TRUST UNDER
▇▇▇▇▇▇ & ▇▇▇▇▇▇ GROUP, INC.
DEFERRED COMPENSATION AGREEMENT
This Trust Agreement made this second day of February, 2000, by
and between ▇▇▇▇▇▇ & ▇▇▇▇▇▇ Group, Inc., a corporation organized under the
laws of the State of New York (the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Trustee"); WHEREAS, the Company has entered into a deferred compensation
agreement (the "Deferred Compensation Agreement") (attached hereto as Appendix
"A") effective as of October 19, 1999, with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Executive") pursuant to the Executive's employment agreement;
WHEREAS, the Company may incur liability under the terms of the
Deferred Compensation Agreement with respect to the Executive;
WHEREAS, the Deferred Compensation Agreement contemplates the
establishment of this trust (hereinafter called the "Trust") and the
contribution by the Company to the Trust of amounts that shall be held
therein, in order to assist the Company in meeting its obligations under
the Deferred Compensation Agreement;
WHEREAS, the assets of this Trust shall be subject to the claims
of the Company's creditors in the event of the Company's Insolvency, as herein
defined, until paid to the Executive (or his beneficiary) in such manner and
at such times as specified in the Deferred Compensation Agreement;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Deferred Compensation Agreement as an unfunded plan maintained for the purpose
of providing deferred compensation for a highly compensated employee for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA");
NOW, THEREFORE, the parties do hereby establish the Trust and
agree that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(1) The Company hereby deposits with the Trustee in trust the
sum of $58,801.33, which shall become the principal of the Trust to be
held, administered and disposed of by the Trustee as provided in this Trust
Agreement.
(2) The Trust hereby established shall be irrevocable, but is
subject to termination in accordance with Section 12 hereof.
(3) The Trust is intended to be a grantor trust, of which the
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, and
shall be construed accordingly.
(4) The principal of the Trust, and any earnings thereon shall
be held separate and apart from other funds of the Company and shall be used
exclusively for the purposes herein set forth. The Executive and his
beneficiary shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Deferred
Compensation Agreement and this Trust Agreement shall be a mere unsecured
contractual right of the Executive and his beneficiary 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 that the Company is
considered Insolvent, as defined in Section 3(1) herein.
(5) On the last business day of each month, or otherwise as
required pursuant to the Deferred Compensation Agreement, the Company shall
contribute in cash to the Trustee hereunder an amount equal to the
contributions required to be made pursuant to the terms of the Deferred
Compensation Agreement. The Trustee shall not have any right or duty to
compel such contributions.
Section 2. Payments to Executive and Beneficiary.
(1) The Trustee shall make payment to the Executive or his
beneficiary in accordance with the directions of the Company. With respect to
payments to Trust Beneficiaries, the Company shall be solely responsible for
determining the amounts of income that are taxable and reportable, determining
the nature and amounts of taxes to be withheld and for withholding, remitting
and reporting all such income and taxes to the applicable government entities.
The Trustee shall have no duties with respect thereto.
(2) The entitlement of the Executive or his beneficiary to
benefits shall be determined by the Company in accordance with the provisions
of the Deferred Compensation Agreement.
(3) The Company may make payment of benefits directly to the
Executive or his beneficiary as they become due under the terms of the
Deferred Compensation Agreement. The Company shall notify the Trustee of its
decision to make a direct payment of benefits prior to the time amounts
payable to the Executive or his beneficiary are due. In the event that the
Company pays the entire amount due to the Executive or his beneficiary
pursuant to the terms of the Deferred Compensation Agreement, then the
Trustee, upon receipt of a certification from the Company that such payment
has been made, shall return all remaining Trust assets to the Company.
Section 3. Trustee Responsibility Regarding Payments When the Company
Is Insolvent.
(1) The Trustee shall cease payment to the Executive and his
beneficiary if the Company is Insolvent. The Company shall be considered
"Insolvent" for purpose of this Trust Agreement if (i) the Company is unable
to pay its debts as they become due, or (ii) the Company is subject to a
pending procedure as a debtor under the United States Bankruptcy Code.
(2) At all times during the continuance of this Trust, as
provided in Section 1(4) hereof, the principal and income of the Trust shall
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
Financial Officer of the Company shall have the duty to inform the
Trustee in writing of the Company's becoming Insolvent. If a
person claiming to be a creditor of the Company alleges in
writing to the Trustee that the Company has become Insolvent, the
Trustee shall determine whether the Company is Insolvent and,
pending such determination, the Trustee shall discontinue payment
of benefits hereunder.
(2) Unless the Trustee has actual knowl
edge of the Company's becoming Insolvent, or has received notice
from the Company or a person claiming to be a creditor alleging
that the Company is Insolvent, the Trustee shall have no duty to
inquire whether the Company is Insolvent. The Trustee may in all
events 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 that the Company is Insolvent, the Trustee shall
discontinue payments to the Executive or his beneficiary and shall
hold the assets of the Trust for the benefit of the Company's
general creditors. Nothing in this Trust Agreement shall in any
way diminish any right of the Executive or his beneficiary to
pursue rights as a general creditor of the Company with respect to
benefits due under the Deferred Compensation Agreement or otherwise.
(4) The Trustee shall resume the payment
of benefits to the Executive or his beneficiary in accordance with
Section 2 of this Trust Agreement only after the Trustee has
determined that the Company is not Insolvent (or is no longer
Insolvent).
(3) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(2)
hereof and subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all payments due to
the Executive or his beneficiary under the terms of the Deferred Compensation
Agreement for the period of such discontinuance, less the aggregate amount of
any payments made to the Executive or his beneficiary by the Company in lieu
of the payments provided for hereunder during any such period of
discontinuance.
Section 4. Payments to Company.
Except as provided in Sections 2(3) and 3 hereof, the Company
shall have no right or power to direct the Trustee to return to the Company or
to divert to others any of the Trust assets before all payments of benefits
have been made to the Executive and his beneficiary pursuant to the terms of
the Deferred Compensation Agreement.
Section 5. Accounts and Investment Authority.
(1) The Trustee shall determine the manner in which the assets
shall be invested; subject to the investment guidelines established for the
Trust by the Company from time to time. Without limitation of and in addition
to the foregoing, the term "investments" as used in this Section shall include
stocks of all kinds and classes (other than stocks of the Company or any
affiliate), bonds, notes, debentures, savings bank accounts and other interest
bearing deposits (including accounts or deposits in the Trustee's Banking
Department), mortgages and other obligations, insurance contracts and
annuities, common trust funds, shares or participations in any investment
company, fund or trust, including a registered investment company from which
the Trustee or its affiliates received compensation for providing investment
advisory, custodial, transfer agency or other services, and all other
property, tangible and intangible, real, personal and mixed of every kind and
nature. The Company acknowledges that interests in registered investment
companies are not bank deposits and are not insured by, guaranteed by,
obligations of, or otherwise supported by the United States of America, the
Federal Deposit Insurance Corporation, PNC Bank, National Association or any
bank or government entity. In making such investments, the Trustee shall not
be restricted by any state law or statute designating investments eligible for
trust funds.
(2) The Trustee is authorized to hold uninvested, from time to
time, without liability for interest thereon, such amounts as are necessary
for the cash requirements of the Plan; and to hold assets of the Trust in
cash or equivalents, government securities, or straight debt securities in
varying proportions when and for so long as, in the opinion of the Trustee,
prevailing market and economic considerations indicate that it is in the best
interest of the Trust to do so.
(3) The Trustee is authorized to cause any securities or other
property to be registered in its own name or in the name of one or more of its
nominees or a nominee or nominees of any national registered securities
depository which it has selected and to hold any investment in bearer or other
negotiable form provided that the books and records of the Trustee at all
times show that such investments are part of the Trust. In compliance
herewith, the Trustee may give to any registrar, transfer agent, or insurer,
including but not limited to corporations, state, or Federal authorities or
agents, any bond or other guarantee which may be required. Any registrar,
transfer agent, or insurer shall be fully protected and saved harmless from
any action either at law or in equity for acting upon or in compliance with
the instructions received in writing from the Trustee.
(4) The Trustee shall have the power to vote upon any stocks,
bonds or other securities; to give general or special proxies or powers of
attorney with or without power of substitution; to exercise any conversion
privileges, subscription rights, or other options, and to make any payments
incidental thereto; to oppose or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting corporate securities, to
delegate discretionary powers, and to pay any assessments or charges in
connection therewith; and generally to exercise any of the powers of an owner
with respect to stocks, bonds, securities, or other properties held as part of
the Trust.
(5) The Trustee shall have the power to settle, compromise, or
submit to arbitration any claims, debts, or damage due or owing to or from the
Trust, to commence or defend suits or legal or administrative proceedings, and
to represent the Trust in all legal and administrative proceedings, provided,
however, the Trustee shall not be obligated to take any action or to appear
and participate in any action which would subject it to expense or liability
unless it is first indemnified in an amount and manner satisfactory to it, or
is furnished with funds sufficient, in its sole judgment, to cover the same.
(6) In addition to the foregoing powers, the Trustee shall have
all of the powers, rights and privileges conferred upon trustees by the
fiduciary laws of the Commonwealth of Pennsylvania to the extent such law is
not preempted by federal law, and the power to do all acts, take all
proceedings, and execute all rights and privileges, although not specifically
mentioned herein, as the Trustee may deem necessary to administer the Trust
and to carry out the purposes of this Trust.
(7) Notwithstanding anything to the contrary, the Company may
reserve to itself the exclusive authority to direct the Trustee as to the
acquisition, retention or disposition of all or any portion of the assets of
the Trust and, to the extent the Company reserves such authority, the Trustee
shall not be responsible for the management and control of such assets other
than to serve as custodian of them. Upon receipt by the Trustee of a written
notice from the Company advising the Trustee that the Company has reserved
such authority, the Trustee shall, pursuant to such notice, invest all or any
portion of the Trust designated in such notice only in accordance with the
instructions of the Company. The Trustee shall be under no duty to question
any instruction of the Company. Any such instruction may be of a continuing
nature or otherwise and may be changed or revoked in writing by the Company at
any time. In the absence of such a written direction, the Trustee shall have
full authority as to the acquisition, retention or disposition of the assets
of the Trust. The Company may revoke or amend the investment powers that it
reserves to itself provided such revocation or amendment is in writing and is
consented to in advance by the Trustee.
(8) In no event may the Trustee invest in securities (including
stock or rights to acquire stock) or obligations issued by the Company or
affiliate, other than a de minimis amount held in common investment vehicles
in which the Trustee invests.
Section 6. Disposition of Income.
During the term of this Trust, all income received by the Trust,
net of expenses, shall be accumulated and reinvested.
Section 7. Accounting by Trustee.
The Trustee shall separately keep accurate and detailed records of
all investments, receipts, disbursements, and all other transactions required
to be made, including such specific records as may be agreed upon in writing
between the Company and the Trustee. Within 60 days following the close of
each calendar quarter and within 120 days after the removal or resignation of
the Trustee, the Trustee shall deliver to the Company a written account of its
administration of the Trust during such quarter or during the period from the
close of the last preceding quarter to the date of such removal or
resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it for the Executive, 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 for the Executive at the end of such quarter or as of the date of such
removal or resignation, as the case may be. The Company may approve the
account either by written notice of approval delivered to the Trustee or by
failure to object in writing to the Trustee within one hundred and eighty
(180) days from the date on which the account was delivered to the Trustee.
Upon receipt of written approval of the accounting, or upon the expiration of
the 180-day period without written objections, the account shall be approved,
and the Trustee shall be released and discharged with respect to the account
as if the account had been settled and allowed by a decree of a court of
competent jurisdiction. Nothing herein contained, however, shall be deemed to
preclude the Trustee of its right to have its account settled by a court of
competent jurisdiction.
Section 8. Responsibility of Trustee.
(1) The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant
to a direction, request or approval given by the Company or the Executive that
is contemplated by, and in conformity with, the terms of the Deferred
Compensation Agreement or this Trust; and provided further, that the Trustee
shall incur no liability to any person for any reasonable action or failure
to act taken pursuant to a reasonable determination of the existence or
nonexistence of an event of Insolvency pursuant to Section 3 hereunder. In
the event of a dispute between the Company and a party, the Trustee may apply
to a court of competent jurisdiction to resolve the dispute.
(2) If the Trustee undertakes, defends or settles any pending or
threatened claim or litigation arising in connection with this Trust, the
Company agrees to indemnify the Trustee against the Trustee's costs, expenses
and liabilities (including, without limitation, attorneys' fees and expenses)
relating thereto and to be primarily liable for such payments. If the Company
does not pay such costs, expenses and liabilities in a reasonably timely
manner, the Trustee may obtain payment from the Trust.
(3) The Trustee may consult with legal counsel (who may also be
counsel for the Company generally) with respect to any of its duties or
obligations hereunder and shall be fully protected in reasonably relying upon
the advice of counsel.
(4) Provided there is a prior consultation with the Company, the
Trustee may hire agents, accountants, actuaries, investment advisors,
financial consultants or other professionals to assist it in performing any
of its duties or obligations hereunder.
(5) The Trustee shall have, without exclusion, all powers
conferred on the Trustee by applicable law, unless expressly provided
otherwise herein.
(6) Notwithstanding any power granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have any
power that could give this Trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Internal
Revenue Code of 1986, as amended.
Section 9. Compensation and Expenses of Trustee.
The Company shall pay all administrative and Trustee's fees and
expenses. If the Company fails to pay such fees and expenses in a reasonably
timely manner, Trustee may obtain payment from the Trust.
Section 10. Resignation and Removal of Trustee.
(1) The Trustee may resign at any time by written notice to the
Company, which shall be effective 30 days after receipt of such notice unless
the Company and the Trustee agree otherwise.
(2) The Trustee may be removed by the Company on 30 days notice
or upon shorter notice accepted by Trustee.
(3) Upon resignation or removal of the Trustee and appointment
of a successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within 30 days after
receipt of notice of resignation, removal or transfer, unless the Company
extends the time limit.
(4) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraphs (1) or (2) of this section. If no
such appointment 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 shall be allowed as
administrative expenses of the Trust.
Section 11. Appointment of Successor.
(1) If the Trustee resigns or is removed in accordance with
Section 10(1) or (2) hereof, the Company may appoint any third party, such as
a bank trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace the Trustee upon resignation
or removal. The appointment shall be effective when accepted in writing by
the new Trustee, who shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets. The former Trustee
shall execute any instrument necessary or reasonably requested by the Company
or the successor Trustee to evidence the transfer.
(2) The successor Trustee need not examine the records and acts
of any prior Trustee and may retain or dispose of existing Trust assets,
subject to Sections 7 and 8 hereof. The successor Trustee shall not be
responsible for and the Company shall indemnify and defend the successor
Trustee from any claim or liability resulting from any action or inaction of
any prior Trustee or from any other past event, or any condition existing at
the time it becomes successor Trustee.
Section 12. Amendment or Termination.
(1) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company; provided, however, that no amendment
that alters or impairs the rights of the Executive hereunder may be made
without the prior written consent of the Executive.
(2) The Trust shall not terminate until the date on which the
Executive and his beneficiary are no longer entitled to benefits pursuant to
the terms of the Deferred Compensation Agreement. Upon termination of the
Trust any assets remaining in the Trust shall be returned to Company.
(3) Upon written approval of the Executive or his beneficiary
entitled to payment pursuant to the terms of the Deferred Compensation
Agreement, the Company may terminate this Trust prior to the time all benefit
payments under the Deferred Compensation Agreement have been made. All assets
in the Trust at termination shall be returned to the Company.
Section 13. Miscellaneous.
(1) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
(2) Benefits payable to the Executive and his beneficiary 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.
(3) This Trust Agreement shall be construed in accordance with
and governed by the laws of the Commonwealth of Pennsylvania without regard to
its conflict of laws principles.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be as of
February 2, 2000.
IN WITNESS WHEREOF, the parties hereto have executed the Trust as
of the date first above written.
▇▇▇▇▇▇ & ▇▇▇▇▇▇ GROUP, Inc.
By:/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
PNC BANK, Trustee
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President