Exhibit 10(b)
RESTRICTED STOCK RETENTION AGREEMENT
This Agreement is entered into as of August 1, 2001, between Northwest
Natural Gas Company, an Oregon corporation (the "Company"), and Xxxxx X. XxXxxx
("Recipient").
The Company has awarded restricted stock to Recipient pursuant to Section 6
of the Company's Long Term Incentive Plan (the "Plan") and Recipient desires to
accept the award subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Award of Restricted Stock. Subject to the terms and conditions of
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this Agreement, the Company hereby grants to Recipient 4,500 shares of Common
Stock of the Company (the "Restricted Shares"). The Restricted Shares are
subject to forfeiture to the Company as set forth in Section 3.
2. Shares Purchased on Open Market; Stock Certificate.
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2.1 As soon as practicable after execution of this Agreement by
the Company and Recipient, the Company shall pay to a securities broker or other
third party an amount equal to the market price of the Restricted Shares, with
instructions to purchase the Restricted Shares on the open market in Recipient's
name and to deliver the certificates representing the Restricted Shares in
Recipient's name to the Company to hold pursuant to Section 2.2.
2.2 To secure the rights of the Company under Sections 3 and 5,
the Company will retain the certificate or certificates representing the
Restricted Shares. Upon any forfeiture of Restricted Shares covered by this
Agreement, the Company shall have the right to cancel such Restricted Shares in
accordance with this Agreement without any further action by Recipient. Upon any
failure of the Recipient to pay required withholding under Section 5, the
Company shall have the right to cancel vested Restricted Shares with a value
equal to the required withholding amount without any further action by the
Recipient. After Restricted Shares have vested and all required withholding has
been paid to the Company in connection with such vesting, the Company shall
deliver a certificate for the vested Restricted Shares to Recipient (unless
Recipient shall have made a deferral election as provided for in Section 5.3).
3. Vesting; Forfeiture Restriction.
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3.1 All of the Restricted Shares shall initially be unvested. The
Restricted Shares shall vest in accordance with the following schedule:
50% of the Restricted Shares shall vest on January 15, 2005 An
additional 25% of the Restricted Shares shall vest on January 15, 2006
The remaining 25% of the Restricted Shares shall vest on January 15,
2007
In addition, all Restricted Shares shall immediately vest if (a) Recipient's
employment by the Company is terminated because of death or physical disability
(within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986
(the "Code")), or (b) a Change in Control (as defined below) shall occur.
3.2 If Recipient ceases to be employed by the Company for any
reason or for no reason, with or without cause, other than death or physical
disability (within the meaning of Section 22(e)(3) of the Code), any unvested
Restricted Shares shall be forfeited to the Company.
3.3 For purposes of this Agreement, a "Change in Control" of the
Company shall mean the occurrence of any of the following events:
(a) The approval by the shareholders of the Company of:
(1) any consolidation, merger or plan of share exchange
involving the Company (a "Merger") in which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common Stock of the Company
("Company Shares") would be converted into cash, securities or other property,
other than a Merger involving Company Shares in which the holders of Company
Shares immediately prior to the Merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the Merger;
(2) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
the assets of the Company; or
(3) the adoption of any plan or proposal for the
liquidation or dissolution of the Company;
(b) At any time during a period of two consecutive years,
individuals who at the beginning of such period constituted the Company's Board
of Directors ("Incumbent Directors") shall cease for any reason to constitute at
least a majority thereof; provided, however, that the term "Incumbent Director"
shall also include each new director elected during such two-year period whose
nomination or election was approved by two-thirds of the Incumbent Directors
then in office; or
(c) Any person (as such term is used in Section 14(d) of the
Securities Exchange Act of 1934, other than the Company or any employee benefit
plan sponsored by the Company) shall, as a result of a tender or exchange offer,
open market purchases or privately negotiated purchases from anyone other than
the Company, have become the beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company ordinarily having the right to vote for the election
of directors ("Voting Securities") representing twenty percent (20%) or more of
the combined voting power of the then outstanding Voting Securities.
4. Restriction on Transfer. Recipient shall not sell, assign, pledge,
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or in any manner transfer unvested Restricted Shares, or any right or interest
in unvested Restricted Shares, whether voluntarily or by operation of law, or by
gift, bequest or otherwise. Any sale or transfer, or purported sale or transfer,
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of unvested Restricted Shares, or any right or interest in unvested Restricted
Shares, in violation of this Section 4 shall be null and void.
5. Tax Withholding; Deferral Election.
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5.1 Except as otherwise provided in Section 5.2 or 5.3, Recipient
acknowledges that, on the date (the "Vesting Date") any portion of the
Restricted Shares vests, the Value (as defined below) on that date of such
vested Restricted Shares will be treated as ordinary compensation income for
federal and state income and FICA tax purposes, and that the Company will be
required to withhold taxes on this income amount. Promptly following vesting,
the Company will notify Recipient of the required withholding amount. Within 10
days of such notice, Recipient shall pay to the Company the required withholding
amount in cash or by check.
5.2 If Recipient timely files an election under Section 83(b) of
the Code with respect to the Restricted Shares, Recipient acknowledges that the
Value of the Restricted Shares as of the date of this Agreement will be treated
as ordinary compensation income for federal and state income and FICA tax
purposes, and that the Company will be required to withhold taxes on this income
amount. Promptly following Recipient's filing of a timely election under Section
83(b) of the Code, the Company will notify Recipient of the required withholding
amount. Within 10 days of such notice, Recipient shall pay to the Company the
required withholding amount in cash or by check.
5.3 If Recipient makes a valid election to defer receipt of
vested Restricted Shares pursuant to the terms of the Company's Executive
Deferred Compensation Plan (as such plan may be amended to permit such
elections), any vested Restricted Shares covered by such election shall be
delivered to the trustee of the Company's Umbrella Trust(TM) For Executives
promptly following vesting and withholding of taxes shall be governed by the
terms of the Executive Deferred Compensation Plan.
6. Rights as Shareholder; Dividends. Upon the execution and delivery
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of this Agreement and the purchase of the Restricted Shares in the market as
provided in Section 2.1, the award of the Restricted Shares shall be completed
and, except as limited by this Agreement, Recipient shall be the owner of the
Restricted Shares with all rights of a shareholder, including the right to vote
the Restricted Shares and to receive dividends payable with respect to the
Restricted Shares. Until the Restricted Shares become vested, the Restricted
Shares will not be treated as issued shares for tax purposes and dividends paid
to Recipient with respect to unvested Restricted Shares will be treated for
federal and state income and FICA tax purposes as ordinary compensation income
subject to applicable withholding.
7. Additional Company Shares. If, prior to vesting of Restricted
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Shares, the outstanding Common Stock is increased as a result of a stock
dividend or stock split, the restrictions and other provisions of this Agreement
shall apply to any such additional shares of Common Stock which are issued in
respect of the Restricted Shares to the same extent as such restrictions and
other provisions apply to the Restricted Shares.
8. No Right to Employment. Nothing contained in this Agreement shall
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confer upon Recipient any right to be employed by the Company or to continue to
provide services to the Company or to interfere in any way with the right of the
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Company to terminate Recipient's services at any time for any reason, with or
without cause.
9. Miscellaneous.
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9.1 Entire Agreement; Amendment. This Agreement constitutes the
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entire agreement of the parties with regard to the subjects hereof and may be
amended only by written agreement between the Company and Recipient.
9.2 Notices. Any notice required or permitted under this
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Agreement shall be in writing and shall be deemed sufficient when delivered
personally to the party to whom it is addressed or when deposited into the
United States Mail as registered or certified mail, return receipt requested,
postage prepaid, addressed to the Company, Attention: Corporate Secretary, at
its principal executive offices or to Recipient at the address of Recipient in
the Company's records, or at such other address as such party may designate by
ten (10) days' advance written notice to the other party.
9.3 Assignment; Rights and Benefits. Recipient shall not assign
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this Agreement or any rights hereunder to any other party or parties without the
prior written consent of the Company. The rights and benefits of this Agreement
shall inure to the benefit of and be enforceable by the Company's successors and
assigns and, subject to the foregoing restriction on assignment, be binding upon
Recipient's heirs, executors, administrators, successors and assigns.
9.4 Further Action. The parties agree to execute such further
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instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
9.5 Applicable Law; Attorneys' Fees. The terms and conditions of
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this Agreement shall be governed by the laws of the State of Oregon. In the
event either party institutes litigation hereunder, the prevailing party shall
be entitled to reasonable attorneys' fees to be set by the trial court and, upon
any appeal, the appellate court.
9.6 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NORTHWEST NATURAL GAS COMPANY
By /s/ X. X. Xxxxxx
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Chairman and CEO
RECIPIENT
/s/ Xxxxx X. XxXxxx
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Xxxxx X. XxXxxx
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