaluation should be reserved for truly extraordinary performance
	 
	VII.	 	SERVICE FACTOR:
	 
	 	 	The service factor is equal to the number of months the participant is employed with the
corporation during the plan year. Example: 1.0 is equal to 12 months, .5 is equal to 6
months.
	 
	VIII.	 	AWARD PAYMENTS:
	 
	 	 	All awards earned under Management Incentive Plan will be paid as soon as practical following
approval by the Compensation and Human Resources Committee.
	 
	IX.	 	ADDITIONAL PROVISIONS:
	 
	 	 	The Management Incentive Plan shall be administered by the Compensation and Human Resources
Committee of the Corporation.
	 
	 	 	While all attempts will be made to follow the incentive formulas and metrics, subjective
adjustments occasionally can and will be made both upwards and downwards based on management
discretion which will require CEO approval. Adjustments will be considered based on value of
an individual’s contribution to performance during the year and not based on comparison to
prior year awards, comparison to peer’s incentive levels, attitude, effort, etc. In general,
subjective adjustments will be the exception and not the rule. Management will however
reserve the right to make these subjective adjustments if necessary to be equally fair to
shareholders and plan participants.
	 
	 	 	The incentive award for the Chairman and President and CEO will be determined by the
Compensation and Human Resources Committee of Citizens Banking Corporation Board of
Directors.
	 
	 	 	A special award fund (Discretionary) equal to 15% of the aggregate incentive award will be
available for individual awards as determined by the President and CEO. Awards from this
fund are made to staff members who are not participants in the Management Incentive Plan.
	 
	 	 	Awards for the Discretionary Fund will be made only in recognition of exemplary achievements.
Distribution of all available amounts in this fund is not mandatory.
	 
	 	 	Participation in the Management Incentive Plan shall not be construed as giving any employee
the right to continued employment with the corporation for the full or for any subsequent
period.

 

 

Performance Plan Guidelines

	 	•	 	If participant is on corrective action on the last day of the quarter/year they are not
eligible for incentive payment
	 
	 	•	 	Minimum annual performance rating of Productive required in most recent Annual
Performance Review in both Key Performance Activities and Competencies
	 
	 	•	 	This plan does not represent a contract with any individual plan participant
	 
	 	•	 	The plan may be changed, modified or terminated at any time throughout the plan year

	X.	 	DISCRETIONARY AWARD GUIDELINES:
	 
	 	 	Objectives: Recognize and promote exemplary individual performance or initiative.
	 
	 	 	Eligible Participants: All staff members are eligible except staff members who are in
established incentive plans with payment amounts determined by performance in relation to
established goals.
	 
	 	 	Nomination Process: Managers would nominate staff member(s) according to established
guidelines. They would also obtain concurrence and approval from their respective Direct
Report to the CEO.
	 
	 	 	Monetary Guidelines: Range of $500 to $3000. Larger amounts could be given in exceptional
circumstances.
	 
	 	 	Guidelines: Discretionary awards should be given in recognition for one or more of the
following performance criteria:

Earnings:

	 	•	 	Expense reduction
	 
	 	•	 	Revenue enhancement

Innovation:

	 	•	 	Continuous improvement efforts
	 
	 	•	 	Innovative delivery alternatives
	 
	 	•	 	Foresight and planning to prevent crises

Achievement:

	 	•	 	Unique/specialized skills or knowledge of value to the company, i.e., Key Performers
	 
	 	•	 	Sustained high performance
	 
	 	•	 	Exemplary performance during unusual circumstances or specific events
	 
	 	•	 	Special projects completed in an exceptional manner or ahead of schedule
	 
	 	•	 	Extraordinary client service

 

 

     

MIP will be initially calculated based on the following components and payout tier structure.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	25%
	 	Net Interest Income	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	 	 
	 
	 	2004 Actual = 275.3	 	% to Actual (Actual/Budget)	 	 	<98.7	%	 	 	 	98.7	%	 	 	98.9	%	 	 	99.1	%	 	 	99.3	%	 	 	99.5	%	 	 	99.6	%	 	 	99.8	%	 	 	100	%	 	 	100.2	%	 	 	100.4	%	 	 	100.5	%	 	 	100.7	%	 	 	100.9	%	 	 	101.1	%	 	 	101.3	%	 	No Cap
	 
	 	2005 Actual = 275.7	 	Payout Factor	 	 	0	%	 	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%	 	 	70	%	 	 	75	%	 	 	80	%	 	 	85	%	 	 	90	%	 	 	95	%	 	 	100	%	 	 	105	%	 	 	110	%	 	 	115	%	 	 	120	%	 	 	 	 
	 
	 	2006 Budget = *	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	20%
	 	Low Cost Deposits	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	 	 
	 
	 	2005 Actual = 2,747	 	% to Actual (Actual/Budget)	 	 	<90	%	 	 	 	90	%	 	 	91	%	 	 	92	%	 	 	93	%	 	 	94	%	 	 	95	%	 	 	96	%	 	 	97	%	 	 	98	%	 	 	99	%	 	 	100	%	 	 	101.7	%	 	 	103.5	%	 	 	105.2	%	 	 	107.0	%	 	No Cap
	 
	 	2006 Budget = *	 	Payout Factor	 	 	0	%	 	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%	 	 	70	%	 	 	75	%	 	 	80	%	 	 	85	%	 	 	90	%	 	 	95	%	 	 	100	%	 	 	105	%	 	 	110	%	 	 	115	%	 	 	120	%	 	 	 	 
	 
	 	 	 	(YE Avg Bal)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10%
	 	Total Deposits	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	 	 
	 
	 	2005 Actual = 5,091	 	% to Actual (Actual/Budget)	 	 	<97.5	%	 	 	 	97.5	%	 	 	97.9	%	 	 	98.2	%	 	 	98.6	%	 	 	98.9	%	 	 	99.3	%	 	 	99.6	%	 	 	100	%	 	 	100.4	%	 	 	100.7	%	 	 	101.1	%	 	 	101.4	%	 	 	101.8	%	 	 	102.1	%	 	 	102.5	%	 	No Cap
	 
	 	2006 Budget = *	 	Payout Factor	 	 	0	%	 	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%	 	 	70	%	 	 	75	%	 	 	80	%	 	 	85	%	 	 	90	%	 	 	95	%	 	 	100	%	 	 	105	%	 	 	110	%	 	 	115	%	 	 	120	%	 	 	 	 
	 
	 	 	 	(YE Avg Bal)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	15%
	 	Fee Income	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	 	 
	 
	 	2004 Actual = 93.4	 	% to Actual (Actual/Budget)	 	 	< 94.2	%	 	 	 	94.2	%	 	 	95.1	%	 	 	95.9	%	 	 	96.7	%	 	 	97.5	%	 	 	98.4	%	 	 	99.2	%	 	 	100	%	 	 	100.8	%	 	 	101.6	%	 	 	102.5	%	 	 	103.3	%	 	 	104.1	%	 	 	104.9	%	 	 	105.8	%	 	No Cap
	 
	 	2005 Actual = 91.5	 	Payout Factor	 	 	0	%	 	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%	 	 	70	%	 	 	75	%	 	 	80	%	 	 	85	%	 	 	90	%	 	 	95	%	 	 	100	%	 	 	105	%	 	 	110	%	 	 	115	%	 	 	120	%	 	 	 	 
	 
	 	2006 Budget = *	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10%
	 	Net Charge-Offs	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 
	 	2004 Actual = 20.8	 	% to Actual (Actual/Budget)	 	 	> 119.0	%	 	 	 	119.0	%	 	 	116.3	%	 	 	113.6	%	 	 	110.9	%	 	 	108.1	%	 	 	105.4	%	 	 	102.7	%	 	 	100	%	 	 	97.8	%	 	 	95.6	%	 	 	93.4	%	 	 	89.0	%	 	 	84.6	%	 	 	80.1	%	 	 	75.7	%	 	 	71.3	%
	 
	 	2005 Actual = 14.6	 	Payout Factor	 	 	0	%	 	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%	 	 	70	%	 	 	75	%	 	 	80	%	 	 	85	%	 	 	90	%	 	 	95	%	 	 	100	%	 	 	110	%	 	 	120	%	 	 	130	%	 	 	140	%	 	 	150	%
	 
	 	2006 Budget = *	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10%
	 	Non Performing Loans	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 
	 	2004 Actual = 50.8	 	% to Actual (Actual/Budget)	 	 	> 111.1	%	 	 	 	111.1	%	 	 	109.5	%	 	 	107.9	%	 	 	106.3	%	 	 	104.7	%	 	 	103.2	%	 	 	101.6	%	 	 	100	%	 	 	99.1	%	 	 	98.3	%	 	 	97.4	%	 	 	95.7	%	 	 	94.0	%	 	 	92.3	%	 	 	90.6	%	 	 	88.9	%
	 
	 	2005 Actual = 46.6	 	Payout Factor	 	 	0	%	 	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%	 	 	70	%	 	 	75	%	 	 	80	%	 	 	85	%	 	 	90	%	 	 	95	%	 	 	100	%	 	 	110	%	 	 	120	%	 	 	130	%	 	 	140	%	 	 	150	%
	 
	 	2006 Budget = *	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10%
	 	Expense	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 
	 	2004 Actual = 244.8	 	% to Actual (Actual/Budget)	 	 	>101.8	%	 	 	 	101.8	%	 	 	101.5	%	 	 	101.3	%	 	 	101.0	%	 	 	100.8	%	 	 	100.5	%	 	 	100.3	%	 	 	100	%	 	 	99.9	%	 	 	99.7	%	 	 	99.6	%	 	 	99.3	%	 	 	99.0	%	 	 	98.8	%	 	 	98.5	%	 	 	98.2	%
	 
	 	2005 Actual = 243.0	 	Payout Factor	 	 	0	%	 	 	 	50	%	 	 	55	%	 	 	60	%	 	 	65	%	 	 	70	%	 	 	75	%	 	 	80	%	 	 	85	%	 	 	90	%	 	 	95	%	 	 	100	%	 	 	110	%	 	 	120	%	 	 	130	%	 	 	140	%	 	 	150	%
	 
	 	2006 Budget = *	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	100%	 	Payout % is incremental between tiers (ex. Each % over budget earns x% additional incentive)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	EPS and ROE factors will provide an additional weighted average calculation to be applied against the above results.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	60%
	 	EPS Factor	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2004 Actual = 1.74	 	% to Actual (Actual/Budget)	 	 	< 96.3	%	 	 	 	96.3	%	 	 	97.1	%	 	 	97.8	%	 	 	98.5	%	 	 	99.3	%	 	 	100	%	 	 	100.7	%	 	 	101.5	%	 	 	102.2	%	 	 	102.9	%	 	 	103.7	%	 	No Cap	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2005 Actual = 1.85	 	Payout Factor	 	 	0	%	 	 	 	85	%	 	 	88	%	 	 	91	%	 	 	94	%	 	 	97	%	 	 	100	%	 	 	103	%	 	 	106	%	 	 	109	%	 	 	112	%	 	 	115	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2006 Budget = *	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Budget	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	40%
	 	ROE Factor	 	Actual	 	 	*	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2004 Actual = 11.90	 	% to Actual (Actual/Budget)	 	 	< 94.4	%	 	 	 	94.4	%	 	 	95.5	%	 	 	96.7	%	 	 	97.8	%	 	 	98.9	%	 	 	100	%	 	 	101.1	%	 	 	102.2	%	 	 	103.2	%	 	 	104.3	%	 	 	105.4	%	 	No Cap	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2005 Actual = 12.33	 	Payout Factor	 	 	0	%	 	 	 	85	%	 	 	88	%	 	 	91	%	 	 	94	%	 	 	97	%	 	 	100	%	 	 	103	%	 	 	106	%	 	 	109	%	 	 	112	%	 	 	115	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2006 Budget = *	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	100%	 	Payout % is incremental between tiers (ex. Each % over budget earns x% additional incentive)

Discretionary Modifier — Guidelines Only

An additional peer group ranking modifier may be used to determine final payouts of MIP

	 	 	 
	Component	 	Weighting
	NII
	 	50%
	EPS
	 	50%

	 	 	 	 	 
	 	 	 	 	Equates to x% payout
	Peer Ranking	 	Factor	 	@ 100% of budget
	Above 75th Percentile
	 	118%
	 	100%
	Below 25th Percentile
	 	59%
	 	50%
	2006 vs 2005 performance
	 	 	 	(factor x 85%)

Peer Group*

1 Discretion may be used by the comp committee to over-ride the formula under appropriate circumstances

2 Any adjustments for unusual items (such as acquisitions, divestitures) will require comp committee approval

3 The above numbers will not include the impact of extra-ordinary items

4 The above numbers will be adjusted to neutralize the impact of equity compensation

5 The above numbers will be adjusted to normalize the impact of equity adjustments due to interest rate movements

 

 

			
	*	 	Portions of this exhibit have been omitted pursuant to Citizens’ request to the
Secretary of the Securities and Exchange
Commission for confidential treatment pursuant to
Rule 24b-2 under the Securities and Exchange Act of 1934, as amended.exv10w1

 

Exhibit
10.1

SWIFT ENERGY COMPANY

EMPLOYEE STOCK PURCHASE PLAN

(Amended and Restated as of June 1, 2006)

 

 

SWIFT ENERGY COMPANY

EMPLOYEE STOCK PURCHASE PLAN

(Amended and Restated as of June 1, 2006)

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I — NATURE OF PLAN	 	 	1	 
	ARTICLE II — DEFINITIONS AND CONSTRUCTION	 	 	1	 
	2.1
	 	DEFINITIONS	 	 	1	 
	2.2
	 	WORD USAGE	 	 	2	 
	2.3
	 	CONSTRUCTION	 	 	3	 
	ARTICLE III — ELIGIBILITY AND PARTICIPATION	 	 	3	 
	3.1
	 	ELIGIBILITY	 	 	3	 
	3.2
	 	ELECTION TO PARTICIPATE	 	 	3	 
	3.3
	 	WAIVER OF PARTICIPATION	 	 	3	 
	ARTICLE IV — PAYROLL DEDUCTION AUTHORIZATION	 	 	3	 
	4.1
	 	PAYROLL DEDUCTIONS	 	 	3	 
	4.2
	 	WITHDRAWAL OF PAYROLL DEDUCTION ACCOUNT	 	 	4	 
	ARTICLE V — PURCHASE OF STOCK	 	 	4	 
	5.1
	 	GRANT OF OPPORTUNITY TO PURCHASE STOCK	 	 	4	 
	5.2
	 	LIMITATION ON STOCK	 	 	5	 
	5.3
	 	LIMITATIONS ON GRANTS	 	 	5	 
	5.4
	 	STOCK PRICE	 	 	6	 
	5.5
	 	PURCHASE OF STOCK	 	 	6	 
	5.6
	 	PAYMENT	 	 	8	 
	5.7
	 	TRANSFER OF SHARES	 	 	8	 
	5.8
	 	TRANSFER OF RIGHTS	 	 	8	 
	ARTICLE VI — ADMINISTRATION COMMITTEE	 	 	8	 
	6.1
	 	APPOINTMENT OF COMMITTEE	 	 	8	 
	6.2
	 	POWERS OF THE ADMINISTRATION COMMITTEE	 	 	9	 
	6.3
	 	MANNER OF ACTION	 	 	10	 
	6.4
	 	AUTHORIZED REPRESENTATIVE	 	 	10	 
	6.5
	 	NONDISCRIMINATION	 	 	10	 
	6.6
	 	BOOKS AND RECORDS	 	 	10	 
	ARTICLE VII — AMENDMENT AND TERMINATION	 	 	10	 
	7.1
	 	AMENDMENT	 	 	10	 
	7.2
	 	TERMINATION	 	 	10	 
	7.3
	 	NO ALTERATION OF RIGHTS	 	 	11	 
	ARTICLE VIII — MISCELLANEOUS	 	 	11	 
	8.1
	 	EXECUTION OF RECEIPTS AND RELEASES	 	 	11	 
	8.2
	 	PLAN FUNDS	 	 	11	 
	8.3
	 	NO GUARANTEE OF INTERESTS	 	 	11	 
	8.4
	 	PAYMENT OF EXPENSES	 	 	11	 
	8.5
	 	EMPLOYER RECORDS	 	 	11	 

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	 	 	 	 	Page	 
	8.6
	 	INTERPRETATIONS AND ADJUSTMENTS	 	 	11	 
	8.7
	 	UNIFORM RULES	 	 	11	 
	8.8
	 	NO RIGHTS IMPLIED	 	 	12	 
	8.9
	 	INFORMATION	 	 	12	 
	8.10
	 	NO LIABILITY OF EMPLOYER	 	 	12	 
	8.11
	 	EMPLOYER ACTION	 	 	12	 
	8.12
	 	SEVERABILITY	 	 	12	 
	8.13
	 	NOTICE	 	 	12	 
	8.14
	 	WAIVER OF NOTICE	 	 	12	 
	8.15
	 	SUCCESSORS	 	 	12	 
	8.16
	 	HEADINGS	 	 	12	 
	8.17
	 	LAW	 	 	12	 
	8.18
	 	NO LIABILITY FOR GOOD FAITH DETERMINATIONS	 	 	13	 
	ARTICLE IX — ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS	 	 	13	 
	9.1
	 	PARTICIPATING EMPLOYERS	 	 	13	 
	9.2
	 	APPLICATION OF PLAN PROVISIONS	 	 	13	 
	9.3
	 	POWERS EXERCISABLE ONLY BY SWIFT ENERGY COMPANY	 	 	13	 

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SWIFT ENERGY COMPANY

EMPLOYEE STOCK PURCHASE PLAN

(Amended and Restated as of June 1, 2006)

ARTICLE I — NATURE OF PLAN

     This employee stock purchase plan is hereby established for the purpose of providing all
employees of Swift Energy Company, a Texas corporation, and its adopting subsidiary or
subsidiaries, if any, with the opportunity to acquire a proprietary interest in the Company,
thereby increasing their interest in their Employer’s welfare, and encouraging them to remain in
the employ of their Employer.

ARTICLE II — DEFINITIONS AND CONSTRUCTION

	2.1	 	DEFINITIONS. For the purpose of this Plan, the following definitions shall apply unless
the context requires otherwise:

	 	(a)	 	ADMINISTRATION COMMITTEE shall mean the Plan Administration Committee as from
time to time constituted pursuant to Section 6.1.
	 
	 	(b)	 	BOARD OF DIRECTORS shall mean the Board of Directors of the Company unless
otherwise indicated or the context otherwise requires.
	 
	 	(c)	 	CODE shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	(d)	 	COMPANY shall mean Swift Energy Company, a Texas corporation, or any successor
thereto which shall adopt this Plan.
	 
	 	(e)	 	COMPENSATION shall mean an Employee’s base salary or wages received for
personal services rendered to the Employer as an Employee which are actually paid
during the Plan Year and which are subject to withholding for Federal income tax
purposes, plus amounts excluded from the gross income of an Employee under sections
125, 402(a)(8), 402(h)(1)(B), or 403(b) of the Code. Compensation shall not include
commissions based on sales, bonuses, or overtime pay.
	 
	 	(f)	 	EFFECTIVE DATE shall mean June 1, 2006. The Plan has been approved by the
shareholders of the Company and adopted by the Board of Directors, and the stock to be
sold hereunder was properly registered under federal securities law.
	 
	 	(g)	 	EMPLOYEE shall mean any person who, on or after the Effective Date, is in the
employ of the Employer and whose wages therefrom are subject to withholding for
purposes of Federal income taxes and the Federal Insurance Contributions Act; provided,
however, that Employee shall not include any person who customarily works less than one
thousand (1000) hours per year.

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	 	(h)	 	EMPLOYER shall mean the Company and each Participating Employer, if any.
	 
	 	(i)	 	OFFERING PERIOD shall mean that period to be determined by the Administration
Committee beginning on the date the Employees are offered the opportunity to purchase
Stock hereunder, during which each eligible Employee shall determine whether and to
what extent he desires to participate by authorizing payroll deductions. Until changed
by the Administration Committee in its sole and absolute discretion, a new Offering
Period shall begin on the first day of each Plan Year and shall end on the last day of
such Plan Year.
	 
	 	(j)	 	PARTICIPANT shall mean an Employee or former Employee who has been offered the
opportunity to purchase Stock hereunder and who has elected to participate herein by
authorizing payroll deductions.
	 
	 	(k)	 	PARTICIPATING EMPLOYER shall mean a corporation, partnership or other trade or
business which has adopted this Plan pursuant to Article IX for its own Employees.
	 
	 	(l)	 	PAYROLL DEDUCTION ACCOUNT shall mean that separate account maintained hereunder
to record the amount of a Participant’s Compensation that has been withheld hereunder.
	 
	 	(m)	 	PAYROLL DEDUCTION PERIOD shall mean that period beginning on the first day of
each Plan Year and ending on the earlier of:

	 	(i)	 	The latest date for which a Participant receives his
last paycheck from the Employer after his employment with the Employer
terminates; or
	 
	 	(ii)	 	The last day of the Plan Year.

	 	(n)	 	PLAN shall mean the Swift Energy Company Employee Stock Purchase Plan, as
embodied herein and as amended from time to time.
	 
	 	(o)	 	PLAN YEAR shall mean, with respect to the first Plan Year under this Plan, as
amended and restated on June 1, 2006, the seven (7) calendar months beginning on the
Effective Date and ending on December 31, 2006; thereafter, it shall mean the twelve
(12) calendar months, beginning on January 1 and ending on December 31 of each year.
	 
	 	(p)	 	STOCK shall mean the common stock, par value $.01 per share, of the Company.

	2.2	 	WORD USAGE. Except when otherwise indicated by the context, any masculine terminology
used herein also includes the feminine and neuter, and vice versa, and the singular shall
also include the plural, and vice versa. The words “hereof,”

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	 	 	“herein” and “hereunder,” and other similar compounds of the word “here” shall mean and
refer to the entire Plan and not to any particular provision or section. All references to
Sections or Articles shall mean and refer to Sections and Articles contained in this Plan
unless otherwise indicated.
	 
	2.3	 	CONSTRUCTION. It is the intention of the Company that the Plan be qualified as an
employee stock purchase plan under the provisions of section 423 of the Code, and all
provisions shall be construed to that result. Moreover, the provisions of the Plan shall
apply only to an Employee who is in the employ of the Employer on or after the Effective
Date.

ARTICLE III — ELIGIBILITY AND PARTICIPATION

	3.1	 	ELIGIBILITY. Each Employee who has attained age twenty-one (21) and who is an Employee
as of the first business day of a given Offering Period shall be eligible to participate in
such Offering Period under the Plan.
	 
	3.2	 	ELECTION TO PARTICIPATE. Any Employee who is eligible to participate herein may become
a Participant only by filing a written election to participate with the Administration
Committee that authorizes payroll deductions during the Offering Period under Section 4.1.
An Employee may elect to participate for less than the maximum number of shares which he has
been offered the opportunity to purchase by authorizing a payroll deduction under Section
4.1 of a percentage of Compensation less than the percentage determined by the Board of
Directors under Section 5.1(b).
	 
	3.3	 	WAIVER OF PARTICIPATION. An Employee who is otherwise eligible to participate herein
may waive his right to participate for any Offering Period by declining to authorize a
payroll deduction. Such declination must be filed in writing with the Administration
Committee in the time and manner specified thereby. The filing of a written declination
shall result in the Employee’s waiver of participation for only the Offering Period to which
it relates and shall be irrevocable with respect to such Offering Period. Except as
otherwise provided in this Section, an Employee’s waiver of participation for a specified
Offering Period shall not, in and of itself, adversely impact the right of such Employee to
participate in the Plan during any subsequent Offering Periods except those Offering Periods
with respect to which he files additional written declinations with the Administration
Committee in accordance with the provisions of this Section. Failure to timely authorize
payroll deductions for an Offering Period shall not be treated as if the Participant
declined in writing to authorize such deductions, but shall instead be treated as a zero
percent (0%) election under Section 4.1.

ARTICLE IV — PAYROLL DEDUCTION AUTHORIZATION

	4.1	 	PAYROLL DEDUCTIONS. Each Employee who is eligible and elects, pursuant to Article III,
prior to the beginning of a Payroll Deduction Period to participate herein shall authorize
the making of payroll deductions to fund the purchase of

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	 	 	the Stock he has agreed to purchase hereunder. Deductions shall be made pro-rata at the
regular payroll periods applicable to the Participant during the Payroll Deduction Period
and shall be credited to the Participant’s Payroll Deduction Account.

	 	(a)	 	Amount of Payroll Deductions. A Participant may authorize payroll
deductions in an amount of either (i) zero percent (0%) or (ii) not less than one
percent (1%) nor more than ten percent (10%) (in multiples of one percent (1%)) of his
Compensation for the Plan Year. A Participant who authorizes a payroll deduction of
zero percent (0%) shall not be deemed to have waived participation pursuant to Section
3.3.
	 
	 	(b)	 	Change in Authorization. A Participant may not vary the amount of his
payroll deduction for any Payroll Deduction Period; provided, however, that
notwithstanding the foregoing, he may (i) elect to stop his payroll deductions
effective with the first payroll occurring thirty (30) days after the Administration
Committee’s receipt of his written election to stop his payroll deductions and (ii)
with at least thirty (30) days advance written notice to the Administration Committee,
elect to decrease his payroll deduction rate, within the limits specified in subsection
(a) of this Section, effective on the first (1st) day of the calendar quarter next
following the date of his notice. A Participant’s election to stop his payroll
deductions shall be treated as a waiver of participation under Section 3.3 for the
Offering Period in which the cessation occurs. A Participant’s election to decrease
his payroll deduction rate to zero percent (0%) shall not be deemed to be a waiver of
participation pursuant to Section 3.3.

	4.2	 	WITHDRAWAL OF PAYROLL DEDUCTION ACCOUNT. Notwithstanding anything contained herein to
the contrary, any amounts remaining credited to a Participant’s Payroll Deduction Account on
the last day of the Plan Year, after taking into account the amount of Stock purchased by
the Participant, shall be refunded to the Participant in cash.

ARTICLE V — PURCHASE OF STOCK

	5.1	 	GRANT OF OPPORTUNITY TO PURCHASE STOCK. Each Offering Period during the term of the
Plan, unless the Board of Directors determines otherwise, the Administration Committee shall
make an offering under which all Employees eligible to participate in the Plan pursuant to
Section 3.1 are granted the opportunity to purchase Stock.

	 	(a)	 	Date of Grant. All grants made hereunder shall be deemed to have been
made on the same date, which date shall be the first day of the Offering Period.
	 
	 	(b)	 	Amount of Grant. Each Employee who is eligible to participate herein
shall be granted an opportunity to purchase up to that number of whole

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	 	 	 	shares of Stock which could be purchased at the price determined in accordance with
Section 5.4, with an amount equal to such percentage, not to exceed ten percent
(10%), as the Board of Directors determines, of an Employee’s Compensation which
Participant has chosen to add to his Payroll Deduction Account for the Plan Year
beginning coincident with the Offering Period.

	5.2	 	LIMITATION ON STOCK. No more than 500,000 shares of Stock may be purchased by
Participants hereunder. Either authorized and unissued shares or issued shares heretofore
or hereafter reacquired by the Employer may be made subject to purchase under the Plan, in
the sole and absolute discretion of the Administration Committee. Further, if for any
reason any purchase of Stock under the Plan is not consummated, shares subject to such
purchase agreement may be subjected to a new purchase agreement under the Plan.
	 
	 	 	Notwithstanding the foregoing provision, if the shares of Stock subject to purchase
hereunder are increased, decreased, changed into, or exchanged for a different number or
kind of shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split-up or similar event, an appropriate and
proportionate adjustment shall be made in the number and kind of shares as to which
purchases are or may be made hereunder. A corresponding adjustment changing the number or
kind of shares allocated to unpurchased Stock shall likewise be made. Any such adjustment,
however, in the Stock shall be made without change in the total price applicable to the
portion of the Stock purchased hereunder which has not been fully paid for, but with a
corresponding adjustment, if appropriate, in the price for each share of Stock.
	 
	 	 	Further, if the Company is reorganized, merged or consolidated with another corporation
while Stock is subject to a purchase agreement under the Plan, or, solely for purposes of
(ii) below, if the Company is dissolved or liquidated, the Company shall either (i)
substitute for such shares an appropriate number of shares of each class of stock or other
securities of the reorganized or merged or consolidated corporation which were distributed
to the shareholders of the Company with respect to such shares, or (ii) permit each
Participant to immediately complete making payment for the Stock he agreed to purchase,
without regard to the payroll deduction provisions provided for in Article IV, by making a
cash contribution to his Payroll Deduction Account during the thirty day period next
preceding the effective date of any such reorganization, merger or consolidation or of any
dissolution or liquidation of the Company.
	 
	5.3	 	LIMITATIONS ON GRANTS. Notwithstanding any provision contained herein to the contrary,

	 	(a)	 	No Employee shall be given the opportunity to purchase Stock hereunder if,
immediately following the grant of the right to purchase Stock hereunder, such Employee
owns Stock, including, for the purposes of this Section 5.3(a), the Stock he has been
granted the opportunity to purchase

5

 

	 	 	 	under the Plan, possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or any parent or subsidiary
thereof, computed in accordance with section 423(b)(3) of the Code, and
	 
	 	(b)	 	No Employee shall be granted the opportunity to purchase Stock hereunder which
permits his rights to purchase Stock under this Plan and under all other employee stock
purchase plans of the Employer or any corporation which is the parent or a subsidiary
company of the Employer to accrue at a rate which exceeds $25,000 (or such other rate
as may be prescribed from time to time by the Code) of the fair market value of Stock
(determined as of the first day of the Offering Period) for each calendar year in which
such Employee is participating hereunder, in accordance with the provisions of section
423(b)(8) of the Code.

	5.4	 	STOCK PRICE. A Participant may acquire Stock hereunder at a cost of eighty-five percent
(85%) of the lower of (i) the fair market value of the Stock on the first day of the Plan
Year or (ii) the fair market value of the Stock on the last day of the Plan Year.
	 
	 	 	For the purposes of this Section, the fair market value of the Stock on any given date shall
be the closing price of such Stock as reported by the New York Stock Exchange, or reported
on such other national exchange as it may, from time to time, be reported on, on such date
(or if there shall be no trading on such date, then on the first previous date on which
there is such trading).
	 
	5.5	 	PURCHASE OF STOCK. The purchase of Stock hereunder by a Participant may be accomplished
in accordance with the following:

	 	(a)	 	By Participant While Employed. At any time during the Plan Year, a
Participant, only if allowed by the Administration Committee in its sole discretion and
subject to such terms and conditions as it may in its sole discretion impose, may elect
to purchase that amount of Stock that he has been given the opportunity to purchase
hereunder, by delivering written notice of his election to purchase such Stock
hereunder and his payroll deduction authorization to the Administration Committee or
its agent, in such form and in such manner as the Administration Committee shall
prescribe, as described in Section 4.1. If a Participant elects to purchase only a part
of the Stock that he has been given the opportunity to purchase, the remainder of his
grant shall continue to the end of the Plan Year and be exercised as provided in the
next paragraph. If a Participant files a written notice of election not to purchase
with the Administration Committee, the balance credited to his Payroll Deduction
Account shall be paid to him in cash, and he shall not be entitled to participate again
in the Plan for the remainder of the Plan Year.

6

 

	 	 	 	If, on the last day of the Plan Year, a Participant has not made his election to
purchase, in whole or in part, and has not filed a written notice of election not to
purchase with the Administration Committee, such Participant shall be deemed to have
elected to purchase the amount of Stock which he can purchase with the money in his
Payroll Deduction Account on such last date.
	 
	 	 	 	The balance credited to a Participant Payroll Deduction Account, after paying for
his Stock, shall be paid to him in cash; provided, however, that if such a balance
occurs during an Offering Period, it shall be carried over during the Offering
Period and be credited to the Participant’s Payroll Deduction Account as if
contributed during that Offering Period.
	 
	 	(b)	 	By Participant After Termination of Employment. If a Participant’s
employment with the Employer terminates for any reason other than death, disability, or
retirement, his right to purchase Stock hereunder shall immediately terminate and
become void, and the amount credited to such Participant’s Payroll Deduction Account
shall be paid to him in cash.
	 
	 	(c)	 	By a Retired or Disabled Participant. If a Participant’s employment
with the Employer terminates on account of the Participant’s disability or retirement,
such Participant shall have the right to complete paying for the Stock he agreed to
purchase by making a cash contribution to his Payroll Deduction Account during the
period beginning on the date his employment terminates and ending ninety (90) days
following such date. In the event that such a contribution is not made, the
Participant’s right to purchase Stock hereunder shall immediately terminate and become
void, and the amount credited to such Participant’s Payroll Deduction Account shall be
paid to him in cash.
	 
	 	 	 	For purposes of this Section, a Participant shall be considered disabled if, in the
sole discretion of the Administration Committee, he is unable by reason of physical
or mental impairment to perform the usual and customary duties of his employment.
	 
	 	 	 	For purposes of this Section, a Participant shall be considered to have retired if
his employment with the Employer terminates by reason of his retirement and with the
consent of the Employer.
	 
	 	(d)	 	By a Participant’s Representative. In the event a Participant’s
employment with the Employer terminates on account of the death of the Participant, his
heirs, legatees, distributees or personal representatives shall have the right to
complete paying for the Stock he agreed to purchase by making a cash contribution to
his Payroll Deduction Account during the period beginning on the date of his death and
ending ninety (90) days following his date of death. In the event that such a
contribution is not made, the right to purchase Stock hereunder shall immediately

7

 

	 	 	 	terminate and become void, and the amount credited to such Participant’s Payroll
Deduction Account shall be paid to his heirs, legatees, distributees or personal
representatives in cash.
	 
	 	 	 	Notwithstanding anything to the contrary herein, in no event shall Stock be
purchasable hereunder after the expiration of 27 months from the date such Stock
first become purchasable under the terms of this Plan.

	5.6	 	PAYMENT. Upon the election to participate herein, and agreement to purchase shares
hereunder, the shares of Stock shall be paid for in full by the making of payroll deductions
and, at the end of the Plan Year, the transfer of the purchase price from the amount
credited to the Participant’s Payroll Deduction Account to an account of the Employer. Any
balance credited to such Participant’s Payroll Deduction Account in excess of the purchase
price at the end of the Plan Year shall be paid to him in cash. If for any reason, the
balance credited to the Participant’s Payroll Deduction Account at the end of the Plan Year
is not sufficient to pay for the Stock purchased, the Participant, his legatees, or
distributees may, at such time and in such manner as the Administration Committee shall
prescribe, contribute cash hereunder, which shall be credited to his Payroll Deduction
Account in order to pay for the full number of shares for which the Participant has elected
to participate, or the Participant, his personal representative heirs, legatees or
distributees may purchase that part of the number of full shares which the balance credited
to the Participant’s Payroll Deduction Account is sufficient to purchase and shall receive
the balance credited to such account and not used to purchase Stock in cash.
	 
	5.7	 	TRANSFER OF SHARES. The shares of the Stock purchased by a Participant hereunder shall
be issued or transferred to him on the books of the Company on the last day of the Plan Year
in which he made the purchase. Stock certificates shall be delivered to the Participant at
such time. Until such time, the Participant shall have none of the rights and privileges of
a stockholder in the Company with respect to shares of Stock purchased hereunder.
Notwithstanding anything to the contrary herein, the Employer shall not be obligated to
issue Stock hereunder if, in the opinion of counsel for the Company, such issuance would
constitute a violation of Federal or state securities laws.
	 
	5.8	 	TRANSFER OF RIGHTS. No rights granted under the Plan may be transferred except by will
or the laws of descent and distribution and, during the lifetime of the Participant to whom
granted, may be exercised only by such Participant.

ARTICLE VI — ADMINISTRATION COMMITTEE

	6.1	 	APPOINTMENT OF COMMITTEE. The Company shall appoint an Administration Committee
comprised of not less than two members to administer the Plan. The members of such
committee shall be the members of the Compensation Committee of the Board of Directors, none
of whom may be Employees of the Company.

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	 	(a)	 	Interested Member. Notwithstanding anything contained herein to the
contrary, no member of the Administration Committee shall be eligible to participate in
the Plan at any time during his term as a member of the Administration Committee.
	 
	 	(b)	 	Term. Each member of the Administration Committee shall serve until his
successor is appointed. Any member of the Administration Committee may be removed at
any time by the Board of Directors, with or without cause, which shall have the power
to fill any vacancy which may occur. A committee member may resign upon thirty (30)
days’ written notice to the Company.
	 
	 	(c)	 	Compensation. The members of the Administration Committee shall serve
without compensation for services as such, but the Company shall pay all expenses of
the Administration Committee.

	6.2	 	POWERS OF THE ADMINISTRATION COMMITTEE. The Administration Committee shall have the
following powers and duties:

	 	(a)	 	To direct the administration of the Plan in accordance with the provisions
herein set forth;
	 
	 	(b)	 	To adopt rules of procedure and regulations necessary for the administration of
the Plan provided the rules are not inconsistent with the terms of the Plan;
	 
	 	(c)	 	To determine all questions with regard to rights of Employees and Participants
under the Plan, including, but not limited to, rights of eligibility of an Employee to
participate in the Plan and the amount of Stock that a Participant is offered the
opportunity to purchase;
	 
	 	(d)	 	To enforce the terms of the Plan and the rules and regulations it adopts;
	 
	 	(e)	 	To direct the distribution of the shares of Stock purchased hereunder;
	 
	 	(f)	 	To furnish the Employer with information which the Employer may require for tax
or other purposes;
	 
	 	(g)	 	To engage the service of counsel (who may, if appropriate, be counsel for the
Employer) and agents whom it may deem advisable to assist it with the performance of
its duties;
	 
	 	(h)	 	To prescribe procedures to be followed by Participants in electing to
participate herein;
	 
	 	(i)	 	To receive from each Employer and from Employees such information as shall be
necessary for the proper administration of the Plan;

9

 

	 	(j)	 	To maintain, or cause to be maintained, separate Accounts in the name of each
Participant to reflect the Participant’s Payroll Deduction Account under the Plan;
	 
	 	(k)	 	To select a secretary, who need not be a member of the Administration
Committee; and
	 
	 	(l)	 	To interpret and construe the Plan.

	6.3	 	MANNER OF ACTION. The decision of a majority of the members of the Administration
Committee appointed and qualified shall control. In case of a vacancy in the membership of
the Administration Committee, the remaining members of the Committee may exercise any and
all of the powers, authorities, duties, and discretions conferred upon the Administration
Committee pending the filling of the vacancy. The Administration Committee may, but need
not, call or hold formal meetings. Any decisions made or action taken pursuant to written
approval of a majority of the then members shall be sufficient. The Administration
Committee shall maintain adequate records of its decisions.
	 
	6.4	 	AUTHORIZED REPRESENTATIVE. The Administration Committee may authorize any one of its
members, or its secretary, to sign on its behalf any notices, directions, applications,
certificates, consents, approvals, waivers, letters, or other documents.
	 
	6.5	 	NONDISCRIMINATION. The Administration Committee shall administer the Plan in a uniform,
nondiscriminatory manner.
	 
	6.6	 	BOOKS AND RECORDS. The Administration Committee shall maintain, or cause to be
maintained, records which will adequately disclose at all times the number of shares that
are subject to a purchase agreement hereunder, and the Employees who are purchasing such
Stock. The books, forms, and methods of accounting shall be the responsibility of the
Administration Committee.

ARTICLE VII — AMENDMENT AND TERMINATION

	7.1	 	AMENDMENT. The Company shall have the right at any time to amend the Plan in any manner
it deems necessary or advisable to qualify the Plan under the provisions of section 423 of
the Code and to amend the Plan in any other manner; provided, however, that no amendment to
the Plan which alters the aggregate number of shares of Stock which may be sold hereunder or
which alters the classification of employees which are eligible to participate hereunder
shall become effective unless such amendment is approved by the shareholders of the Company
within twelve (12) months before or after the date such amendment is adopted by the Board of
Directors.
	 
	7.2	 	TERMINATION. The Company shall have the right to terminate the Plan at any time.
Further, no offering shall be made hereunder after any day upon which Participants elect to
participate herein for a number of shares equal to or greater

10

 

	 	 	than the number of shares remaining available for purchase. If the number of shares for
which Participants elect to participate shall be greater than the shares remaining
available, the shares available shall at the end of the Offering Period be allocated among
such Participants pro-rata on the basis of the number of shares for which each has elected
to participate.
	 
	7.3	 	NO ALTERATION OF RIGHTS. Notwithstanding the foregoing provisions of this Article, the
Company shall not amend or terminate the Plan in any manner which shall retroactively affect
or impair any Participant’s rights heretofore granted under the Plan.

ARTICLE VIII — MISCELLANEOUS

	8.1	 	EXECUTION OF RECEIPTS AND RELEASES. Any payment or any issuance or transfer of shares
of Stock to any Participant, or to his legal representative, heir, legatee or distributee,
in accordance with the provisions of the Plan, shall to the extent thereof be in full
satisfaction of all claims hereunder against the Plan. The Administration Committee may
require such Participant, legal representative, heir, legatee or distributee, as a condition
precedent to such payment, to execute a receipt and release therefor in such form as it
shall determine.
	 
	8.2	 	PLAN FUNDS. All amounts held by the Employer in Payroll Deduction Accounts under the
Plan may be used for any corporate purpose of the Employer, and shall be considered part of
the general assets of the Employer.
	 
	8.3	 	NO GUARANTEE OF INTERESTS. Neither the Administration Committee nor the Employer
guarantee the Stock from loss or depreciation.
	 
	8.4	 	PAYMENT OF EXPENSES. All expenses incident to the administration, termination, or
protection of the Plan, including, but not limited to, legal and accounting fees, shall be
paid by the Employer.
	 
	8.5	 	EMPLOYER RECORDS . Records of the Employer as to an Employee’s or Participant’s period
of employment, termination of employment and the reason therefor, leaves of absence,
reemployment, and Compensation will be conclusive on all persons, unless determined to be
incorrect.
	 
	8.6	 	INTERPRETATIONS AND ADJUSTMENTS. To the extent permitted by law, an interpretation of
the Plan and a decision on any matter within the Administration Committee’s discretion made
in good faith is binding on all persons. A misstatement or other mistake of fact shall be
corrected when it becomes known and the person responsible shall make such adjustment on
account thereof as he considers equitable and practicable.
	 
	8.7	 	UNIFORM RULES. In the administration of the Plan, uniform rules will be applied to all
Participants similarly situated.

11

 

	8.8	 	NO RIGHTS IMPLIED. Nothing contained in this Plan or any modification or amendment to
the Plan or in the creation of any Account, or the execution of any participation election
form, or the issuance of any shares of Stock, shall give any Employee or Participant any
right to continue employment, any legal or equitable right against the Employer or any
officer, director, or Employee of the Employer, except as expressly provided by the Plan.
	 
	8.9	 	INFORMATION. The Employer shall, upon request or as may be specifically required
hereunder, furnish or cause to be furnished, all of the information or documentation which
is necessary or required by the Administration Committee to perform its duties and functions
under the Plan. The Employer’s records as to the current information the Employer furnishes
to the Administration Committee shall be conclusive as to all persons.
	 
	8.10	 	NO LIABILITY OF EMPLOYER. The Employer assumes no obligation or responsibility to any
of the Employees, Participants, or personal representatives, heirs, legatees or distributees
for any act of, or failure to act, on the part of the Administration Committee.
	 
	8.11	 	EMPLOYER ACTION. Any action required of the Employer shall be by resolution of its
board of directors or by a person authorized to act by Board resolution.
	 
	8.12	 	SEVERABILITY. In the event any provision of the Plan shall be held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable and the Plan shall be construed and
enforced as if the illegal or invalid provision had never been included herein.
	 
	8.13	 	NOTICE . Any notice required to be given herein by the Employer or the Administration
Committee shall be deemed delivered, when (a) personally delivered, or (b) placed in the
United States mails, in an envelope addressed to the last known address of the person to
whom the notice is given.
	 
	8.14	 	WAIVER OF NOTICE. Any person entitled to notice under the Plan may waive the notice.
	 
	8.15	 	SUCCESSORS. The Plan shall be binding upon all persons entitled to purchase Stock under
the Plan, their respective heirs, legatees, and legal representatives upon the Employer, its
successors and assigns, and upon the Administration Committee, and their successors.
	 
	8.16	 	HEADINGS. The titles and headings of Articles and Sections are included for convenience
of reference only and are not to be considered in construction of the provisions hereof.
	 
	8.17	 	LAW. All questions arising with respect to the provisions of this Agreement shall be
determined by application of the laws of the State of Texas except to the

12

 

	 	 	extent Texas law is preempted by Federal statute. The obligation of the Employer to sell
and deliver Stock under the Plan is subject to applicable laws and to the approval of any
governmental authority required in connection with the authorization, issuance, sale or
delivery of such Stock.

	8.18	 	NO LIABILITY FOR GOOD FAITH DETERMINATIONS. Neither the members of the Board of
Directors nor any member of the Administration Committee (nor their delegates) shall be
liable for any act, omission, or determination taken or made in good faith with respect to
the Plan or any right to purchase shares of Stock granted under it, and members of the Board
of Directors and the Administration Committee (and their delegatees) shall be entitled to
indemnification and reimbursement by the Employer in respect of any claim, loss, damage, or
expense (including attorneys’ fees, the costs of settling any suit, provided such settlement
is approved by independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith) arising
therefrom to the full extent permitted by law and under any directors and officers liability
or similar insurance coverage that may from time to time be in effect.

ARTICLE IX — ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS

	9.1	 	PARTICIPATING EMPLOYERS. This Plan shall constitute the employee stock purchase plan of
each Participating Employer which shall adopt this Plan as its own employees’ employee stock
purchase plan, effective with respect to each such Participating Employer upon the adoption
thereof by (1) official action of its board of directors, or by other similar action, (2)
execution of an instrument making such Participating Employer a signatory to this Plan, and
(3) by obtaining the consent of the Board of Directors; provided, however, that the granting
or withholding of consent to the Participating Employer’s participation by the Company shall
be within the sole discretion of the Board of Directors.
	 
	9.2	 	APPLICATION OF PLAN PROVISIONS. Except as provided in Section 9.3, the provisions of
this Plan shall be applied separately to each Participating Employer and its employees
exactly as if each such Participating Employer adopting the Plan was the sole and only
employer which is a party hereto. Except in Section 9.1 and as provided in Section 9.3, the
word “Employer,” wherever used herein, shall be deemed to refer only to the particular
employer separately insofar as that employer and its employees are concerned, and likewise
the words “Employee,” “Employees,” “Participant” and “Participants” shall be deemed to refer
solely to the employees of that particular employer, or such of them as may become
Participants, as if their employer were the sole and only employer which is a party hereto.
	 
	9.3	 	POWERS EXERCISABLE ONLY BY SWIFT ENERGY COMPANY. Only the Board of Directors shall be
authorized to appoint the members of the Administration Committee, which shall perform the
functions set forth in this Plan

13

 

	 	 	as the Administration Committee for the entire Plan, including portions attributable to
Participants employed by Participating Employers.

     IN WITNESS WHEREOF, this Agreement has been executed effective the ___day of ___,
2006.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	SWIFT ENERGY COMPANY	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	ATTEST:

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Secretary
	 	 	 	 	 	 	 	 

14

 

SWIFT ENERGY COMPANY

Employee Stock Purchase Plan

(ESPP)

PARTICIPATION ELECTION FORM

Being a full-time employee of Swift Energy Company or one of its subsidiaries (collectively,
the “Company”) as of June 1, 2006, I am eligible to participate in the Company’s Employee Stock
Purchase Plan (the Plan”) for the transitional Plan Year beginning June 1, 2006 and ending on
December 31, 2006. I elect as follows:

	 	 	 
	                    

	 	TO PARTICIPATE: I wish to purchase that amount of stock
that can be purchased with ___% of my annual base salary
(in increments of 1%, up to a maximum of 10% of annual base
salary) by payroll deduction. I hereby authorize my
employer to deduct the percentage of my annual base salary
that I specified above from my payroll check each pay
period effective June 1, 2006 and continuing while this
election is in effect.
	 
	 	 
	                    
(Initial)

	 	I understand and acknowledge that I may only decrease
my percentage contribution during the Plan Year.
	 
	 	 
	                    

	 	TO NOT PARTICIPATE: I do not wish to participate in the
Plan Year beginning June 1, 2006 and ending December 31,
2006. I understand that I will not be able to elect to
participate in the Plan until the Plan Year beginning
January 1, 2007 and ending December 31, 2007.
	 
	 	 
	                    

	 	TO CHANGE PERCENTAGE: I wish to change my current payroll
deduction to ___% of my annual base salary (in
increments of 1%, and can only be decreased from the
maximum of 10%).
	 
	 	 
	                    

	 	TO TERMINATE: I wish to terminate my participation in the
Plan for the Plan Year beginning June 1, 2006 and ending
December 31, 2006, and have all previous deductions
withdrawn from the Plan and paid to me.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Date

	 	 	 	Employee Signature
	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Print Name	 	 

	 	 	 
	                    
(Initial)

	 	Received by Human Resources on the ___day of ___, 2006.

15

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