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EXHIBIT 10.2
UNION PACIFIC RESOURCES GROUP INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(Effective September 5, 1997)
ARTICLE I
Establishment of the Plan
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1.1. PURPOSE. The Union Pacific Resources Group Inc. (the "Company")
hereby adopts the Union Pacific Resources Group Inc. Executive Deferred
Compensation Plan (the "Plan") for the purpose of allowing selected
executives of the Company and its subsidiaries to defer salary,
executive incentive awards and certain items of long-term incentive
compensation. The Company intends that the Plan shall at all times be
maintained on an unfunded basis for federal income tax purposes under
the Internal Revenue Code of 1986, as amended (the "Code"), and
administered as a "top hat" plan exempt from the substantive
requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). To the extent that this Plan permits the deferral of
"performance-based compensation" within the meaning of Code section
162(m), it is the Company's intention that this Plan be administered in
a manner which preserves the status of such compensation as
"performance-based compensation".
1.2. EFFECTIVE DATE. Unless otherwise indicated, this Plan shall be
effective as of September 5, 1997.
ARTICLE II
Definitions
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2.1 ACCOUNT. The bookkeeping record of a Participant's deferrals and
corresponding credits as provided in Article V.
2.2 BENEFICIARY. The individual or individuals designated by the
Participant to receive distributions under this Plan in the event of
the Participant's death.
2.3 BOARD. The Board of Directors of the Union Pacific Resources Group
Inc. or such Committee thereof delegated to act on its behalf.
2.4 CHANGE OF CONTROL. An event set forth in any one of the following
paragraphs:
(a) any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates of
a business) representing 15% or more of either the then outstanding
shares of common stock of the Company or the combined voting power
of the Company's then outstanding securities; or
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(b) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals
who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A under the
Securities Exchange Act of 1933)) whose appointment or election
by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds ( ) of
the directors then still in office who either were directors on
the date hereof or whose appointment, election or nomination for
election was previously so approved; or
(c) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or
approve the issuance of voting securities of the Company in
connection with a merger or consolidation of the Company (or any
direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (i) a merger
or consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 50% of
the combined voting power of the voting securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person is or becomes
the beneficial owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned
by such person any securities acquired directly from the Company
or its affiliates other than in connection with the acquisition
by the Company or its affiliates of a business) representing 15%
or more of either the then outstanding shares of common stock of
the Company or the combined voting power of the Company's then
outstanding securities; or
(d) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 50% of the combined voting power of the voting
securities of which are owned by persons in substantially the
same proportions as their ownership of the Company immediately
prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed
to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders
of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially
the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately following
such transaction or series of transactions.
2.5 COMMITTEE. The Compensation and Corporate Governance Committee of
the Board.
2.6 COMPANY. Union Pacific Resources Group Inc.
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2.7 DEFERRAL ELECTION. The Executive Incentive Award Deferral
Election, the Long-Term Incentive Deferral Election, and the Salary
Deferral Election.
2.8 DEFERRED EXECUTIVE INCENTIVE AWARD. The amount of Executive
Incentive Award which the Executive and the Company mutually agree
shall be deferred in accordance with this Plan.
2.9 DEFERRED COMPENSATION. Deferred Executive Incentive Award,
Deferred Long-Term Incentive and Deferred Salary.
2.10 DEFERRED LONG-TERM INCENTIVE. The amount of Long-Term Incentive
which the Officer and the Company mutually agree shall be deferred in
accordance with this Plan.
2.11 DEFERRED SALARY. The amount of Salary which the Officer and the
Company mutually agree shall be deferred in accordance with this Plan.
2.12 DISABILITY. A Participant is considered to have suffered a
disability under this Plan if he or she would be treated as disabled
under the Company's long-term disability plan in force at the time of
the disability.
2.13 ELECTION DEADLINE. The day or date established by the Committee
after which a Deferral Election may not be revoked by the Participant.
2.14 EXECUTIVE. An Officer or senior manager of the Company or
subsidiary selected by the Committee to be a participant in this Plan.
2.15 EXECUTIVE INCENTIVE AWARD. Any form of annual incentive
compensation awarded to the Executive under any plan or arrangement
maintained by the Company or any of its subsidiaries.
2.16 EXECUTIVE INCENTIVE AWARD DEFERRAL ELECTION. An Executive's
election to defer all or a portion of an Executive Incentive Award in
the form specified by the Committee and subject to the terms of the
Plan.
2.17 INVESTMENT FUND. Any fund or funds selected by the Committee into
which deferrals and matching contributions are notionally invested
under this Plan. Unless otherwise specified, the UPR Stock Fund shall
at all times be an Investment Fund under this Plan.
2.18 LONG-TERM INCENTIVE. Compensation attributable to the award of
retention stock, the gains attributable to nonqualified stock options
and such other forms of long-term incentive compensation as the
Committee may determine.
2.19 LONG-TERM INCENTIVE DEFERRAL ELECTION. An Officer's election to
defer all or a portion of Long-Term Incentive in the form specified by
the Committee and subject to the terms of the Plan.
2.20 OFFICER. A senior level Executive of the Company specifically
designated by the Committee.
2.21 PARTICIPANT. An Executive who elects to participate in this Plan
pursuant to the requirements of Article III hereof.
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2.22 RETIREMENT. A separation from the service of the Company or
subsidiary coupled with the immediate receipt of retirement benefits
under the Union Pacific Resources Group Inc. Employees' Pension Plan.
2.23 SALARY. An Officer's annual base pay in excess of the compensation
limit imposed by Code section 401(a)(17) or such other amount as may be
determined by the Committee.
2.24 SALARY DEFERRAL ELECTION. An Officer's election to defer Salary
in the form specified by the Committee and subject to the terms of
this Plan.
2.25 TERMINATION OF EMPLOYMENT. A separation from the service of the
Company or subsidiary for any reason other than Retirement, death or
Disability. A transfer from the Company to a subsidiary shall not
constitute a Termination of Employment.
2.26 UPR STOCK FUND. An Investment Fund into which amounts deferred and
credited shall be converted to phantom shares of the Company's common
stock in the manner determined by the Committee. Deferrals into the UPR
Stock Fund shall be available to Officers only.
ARTICLE III
Eligibility and Participation
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3.1 ELIGIBILITY. An Executive shall be eligible to participate in this
Plan only if he or she has already made or agreed to make, with respect
to the Company's Employee's Thrift Plan, the maximum elective deferrals
described in Code section 402(g) or the maximum elective contributions
permitted under such Thrift Plan; provided, however, that this
eligibility requirement shall remain effective only for such period as
it is deemed necessary to preserve the tax-qualified status of the
Thrift Plan.
3.2. ELECTION TO DEFER EXECUTIVE INCENTIVE AWARD. An Executive may
participate in the Deferred Executive Incentive Award portion of this
Plan by executing an Executive Incentive Award Deferral Election on or
before the date prescribed by the Committee with respect to any
Executive Incentive Award not yet awarded. The Executive Incentive
Award Deferral Election shall be made on a form approved by the
Committee, which shall require an electing Executive to defer a
specific amount of any Executive Incentive Award which may be made to
him or her in the future, not to exceed the Executive Incentive Award
less applicable withholding taxes.
3.3 ELECTION TO DEFER SALARY. An Executive, who is an Officer, may
participate in the Deferred Salary portion of this Plan by executing a
Salary Deferral Election on or before the date prescribed by the
Committee with respect to Salary not yet earned. The Salary Deferred
Election shall be made on a form approved by the Committee which shall
require the electing Officer to defer a specific amount of Salary not
to exceed the Salary less applicable withholding taxes.
3.4 ELECTION TO DEFER LONG-TERM INCENTIVE. An Executive, who is an
Officer, may participate in the Deferred Long-Term Incentive portion of
this Plan by executing a Long-Term Incentive Election on or before the
date prescribed by the Committee with respect to any Long-Term
Incentive which is not yet recognizable by the Officer for federal
income tax purposes. The Long-Term Incentive Election shall be made on
a form approved by the Committee, which shall require the
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electing Officer to defer a specified amount of the Long-Term
Incentive, not to exceed the Long-Term Incentive less applicable
withholding taxes.
3.5 REVOCATION. A Deferral Election may not be revoked by the
Participant after the Election Deadline; provided, however, that with
respect to a Salary Deferral Election, a Participant may revoke future
deferrals of amounts not yet earned for the remainder of the year in
question, with appropriate written notice to the Committee.
3.6 CHANGE OF STATUS. Notwithstanding any other provision of this Plan,
in the case of any Executive who becomes a non-Executive while still
employed by the Company, any Executive Incentive Award Deferral
Election, Salary Deferral Election or Long-Term Incentive Deferral
Election entered into prior to the occurrence of such change in status
shall be unaffected by such change in status, except that, as provided
in Section 3.4 hereof, future deferrals of Salary not yet earned for
the year in question may be revoked. No new elections relating to
Salary, an Executive Incentive Award or a Long-Term Incentive will be
permitted hereunder while such employee remains in a non-Executive
status.
ARTICLE IV
Matching Company Contributions
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4.1 CONTRIBUTION. The Company shall credit an additional 25 percent to
the Account of any Officer who elects to have his or her Deferred
Executive Incentive Award or his or her Deferred Salary notionally
invested in the UPR Stock Fund for a period of at least three years.
The Company's matching contribution shall also be invested in the UPR
Stock Fund and shall remain so invested until the Officer terminates
employment with the Company for any reason.
4.2 FORFEITURE. The Company's matching contribution shall be forfeited
by the Officer if the Officer incurs a Termination of Employment or
Retirement prior to the first anniversary of the date such matching
contribution is credited to his or her Account and under the
circumstances described in the hardship withdrawal provisions of
Section 7.2. Notwithstanding the foregoing, a forfeiture shall not be
imposed if either (a) the Officer's Termination of Employment or
Retirement occurs within two years after a Change of Control, or (b)
the Committee determines that it is in the best interests of the
Company that the forfeiture not be imposed.
ARTICLE V
Account
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5.1 ACCOUNT. The Committee shall establish an Account (including all
necessary subaccounts) for each Participant hereunder.
5.2 PARTICIPANT AND MATCHING CONTRIBUTIONS. Each Participant's Account
shall be credited by bookkeeping entries in amounts equal to the
amounts which (a) the Participant has elected to defer by a Deferral
Election as of the date such amounts would have been paid to such
Participant had such Deferral Election not been in force and (b) any
matching amounts, if applicable, credited under Article IV.
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5.3 ADJUSTMENTS. Each Participant's Account shall be credited by
bookkeeping entries with earnings (or losses) reflecting the Investment
Fund into which his or her Deferred Compensation or corresponding
matching contribution was notionally invested. A Participant may change
Investment Funds at any time and in any manner prescribed by the
Committee; provided, however, that (a) only an Officer may elect to
have his or her deferrals notionally invested in the UPR Stock Fund;
(b) any Deferred Executive Incentive Award or any Deferred Salary which
an Officer elects to have notionally invested in the UPR Stock Fund
shall remain so invested until paid to the Officer under Article VII
and (c) any Deferred Long-Term Incentive and any Company matching
contributions credited to the Officer's Account under Section 4.1 shall
be invested in the UPR Stock and shall remain so invested until the
Officer terminates employment with the Company for any reason.
5.4 STATEMENTS. Each Participant will receive a statement of his or her
Account at such regular intervals as determined by the Committee.
ARTICLE VI
Deferred Elections
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6.1 DEFERRAL PERIOD. A Participant shall elect at the time of his or
her Deferral Election to have the specified amount, plus any earnings
attributable thereto, deferred until (a) a future date specified by the
Participant in such Deferral Election or (b) the earliest to occur of
such Participant's Termination of Employment, Retirement, Disability or
death. If a Participant, who is an officer, elects to have his or her
Deferred Executive Incentive Award or Deferred Salary notionally
invested in the UPR Stock Fund, the deferral period for such investment
must be at least three years, otherwise the Company's matching
contribution under Section 4.1 shall not be credited to his or her
Account.
6.2 LIMITATIONS. Notwithstanding Section 6.1, a Participant may not
make a Deferral Election to a date beyond the Participant's life
expectancy and, in general, the commencement of any distribution under
this Plan will not be deferred beyond the earliest to occur of the
following: the Participant's Termination of Employment, Retirement,
Disability or death.
ARTICLE VII
Distributions and Withdrawals
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7.1 DISTRIBUTIONS. Distributions under this Plan shall be made in the
manner set forth below:
(a) IN-SERVICE. Deferred Compensation shall be distributed to
a Participant, while employed with the Company, on the date
specified pursuant to Section 6.1(a) hereof and in accordance
with the distribution method selected by the Participant on
his or her Deferral Election form.
(b) TERMINATION OF SERVICE. Upon a Participant's termination
of employment for any reason, the Committee shall distribute
his or her Account, in the sole discretion of the Committee,
as follows:
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(i) in a single distribution paid in the year of his
or her termination or in January of the following
year, as determined by the Committee; or
(ii) over such number of years as are fixed by the
Committee but not exceeding fifteen, in annual
installments of substantially equal value,
the first of such installments to be paid or
delivered in the month following the month of his or
her termination, or at the discretion of the
Committee not later than 12 months following the date
of termination and subsequent installments to be paid
or delivered in January of each subsequent year; or
(iii) in the event of Retirement or death of a
currently employed Participant, at a specified future
date not to exceed 15 years from the
date of such Retirement or death in a single
distribution, an amount equal to the value of the
Participant's Account. Prior to such distribution,
the income generated by such Account shall be paid in
cash quarterly to such Participant's or his or her
Beneficiary commencing with the first day of the
month subsequent to such Participant's Retirement or
death. In the case of Retirement, the single
distribution referred to above will be paid on the
date specified or upon death, whichever occurs first;
or
(iv) in any other manner determined by the Committee.
7.2 HARDSHIP WITHDRAWALS. Upon written application to the Committee, a
Participant may request a withdrawal of all or any portion of the
amounts then credited to his or her Account (except for any Company
matching contributions credited under Section 4.1) prior to the time of
payment applicable under section 6.1 in the case of an unforeseeable
emergency.
For purposes of this Section 7.2, an unforeseeable emergency is any
severe financial hardship to the Participant resulting from a sudden
and unexpected illness or accident of the Participant or of a dependent
of the Participant, loss of the Participant's property due to casualty,
or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. The
circumstances that will constitute an unforeseeable emergency will
depend upon the facts of each case, but, in any case, payment may not
be made to the extent that such hardship is or may be relieved --
(a) Through reimbursement or compensation by insurance or otherwise,
(b) By liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship, or
(c) By cessation of deferrals under the Plan.
The Participant's need to send a child to college, the desire to
purchase a home and similar financial circumstances shall not be
considered unforeseeable emergencies under this Plan.
The decision of the Committee shall be final, conclusive and binding
upon the Participant and any and all persons claiming through the
Participant. Under no circumstances shall the Committee consent to the
withdrawal of an amount which is in excess of the amount necessary to
relieve the Participant's need. If a Participant, who is an officer,
requests, and the Committee consents to, the release of amounts held
in the UPR Stock Fund for a period
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of less than three years, then the release of any such amounts shall
result in the forfeiture of any corresponding Company matching
contributions credited under Section 4.1 hereto.
7.3 DEATH.
(a) If the Participant dies prior to the time his or her Account is
distributed under Section 7.1, all amounts credited to such Account
shall be paid to the Participant's Beneficiary in accordance with
Section 7.1.
(b) All designations of Beneficiary shall be on such forms as are
specified by and filed with the Committee. Any Beneficiary designation
made by the Participant in accordance with this provision may be
changed from time to time by filing with the Committee a notice of
such change on the form provided by the Committee and such change of
Beneficiary designation shall become effective upon receipt by the
Committee.
(c) In the event a Participant's Beneficiary would otherwise become
entitled to a distribution hereunder, and all Beneficiaries designated
by the Participant are not then living, or if no valid Beneficiary
designation is in effect, the Participant's estate or duly authorized
personal representative shall be deemed to have been designated by the
Participant.
7.4 ACCELERATED PAYMENTS. The Committee may accelerate any payments
deferred hereunder if it determines that such acceleration is in the best
interests of the Company.
7.5 PAYMENTS FROM THE UPR STOCK FUND. Notwithstanding the foregoing,
any distributions or withdrawals from the UPR Stock Fund shall be paid
in whole shares of the Company's common stock, except that any
fractional share shall be paid in cash.
ARTICLE VIII
Administration
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8.1 The Plan shall be administered by the Committee. The Committee
shall be vested with full authority to make, administer and interpret
such rules and regulations as it deems necessary to administer the
Plan. Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration or
application of the Plan shall be final, conclusive and binding upon all
Participants and any and all persons claiming under or through any
Participant. The Committee shall have the authority to:
(i) Engage agents to perform services on behalf of the Committee and
to authorize the payment of reasonable compensation for the
performance of such service;
(ii) Delegate to designated employees or departments of the Company
the authority to perform such of the Committee's administrative duties
hereunder as may be delegated to such employees or departments.
8.2 The Company shall pay the costs of administering the Plan.
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ARTICLE IX
Amendment and Termination
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9.1 AMENDMENT. The Company may at any time amend this Plan; provided,
however that no amendment shall reduce amounts already credited to a
Participant's Account at the time of such amendment.
9.2 TERMINATION. The Company may at any time terminate this Plan
provided that:
(a) no such termination shall reduce amounts already credited to a
Participant's Account at such time; and
(b) termination of the Plan will not automatically accelerate the
time of distributions nor cease the accrual of earnings prior to
the applicable event under section 6.1 hereof, unless the
Company, by action of its Board, shall elect to accelerate all
distributions at the time it elects to terminate this Plan.
ARTICLE X
Miscellaneous
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10.1 EFFECT ON OTHER PLANS. This Plan relates only to deferrals made by
Executives pursuant to its provisions on or after the Effective Date.
The timing and method of payment of distributions attributable to any
other deferral elections previously made by the Executive under any
other plan or plans maintained by the Company shall be controlled by
such other plan or plans.
10.2 NO RIGHT OF EMPLOYMENT. Nothing in the Plan shall be deemed to
grant an Executive any rights other than those specifically outlined in
the Plan. Nothing in the Plan shall be deemed to create any right of,
or contract for, employment between an Executive and the Company.
10.3 WITHHOLDING. The Company shall, on behalf of itself or any
subsidiary, deduct from any distributions due to any Participant or
Beneficiary hereunder, any taxes required to be withheld by Federal,
state or local governments.
10.4 NON-ASSIGNABILITY CLAUSE. Participants may not borrow from their
Accounts in this Plan. Neither the Participant, nor his Beneficiary,
nor any other designee, shall have any right to commute, sell, assign,
encumber, transfer or otherwise convey the right to receive any
distributions hereunder which distributions and right thereto are
expressly declared to be non-assignable and non-transferable; and, any
such attempted assignment or transfer shall be null and void.
10.5 PROHIBITION AGAINST FUNDING. Any provision for distributions
hereunder shall be by means of bookkeeping entries on the books of the
Company and shall not create in the Participant or Beneficiary any
right to, or claim against any specific assets of the Company, nor
result in the creation of any trust or escrow account for the
Participant or Beneficiary. A Participant or Beneficiary entitled to
any distributions hereunder shall be a general creditor of the Company.
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10.6 CONTROLLING LAW. This Plan and the respective rights and
obligations of the Company and the Participants and Beneficiaries,
except to the extent otherwise provided by Federal law, shall be
construed under the laws of the State of Texas.
10.7 SEVERABILITY. The invalidity or unenforceability of any provision
of this Plan shall not affect the other provisions, and the Plan shall
be construed in all respects as if any invalid or unenforceable
provision were omitted.