EXHIBIT 10.5
TRUST UNDER SEMELE GROUP, INC.
INCENTIVE COMPENSATION PLAN
This Agreement is by and between Semele Group, Inc. ("Semele") and
Boston Private Bank and Trust Company as Trustee ("Trustee");
WHEREAS, Semele has adopted a certain Incentive Compensation Plan
containing provisions for payment of deferred compensation (the "Plan");
WHEREAS, Semele has incurred or expects to incur liability under the terms
of the Plan with respect to certain individuals as participants (together with
their designated beneficiaries, the "Participants") in such Plan;
WHEREAS, Semele wishes to establish a trust (hereinafter called "Trust")
and to contribute to the Trust assets that shall be held therein, subject to the
claims of Semele's creditors in the event of Semele's Insolvency, as herein
defined, until paid to the Participants in such manner and at such times as
specified in the Plans;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plans
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;
WHEREAS, it is the intention of Semele to contribute to the Trust to
provide itself with a source of funds to assist it in the meeting of its
liabilities under the Plans;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
I. Establishment of Trust
A. Semele hereby deposits with Trustee in trust 154,826 shares of common
stock of Semele Group, Inc. ("Shares"), which shall become the principal of the
Trust to be held, invested, administered and disposed of by Trustee 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 Semele 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 initial principal of the Trust, and any gains, losses, or earnings
thereon, shall be held separate and apart from other funds of Semele and shall
be used exclusively for the uses and purposes of the Plan Participants and
Semele's general creditors as herein set forth. The Plan Participants shall have
no preferred claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plans and this Trust Agreement shall be
mere
unsecured contractual rights of Plan Participants against Semele. Any assets
held by the Trust will be subject to the claims of Semele's general creditors
under federal and state law in the event of Insolvency, as defined in Section
3(a) herein.
E. To meet its continuing obligations to Participants under the Plan, it
is the intention of Semele, from time to time, to make additional deposits of
Shares, cash or other property in trust with Trustee to augment the principal to
be held, administered and disposed of by Trustee as provided in this Trust
Agreement. Neither Trustee nor the Plan Participants shall have any rights under
this Trust to compel such additional deposits.
II. Payments to Plan Participants and Their Beneficiaries.
A. Semele shall deliver to Trustee a copy of the Plan that indicates the
amounts payable in respect of the Plan Participants (and their beneficiaries),
and the time of commencement for payment of such amounts under the Plans. Except
as otherwise provided herein, Trustee shall make payments to each Plan
Participant and his beneficiaries (or, in the event of forfeiture of a
Participant's benefit, to Semele) in accordance with the Plan. Semele shall
provide the Trustee with all information necessary to make such distribution and
the Trustee will be entitled to rely on such information.
B. The Trustee shall 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 Plans and shall
pay amounts withheld to the appropriate taxing authorities or determine that
such amounts have been reported, withheld and paid by Semele. Semele shall
provide the Trustee with all information necessary to make such tax withholding
provision and the Trustee shall be entitled to rely on such information.
C. The entitlement of the Plan Participant or his beneficiaries to
benefits under the Plans shall be determined by Semele or such party as it shall
designate under the Plans, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plans.
D. 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, Semele shall make the balance of each such payment as it falls due.
E. Once all assets of the Trust have been expended in Plan payments in
accordance with Section 2, to or for the benefit of general creditors of Semele
in accordance with Section 3(b), or for Trust expenses in accordance with
Section 8 or 9, the Trust shall terminate and the Trustee shall have no further
responsibility to make payments to Participant or his beneficiaries. Upon
termination of the Trust, Trustee shall make payment as set forth in Section
12(b).
III. Trustee Responsibility Regarding Payments to Trust
Beneficiary When Semele Is Insolvent.
A. Trustee shall cease payment of benefits to Plan Participants if Semele
is Insolvent. Semele shall be considered "Insolvent" for purposes of this Trust
Agreement if (i) Semele is unable to pay its debts as they become due, or (ii)
Semele is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.
B. At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Semele under federal and state law as set forth
below.
1. The Board of Directors and the President of Semele shall have
the duty to inform Trustee in writing of Semele's Insolvency. If a person
claiming to be a creditor of Semele alleges in writing to Trustee that
Semele has become Insolvent, Trustee shall determine whether Semele is
Insolvent and, pending such determination, Trustee shall discontinue
payment of benefits to the Plan Participants or their beneficiaries.
2. Unless Trustee has actual knowledge of Semele's Insolvency, or
has received notice from Semele or a person claiming to be a creditor
alleging that Semele is Insolvent, Trustee shall have no duty to inquire
whether Semele is Insolvent. Trustee may in all events rely on such
evidence concerning Semele's solvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for making a determination
concerning Semele's solvency.
3. If at any time Trustee has determined that Semele is Insolvent,
Trustee shall discontinue payments to the Plan Participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Semele's general creditors. While so holding such assets, Trustee shall
make payments to such creditors if Semele shall so direct or, if Semele is
subject to a pending proceeding as a debtor under the United States
Bankruptcy Code, as a court of competent jurisdiction shall direct.
Nothing in this Trust Agreement shall in any way diminish any rights of
the Plan Participants or their beneficiaries to pursue their rights as
general creditors of Semele with respect to benefits due under the Plans
or otherwise.
4. Trustee shall resume the payment of benefits to the Plan
Participants or their beneficiaries in accordance with Section 2 of this
Trust Agreement only after Trustee has determined that Semele is not
Insolvent (or is no longer Insolvent).
C. Provided that there are sufficient assets, if Trustee discontinues the
payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to the
Plan Participants or their beneficiaries under the Payment Schedule for the
period of such discontinuance, less the aggregate amount of payments, if any,
made to the Plan Participants or their beneficiaries by Semele in lieu of the
payments provided for hereunder during any such period of discontinuance.
IV. Payments to Semele.
Except as provided in Section 2(a) and Section 3 and Section 6 and
Section 12(b) hereof, Semele shall have no right or power to direct Trustee to
return to Semele or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan Participants pursuant to the terms of
the Plans.
V. Investment Authority and Trustee Powers.
A. The Trustee shall retain any contributions of Shares in the form of
Shares. If the Trustee receives contributions in the form of cash or other
property, the Trustee shall invest such cash or other property in a diversified
portfolio as the Trustee determines in its discretion.
B. The Trustee may hold property in the name of a nominee without
disclosure of its trust. No transfer agent, broker, bank or other person dealing
with the Trustee need inquire into the Trustee's authority to make transfers or
need see to the application of property received by the Trustee. To the extent
permitted by law, the requirement of giving bond by the Trustee or of giving
surety on any bond shall be dispensed with.
C. Subject to the foregoing, the Trustee shall have the following powers
exercisable without leave of court and without limiting any power otherwise
given to the Trustee:
1. Transfers. The Trustee may buy, sell or otherwise deal with
securities (including without limitation stocks, bonds, mutual funds, and
government securities) on such terms as the Trustee deems proper; the
Trustee may take any action which it deems proper regarding the sale or
exchange of securities in connection with any merger or other
reorganization; and the Trustee may execute instruments of conveyance in
such form as the Trustee deems proper.
2. Contracts. The Trustee may make contracts binding upon the Trust
estate without assuming personal liability therefor.
3. Claims. The Trustee may pay a claim on such proof as the Trustee
deems sufficient and may compromise disputed claims of or against the
Trustee on such terms as the Trustee deems adequate.
4. Banking and Brokerage Transactions. The Trustee may deposit funds
with a bank, broker or other custodian. The Trustee may sign checks and
other commercial paper and engage in banking and brokerage transactions on
behalf of the Trust.
VI. Disposition of Income and Taxes Attributable Thereto.
During the term of this Trust, all income received by the Trust shall be
accumulated and reinvested. Semele shall be responsible for payment of all taxes
payable on such net income, but shall be entitled to reimbursement from the
Trust for any such taxes so paid.
VII. Accounting by Trustee.
The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made.
VIII. Responsibility of Trustee.
A. 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
Trustee shall incur no (and Semele indemnifies Trustee for any) liability to any
person for any action taken pursuant to a direction, request or approval given
by Semele which is contemplated by the terms of the Plans or this Trust and is
given in writing by Semele. In the event of a dispute between Semele and a
party, the Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
B. If the Trustee undertakes or defends any litigation arising in
connection with this Trust, Semele agrees to indemnify Trustee against Trustee'
costs, expenses and liabilities (including, without limitation, attorneys' fees
and expenses) relating thereto and to be liable for such payments. If Semele
does not pay such costs, expenses and liabilities in a reasonably timely manner,
Trustee may obtain payment from the Trust.
C. Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein.
D. Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, 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.
IX. Compensation and Expenses of Trustee.
Semele shall pay all administrative and Trustee's fees and expenses. Trustee
shall provide Semele with at least thirty (30) days advance notice of all such
fees and expenses. If Semele does not pay such fees and expenses in a reasonably
timely manner, Trustee may obtain payment from the Trust.
X. Resignation of Trustee.
A. Trustee may resign at any time by written notice to Semele, which
shall be effective 30 days after receipt of such notice unless Semele and
Trustee agree otherwise.
B. Upon appointment of a successor Trustee as provided in Section 11
herein, all assets shall subsequently be transferred to the successor Trustee.
The transfer shall be completed within 60 days after receipt of notice of
acceptance of the successor Trustee, unless Semele extends the time limit.
C. If Trustee ceases to serve hereunder, a successor shall be appointed,
in accordance with Section 11 hereof, within 60 days after the vacancy occurs.
If no such appointment has been made, one or more of the Participants or their
beneficiaries may apply to a court of competent jurisdiction for appointment of
a successor. All expenses of or the Participants or their beneficiaries in
connection with the proceeding shall be paid by Semele.
XI. Appointment of Successor.
A. Any needed Trustee shall be appointed by Semele. Any such successor
Trustee shall be a financial institution having corporate trustee powers under
state law. Any successor Trustee shall become Trustee upon the written
acceptance of 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
successor Trustee to evidence the transfer.
B. 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
Semele 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.
XII. Amendment and Termination.
A. This Trust Agreement may be amended by a written instrument executed
by Trustee and Semele. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plans or shall make the Trust revocable after it
has become irrevocable in accordance with Section 1(b) hereof.
B. The Trust shall terminate when all benefit payments under the Plan
have been made. Upon termination of the Trust as provided in Section 2(f), the
Trustee shall pay any remaining Trust assets to Semele.
XIII. Miscellaneous.
A. 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.
B. Benefits payable to the Plan Participants and his 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.
C. This Trust Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
(d) The obligations of Semele hereunder may not be assigned, provided that such
obligations shall be binding on any successor-in-interest of Semele.
XIV. Effective Date
This Trust shall be effective upon execution by the Trustee.
Semele Group, Inc.
Date: 2/19/98 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Chairman, Compensation Committee
Boston Private Bank and Trust
Company, Trustee
Date: 2/24/98 By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Vice President