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Exhibit 10.2
TRUST UNDER THE
NEW YORK MERCANTILE EXCHANGE MEMBERS
RETENTION AND RETIREMENT PLAN
This Agreement made this 31 day of December, 1997 by and between the New
York Mercantile Exchange ("NYMEX") and the Board of Trustees of the New York
Mercantile Exchange Members Retention and Retirement Plan (the "Plan")
(comprised of the individuals referred to in Exhibit A of this Trust Agreement
as it may be amended from time to time);
WHEREAS, NYMEX has adopted the Plan, a nonqualified deferred compensation
arrangement;
WHEREAS, NYMEX has incurred or expects to incur certain obligations under
the terms of such Plan with respect to the individuals participating in such
Plan;
WHEREAS, NYMEX wishes to establish a trust (the "Trust") and to contribute
to the Trust assets that shall be held therein to cover its obligations under
the Plan, subject to the claims of NYMEX's creditors in the event of NYMEX's
Insolvency, as herein defined, until paid to Plan Participants and their
beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of NYMEX and the Board of Trustees that the
Trust shall constitute an unfunded arrangement; and
WHEREAS, it is the intention of NYMEX to make contributions to the Trust
to provide itself with a source of funds to assist it in the meeting of its
obligations under the Plan.
NOW, THEREFORE, NYMEX and the Board of Trustees do hereby establish the
Trust and agree that the Trust shall be comprised, held and disposed of as
follows:
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Section 1 - Purpose of Trust
This Trust is being established so that NYMEX can contribute assets to the
Trust that shall be held therein to cover all or a portion of its obligations
under the Plan. All assets are intended to be subject to the claims of NYMEX's
creditors in the event of NYMEX's Insolvency, as herein defined, until paid to
Plan Participants and their beneficiaries in such manner and at such times as
specified in the Plan.
Section 2 - Establishment Of Trust
(a) NYMEX hereby deposits with the Board of Trustees in trust $22,729,877
(comprised of A/C 1332871 and A/C 777-007940 on deposit at Chase Manhattan
Bank), which shall become the principal of the Trust to be held, administered
and disposed of by the Board of Trustees as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which NYMEX is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of NYMEX and shall be used exclusively for
the uses and purposes of Plan Participants and general creditors as herein set
forth. Plan Participants and their beneficiaries shall 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 shall be mere
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unsecured contractual rights of Plan Participants and their beneficiaries
against NYMEX. Any assets held by the Trust will be subject to the claims of
NYMEX's general creditors under federal and state law in the event of
Insolvency, as defined in Section 4(a) herein.
(e) NYMEX, under the terms of the Plan, may make additional deposits of
cash or other property to the Trust to augment the principal to be held,
administered and disposed of by the Board of Trustees as provided in this Trust
Agreement. Neither the Board of Trustees nor any Plan Participant or beneficiary
shall have any right to compel such additional deposits.
Section 3 - Payments to Plan Participants and Their Beneficiaries
(a) NYMEX shall deliver to the Board of Trustees a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
Participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to the Board of Trustees for determining the amounts so
payable, the form in which such amount is to be paid (as provided for or
available under the Plan), and the time of commencement for payment of such
amounts. The Board of Trustees shall make payments to the Plan Participants and
their beneficiaries in accordance with such Payment Schedule. If NYMEX fails to
contribute to the Trust the minimum amount required by the Plan, then the Board
of Trustees shall distribute all benefits pursuant to Section 8 of the Plan. The
Board of Trustees may make provision for the reporting and withholding of any
federal, state or local income taxes that the Board of Trustees deems
appropriate with respect to the payment of benefits pursuant to the terms of the
Plan. If amounts are withheld, the Board of Trustees shall pay such amounts
withheld to the appropriate
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taxing authorities or determine that such amounts have been reported, withheld
and paid by NYMEX.
(b) The entitlement of a Plan Participant or his or her beneficiaries to
benefits under the Plan shall be determined by NYMEX or such party as it shall
designate under the Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
(c) NYMEX may make payment of benefits directly to Plan Participants or
their beneficiaries as they become due under the terms of the Plan. NYMEX shall
notify the Board of Trustees of its decision to make payment of benefits
directly prior to the time amounts are payable to Participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan, NYMEX shall make the balance of each such payment as it falls
due, except as specified in Section 8 of the Plan. The Board of Trustees shall
notify NYMEX where principal and earnings are not sufficient.
Section 4 - The Board of Trustees' Responsibility Regarding
Payments to Trust Beneficiary When NYMEX Is Insolvent
(a) The Board of Trustees shall cease payment of benefits to Plan
Participants and their beneficiaries if NYMEX is Insolvent or would thereby be
made Insolvent. NYMEX shall be considered "Insolvent" for purposes of the Trust
Agreement if, within the meaning of sections 515 and 1410 of the New York
Not-for-Profit Corporation Law and as said sections may from time to time be
hereafter amended. (i) NYMEX is rendered unable to carry on its corporate
purposes. (ii) the fair market value of NYMEX's assets remaining after such
payment would be
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insufficient to meet its liabilities, or (iii) NYMEX is insolvent within the
meaning of such law. In addition, NYMEX shall be considered to be "Insolvent"
for purposes of this Trust Agreement if (A) NYMEX is unable to pay its debts as
they become due or (B) NYMEX is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.
(b) At all times during the continuance of the Trust, as provided in
Section 2(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of NYMEX under federal and state law as set forth
below.
(1) The Board of Directors and the highest ranking officer of NYMEX
shall have the duty to inform the Board of Trustees in writing of NYMEX's
Insolvency. if a person claiming to be a creditor of NYMEX alleges in
writing to the Board of Trustees that NYMEX has become Insolvent, the
Board of Trustees shall determine whether NYMEX is Insolvent and, pending
such determination, the Board of Trustees shall discontinue payment of
benefits to Plan Participants or their beneficiaries.
(2) Unless the Board of Trustees has actual knowledge of NYMEX's
Insolvency, or has received notice from NYMEX or a person claiming to be a
creditor alleging that NYMEX is Insolvent, the Board of Trustees shall
have no duty to inquire whether NYMEX is Insolvent. The Board of Trustees
may in all events rely on such evidence concerning NYMEX's solvency as may
be furnished to the Board of Trustees and that provides the Board of
Trustees with a reasonable basis for making a determination concerning
NYMEX's solvency.
(3) If at any time the Board of Trustees has determined that NYMEX
is Insolvent. the Board of Trustees shall discontinue payments to Plan
Participants or their
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beneficiaries and shall hold the assets of the Trust for the benefit of
NYMEX's general creditors. Nothing in the Trust Agreement shall in any way
diminish any rights of Plan Participants or their beneficiaries to pursue
their rights as general creditors of NYMEX with respect to benefits due
under the Plan or otherwise.
(4) The Board of Trustees shall resume the payment of benefits to
Plan Participants or their beneficiaries in accordance with Section 3 of
the Trust Agreement only after the Board of Trustees has determined that
NYMEX is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Board of Trustees
discontinues the payment of benefits from the Trust pursuant to Section 4(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
Participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
Participants or their beneficiaries by NYMEX in lieu of the payments provided
for hereunder during any such period of discontinuance.
Section 5 - Payments to NYMEX
Except as provided in Section 4 hereof, NYMEX shall have no right or power
to direct the Board of Trustees to return to NYMEX or to divert to others any of
the Trust assets before all payment of benefits have been made to Plan
Participants and their beneficiaries pursuant to the terms of the Plan.
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Section 6 - Investment Authority
(a) NYMEX may direct the investment of the Trust funds. In the absence of
such direction, the Board of Trustees shall invest the Trust funds in a manner
consistent with the purposes of the Trust, as set forth in Section 1.
(b) In no event may the Board of Trustees invest in securities (including
stock or rights to acquire stock) or obligations issued by NYMEX or its
successors, other than a de minimis amount held in common investment vehicles in
which the Board of Trustees invests. All rights associated with assets of the
Trust shall be exercised by the Board of Trustees or the person designated by
the Board of Trustees, and shall in no event be exercisable by or rest with Plan
Participants.
(c) Subject to the terms of the Plan, NYMEX shall have the right, at
anytime, and from time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust.
Section 7 - Disposition of Income
During the term of the Trust, all income received by the Trust, net of
expenses and taxes as described in Section 10, shall be accumulated and
reinvested.
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Section 8 - Accounting by the Board of Trustees
(a) The Board of Trustees shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
NYMEX and the Board of Trustees. Within a reasonable period of time following
the close of each calendar year, the Board of Trustees shall deliver to NYMEX a
written account of its administration of the Trust during such year, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year.
Section 9 - Responsibility of the Board of Trustees
(a) The Board of Trustees shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that the
Board of Trustees shall incur no liability to any person for any action taken
pursuant to a direction, request or approval given by NYMEX which is
contemplated by, and in conformity with, the terms of the Plan or the Trust and
is given in writing by NYMEX. In the event of a dispute between NYMEX and a
party, the Board of Trustees may apply to a court of competent jurisdiction to
resolve the dispute.
(b) The Board of Trustees shall report to the Board of Directors of NYMEX
or any other party as the Board of Directors of NYMEX deems appropriate.
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(c) If the Board of Trustees undertakes or defends any litigation arising
in connection with the Trust, NYMEX agrees to indemnify the Board of Trustees
against the Board of Trustees' costs, expenses and liabilities (including,
without limitation, attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If NYMEX does not pay such costs, expenses
and liabilities in a reasonably timely manner, the Board of Trustees may obtain
payment from the Trust.
(d) The Board of Trustees may consult with legal counsel (who may also be
counsel for NYMEX generally) with respect to any of its duties or obligations
hereunder.
(e) The Board of Trustees may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder.
(f) The Board of Trustees shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly provided otherwise
herein, provided, however, that if an insurance policy is held as an asset of
the Trust, the Board of Trustees shall 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 of the
Board of Trustees, or to loan to any person the proceeds of any borrowing
against such policy.
(g) Notwithstanding any powers granted to the Board of Trustees pursuant
to the Trust Agreement or to applicable law, the Board of Trustees shall not
have any power that could give the Trust the objective of carrying on a business
and dividing the gains therefrom, within the meaning of section 301.77011-2 of
the Procedure and Administrative Regulations promulgated pursuant to the
Internal Revenue Code.
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Section 10 - Compensation and Expenses of the Board of Trustees
(a) The Trust shall pay all administrative fees and expenses. In addition,
the Trust shall reimburse NYMEX for the actual amount of income taxes, including
but not limited to all federal, state and local taxes, paid by NYMEX which
relate to the income attributable to the Trust. At the sole discretion of NYMEX
such taxes, fees and expenses may be paid by NYMEX and offset against amounts
payable by NYMEX to the Trust under the terms of the Plan.
(b) Compensation, if any, for the individuals who are members of the Board
of Trustees in respect of their services performed in relation to the Trust
shall be determined by the Board of Directors of the NYMEX.
Section 11 - Resignation and Removal of a member of the Board of Trustees
(a) An individual who serves as a member of the Board of Trustees by
virtue of holding an office listed in Exhibit A of this Trust Agreement shall be
considered to have automatically resigned upon termination of his or her
respective duties in that position.
(b) An individual who serves as a member of the Board of Trustees solely
by virtue of having been selected by NYMEX shall be considered to have
automatically resigned after serving on the Board of Trustees for a period of
three years. Of the initial three members serving solely by virtue of having
been selected by NYMEX, one shall be designated at the time of appointment to
serve for a period of only one year and a second shall be designated at the time
of appointment to serve for a period of only two years. Notwithstanding the
above, if an individual who serves as a member of the Board of Trustees is also
a member of NYMEX, then such
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individual shall be considered to have automatically resigned upon the
termination of his membership with NYMEX.
(c) Any individual serving as a member of the Board of Trustees may resign
at any time by written notice to NYMEX, which shall be effective thirty days
after receipt of such notice unless NYMEX and the Board of Trustees agree
otherwise.
(d) Any individual serving as a member of the Board of Trustees, including
any individual who serves as a member of the Board of Trustees by virtue of
holding an office listed in Exhibit A, may be removed by NYMEX without any prior
notice.
(e) Upon resignation or removal of all the individuals serving as members
of the Board of Trustees and appointment of a successor trustee, the Board of
Trustees as constituted immediately prior to such occurrence shall transfer all
assets to the successor trustee. The transfer shall be completed within thirty
days after receipt of notice of resignation, removal or transfer, unless NYMEX
extends the time limit.
(f) Upon resignation or removal of all the individuals serving as members
of the Board of Trustees, a successor shall be appointed, in accordance with
Section 12(b) hereof, by the effective date of resignation or removal. If no
such appointment has been made, the Board of Trustees as constituted immediately
prior to such occurrence (or any member thereof) may apply to a court of
competent jurisdiction for appointment of a successor or for instructions. All
expenses of the Board of Trustees in connection with the proceeding shall be
allowed as administrative expenses of the Trust.
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Section 12 - Appointment of Successor
(a) If an individual serving as a member of the Board of Trustees is
considered to have automatically resigned under Section 11(a), the individual
appointed to carry on his or her respective duties shall be considered to have
been automatically appointed to serve as a member of the Board of Trustees.
(b) If one or more individuals serving as members of the Board of Trustees
are considered to have resigned or are removed in accordance with Section 11(b),
(c) or (d) hereof, NYMEX may appoint any party, including a party that may be
granted corporate trustee powers under state law, as a successor to replace such
individual upon resignation or removal. Such party shall serve as a member of
the Board of Trustees until the term of the former member would have been due to
expire had such member not been removed or resigned. The appointment shall be
effective when accepted in writing by the new member of the Board of Trustees,
who shall have all of the rights and powers of the former member of the Board of
Trustees, including custodial ownership rights in the Trust assets. The former
member of the Board of Trustees shall execute any instrument necessary or
reasonably requested by NYMEX or the successor member of the Board of Trustees
to evidence the transfer.
(c) The successor member of the Board of Trustees need not examine the
records and acts of any prior members of the Board of Trustees and may retain or
dispose of existing Trust assets, subject to Sections 8 and 9 hereof. The
successor member of the Board of Trustees shall not be responsible for and NYMEX
shall indemnify and defend the successor member of the Board of Trustees from
any claim or liability resulting from any action or inaction of any prior
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members of the Board of Trustees or from any other past event, or any condition
existing at the time such individual becomes a successor member of the Board of
Trustees.
Section 13 - Amendment or Termination
(a) This Trust Agreement may be amended by a written instrument executed
by the Board of Trustees and NYMEX. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan or shall make the Trust
revocable.
(b) The Trust shall not terminate until the date on which Plan
Participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan. Upon termination of the Trust any assets remaining in
the Trust shall be returned to NYMEX.
(c) Upon written approval of Participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, NYMEX may terminate the
Trust prior to the time all benefit payments under the Plan have been made. All
assets in the Trust at termination shall be returned to NYMEX.
Section 14 - Miscellaneous
(a) Any provision of the Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan Participants and their beneficiaries under
the Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged,
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encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process, without the prior written consent of the Board of
Directors.
(c) This Trust Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflicts
of laws.
(d) Any action to be taken by NYMEX shall be by a majority vote of the
Board of Directors of NYMEX. Notwithstanding the above, any action taken by
NYMEX with respect to the removal or appointment of a member of the Board of
Trustees shall be by a two-thirds majority vote of the Board of Directors of
NYMEX. Any action required by any other non-natural entity shall be by its Board
of Directors or other board or person charged with the management of the entity,
or its duly authorized delegate.
(e) Any action authorized by the Board of Trustees shall be by a majority
vote of the individuals then serving as members of such Board of Trustees at a
meeting at which a quorum is present. A quorum shall consist of the lesser of
four individuals or the number of members then serving on the Board of Trustees.
Notwithstanding the above, the Board of Trustees shall have the power to
establish additional rules and procedures governing the manner in which it shall
act, including but not limited to the right to vote by proxy. If the sole member
of the Board of Trustees is a corporate trustee, then all references to Board of
Trustees shall refer to such trustee.
(f) The Chairman of the Board of Directors of NYMEX shall also be the
Chairman of the Board of Trustees. The Vice-Chairman of the Board of Directors
of NYMEX shall also be the Vice-Chairman of the Board of Trustees. In the event
there is no Vice-Chairman of the Board of Directors, the Chairman of the Board
of Trustees shall select a member of the Board of
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Trustees to serve as Vice-Chairman. Any other appointments shall be made by the
entire Board of Trustees.
(g) NYMEX indemnifies and saves harmless the Board of Trustees, from and
against any and all losses resulting from the liability to which the Board of
Trustees may be subjected by reason of any act or conduct (except willful
misconduct or gross negligence) in its official capacity as the Board of
Trustees, including all judgments and expenses reasonably incurred in its
defense, in case NYMEX fails to provide such defense.
Section 15 - Effective Date
The effective date of the Trust Agreement shall be December 31, 1997.
NEW YORK MERCANTILE EXCHANGE
Attest: /s/ [ILLEGIBLE] By: /s/ R. Xxxxxxx Xxxxxxxx
----------------------------- -----------------------------------
R. Xxxxxxx Xxxxxxxx
President
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EXHIBIT A
Effective as of the date this Agreement, the Board of Trustees shall consist of
the following group of seven (7) individuals:
(1) The individual appointed to serve as the Chairman of the Board of
Directors of NYMEX;
(2) The individual appointed to serve as the Vice Chairman of the Board of
Directors of NYMEX;
(3) The individual appointed to serve as the Treasurer of NYMEX;
(4) The individual appointed to serve as the Senior Vice President of Finance
and Administration of NYMEX or comparable successor position; and
(5) An additional three individuals selected by the Board of Directors of
NYMEX.
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