EXHIBIT 10.2
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XXXXX XXXXXXX NATURAL GAS CORP.
DEFERRED STOCK TRUST AGREEMENT
This Trust Agreement ("Trust Agreement") is made effective this 14th day
of April, 1998 by and between Xxxxx Xxxxxxx Natural Gas Corp. ("Company") and
Bank of Oklahoma, N.A. ("Trustee");
WHEREAS, the Company has awarded 55,000 shares ("Shares") of common stock
as deferred stock awards ("Awards") which are intended to be a nonqualified
deferred compensation plan as described in Section 201(2) of the Employee
Retirement Income Security Act of 1974 as amended, ("ERISA").
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Awards with respect to the individuals participating in such
Award or their beneficiaries ("Participant");
WHEREAS, Company desires to establish a trust ("Trust") and contribute to
the Trust the Shares to be held therein, subject to the claims of Company's
creditors in the event of Company's Insolvency, as herein defined, until paid
to Participants in such manner and at such times as specified in the Awards;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Award as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of ERISA;
NOW THEREFORE, the parties do hereby establish the terms of the Trust and
agree that the Trust shall be comprised, held and disposed of as follows:
ARTICLE I
ESTABLISHMENT OF TRUST
1.1 Deposits. The Trust is hereby established and the Company has
deposited or will deposit the Shares to be held, administered and disposed of
by Trustee as provided in this Trust Agreement. The Participants and the
number of Shares to be allocated to the account of each Participant are as
follows:
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NAME NUMBER OF SHARES
---- ----------------
Xxxx X. Xxxxxx 20,000
Xxxxxxx X. Xxxxx 15,000
Xxxxxx X. Xxxxx 15,000
Xxxxx X. Xxxxx 5,000
------
Total 55,000
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1.2 Irrevocable Trust. The Trust hereby established shall be
irrevocable.
1.3 Grantor Trust. The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended
("Code"), and shall be construed accordingly.
1.4 Claims Against Trust. The principal of the Trust and any earnings
thereon shall be held separate and apart from other funds of Company and shall
be used exclusively for the uses and purposes of Participants and general
creditors as herein set forth. Participants shall have no preferred claim on,
or any beneficial ownership interest in, any assets of the Trust except for
the voting rights as described below. Any rights created under the Plan and
this Trust Agreement shall be mere unsecured contractual rights of
Participants against Company. Any assets held by the Trust shall be subject
to the claims of Company's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3.1.
1.5 Additional Deposits. Company shall make additional deposits in trust
with Trustee as required by the Awards to be held, administered and disposed
of by Trustee as provided in this Trust Agreement. In the event that any cash
or property dividend is paid with respect to the Shares or in the event of any
subdivision or consolidation of the shares of stock of the Company or other
capital adjustment or the payment of a stock dividend or other increase or
decrease in the number of shares of Company stock outstanding effected without
receipt of consideration by the Company, the Company shall cause to be
deposited in the Trust the cash, property or securities that would be
otherwise payable with respect to any of the Shares that remain in the Trust
as if such Shares were fully entitled to participate in any such distribution.
1.6 Sale or Conversion of Shares. In the event the Shares are sold or
converted into the securities of another company ("Proceeds") in the manner
permitted by this Trust Agreement and the Shares or Proceeds are not
immediately distributed to Participants, such Proceeds shall be held by the
Trustee and invested in accordance with the provisions hereof and the Oklahoma
Uniform Prudent Investor Act until otherwise distributed at the direction of
the Company.
ARTICLE II
PAYMENTS TO PLAN PARTICIPANTS AND BENEFICIARIES
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2.1 Delivery of Shares. Certificates for Shares duly endorsed and ready
for transfer, together with any additional property or Proceeds previously
deposited with the Trustee as provided in Sections 1.5 and 1.6, shall be
delivered by the Trustee (i) to an individual Participant ("Terminating
Participant") after such Participant's termination of employment with the
Company for any reason other than a "termination for cause" at such time as
the Company authorizes delivery, which shall in any event be no more than one
year following termination of employment or (ii) to all Participants
immediately after a "Change in Control" of the Company. A Terminating
Participant shall forfeit his right to receive delivery of the Shares, other
property or Proceeds if during the one year period following his termination
of employment, he directly or indirectly solicits or induces any other
employee of the Company or its subsidiaries to terminate his or her employment
with the Company. The Company shall promptly direct the Trustee to make any
payments that are payable hereunder. The Trustee may rely on the accuracy of
these directions. The Trustee shall make provision for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the delivery of the Shares and any additional
property to a Participant and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amounts have been withheld and paid
by the Company.
2.2 Termination for Cause. For purposes of this Trust Agreement, the
term "termination for cause" shall mean any discharge for violation of the
policies and procedures of the Company or for other job performance or conduct
which is detrimental to the best interest of the Company, as determined by the
Company in its sole discretion.
2.3 Change in Control. For purposes of this Trust Agreement the term
"Change in Control" of the Company shall mean the occurrence after the date
hereof:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Exchange Act) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of fifty percent (50%) or more of the combined
voting power of the Company's then outstanding Voting Securities;
(ii) The individuals who, as of the date hereof, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the members of the Board; provided, however, that
if the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes
of this Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened 'election contest' (as described in
Rule 14A-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by reason of
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any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization involving the
Company, unless
(1) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation, and
(3) no Person, other than (a) the Company, any
Subsidiary, any employee benefit plan (or any trust forming a
part thereof) maintained by the Company, the Surviving
Corporation, or any Subsidiary, (b) S.A. Xxxxx Xxxxxxx et Cie
("SALD") or a corporation or other entity that is directly or
indirectly more than 50% owned by SALD, or (c) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifty percent (50%)
or more of the then outstanding Voting Securities, has
Beneficial Ownership of fifty percent (50%) or more of the
combined voting power of the Surviving Corporation's then
outstanding voting securities;
(B) A complete liquidation or dissolution of the Company; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than
a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur:
(i) Solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding
Voting Securities as a result of the acquisition of Voting Securities by
the Company which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially
Owned by the Subject Person, provided that if a Change in Control would
occur (but for the operation of this sentence) as a result of the
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acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage
of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur or
(ii) By reason of any acquisition of Voting Securities by a
corporation or entity that is directly or indirectly more than 50% owned
by SALD
ARTICLE III
TRUSTEE'S RESPONSIBILITY UPON COMPANY'S INSOLVENCY
3.1 Cessation of Payment. Trustee shall cease payment of benefits to
Participants if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (a) Company is unable to
pay its debts as they become due, or (b) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
3.2 Assets Subject to Claims. At all times during the continuance of
this Trust, the principal and income of the Trust shall be subject to claims
of general creditors of Company under federal and state law set forth below.
3.2.1 Notice of Insolvency. The Board of Directors and the Chief
Executive Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be a creditor
of Company alleges in writing to Trustee that Company has become
Insolvent, Trustee shall determine whether Company is Insolvent and,
pending such determination, Trustee shall discontinue payment of benefits
to Participants.
3.2.2 Duty of Inquiry. Unless Trustee has actual knowledge of
Company's Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is Insolvent, Trustee
shall have no duty to inquire whether Company is Insolvent. Trustee may
in all events rely on such evidence concerning Company's solvency as may
be furnished to Trustee and that provides Trustee with a reasonable basis
for making a determination concerning Company's solvency.
3.2.3 Discontinuance of Benefits. If at any time Trustee has
determined that Company is Insolvent, Trustee shall discontinue payments
to Participants and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in
any way diminish any rights of Participants to pursue their rights as
general creditors of Company with respect to benefits due under the
Awards or otherwise.
3.2.4 Resumption of Benefits. Trustee shall resume the payment of
benefits to Participants in accordance with Article II of this Trust
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Agreement only after Trustee has determined that Company is not Insolvent
or is no longer Insolvent.
3.3 Continuation of Payments. Provided that there are sufficient assets,
if Trustee discontinues the payment of benefits from the Trust pursuant to
Section 3.2 hereof and subsequently resumes such payments, the first payment
following such discontinuance shall include the aggregate amount of all
payments due to Participants under the terms of the Awards for the period of
such discontinuance, less the aggregate amount of any payments made to
Participants by Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
ARTICLE IV
INVESTMENT AUTHORITY
4.1 Reversion of Assets. Except as provided in Article III hereof,
Company shall have no right or power to direct Trustee to return to Company or
to divert to others any of the Trust assets before all payment of benefits
have been made to Participants pursuant to the terms of the Awards; provided,
however, the Company may direct the Trustee to return the Trust assets held in
the account of a Participant to the Company in the event such Participant's
employment is terminated for cause.
4.2 Securities and Voting Rights. The Trustee shall hold the Shares and
any additional property or Proceeds deposited with respect thereto as provided
in Sections 1.5 or 1.6. The Trustee shall not sell the Shares or any other
securities of the Company deposited hereunder and shall have no liability to
the Company or Participants with respect to any decline in value of the Shares
or other securities of the Company. Subject to the foregoing, all rights
associated with the Shares and any other assets of the Trust shall be
exercised by Trustee or the person designated by Trustee, and shall in no
event be exercisable by or vest with Participants; provided, however, that
each Participant shall be entitled to direct the Trustee (i) as to how the
Shares allocated to him shall be voted and the Trustee shall not vote the
Shares in the absence of specific instructions from such Participant; and (ii)
whether to sell or not sell the Shares allocated to him if a tender offer or
exchange offer is made for the common stock of the Company, and, in the
absence of such direction, the Trustee shall not be required to take any
action with respect to such offer and shall not be liable to the Participant
for any inaction.
4.3 Cash and Income Accumulation. Any cash dividends paid with respect
to the Shares shall be invested by the Trustee in money market funds or
similar short term interest bearing investments. During the term of this
Trust, all income received by the Trust, net of expenses and taxes, shall be
accumulated and reinvested.
4.4 Mutual Funds. The Trustee, at its own discretion where the Trustee
has discretion with respect to investments under this Trust Agreement or
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applicable law or upon the direction of any person authorized to direct
investments under this Trust Agreement, including but not limited to, an
investment manager, employer, Participant or advisory committee, may invest in
the securities of any open-end or closed-end investment management trust or
company registered under the Investment Company Act of 1940, as amended from
time to time, to the maximum extent permitted by the laws of the State of
Oklahoma and ERISA. Such securities include but are not limited to securities
for which the Trustee or any of its subsidiaries or affiliated companies
serves as an investment advisor, sponsor, distributor, custodian, transfer
agent, administrator, registrar, or otherwise.
4.5 Accounting. Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to
be made, and shall provide a written account thereof to the Company or any
Participant upon request. All accounts, books and records relating to the
Trust shall be kept open to inspection and audit at all reasonable times by
the Company and Participants insofar as such records relate to such
Participant's account.
4.6 Participant Accounts. The Trustee shall maintain separate accounts
for the benefit of each Participant which shall be credited with the Shares
allocated to each such Participant and any additional property deposited and
the earnings attributable thereto.
ARTICLE V
RESPONSIBILITY OF TRUSTEE
5.1 Fiduciary Standard. Trustee shall act with the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent person
acting in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims, provided,
however, that Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by Company or a
Participant which is contemplated by, and in conformity with, the terms of the
Awards or this Trust and is given in writing by Company or Participant. In
the event of a dispute between Company and a Participant, Trustee may apply to
a court of competent jurisdiction to resolve the dispute.
5.2 Indemnification. If Trustee undertakes or defends any litigation
arising in connection with this Trust, Company agrees to indemnify Trustee
against Trustee's costs, expenses and liabilities (including, without
limitation, attorneys' fees and expenses) relating thereto and to be liable
for such payments.
5.3 Consultation. Trustee may consult with legal counsel (who may also
be counsel for Company generally) with respect to any of its duties or
obligations hereunder.
5.4 Hiring of Professionals. Trustee may hire agents, accountants,
actuaries, investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations hereunder.
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5.5 Powers. Trustee shall have, without exclusion, all powers conferred
on Trustees by applicable law, unless expressly provided otherwise herein.
5.6 Tax Returns. Trustee shall not be responsible for tax return
preparation or filing, nor any reporting to any governmental agency of income
earned, but not distributed.
5.7 Other Business. Notwithstanding any powers granted to Trustee
pursuant to this Trust Agreement or applicable law, Trustee shall not have any
power that could give this Trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning of Section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Code.
5.8 Fees and Expenses. Company shall pay all administrative and
Trustee's fees and expenses.
ARTICLE VI
RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
6.1 Resignation. Trustee may resign at any time by written notice to
Company, which shall be effective 30 days after receipt of such notice unless
Company and Trustee agree otherwise.
6.2 Removal. Trustee may be removed by Company on 30 days notice or upon
shorter notice accepted by Trustee.
6.3 Appointment of Successor by Company. If Trustee resigns or is
removed in accordance with Section 6.1 or 6.2 hereof, Company may appoint a
successor trustee to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee,
who shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor
Trustee to evidence the transfer.
6.4 Court Appointed Trustee. If Trustee resigns or is removed, a
successor shall be appointed, in accordance with Sections 6.3 hereof, by the
effective date of resignation or removal. If no such appointment has been
made, Trustee may apply to a court of competent jurisdiction for appointment
of a successor or for instructions. All expenses of Trustee in connection
with the proceeding shall be allowed as administrative expenses of the Trust.
6.5 Indemnification of Successor Trustee. The successor Trustee need not
examine the records and acts of any prior Trustee and may retain or dispose of
existing Trust assets. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it becomes
successor Trustee.
ARTICLE VII
AMENDMENT OR TERMINATION
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7.1 Amendment. This Trust Agreement may be amended by a written
instrument executed by Trustee and Company. Notwithstanding the foregoing, no
such amendment shall conflict with the terms of the Awards or shall make the
Trust revocable.
7.2 Termination. The Trust shall not terminate until the date on which
Participants are no longer entitled to benefits pursuant to the terms of any
Award. Upon termination of the Trust any assets remaining in the Trust shall
be returned to Company.
7.3 Termination with Approval of Participants. Upon written approval any
Participant entitled to payment of benefits pursuant to the terms of an Award,
Company may terminate this Trust as to such Participant prior to the time all
benefit payments under the Award have been made. All assets in the Trust held
for the benefit of such Participant at termination shall be returned to
Company.
ARTICLE VIII
MISCELLANEOUS
8.1 Severability. Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
8.2 Assignment of Benefits. Benefits payable to Participants under this
Trust Agreement may not be anticipated, assigned, either at law or in equity,
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process, except in the event of the
death of a Participant pursuant to the laws of descent and distribution or to
the Participant's designated beneficiary.
8.3 Governing Law. This Trust Agreement shall be governed by and
construed in accordance with the laws of Oklahoma.
8.4 No Relief of Company Obligation. The terms of this Trust Agreement
shall not be construed to relieve the Company from any obligation to
Participants under the Awards except to the extent the Company's
obligations are satisfied by delivery of the Shares and any other property as
provided herein.
TRUSTEE
BANK OF OKLAHOMA, N.A.
By:
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Authorized Officer
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COMPANY
XXXXX XXXXXXX NATURAL GAS CORP.
By:
--------------------------------
Authorized Officer
