Document:

Exhibit 10.2

 

Exhibit 10.2

NATIONAL FUEL GAS COMPANY AND PARTICIPATING SUBSIDIARIES

EXECUTIVE RETIREMENT PLAN 2003 TRUST AGREEMENT (I)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page

	SECTION 1. Restatement and Title of the Trust
	 	 	2	 
	SECTION 2. Acceptance by the Trustee
	 	 	4	 
	SECTION 3.
Limitation on Use of Funds; Trustee Responsibility Regarding Payments to Member or Beneficiary When the Company is Insolvent; Payments to the Company
	 	 	4	 
	SECTION 4. Duties and Powers of the Trustee with Respect to Investments
	 	 	6	 
	SECTION 5. Additional Powers and Duties of the Trustee
	 	 	8	 
	SECTION 6. Payments by the Trustee
	 	 	11	 
	SECTION 7. Third Parties
	 	 	14	 
	SECTION 8. Taxes, Expenses and Compensation
	 	 	14	 
	SECTION 9. Administration and Records
	 	 	15	 
	SECTION 10. Removal or Resignation of the Trustee and Designation of Successor Trustee
	 	 	17	 
	SECTION 11. Enforcement of Trust Agreement and Legal Proceedings
	 	 	18	 
	SECTION 12. Change in Control Defined
	 	 	19	 
	SECTION 13. Termination
	 	 	21	 
	SECTION 14. Amendments
	 	 	21	 
	SECTION 15. Non-alienation
	 	 	22	 
	SECTION 16. Communications
	 	 	22	 
	SECTION 17. Miscellaneous Provisions
	 	 	24	 
	EXHIBIT A
	 	 	 	 

i

 

NATIONAL FUEL GAS COMPANY AND PARTICIPATING SUBSIDIARIES

EXECUTIVE RETIREMENT PLAN 2003 TRUST AGREEMENT (I)

     This 2003 RESTATEMENT OF THE TRUST AGREEMENT, made and entered into as of
September 1, 2003, by NATIONAL FUEL GAS COMPANY, a corporation organized under
the laws of the State of New Jersey, (the Company), and HSBC Bank USA, a bank
organized under the laws of the state of New York (the Trustee)

W I T N E S S E T H:

     WHEREAS, the Company established an excess benefit plan, within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of
1974, as amended (ERISA), called the National Fuel Gas Company and Subsidiaries
Supplemental Executive Retirement Plan (the SERP), for the benefit of certain
employees;

     WHEREAS, the Company subsequently established an unfunded plan of deferred
compensation under ERISA § 201(2), called the National Fuel Gas Company and
Participating Subsidiaries Executive Retirement Plan (the Plan), and amended
the Plan, so that the Plan provides benefits in addition to and inclusive of
those provided under the SERP, and the SERP was terminated effective April 25,
1988;

     WHEREAS, the Plan provides for the Company to pay all benefits from its
general assets and does not require it to pay benefits from the assets of any
trust or special or separate fund established by the Company to assure those
payments;

     WHEREAS, the Company established a revocable trust fund, subject to the
Company’s Insolvency, to aid it in meeting its obligations under the SERP, and
amended that trust as of May 10, 1996 to aid the Company in meeting its
obligations under the Plan;

     WHEREAS, the Company remains concerned that benefits may not be paid under
the Plan if there is a Change in Control and wishes to assure payment on and
after a Change in Control;

 

 

     WHEREAS, the Company wishes to benefit all participants in the Plan,
called Members, whether retired or not, and Beneficiaries, on and after a
Change in Control;

     WHEREAS, the Company wishes to amend the trust further to provide
additional protection to Members and Beneficiaries of the Plan by making the
trust generally irrevocable on a Change in Control and to provide that
protection as equitably as possible among those Members and Beneficiaries;

     WHEREAS, the Company intends to make contributions to the trust fund to
aid it in meeting its obligations under the Plan, until that trust fund is
revoked by the Company under the circumstances described in this Trust
Agreement, when the trust fund will be returned to the Company, and to provide
for the payment of benefits on and after a Change in Control, and in other
circumstances, and those contributions will be held by the Trustee, and
invested, reinvested and distributed, including subject to the Company’s
Insolvency, in accordance with this Trust Agreement;

     WHEREAS, the Trustee is under no duty to determine whether any
contributions are in accordance with the Plan or to collect or enforce payment
of any contribution; and

     WHEREAS, it is the intention of the parties that this Trust constitute an
unfunded arrangement and will not affect the status of the Plan 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
the Employee Retirement Income Security Act of 1974, as amended (ERISA).

     NOW, THEREFORE, in consideration of the mutual covenants in this Trust
Agreement, the Company and the Trustee declare and agree as follows:

     SECTION 1. Restatement and Title of the Trust.

     1.1. The Company continues with the Trustee a Trust as restated in its
entirety by this agreement, known as the “The National Fuel Gas Company and
Participating Subsidiaries

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Executive Retirement Plan 2003 Trust (I)” (the Trust), consisting of sums
of money and other property acceptable to the Trustee as from time to time are
paid or delivered to the Trustee. All that money and other property, all
investments and reinvestments made with it or proceeds of it and all earnings
and profits on it, less all payments and charges as authorized in this Trust
Agreement, are referred to as the “Trust Fund”. The Trust Fund will be held by
the Trustee IN TRUST and will be dealt with in accordance with the provisions
of this Trust Agreement.

     1.2. The Trust continued by this Trust Agreement is revocable; it will
become irrevocable on a Change in Control.

     1.3. The Company at all times has the power to reacquire assets of the
Trust Fund by substituting readily marketable securities, other than securities
of the Company or any affiliate, of an equivalent value, net of any costs of
disposition, and that other property, following that substitution, will
constitute the Trust Fund.

     1.4. The Trust is intended to be a grantor trust, of which Company is the
grantor, within the meaning of subpart E part 1, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, (the Code) and
will be construed accordingly.

     1.5. The principal of the Trust, and any earnings on it, will be held
separate and apart from other funds of the Company and, except with respect to
the revocability of the Trust prior to a Change in Control, will be used
exclusively for the uses and purposes of Members, Beneficiaries and general
creditors as in set forth in this Trust Agreement. Members and Beneficiaries
have no preferred claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Plan and this Trust Agreement will
be mere unsecured contractual rights of Members and Beneficiaries against the
Company. Any assets held by the Trust will be subject to the claims of the
Company’s general creditors under federal and state law in the event of
Insolvency.

     1.6. Prior to a Change in Control, the Company, in its sole discretion, at
any time, or from time to time, may make additional deposits of cash or other
property in trust with

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the Trustee to augment the principal to be held, administered and disposed
of by the Trustee as provided in this Trust Agreement. Neither the Trustee nor
any Member or Beneficiary has any right to compel these additional deposits.

     1.7. On a Change in Control, the Company, as soon as possible, but not
longer than 15 business days following the Change in Control, must make an
irrevocable contribution to the Trust in an amount sufficient to pay each
Member or Beneficiary the benefits to which Members and Beneficiaries would be
entitled pursuant to the terms of the Plan as of the date of the Change in
Control.

     1.8. Within 30 business days following the end of each Plan year ending
after a Change in Control, the Company is required to deposit irrevocably
additional cash or other property to the Trust in an amount sufficient to pay
each Member or Beneficiary the benefits payable pursuant to the terms of the
Plan as of the close of the Plan year.

     SECTION 2. Acceptance by the Trustee.

     2.1. The Trustee continues the Trust established under this Trust
Agreement on the terms and subject to the provisions set forth in this Trust
Agreement, and it agrees to continue to discharge and perform fully and
faithfully all the duties and obligations imposed on it under this Trust
Agreement.

     SECTION 3. Limitation on Use of Funds; Trustee Responsibility Regarding
Payments to Member or Beneficiary When the Company is Insolvent; Payments to
the Company.

     3.1. Except with respect to the revocability of the Trust prior to a
Change in Control, no part of the corpus or income of the Trust Fund may be
recoverable by the Company, used to provide for borrowing from any lender, or
used for any purpose other than for the exclusive purpose of providing payments
to Members and Beneficiaries in accordance with the provisions of this Trust
Agreement until all payments required by this Trust Agreement have been made.
However, nothing in this Section may be deemed to limit or otherwise prevent
the

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payment from the Trust Fund of expenses and other charges to the extent
provided for in Sections 8 and 17, and the Trust Fund at all times will be
subject to the claims of creditors of the Company and its subsidiaries to the
extent provided for in Section 3.2.

     3.2. (a) The Trustee must cease payment of benefits to Members and
Beneficiaries if the Company is Insolvent. The Company will be considered
“Insolvent” if (i) the Company is unable to pay its debts as they become due,
or (ii) the Company is subject to a pending proceeding as debtor under the
United States Bankruptcy Code.

          (b) At all times during the continuance of this Trust, as provided in
Section 1.1, the principal and income of the Trust will be subject to claims of
general creditors of the Company under federal and state law as set forth
below.

               (1) The Board of Directors and the Chief Executive Officer of the Company
have the duty to inform the Trustee in writing of Company’s Insolvency. If a
person claiming to be a creditor of Company alleges in writing to the Trustee
that Company has become Insolvent, the Trustee will determine whether Company
is Insolvent and, pending that determination, the Trustee will discontinue
payment of benefits to Members and Beneficiaries.

               (2) Unless the Trustee has actual knowledge of the Company’s Insolvency,
or has received notice from Company or a person claiming to be a creditor
alleging that Company is Insolvent, the Trustee has no duty to inquire whether
the Company is Insolvent. The Trustee may rely on such evidence concerning the
Company’s solvency as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination concerning the
Company’s solvency.

               (3) If at any time the Trustee has determined the Company is Insolvent,
the Trustee must discontinue payments to Members and Beneficiaries and will
hold the assets of the Trust for the benefit of the Company’s general
creditors. Nothing in this Trust Agreement in any way may diminish any rights
of Members and Beneficiaries as general creditors of the Company with respect
to benefits due under the Plan or otherwise.

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               (4) The Trustee will resume the payment of benefits to Members and
Beneficiaries in accordance with Section 6 only after the Trustee has
determined the Company is not Insolvent (or is no longer Insolvent).

          (c) Provided there are sufficient assets, if the Trustee discontinues the
payment of benefits from the Trust pursuant to Section 3.2(b)(3) and
subsequently resumes those payments, the first payment following that
discontinuance will include the aggregate amount of all payments due to Members
and Beneficiaries under the terms of the Plan for the period of that
discontinuance, less the aggregate amount of any payments made to Members and
Beneficiaries by the Company in lieu of the payments provided for under this
Trust Agreement during any such period of discontinuance.

     3.3. Except as provided in Sections 3.1 and 3.2, after the Trust has
become irrevocable, the Company will have no right or power to direct the
Trustee to return to the Company or to divert any of the Trust assets before
all payment of benefits have been made to Members and Beneficiaries pursuant to
the terms of the Plan.

     SECTION 4. Duties and Powers of the Trustee with Respect to Investments.

     4.1. The Trustee may not invest in securities (including stock or rights
to acquire stock) or obligations issued by the Company, other than a de minimis
amount held in common investment vehicles in which the Trustee invests. All
rights associated with assets of the Trust will be exercised by the Trustee or
the person designated by the Trustee, and in no event will be exercisable by or
rest with Members and Beneficiaries.

     4.2. The Company has the right at any time, and from time to time in its
sole discretion, to substitute assets of equal fair market value for any asset
held by the Trust. The right is exercisable by Company in a non-fiduciary
capacity without the approval or consent of any person in a fiduciary capacity.

     4.3. (a) The Company, at any time prior to a Change in Control, may direct
the Trustee to, and the Trustee, at any time on or after a Change in Control,
may segregate all or

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a specified portion of the Trust Fund into a separate fund (the Directed
Fund) and invest it in accordance with the directions of one or more Investment
Managers appointed by the Company or the Trustee, as the case may be. Any
Investment Manager so appointed must be (1) an investment adviser registered as
such under the Investment Advisors Act of 1940, (2) a bank, (3) an insurance
company qualified to perform investment management service, under the laws of
more than one state of the United States, or (4) any other person acceptable to
the Trustee. If the Company appoints an Investment Manager, the Company will
deliver to the Trustee a copy of the instruments appointing the Investment
Manager and evidencing the Investment Manager’s acceptance of the appointment.
The Trustee then will be protected in assuming the appointment of an Investment
Manager remains in effect until it is otherwise notified by the Company. All
notifications, instructions, and directions under this Section by or from the
Company, the Trustee or the Investment Manager must be in writing or they will
not be considered as such.

          (b) The Trustee will invest and reinvest the Directed Fund only to the
extent and in the manner directed by the Investment Manager, including an
investment in any open-end or closed-end investment company or companies, as
defined in the Investment Company Act of 1940. In performing its investment
duties, the Investment Manager will have, with respect to the Directed Fund,
all of the powers of the Trustee listed in Sections 4 and 5 (other than
Sections 5.9 and 5.12). If the Trustee does not receive instructions from an
Investment Manager with respect to the Directed Fund, the Trustee, after
providing notice to the Investment Manager, will invest those amounts in
short-term securities of the United States or any agency or instrumentality of
it or in one or more investment companies commonly known as “money market”
funds, whether or not managed by the Trustee or its affiliates, and, prior to a
Change in Control, with the consent of the Company, in a common fund maintained
by the Trustee for short-term investments. If the Investment Manager resigns,
is removed, is no longer qualified to serve as an Investment Manager under
applicable law, the Trustee will reassume complete investment responsibility
for the Directed Fund until, prior to a Change in Control, a new Investment
Manager is appointed by the Company, or on and after a Change in Control, a new
Investment Manager is appointed by the Trustee. On a Change in Control, the
Trustee will notify the Investment Manager either it, the Trustee, is
appointing the Investment Manager to

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continue or it, the Trustee, is reassuming complete investment
responsibility for the Directed Fund.

          (c) Any Investment Manager acting may issue orders for the purchase or
sale of securities directly to a broker or dealer and the Trustee, on request
from the Investment Manager, will execute and deliver appropriate trading
authorization. Notification of the issuance of each such order must be given
promptly to the Trustee by the Investment Manager, and the execution of each
such order will be confirmed by the broker to the Investment Manager and to the
Trustee. That notification is authority to the Trustee to receive securities
purchased against payment for those securities and to deliver securities sold
against receipt of the proceeds from them, as the case may be. Unless the
Trustee participates knowingly in, or knowingly undertakes to conceal, an act
or omission of the Investment Manager, knowing that act or omission to be a
breach of the Investment Manager’s responsibilities with respect to the Trust,
the Trustee will not be liable for any act or omission of the Investment
Manager and will not be under any obligation to invest or otherwise manage the
assets of the Plan that are subject to the management of the Investment
Manager, and the Trustee has no liability or responsibility for acting or not
acting in accordance with any written direction of the Investment Manager or,
subject to Section 4.4(b), failing to act in the absence of any such direction.
The Company agrees, to the extent permitted by applicable law, to indemnify
the Trustee and hold it harmless from and against any claim or liability that
may be asserted against it, other than on account of the Trustee’s own
negligence or willful misconduct, by reason of the Trustee’s taking or
refraining from taking any action in accordance with this Section, including,
any claim or liability that may be asserted against the Trustee on account of
failure to receive securities purchased, or failure to deliver securities sold,
pursuant to orders issued by the Investment Manager directly to a broker or
dealer.

     SECTION 5. Additional Powers and Duties of the Trustee.

     The Trustee has the following additional powers and authority with respect
to all property constituting a part of the Trust Fund:

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     5.1. To sell, exchange or transfer any such property at public or private
sale for cash or on credit and grant options for the purchase or exchange of
it.

     5.2. To participate in any plan or reorganization, consolidation, merger,
combination, liquidation or other similar plan relating to any such property,
and to consent to or oppose any such plan or any action thereunder or any
contract, lease, mortgage, purchase, sale or other action by any corporation or
other entity.

     5.3. To deposit any such property with any protective, reorganization or
similar committee; to delegate discretionary power to any such committee; and
to pay part of the expenses and compensation of any such committee and any
assessments levied with respect to any property so deposited.

     5.4. To exercise any conversion privilege or subscription right available
in connection with any such property; to oppose or to consent to the
reorganization, consolidation, merger or readjustment of the finances of any
corporation company or association, or to the sale, mortgage, pledge or lease
of the property or any of the securities that at any time may be held in the
Trust Fund and to do any act with reference to the property, including the
exercise of options, the making of agreements or subscriptions and the payment
of expenses, assessments or subscriptions, that may be deemed necessary or
advisable in connection with those actions, and to hold and retain any
securities or other property that it may so acquire.

     5.5. To commence or defend suits or legal proceedings and to represent the
Trust in all suits or legal proceedings; to settle, compromise or submit to
arbitration, any claims, debts or damages, due or owing to from the Trust.

     5.6. To exercise, personally or by general or limited power of attorney,
any right, including the right to vote, appurtenant to any securities or other
such property.

     5.7. To borrow money from any lender in amounts and on terms and
conditions as are deemed advisable or proper to carry out the purposes of the
Trust and to pledge any securities or other property for the repayment of any
such loan.

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     5.8. To hold any mortgage in its own name or in the name of a nominee,
with or without the addition of words indicating that the mortgage is held in a
fiduciary capacity, and to cause to be formed a corporation, partnership, trust
or other entity to hold title to any mortgage with those powers, all on terms
and conditions as are deemed advisable; to renew or extend or participate in
the renewal or extension of any mortgage, and to agree to a reduction in the
rate of interest on any mortgage or to any other modification or change in the
terms of any mortgage or of any guarantee pertaining to it, in any manner and
of any guarantee pertaining to it, in any manner and to any extent that is
deemed advisable for the protection of the Trust or the preservation of any
covenant or condition of any mortgage or in the performance of any guarantee,
or to enforce any default in the manner and to the extent as is deemed
advisable; and to exercise and enforce any and all rights of foreclosure, to
bid on any property on foreclosure, to take a deed in lieu of foreclosure with
or without paying a consideration for it and in connection with it to release
the obligation on the bond secured by that mortgage, and to exercise and
enforce in any action, suit or proceeding at law or in equity any rights or
remedies in respect of any such mortgage or guarantee.

     5.9. To engage any legal counsel, including counsel to the Company, or any
other suitable agents, to consult with that counsel or those agents with
respect to the construction of this Trust Agreement, the duties of the Trustee
under it, the transactions contemplated by this Trust Agreement or any act the
Trustee proposes to take or omit, to rely on the advice of such counsel or
agents, and to pay its reasonable fees, expenses and compensation from the
Trust, unless paid by the Company.

     5.10. To register any securities held by it in its own name or in the name
of any custodian of such property or of its nominee, including the nominee of
any system for the central handling of securities, with or without the addition
of words indicating that such securities are held in a fiduciary capacity, to
deposit or arrange for the deposit of any such securities with such a system
and to hold any securities in bearer form.

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     5.11. On the direction of the Company, to enter into or assume any
contract or policy with an insurance company or companies for the purpose of
investment, insurance coverage or otherwise, to pay from the Trust Fund
premiums, assessments, dues, charges and interest, if any, with respect to
those contracts or policies, to exercise any and all of the rights, options or
privileges (including, but not limited to, the right to borrow) under those
contracts or policies, to otherwise take actions that may be available under
those contracts or policies. However, the Trustee will be the sole owner of
all those contracts held as assets of the Trust Fund. The Trustee will have no
power to name a beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different form) other
than to a successor trustee, or to loan to any person the proceeds of any
borrowing against that policy.

     5.12. To make, execute and deliver, as the Trustee, any and all deeds,
leases, notes, bonds, guarantees, mortgages, conveyances, contracts, waivers,
releases or other instruments in writing necessary or proper for the
accomplishment of any of the powers listed above.

     5.13. Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or to applicable law, the Trustee may not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains from it, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.

     SECTION 6. Payments by the Trustee.

     6.1. The Company will deliver to the Trustee at least annually a schedule
(the Payment Schedule) that indicates the amounts payable in respect of each
Member and Beneficiary, that provides a formula or other instructions
acceptable to the Trustee for determining the amounts so payable, the form in
which that amount is to be paid (as provided for or available under the Plan),
and the time of commencement for payment of that amount. Except as otherwise
provided in this Trust Agreement, the Trustee will make payments to the Members
and Beneficiaries in accordance with the Payment Schedule. On and after a
Change in Control,

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the Trustee will 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 payment of benefits pursuant to the terms of the Plan and will pay
amounts withheld to the appropriate taxing authorities or determine that those
amounts have been reported, withheld and paid by the Company. Prior to a
Change in Control, the Company is responsible for that reporting, withholding
and payment.

     6.2. The entitlement of a Member or Beneficiary to benefits under the Plan
will be determined by Company or a party it designates under the Plan, and any
claim for those benefits will be considered and reviewed under the procedures
set out in the Plan.

     6.3. Prior to a Change in Control or, if earlier, until it notifies the
Trustee otherwise, the Company will make payment of benefits directly to
Members and Beneficiaries as they become due under the terms of the Plan. The
Company will notify the Trustee of its decision to not make payment of benefits
directly prior to the time amounts are payable to Members and Beneficiaries.
In addition, if the principal of the Trust, and any earnings on it, are not
sufficient to make payments of benefits in accordance with the terms of the
Plan, the Company will make the balance of each such payment as it falls due.
The Trustee will notify the Company when principal and earnings are not
sufficient.

     6.4. (a) On a Change in Control, the Trustee first must obtain from the
Company a current Payment Schedule, and then determine if the Company has paid
any of the amounts listed on it. To the extent the Company has not paid any
amount due to be paid pursuant to the Payment Schedule, the Trustee will pay
the amount specified or determined from the formulas and adjustments, in the
then current Payment Schedule, subject to Sections 6.5 and 6.6, to each Member
listed as a former employee of the Company or to the Beneficiary in a cash lump
sum. The Trustee will file with the Company a written report of that payment
within 15 days after making the payment. For all purposes of this Trust
Agreement, a Beneficiary is the beneficiary of a deceased Member designated
directly to the Trustee, or the beneficiary designated to the Company and
reflected on the current Payment Schedule (and substantiated with a copy of the
beneficiary designation held by the Company), if it is more recent, or, if
there

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is none of either of those or the Trustee cannot reasonably determine the
beneficiary designated in either manner, the legal representative of the
deceased Member’s estate.

          (b) At any time following a Change in Control, on termination of the
Company’s employment of a Member listed on the Payment Schedule, the amount
specified or determined from the formulas and adjustments contained in the then
current Payment Schedule, subject to Sections 6.5 and 6.6, will be paid by the
Trustee to the Member or Beneficiary in a cash lump sum after the Trustee
determines the extent to which the amount has not been paid by the Company. If
the Company does not notify the Trustee of the Member’s termination of
employment, the Member may deliver to the Trustee two duly executed and
notarized Affidavits and Receipts in substantially the form attached as Exhibit
A, and, in the case of a deceased Member, the Beneficiary may deliver two
copies of the Member’s death certificate. The Trustee will file with the
Company a written report of that payment, with one Affidavit and Receipt or one
copy of the death certificate, if any, within 15 days after making the payment.

          (c) If, at any time after a Change in Control the Trust finally is
determined by the Internal Revenue Service (the IRS) not to be a “grantor
trust” with the result that the income of the Trust Fund is not treated as
income of the Company pursuant to Code §§ 671-679, or if a tax is finally
determined by the IRS or by counsel to the Trustee to be payable by one or more
Members in respect of any right, title or interest in any assets of the Trust
Fund prior to termination of employment with the Company, then the amount
specified or determined from the formulas and adjustments contained in the then
current Payment Schedule, subject to Sections 6.5 and 6.6, will be paid by the
Trustee in a cash lump sum as soon as practicable to each Member or
Beneficiary, subject to reduction for amounts paid by the Company, regardless
of whether that Member’s employment with the Company has terminated and without
the necessity of presentation of an Affidavit and Receipt or death certificate.

     6.5. If the Trustee holds life insurance contracts or policies on the life
of any Member, the Member may elect, with the consent of the Company prior to a
Change in Control and the consent of the Trustee on and after a Change in
Control, under procedures adopted by the

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Trustee and subject to Section 6.6, to have those contracts or policies
assigned to him or her and distributed to that Member in satisfaction of that
portion of the cash lump sum payment to which the Member otherwise would be
entitled under the preceding subsections that those contracts or policies
represent. The determination of the fair market value of such a contract or
policy will be made by the Trustee after consultation with an actuary.

     6.6. On and after a Change in Control, any payment made to a Member or
Beneficiary at any time under this Trust Agreement may not exceed the pro rata
portion of the assets of the Trust Fund determined to be allocable to that
payment, based on the then current Payment Schedule. The Trustee will
determine the sufficiency of the Trust Fund at the time of any such payment.
If the Trustee determines the Trust Fund is not sufficient to make all payments
due at that time and in the future, the Member or Beneficiary, as the case may
be, will receive a pro rata payment based on the amount to be paid to the
Member or Beneficiary compared to the aggregate amount otherwise payable at
that time and in the future to all Members and Beneficiaries. Any amount not
paid because of this reduction will be considered as part of the payments to be
made subsequently, subject to the same pro rata limitations. The Trustee must
engage an actuary to determine the present value of amounts payable in the
future and will use reasonable actuarial assumptions as determined by the
Trustee, in consultation with the actuary.

     SECTION 7. Third Parties.

     7.1. A third party dealing with the Trustee is not required to make
inquiry as to the authority of the Trustee to take any action nor under any
obligation to follow the proper application by the Trustee of the proceeds of
sale of any property sold by the Trustee or to inquire into the validity or
propriety of any act of the Trustee.

     SECTION 8. Taxes, Expenses and Compensation.

     8.1. The Company from time to time will pay taxes of any kind lawfully
levied or assessed on or payable in respect of the Trust Fund, the income or
any property forming a part

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of it, or any security transaction pertaining to it. To the extent that
any taxes lawfully levied or assessed on the Trust Fund are not paid by the
Company, the Trustee will pay those taxes out of the Trust Fund. On and after
a Change in Control, no taxes (other than applicable withholding taxes and
charges pursuant to Section 6.1 and other taxes relating to the Trust Fund for
which the Trustee has been assessed by the appropriate federal, state or local
taxing authority) may be paid from the Trust Fund. The Trustee will contest
the validity of those taxes in any manner deemed appropriate by the Company or
its counsel, but at Company expense, or the Company itself may contest the
validity of any of those taxes.

     8.2. Any other reasonable expenses incurred by the Trustee in the
performance of its duties under this Trust Agreement, including brokerage
commissions, will be charged against and paid from the Trust Fund to the extent
the Company does not pay those expenses.

     8.3. The Company will pay the Trustee reasonable compensation for its
services as may be agreed on in writing from time to time by the Company and
the Trustee. That compensation will be charged against and paid from the Trust
Fund to the extent the Company does not pay that compensation.

     SECTION 9. Administration and Records.

     9.1. The Trustee will keep or cause to be kept accurate and detailed
accounts of any investments, receipts, disbursements and other transactions
under this Trust Agreement, and all accounts, books and records relating to
that will be open to inspection and audit at all reasonable times by any person
designated by the Company and, on and after a Change in Control, by any Member.
All those accounts, books and records will be preserved (in original form, or
on microfilm, magnetic tape or any other similar process) for the period the
Trustee determines, but the Trustee may destroy those accounts, books and
records only after first notifying the Company and, on and after a Change in
Control, all the Members in writing of its intention to do so and transferring
to the Company, with, on and after a Change in Control, a copy to a
representative of the Members, any of those accounts, books and records
requested.

- 15 -

 

     9.2. Within 60 days after the close of each calendar year, and within 60
days after the removal or resignation of the Trustee or the termination of the
Trust, the Trustee will file with the Company a written account setting forth
all investments, receipts, disbursements and other transactions effected by it
during the preceding calendar year or during the period from the close of the
preceding calendar year to the date of its removal, resignation or termination,
including a description of all investments and securities purchased and sold
with the cost or net proceeds of those purchases or sales and showing all cash,
securities and other property held at the end of that calendar year or other
period. After 90 days from the date of filing that annual or other account,
the Trustee will be forever released and discharged from all liability and
accountability with respect to the propriety of its acts and transactions shown
in that account, except with respect to any acts or transactions as to which
the Company, or, on and after a Change in Control, a representative of the
Members, within that 90-day period files with the Trustee written objections.

     9.3. The Trustee from time to time must permit an independent public
accountant selected by the Company (except one to which the Trustee has
reasonable objection) to have access during ordinary business hours to records
as may be necessary to audit the Trustee’s accounts.

     9.4. As of the last day of each calendar year, the fair market value of
the assets held in the Trust Fund will be determined. The Trustee will file
with the Company, and, on and after a Change in Control, a representative of
the Members, the written report of the determination of that fair market value.

     9.5. Nothing contained in this Trust Agreement may be construed as
depriving the Trustee or the Company of the right to have a judicial settlement
of the Trustee’s accounts, and on any proceeding for a judicial settlement of
the Trustee’s accounts or for instructions the only necessary parties to it in
addition to the Trustee are the Company and, on and after a Change in Control,
a representative of the Members.

- 16 -

 

     9.6. If the Trustee is removed or resigns, the Trustee will deliver to the
successor trustee all records required by the successor trustee to enable it to
carry out the provisions of this Trust Agreement.

     9.7. In addition to any returns required of the Trustee by law, the
Trustee must prepare and file tax reports and other returns as the Company and
the Trustee from time to time agree.

     9.8. The Members at any time may chose a representative to receive
information, notices, make objections, and the like under this Section. The
Trustee is not required to deal with more than one representative. If more
than one representative purports to represent the Members, that person or
entity representing the most Members will be considered by the Trustee to be
the representative of the Members under this Section.

     9.9. In any case in this Trust Agreement where the Trustee is protected,
that protection is to the maximum extent of the law.

     SECTION 10. Removal or Resignation of the Trustee and Designation of
Successor Trustee.

     10.1. At any time prior to a Change in Control, the Company may remove the
Trustee with or without cause, on at least 60 days’ notice in writing to the
Trustee. On and after a Change in Control, the Trustee may not be removed,
except by order of a court having competent jurisdiction.

     10.2. The Trustee may resign at any time upon at least 60 days’ notice in
writing to the Company and, on and after a Change in Control, the Members.

     10.3. If the Trustee is removed or resigns, the Trustee will duly file
with the Company a written account as provided in Section 9.2 for the period
since the last previous annual accounting, listing the investments of the Trust
Fund and any uninvested cash balance of it, and setting forth all receipts,
disbursements, distributions and other transactions respecting the

- 17 -

 

Trust not included in any previous account, and if written objections to
that account are not filed as provided in Section 9.2, the Trustee is forever
released and discharged from all liability and accountability with respect to
the propriety of its acts and transactions shown in that account.

     10.4. Within 60 days after any notice of removal or resignation of the
Trustee, the Company will designate a successor trustee qualified to act under
this Trust Agreement. However, if a Trustee resigns on or after a Change in
Control, then the successor Trustee qualified to act under this Trust Agreement
may be only any bank, trust company or other financial institution that may
serve as Trustee under applicable law acceptable to at least 50% of the members
of the Board immediately prior to the Change in Control then living and readily
available and willing to make that decision. If no designation has been made,
the Trustee may apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of the Trustee in connection with
the proceeding will be allowed as administrative expenses of the Trust. Each
successor Trustee, during the period it acts as such, has the powers and duties
conferred in this Agreement on an individual Trustee, and the word “Trustee”
wherever used in this Agreement, except where the context otherwise requires,
is deemed to include any successor Trustee. On designation of a successor
Trustee and delivery to the resigned or removed Trustee of written acceptance
by the successor Trustee of the designation, the resigned or removed Trustee
promptly will assign, transfer, delivery and pay over to that successor
Trustee, in conformity with the requirements of applicable law, the funds and
properties in its control or possession then consisting the Trust Fund. The
transfer will be completed within 30 days after receipt of notice of
resignation, removal or transfer.

     SECTION 11. Enforcement of Trust Agreement and Legal Proceedings.

     11.1. The Company has the right to enforce any provision of this Trust
Agreement, and, on or after a Change in Control, any Member has the right as a
beneficiary of the Trust to enforce any provision of this Trust Agreement that
affects the right, title and interest of that Member in the Trust. Except to
the extent provided in Section 3.2 or as otherwise required by applicable law,
in any actions or proceedings affecting the Trust, the only necessary

- 18 -

 

parties are the Company, the Trustee, and, on or after a Change in
Control, the Members and, except as otherwise required by applicable law, no
other person is entitled to any notice or service of process. Any judgment
entered in such an action or proceeding will be binding and conclusive on all
persons having or claiming to have any interest in the Trust.

     11.2. If the Trustee receives notification pursuant to Section 3.2 that
the Company is Bankrupt or Insolvent, the Trustee promptly will give notice of
that in writing to all Members and Beneficiaries listed on the then current
Payment Schedule as soon as it is reasonably practicable.

     SECTION 12. Change in Control Defined.

          (a) A “Change in Control” will be deemed to have occurred if any of the
following has occurred:

               (i) either (a) the Company receives a report on Schedule 13D, or an
amendment to such a report, filed with the Securities and Exchange Commission
(SEC) pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the
1934 Act) disclosing that any person (as that term is used in Section 13(d) of
the 1934 Act) (Person), is the beneficial owner, directly or indirectly, of 20%
or more of the outstanding stock of the Company or (b) the Company has actual
knowledge of facts that would require any Person to file such a report on
Schedule 13D, or to make an amendment to such a report, with the SEC (or would
be required to file such a report or amendment upon the lapse of the applicable
period of time specified in Section 13(d) of the 1934 Act) disclosing that such
Person is the beneficial owner, directly or indirectly, of 20% or more of the
outstanding stock of the Company;

               (ii) purchase by any Person, other than the Company or a wholly-owned
subsidiary of the Company or an employee benefit plan sponsored or maintained
by the Company or a wholly-owned subsidiary of the Company, of shares pursuant
to a tender or exchange offer to acquire any stock of the Company (or
securities convertible into stock) for cash, securities or any other
consideration provided that after consummation of the offer, that

- 19 -

 

Person is the beneficial owner (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of 20% or more of the outstanding stock of the
Company (calculated as provided in paragraph (d) of Rule 13d-3 under the 1934
Act in the case of rights to acquire stock);

               (iii) approval by the shareholders of the Company of (a) any consolidation
or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of stock of the Company would
be converted into cash, securities or other property, other than a
consolidation or merger of the Company in which holders of its stock
immediately prior to the consolidation or merger have substantially the same
proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately before, or (b) any
consolidation or merger in which the Company is the continuing or surviving
corporation but in which the common shareholders of the Company immediately
prior to the consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation (except
where such holders of common stock hold at least a majority of the common stock
of the corporation which owns all of the common stock of the Company), or (c)
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

               (iv) a change in the majority of the members of the Board within a
24-month period unless the election or nomination for election by the Company’s
shareholders of each new director was approved by the vote of at least 2/3 of
the directors then still in office who were in office at the beginning of the
24-month period.

     12.2. No Change in Control may be deemed to have occurred for purposes of
this Trust Agreement until the Trustee has actual knowledge from a reliable
source, not including a Member acting in his or her individual capacity, of
that Change in Control. A written notarized statement that a Change in Control
has occurred, delivered to the Trustee and signed by at least 50% of the
individuals then living who were members of the Board as of any date during the
one-year period ending on the date that notice is received by the Trustee will
be deemed to be

- 20 -

 

actual knowledge from a reliable source, and a report filed with the
Securities and Exchange Commission, a public statement issued by the Company,
or a periodical of general circulation, including but not limited to The New
York Times or The Wall Street Journal, is deemed to be a reliable source,
regardless of the manner in which that report of a change in Control is made
known to the Trustee.

     SECTION 13. Termination.

     13.1. The Company may terminate this Trust on 30 days’ written notice to
the Trustee. On receipt by the Trustee of that notice of termination of the
Trust and documentation of the approval of all Members, the Trustee, with
reasonable promptness after receipt of any such notice, will arrange for the
orderly distribution of the Trust property, or remaining amounts of it, in
conformity with the provisions of applicable law.

     13.2. Except as provided in Section 13.1, on and after a Change in
Control, the Trust may not terminate until the date on which Members and
Beneficiaries are no longer entitled to benefits pursuant to the terms of the
Plan.

     13.3. On termination of the Trust, any assets remaining in the Trust will
be returned to Company.

     SECTION 14. Amendments.

     14.1. At any time prior to a Change in Control, the Company from time to
time may amend or modify, in whole or in part, any or all of the provisions of
this Trust Agreement that cannot adversely affect the interests of any Members
and that do not conflict with the terms of the Plan. Any such amendment may be
made only with notice to all Members, but need not have the consent of any
Member.

     14.2. Except as provided in Section 14.1, this Trust Agreement may not be
amended by the Company or its successor, except as may be required by
applicable law or with the consent of the Trustee and, on and after a Change in
Control, all Members.

- 21 -

 

     14.3. The Company and the Trustee will execute supplements to, or
amendments of, this Trust Agreement necessary to give effect to any amendment
or modification.

     SECTION 15. Non-alienation.

     15.1. Benefits payable to Members and Beneficiaries 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.

     SECTION 16. Communications.

     16.1. All communications of any kind under all provisions of this Trust
Agreement, including instructions, elections, notifications, and directions,
must be in writing and all communications to parties required under this
Agreement must be in writing and (a) delivered in person, (b) mailed by
registered or certified mail, return receipt requested, (any mailed notice to
be effective four days after the date it is mailed) or (c) sent by facsimile
transmission, with confirmation sent by way of one of the above methods, to the
party at the address given below for that party (or to such other address as
such party designates in a writing complying with this Section, delivered to
the other party):

- 22 -

 

	 	 	 
	If to the Company:
	 
	 	 
	

	 	National Fuel Gas Company
	

	 	      Prior to October 6, 2003:
	

	 	10 Lafayette Square
	

	 	Buffalo, New York 14203
	

	 	      After October 5, 2003:
	

	 	6363 Main Street
	

	 	Williamsville, New York 14221
	 
	 	 
	

	 	Attention: General Counsel
	

	 	Telephone: (716) 857-7548
	

	 	Fax: (716) 857-7195
	 
	 	 
	with a copy to:
	 
	 	 
	

	 	Hodgson Russ LLP
	

	 	One M&T Plaza, Suite 2000
	

	 	Buffalo, New York 14203-2391
	

	 	Attention: Dianne Bennett
	

	 	Telephone: (716) 848-1406
	

	 	Fax: (716) 849-0349

- 23 -

 

	 	 	 
	If to the Trustee:
	 
	 	 
	

	 	HSBC Bank USA
	

	 	17th Floor
	

	 	One HSBC Center
	

	 	Buffalo, New York 14203
	

	 	Attention: Retirement Financial Services
	

	 	Telephone: (716) 841-2424
	

	 	Fax: (716) 841-4244

     16.2. All communications of any kind to a Member, Beneficiary or
representative of Members must be in writing and delivered as in Section 16.1
and delivered to the address on the Payment Schedule, or a more updated address
as specified by the Member, Beneficiary or representative pursuant to Section
16.1.

     16.3. No communication is binding on any entity until received by that
entity.

     16.4. Any action of the Company pursuant to this Trust Agreement,
including all orders, requests, directions, instructions, approvals and
objections of the Company to the Trustee, must be in writing signed on behalf
of the Company by any duly authorized officer of the company. The Trustee may
rely on, and will be fully protected with respect to, any such action taken or
omitted in reliance on, any information, order, request, direction,
instruction, approval, objection list and Payment Schedule delivered to the
Trustee by the Company or, to the extent applicable under this Trust Agreement,
by a Member or the legal representatives of his or her estate.

     SECTION 17. Miscellaneous Provisions.

     17.1. This Trust Agreement is binding on and inures to the benefit of the
Company and the Trustee and their respective successors and assigns.

- 24 -

 

     17.2. The Company will pay and protect, indemnify and save harmless the
Trustee and its officers, employees and agents from and against any and all
losses, liabilities (including liabilities for penalties), actions, suits,
judgments, demands, damages, costs and expenses (including, without limitation,
attorneys’ fees and expenses) of any nature arising from or relating to any
action by or any failure to act by the Trustee, its officers, employees and
agents or the transactions contemplated by this Trust Agreement, including, but
not limited to, any claim made by a Member or his or her Beneficiary with
respect to payments made or to be made by the Trustee, any claim made, whether
before or after a Change in Control, by the Company or its successor, whether
pursuant to a sale of assets, merger, consolidation, liquidation or otherwise,
that this Trust Agreement is invalid or ultra vires, except to the extent that
any such loss, liability, action, suit, judgment, demand, damage, cost or
expense has been determined by final judgment of a court of competent
jurisdiction to be the result of the gross negligence or willful misconduct of
the Trustee, its officers employees or agents. To the extent the Company has
not fulfilled its obligations under this Section, the Trustee will be
reimbursed out of the assets of the Trust Fund or may set up reasonable
reserves for the payment of those obligations. No personal liability will
attach to or be incurred by any employee, officer or director of the Company,
as such, under or by reason of the terms or conditions contained in or implied
from this Trust Agreement.

     17.3. The Trustee assumes no obligation or responsibility with respect to
any action required by this Trust Agreement on the part of the Company.

     17.4. Any corporation into which the Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any merger,
reorganization or consolidation to which the Trustee may be a party, or any
corporation to which all or substantially all the trust business of the Trustee
may be transferred is the successor of the Trustee without the execution or
filing of any instrument or the performance of any act.

- 25 -

 

     17.5. Any provision of this Trust Agreement prohibited by law is
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions of this Trust Agreement.

     17.6. Titles to the Sections of this Trust Agreement are included for
convenience only and do not control the meaning or interpretation of any
provision of this Trust Agreement.

     17.7. To the maximum extent consistent with ERISA, this Trust Agreement
and the Trust established under it will be governed by and construed, enforced
and administered in accordance with the laws of the State of New York, and the
Trustee will be liable to account only in the courts of that state.

     17.8. This Trust Agreement may be executed in any number of counterparts,
each of which will be deemed to be the original, although the others are not
produced.

     IN WITNESS WHEREOF, this Trust Agreement has been duly executed by the
parties to it as of the day and year first above written.

	 	 	 	 	 
	

	 	 	 	NATIONAL FUEL GAS COMPANY
	 
	

	 	 	 	By: /s/ Philip C. Ackerman
	

	 	 	 	

	

	 	 	 	Name: Philip C. Ackerman
	

	 	 	 	Title: Chairman, President, CEO

	 	 	 	 	 
	Attest:

	 	 
	 	 
	 
	 	 	 	 
	/s/ Anna Marie Cellino
	 	 	 	 
	

	 	 	 	 
	Secretary
	 	 	 	 

	 	 	 	 	 
	

	 	 	 	HSBC BANK USA, AS TRUSTEE
	 
	

	 	 	 	By: /s/ Paul L. Morris
	

	 	 	 	

	

	 	 	 	Name: Paul L. Morris
	

	 	 	 	Title: Vice President

	 	 	 	 	 
	Attest:

	 	 
	 	 
	 
	 	 	 	 
	/s/ Paul L. Morris
	 	 	 	 
	

	 	 	 	 
	 
	 	 	 	 
	/s/ James S. Buccella
	 	 	 	 
	

	 	 	 	 
	First Vice President
	 	 	 	 

- 26 -

 

	 	 	 	 	 	 	 
	STATE OF NEW YORK

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 )	 SS:	 	 
	 
	 	 	 	 	 	 
	COUNTY OF ERIE

	 	 	)	 	 	 

     On the 27th day of August, 2003, before me personally came
Philip C. Ackerman to me known, who, being by me duly sworn, did depose and
say that he/she resides in Erie County, New York, and that he/she is the
Chairman/President/CEO of National Fuel Gas Company, one of the corporations
described in and which executed the foregoing instrument; and that he/she
signed
his/her name thereto by order of the Board of Directors of said corporation.

	 	 	 	 	 
	PAULA M. CIPRICH

	 	 	 	/s/ Paula M. Ciprich
	
Notary
Public, State of New York

	 	 	 	
 
	Qualified
in Erie County

My Commission Expires May 19, 2006

	 	 	 	Notary Public

	 	 	 	 	 	 	 
	STATE OF New York

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 )	 SS:	 	 
	 
	 	 	 	 	 	 
	COUNTY OF Erie

	 	 	)	 	 	 

     On the 27th day of August, 2003, before me personally came
Paul L. Morris to be known, who, being by me duly sworn, did depose and say
that he/she resides in Hamburg, New York; that he/she is the Vice President of
HSBC Bank USA, one of the corporation described in and which executed the
foregoing instrument; and that he/she signed his/her name thereto by order of
the Board of Directors of said corporation.

	 	 	 	 	 
	

	 	 	 	/s/ Cynthia M. Wylegala
	

	 	 	 	
 
	

	 	 	 	Notary Public

	 	 	 	 	 
	CYNTHIA
M. WYLEGALA

Notary Public, State of New York

Qualified in Erie County

My Commission Expires July 23, 2006

	 	 	 	 

- 27 -

 

EXHIBIT A

AFFIDAVIT AND RECEIPT

     I,                                       , under penalties of perjury, do hereby solemnly
state:

     That I make this Affidavit in order to induce the Trustee of the National
Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan Trust
to pay me $                    pursuant to its terms; and

     That my employment with the National Fuel Gas Company or any of its
subsidiaries was terminated on                    .

	 	 	 	 	 
	

	 	 	 	
 
	

	 	 	 	Member

	 	 	 	 	 	 	 
	STATE OF                    

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 ): 	 ss.	 	 
	 
	 	 	 	 	 	 
	COUNTY OF                    

	 	 	)	 	 	 

     On the                     day of                    , 200                   , before me personally
came                                        to me known, who, being by me duly sworn, did
depose and say that he/she resides at
                                                                            , and that the statements herein
are all materially correct.

	 	 	 	 	 
	

	 	 	 	
 
	

	 	 	 	Notary PublicExhibit 10.3

 

Exhibit 10.3

Administrative Rules

of the

Compensation Committee

of the

Board of Directors

of

National Fuel Gas Company

As amended and restated

effective September 9, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	I. Meetings 
	 	 	1	 
	II. Quorum and Voting; Delegation 
	 	 	1	 
	III. Grants and Awards Under the Plans 
	 	 	2	 
	A. General Rules Regarding Awards Under
the 1997 and 1993 Plans 
	 	 	3	 
	1. Making of An Award 
	 	 	3	 
	2. Contemporaneous Awards 
	 	 	3	 
	3. Stock-Based Awards 
	 	 	3	 
	a. Source 
	 	 	3	 
	b. Cash Dividends and Cash Dividend Equivalents 
	 	 	3	 
	i. Stock Based Awards Other
Than Restricted Stock 
	 	 	3	 
	ii.Restricted Stock Awards 
	 	 	4	 
	c. Payment 
	 	 	4	 
	4. Withholding Taxes 
	 	 	4	 
	5. Deferral of Payment 
	 	 	5	 
	B. Stock Options Under the 1997 and 1993 Plans 
	 	 	5	 
	1. Designation 
	 	 	5	 
	2. Price 
	 	 	6	 
	3. Exercise Period/Duration 
	 	 	6	 
	a. Non-Qualified Stock Options Under
the 1997 and 1993 Plans 
	 	 	6	 
	b. Incentive
Stock Options Under the 1997 and 1993 Plans 
	 	 	6	 
	4. Death or Other Termination of Employment 
	 	 	6	 
	a. Definitions 
	 	 	6	 
	b. Non-Qualified Stock Options Under
the 1997 and 1993 Plans
	 	 	7	 
	c. Incentive Stock Options Under the
1997 and 1993 Plans
	 	 	7	 
	d. Extension of Incentive Stock Options Under the
1997 and 1993 Plans 
	 	 	8	 
	5. Mechanics of Exercise 
	 	 	10	 
	6. Reload Options 
	 	 	10	 
	C. SARs Under the 1997 Plan 
	 	 	10	 
	D. Restricted Stock Under the 1997 and 1993 Plans 
	 	 	11	 

2

 

	 	 	 	 	 
	1. Restrictions on Transferability; Vesting 
	 	 	11	 
	2. Mechanics of Grant 
	 	 	11	 
	E.
Performance Units and Performance Shares Under The 1997 Plan 
	 	 	11	 
	IV. Procedures For Exercising Stock Options 
	 	 	12	 
	A. Authority and Scope 
	 	 	12	 
	B. Notice of Exercise 
	 	 	12	 
	1. Form and Delivery 
	 	 	12	 
	2. Exercise Date 
	 	 	13	 
	C. Payment of Exercise Price 
	 	 	13	 
	1. Cash Payment 
	 	 	13	 
	2. Payment with Existing Company Stock 
	 	 	14	 
	3. Additional Time to Pay Exercise Price 
	 	 	14	 
	4. Cashless Exercise 
	 	 	15	 

3

 

ADMINISTRATIVE

RULES OF THE

COMPENSATION COMMITTEE

OF THE

BOARD OF DIRECTORS

OF

NATIONAL FUEL GAS COMPANY

As amended and restated

effective September 9, 2004

I. MEETINGS

     Each meeting (“Meeting”) of the Compensation Committee (“Committee”) of
the Board of Directors of National Fuel Gas Company (“Company”) shall be held
as indicated in a notice made in accordance with these rules. Notice of each
Meeting, stating the place, date and hour thereof, shall be given to each
member of the Committee (“Member”) by mailing written notice not less than five
days before the Meeting to each Member, or by telegraphing, telephoning or
delivering oral or written notice to each Member personally not less than one
day before the Meeting.

     Any one or more Members of the Committee may participate in a Meeting by
means of a conference telephone or similar equipment. Participation by such
means shall constitute presence in person at a Meeting.

     The Committee may also take action by unanimous written consent.

II. QUORUM AND VOTING; DELEGATION

     At all Meetings, a quorum shall be required for the transaction of
business and shall consist of a majority of the entire Committee. The majority
vote of the Members at a Meeting at which a quorum is present shall decide any
question that may come before the meeting.

     Consistently with limitations imposed by the Plans, the Committee may
delegate in these rules or by resolution any or all of its authority to the
Chief Executive Officer, to the Secretary and to any other officer of the
Company (individually, “Delegate”), so long as the Delegate has no potential
conflict of interest which would cause him or her not to exercise his or her
good faith independent

 

 

business judgment in respect of a delegated matter, and so long as such
delegation would not result in the requirement under applicable law that the
Delegate’s name appear beneath the Committee’s report required to be included
in Company filings with the Securities and Exchange Commission. Subject to
such limitations, the Committee hereby delegates the power to implement its
decisions to appropriate officers of the Company.

III. GRANTS AND AWARDS UNDER THE PLANS

     The following rules and regulations shall apply with respect to grants and
awards of stock options, stock appreciation rights (“SARs”) and shares of
restricted stock (“Restricted Stock”) under the Company’s 1997 Award and Option
Plan (“1997 Plan”) and 1993 Award and Option Plan (“1993 Plan”) (together, the
“Plans”). These rules also address other Awards under the Plans.

     Any capitalized term not defined in these rules shall have the same
meaning as in the applicable Plan. The following rules are intended to
supplement the Plans and, to the extent that any rule is determined to be
inconsistent with any Plan, the Plan shall control.

     These rules may be amended by the Committee at any time and from time to
time. Except to the extent otherwise specified in the particular Award Notice
or at the time these rules are amended, any grant or award under the Plans
shall be subject to these rules as in effect on the date of the grant or award.

2

 

     A. GENERAL RULES REGARDING AWARDS UNDER THE 1997 AND 1993 PLANS

          1. Making of An Award

               An Award within the meaning of these rules occurs upon the grant by the
Committee of any stock option, SAR, Restricted Stock, performance unit,
performance share or other incentive award. An Award Notice within the meaning
of these rules means a written notice from the Company to a Participant that
sets forth the terms and conditions of an Award in addition to those
established in the applicable Plan and by the Committee’s exercise of its
administrative powers.

          2. Contemporaneous Awards

               An Award of one type granted contemporaneously with an Award of any other
type shall be treated as having been granted in combination, and not in the
alternative, with the Award of the other type.

          3. Stock-based Awards

               a. Source. Stock-based Awards, to the extent actually paid in Common
Stock, shall reduce treasury shares first and thereafter authorized but
unissued shares.

               b. Cash Dividends and Cash Dividend Equivalents.

                    (i) Stock-Based Awards Other Than Restricted Stock. No stock-based Award
carries with it the entitlement to receive cash dividends or cash dividend
equivalents until such stock-based Award is exercised (in the case of a stock
option) or earned. If a stock-based Award is exercised or earned prior to or
on the record date for determination of stockholders entitled to receive a cash
dividend, then such stock-based Award or the securities resulting from the
exercise thereof, as the case may be, shall be entitled to receive such cash
dividend.

                    (ii) Restricted Stock Awards. Notwithstanding clause (i) of this
paragraph (b) or §26 of the 1993 Plan or the 1997 Plan, dividends shall be
payable with respect to each

3

 

outstanding Award of Restricted Stock whether or not the restrictions in such
Award have been satisfied or have lapsed.

               c. Payment. Payment of stock-based Awards (other than SARs and
performance shares, which shall be paid in cash) shall be made with Common
Stock.

          4. Withholding Taxes

               At the time a Participant is taxable with respect to Options, SARs or
Restricted Stock granted under the Plans, or the exercise or surrender of the
same, the Company shall have the right to withhold from amounts payable to the
Participant under the Plan or from other compensation payable to the
Participant in its sole discretion, or require the Participant to pay to it, an
amount sufficient to satisfy all federal, state and/or local withholding tax
requirements. A Participant may pay, in whole or in part, such tax withholding
amounts by requesting that the Company withhold such amounts of taxes from the
amounts owed to the Participant or by delivering as payment to the Company,
shares of Common Stock having a Fair Market Value less than or equal to the
amount of such required withholding taxes (with the remainder payable in cash).

4

 

          5. Deferral of Payment

               The Committee intends to permit Participants to elect, at any time prior
to one year before the date of exercise, to defer the receipt of payment of
Awards that are payable in cash; provided, however, that (1) under the then
applicable income tax rules the Participant is not in constructive receipt of,
and subject to income tax on, the payment prior to its actual receipt, (2) such
deferral does not result in any of the Plans being subject to the Employee
Retirement Income Security Act of 1974, as amended, and (3) if the Participant
is an Executive Officer (i.e., is subject to Section 16 of the Securities
Exchange Act of 1934, including a retired officer who is, at the relevant time,
a director), such election shall comply with Rule 16b-3 promulgated pursuant to
the Securities Exchange Act of 1934, as then in effect.

     B. STOCK OPTIONS UNDER THE 1997 AND 1993 PLANS

          1. Designation

               The Award Notice setting forth the terms and conditions of a grant of a
stock option shall indicate the applicable Plan under which the stock option is
granted and whether the stock option is an incentive stock option (within the
meaning of Section 422 of the Code, an “ISO”) or a non-qualified stock option
(“NSO”). The Committee hereby delegates to the President and Chief Executive
Officer of the Company the authority to prepare, execute and deliver Award
Notices consistent with actions taken by the Committee. The Committee hereby
directs that any action taken by the Committee granting stock options without
specifying whether the stock options are ISOs be interpreted as follows:

               a. an award of stock options to a Participant who is younger than 60 on
the grant date shall be deemed to be an award of ISOs to the maximum extent
permitted in accordance with Section 422 of the Internal Revenue Code, with the
remainder awarded as NSOs; and

5

 

               b. an award of stock options to a Participant who is 60 or older on the
grant date shall be deemed to be awards of NSOs only.

          2. Price

               The price at which Common Stock may be purchased upon exercise of a stock
option (the “exercise price”) shall be the Fair Market Value of the Common
Stock on the date of the Award.

          3. Exercise Period/Duration

               a. Non-Qualified Stock Options Under the 1997 and 1993 Plans. A
non-qualified stock option granted under the 1997 Plan or the 1993 Plan first
may be exercised twelve months after the date of grant, or, if earlier, on the
date of the optionee’s death.

               b. Incentive Stock Options Under the 1997 and 1993 Plans. An incentive
stock option granted under the 1997 Plan or the 1993 Plan first may be
exercised twelve months after the date of grant, or, if earlier, on the date of
the optionee’s death.

          4. Death or Other Termination of Employment

               a. Definitions. For purposes of these rules, the following terms shall
have the following meanings:

                    (i) “Disability” shall mean that the Participant is eligible to receive
disability benefits under Article 3 of The National Fuel Gas Company Retirement
Plan (“Retirement Plan”), as from time to time amended.

                    (ii) “Principal Subsidiary” shall mean a Subsidiary that has a net income
of at least $5,000,000 as of the end of the most recent fiscal year.

                    (iii) “Retirement” shall mean that the Participant has commenced receiving
retirement benefits under the Retirement Plan at or after attaining age 65.

6

 

                    (iv) “Subsidiary” shall mean a corporation or other business entity in
which the Company directly or indirectly has an ownership interest of eighty
percent (80%) or more.

               b. Non-Qualified Stock Options Under the 1997 and 1993 Plans. With
respect to the President and Chief Executive Officer of the Company and the
Presidents of each Principal Subsidiary, if termination of employment occurs by
reason of death, Disability or Retirement, each non-qualified option awarded
under the 1997 Plan or the 1993 Plan shall remain exercisable for the balance
of its unexpired term. If termination occurs by reason of discharge by the
Company for cause or voluntary resignation of the Participant prior to age 60,
each such non-qualified option shall lapse unless extended by the Committee in
its discretion. If termination of any such officer occurs for any other
reason, each such non-qualified option shall remain exercisable for five years
from such termination (or in the case of non-qualified options awarded under
the 1997 Plan, such greater period as the Committee deems appropriate) or the
balance of its unexpired term, whichever is less.

               For all other Participants, if termination of employment occurs by reason
of death, Disability or retirement at or after age 60, each non-qualified
option awarded under the 1997 Plan or the 1993 Plan shall remain exercisable
for five years from such termination or the balance of its unexpired term,
whichever is less. If termination occurs for any other reason, each such
non-qualified option shall lapse unless extended by the Committee in its
discretion.

               c. Incentive Stock Options Under the 1997 and 1993 Plans. Pursuant to
§16(a) of the 1997 Plan and the 1993 Plan, the Committee hereby establishes
that, with respect to an incentive stock option granted under the 1997 Plan or
the 1993 Plan which has not theretofore expired, upon termination of employment
by reason of the optionee’s Disability, the optionee may within one year after
the date of termination of employment, exercise all or part of the incentive
stock option which the optionee was entitled to exercise on the date of
termination of employment.

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               d. Extension of Incentive Stock Options
Under the 1997 and 1993 Plans.

Pursuant to the last paragraph of §16(b) of the 1997 Plan and the 1993 Plan,
the Committee hereby determines that:

     (i) With respect to the President and Chief Executive Officer
of the Company and the Presidents of each Principal Subsidiary, if
termination of employment occurs by reason of death, Disability or
Retirement, another officer of the Company shall, within thirty days
of such termination, offer in writing to extend the period during
which any incentive stock option granted to such optionee under the
1997 Plan or the 1993 Plan may be exercised to the date on which the
incentive stock option would have otherwise expired absent such
termination of employment.

          If termination of any such officer’s employment occurs for any
other reason, another officer of the Company, if the Committee so
authorizes, shall, within thirty days of such termination, offer in
writing to extend the period during which any incentive stock option
granted to such optionee may be exercised to the date specified in
the offer, which shall not be later than the date on which the
incentive stock option would have otherwise expired absent such
termination of employment;

     (ii) With respect to all Participants other than the President
and Chief Executive Officer of the Company and the Presidents of
each Principal Subsidiary, if termination of employment occurs by
reason of death, Disability or Retirement, an officer of the Company
other than such Participant shall, within thirty days of such
termination, offer in writing to extend the period during which any
incentive stock option granted to such optionee under the 1997 Plan
or the 1993 Plan may be exercised,

8

 

to the date which is the earlier of five years from such termination
or the balance of the unexpired term of such incentive stock option.

          If termination of such Participant’s employment occurs for any
other reason, an officer of the Company other than such Participant,
if the Committee so authorizes, shall, within thirty days of such
termination, offer to extend the period during which any incentive
stock option granted to such optionee may be exercised to the date
specified in the offer, which shall not be later than the earlier of
five years from such termination of employment or the date on which
the incentive stock option would have otherwise expired absent such
termination of employment.

     The written offer shall notify the optionee, or the optionee’s estate or
the person to whom the optionee’s rights under the incentive stock option are
transferred by will or the laws of descent and distribution, of the right to
accept the offer by consenting to the extension, in writing, within thirty days
of the offer. If such consent is timely received the incentive stock option
may be exercised during the period specified in the offer, but not later than
the expiration of the exercise period specified in the Award Notice.

	5.	 	Mechanics of Exercise

               To exercise a stock option, the Participant shall provide a signed
exercise notice to an appropriate officer or other designee of the Company,
which notice shall indicate which options are being exercised, how the exercise
price is to be paid and any other appropriate information. Appropriate
delivery of a signed notice of exercise binds the Participant to pay the
exercise price. Part IV of these Rules contains procedures for exercising
stock options.

	6.	 	Reload Options

               No optionee shall be issued a new stock option automatically upon exercise
of a stock option. However, if the Award Notice provides for the issuance of
such new stock option, the

9

 

new stock option shall have an option price equal to the Fair Market Value of
the Common Stock on the date the new stock option is issued and shall otherwise
be subject, as nearly as possible, to the same terms and conditions as the
exercised stock option.

	C.	 	SARs UNDER THE 1997 PLAN

          All outstanding SARs granted under the 1997 Plan are Independent SARs as
described in the Plan. The Plan has been amended to eliminate future awards of
SARs.

               The base price of an Independent SAR shall be the Fair Market Value of the
Common Stock on the date of the grant of the Independent SAR, and shall
otherwise be subject to the terms and conditions imposed by the Award Notice
upon the Independent SAR, by the 1997 Plan, and by these Rules upon
non-qualified stock options. An Independent SAR shall be outstanding and
exercisable during the entire exercise period otherwise applicable to a
non-qualified stock option granted on the same day as the Independent SAR (as
adjusted in accordance with paragraph III.B.4 above in the event of death or
other termination of employment).

               To exercise a SAR, the Participant shall deliver a signed exercise notice
to an appropriate officer or other designee of the Company, which notice shall
indicate which SARs are being exercised, and any other appropriate information.
The Committee hereby delegates to appropriate officers of the Company the
authority to establish and revise appropriate procedures with respect to the
exercise of SARs.

	 	 	D. RESTRICTED STOCK UNDER THE 1997 AND 1993 PLANS

	1.	 	Restrictions on Transferability; Vesting

               The restrictions on transferability and vesting and all other terms and
conditions of Restricted Stock granted under the 1997 and 1993 Plans shall be
specified in the Award Notice. All shares of Restricted Stock shall be subject
to the Participant’s continued employment with the

10

 

Company or a Subsidiary until vesting. The Committee may accelerate the
vesting of Restricted Stock on its own motion as it deems appropriate and in
the best interests of the Company.

	2.	 	Mechanics of Grant

               The Committee hereby delegates to appropriate officers of the Company the
authority to establish and revise appropriate procedures with respect to the
issuance of certificates representing Restricted Stock and the payment of
dividends thereon.

	E.	 	PERFORMANCE UNITS AND PERFORMANCE SHARES UNDER THE 1997 PLAN

               The performance period and performance objectives of a performance unit or
performance share granted under the 1997 Plan shall be specified in the Award
Notice.

          The Committee shall consider any written submission from a Participant,
regarding revision of the performance period and/or performance objectives of
an Award on the basis of events which may have been unforeseen by the
Committee, or circumstances which have changed since the Award, and may
consider such matters on its own motion. Upon such consideration, the
Committee shall revise such performance period and/or performance objectives
when such revision is determined to be in the best interests of the Company and
consistent with the purposes of the 1997 Plan or the 1993 Plan.

IV. PROCEDURES FOR EXERCISING STOCK OPTIONS

	A.	 	AUTHORITY AND SCOPE

          Notwithstanding any provision of any award letter issued before 1998,
these are the exercise procedures for Incentive Stock Options (“ISOs”) and
Non-Qualified Stock Options (“NSOs”) issued under the 1993 Plan, the 1997 Plan,
and (unless the Compensation Committee specifically orders otherwise) any other
compensation plan which in the future is adopted by the Company.

	B.	 	NOTICE OF EXERCISE

	1.	 	Form and Delivery

11

 

               A Participant holding options granted under any of the Plans elects to
exercise options by delivering (by personal delivery or fax) to the office of
the Company’s Secretary or Assistant Secretary a Notice of Exercise. A Notice
of Exercise is a writing signed by the Participant indicating that the
Participant thereby elects to exercise options identified in the Notice
(including the quantity and exercise price), and describing the method by which
the Participant will pay the exercise price. Appropriate delivery of a Notice
of Exercise binds the Participant to pay the exercise price. An optional form
of Notice of Exercise is attached to these Rules (see Exhibit A).

	2.	 	Exercise Date

               The effective date of a Notice of Exercise is the “Exercise Date”. An
exercise will be effective as of the date the Notice of Exercise is received by
the office of the Secretary or Assistant Secretary; provided, however, that:

               (i) a Notice of Exercise received on a business day before
trading opens that day on the New York Stock Exchange may validly
designate the Exercise Date to be the preceding business day; and

               (ii) a Notice of Exercise may validly designate the Exercise
Date to be any date later than the date the Notice of Exercise is
received.

               (iii) if the exercise is accomplished through a “cashless
exercise” as described in Section IV (C)(4) below, the Exercise Date
shall be the date the broker sells Company stock into the market
regarding that exercise.

	C.	 	Payment of Exercise Price

	1.	 	Cash Payment

               To pay the exercise price in cash, a Participant must deliver to the
Secretary or Assistant Secretary payment in full, in cash or by check payable
in immediately available U.S. funds to the Company, within three business days
after the Exercise Date (except as additional time may be

12

 

allowed under Section IV (C)(3) below). Payment of the exercise price may be
partly in cash and partly in Company stock as described in Section IV (C)(2)
below, or may be accomplished through a “cashless exercise” as described in
Section IV (C)(4) below.

	2.	 	Payment with Existing Company Stock

               To pay the exercise price in shares of Company stock already owned by a
Participant, the Participant must surrender to the Company shares having a
total Market Value (as of the Exercise Date) of at least the total exercise
price, or pay any shortfall in cash. The Participant must, within three
business days after the Exercise Date (except as additional time may be allowed
under Section IV (C)(3) below) do one or both of the following:

a. regarding shares in the Company’s Direct Registration
System, comply with the Company’s procedures (including
signature guarantee requirements) for transferring book-entry
shares to the Company; or

b. regarding shares that are evidenced by a paper stock
certificate, deliver the certificate to the Secretary or
Assistant Secretary. Each certificate delivered must have a
guaranteed signature either on the back or on a stock power to
be attached. Recommended procedure for mailing certificates
is to mail the certificate and signed stock power separately.

	3.	 	Additional Time to Pay Exercise Price

               If, at any time the Participant’s payment of the exercise price would
otherwise be required pursuant to Section IV (C)(1) or (2) above, a Participant
is either

               a. traveling away from his or her usual place of Company employment, or

               b. “disabled”, as defined in the applicable Plan or these Administrative
Rules,

13

 

               then the Participant may pay the exercise price on or before the first
business day after the Participant’s return to his or her usual place of NFG
employment, but no later than the tenth business day after the Exercise Date.
However, the President, Chief Executive Officer, or Treasurer of the Company
shall have the authority to grant such additional time to pay the exercise
price as is reasonably necessary to accommodate the travel or disability of the
Participant.

	4.	 	Cashless Exercise

          The broker-assisted method of exercising options described in this Section
IV (C)(4) (“cashless exercise”) requires no cash outlay by the Participant. A
Participant wishing to do a cashless exercise must first establish a trading
account with a registered securities broker-dealer. Establishing that trading
account will likely include the Participant’s commitment to pay the broker as
described in their agreement. Upon request by a Participant, the Secretary or
Assistant Secretary will provide information that may help the Participant find
a broker who has previously done cashless exercises with the Company and/or may
be willing to do so at a discounted commission rate. The Participant must
provide the Secretary or Assistant Secretary with the Participant’s broker’s
name, firm, address, telephone and fax numbers.

          To do a cashless exercise, the Participant must deliver a Notice of
Exercise as described in Section IV (B)(1), and notify the Participant’s broker
to proceed with the exercise. The Participant’s broker will sell Company stock
for the Participant’s account and pay to the Company the exercise price, plus
any necessary tax withholding. The Company will have share certificates
delivered to the Participant’s broker within three business days after the
Exercise Date, unless the Company elects to retain the certificates pending
receipt of the exercise price. The Participant will be required to pay the
Participant’s broker according to the agreement between them, typically a few
days’ interest on the exercise price plus a commission on the shares sold.

14

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