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AGREEMENT TO DEFER BONUS PAYMENT
This AGREEMENT TO DEFER BONUS PAYMENT (this "Agreement") is made effective
as of the 23rd day of August 1996 between Tremont Corporation, a Delaware
corporation (the "Corporation") and J. Xxxxxx Xxxxxx ("Executive").
WHEREAS, Executive was awarded a Special Bonus in recognition of his
performance which substantially contributed to the success of the Corporation;
WHEREAS, The Corporation and Executive desire to defer payment of
$1,045,000 (the "Deferred Special Bonus") which Executive, in the absence of
this Agreement, would be entitled to receive immediately with respect to
services performed by Executive for the Corporation during the first half of
1996 until the Executive ceases to be an Executive Officer of the Corporation
(or such earlier date as the Corporation, in its sole discretion, may
determine); and
WHEREAS, the Corporation and Xxxxxx X. Xxxxxxxxx as trustee, will enter
into an agreement (the "Trust Agreement") which establishes an irrevocable
trust (the "Trust") which is intended to hold and invest an amount of funds
equal to the Deferred Special Bonus until such bonus is paid to Executive
pursuant to this Agreement;
NOW, THEREFORE, in consideration of the agreements set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Deferred Special Bonus shall be paid to Executive, or his
designated beneficiaries, upon the earliest to occur of (a) the termination of
Executive's employment (including Executive's resignation) for any reason (b)
Executive's death, or (c) such date as shall be determined by the Management
Development and Compensation Committee of the Board of Directors (the
"Committee") in its sole discretion.
2. The Deferred Special Bonus shall accrue interest beginning on August
23, 1996 up to and including the date such amount is paid to Executive pursuant
to Paragraph 1 hereof (the "Deferred Payment Date") and the entire amount of
such accrued interest shall be paid to Executive, or his designated
beneficiaries, on the Deferred Payment Date. Such interest shall accrue at the
rate of eight and three quarters percent (8.75%) per annum. Interest accrued
pursuant to this Paragraph 2 shall compound on a semi-annual basis and shall be
computed for the actual number of days elapsed on the basis of a year
consisting of 365 or 366 days.
3. The Corporation shall immediately enter into the Trust Agreement and
thereby establish the Trust. The Corporation shall contribute an amount equal
to the Deferred Special Bonus to the Trust.
4. Subject to the terms of the Trust Agreement, the Corporation may
satisfy its payment obligations to Executive, or to his designated
beneficiaries, under this Agreement by (a) directing the Trustee to make such
payments from the principal and/or earnings of the Trust, (b)
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making such payments directly from the Corporation's internal funds, or (c) by
any combination of (a) and (b), provided that all payments to Executive, or to
his designated beneficiaries, pursuant to this Agreement shall be made in
immediately available funds.
5. The Corporation shall withhold, either from the Deferred Special Bonus
in the year such amount is paid to Executive pursuant to Paragraph 1 hereof, or
from any salary, bonus or other compensatory payment made to Executive as the
Corporation in its sole discretion may determine, such amounts as is required
by law to be withheld in 1996 or after, as the case may be, pursuant to Code
xx.xx. 3101 and 3121(v)(2) or successor provisions thereof.
6. Title to and beneficial ownership of any assets, whether cash or
investments and whether held by the Corporation or the Trust, which the
Corporation may earmark to meet its payment obligations to Executive under this
Agreement, shall at all times remain in the Corporation or the Trust, as
applicable, and Executive and his designated beneficiaries shall not have any
property interest whatsoever in any specific assets of the Corporation or the
Trust. Any right of the Executive or any of his designated beneficiaries to
receive payments from the Corporation under this Agreement shall be no greater
than the right of any unsecured general creditor of the Corporation.
7. The right of Executive or any other person to any payment under this
Agreement shall not be assigned, transferred, pledged or encumbered except by
will or by the laws of descent and distribution.
8. If the Committee shall find that any person to whom any payment is
payable under this Agreement is unable to care for his or her affairs because
of illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian or other legal
representative) may be paid to the spouse, a child, a parent, a brother or
sister, or the person or persons designated by the Executive in writing, or, in
the absence of any of the foregoing, to any one or more persons deemed by the
Committee to be appropriate. Any such payment shall be a complete discharge of
the liabilities of the Corporation under this Agreement.
9. Nothing contained herein shall be construed as conferring upon
Executive the right to continue in the employ of the Corporation as an
executive or in any other capacity.
10. This Agreement shall be binding upon and inure to the benefit of the
Corporation, it successors and assigns, and the Executive and his heirs,
executors, administrators and legal representatives.
11. This Agreement contains the entire agreement of and between the
parties with respect to the subject matter hereof, and supersedes any prior
understandings, agreements, or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way. In the event of any conflict between the terms and provisions of this
Agreement and the terms and provisions of any employment or severance agreement
entered into by the parties hereto, the terms and provisions of this Agreement
shall govern.
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12. The Agreement shall be governed by the laws of the State of Colorado
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Colorado or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Colorado.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TREMONT CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Its: Vice President & Chief Financial Officer
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EXECUTIVE
/s/ J. Xxxxxx Xxxxxx
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J. Xxxxxx Xxxxxx
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TRUST AGREEMENT
This Agreement is made effective as of the 23rd day of August, 1996 by and
between Tremont Corporation (the "Corporation") and Xxxxxx X. Xxxxxxxxx (the
"Trustee");
WHEREAS, the Corporation and J. Xxxxxx Xxxxxx (the "Executive") have
entered into the Agreement to Defer Bonus Payment (the "Deferral Agreement")
attached hereto as Exhibit A;
WHEREAS, the Corporation has incurred or expects to incur liability under
the terms of such Deferral Agreement with respect to the Executive;
WHEREAS, the Corporation wishes to establish a trust (hereinafter called
the "Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Corporation's creditors in the event of the
Corporation's Insolvency, as herein defined, until paid to the Executive and
his beneficiaries in such manner and at such times as specified in the Deferral
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
Deferral Agreement as an unfunded plan maintained for the purpose of providing
deferred compensation for a member of the 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 the Corporation to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Deferral Agreement;
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
(a) The Corporation hereby deposits with the Trustee in trust $100 or such
other amount as determined by the Corporation, which shall become the principal
of the Trust to be held, administered and disposed of by the 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 the Corporation
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.
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(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of the Corporation and shall be used
exclusively for the uses and purposes of the Executive and general creditors as
herein set forth. The Executive and his beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Deferral Agreement and this Trust Agreement shall be
mere unsecured contractual rights of the Executive and his beneficiaries
against the Corporation. Any assets held by the Trust will be subject to the
claims of the Corporation's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3(a) herein.
(e) The Corporation shall make additional deposits of cash or other
property in trust with the Trustee in accordance with the terms of the Deferral
Agreement to augment the principal to be held, administered and disposed of by
the Trustee as provided in this Trust Agreement. Neither the Trustee nor the
Executive or any of his beneficiaries shall have any right to compel additional
deposits, except as may be required by the terms of the Deferral Agreement.
SECTION 2. PAYMENTS TO EXECUTIVE AND HIS BENEFICIARIES.
(a) The Corporation shall deliver to the Trustee a written schedule (the
"Payment Schedule") that indicates the amounts payable in respect of the
Executive (and his beneficiaries), that provides the amounts so payable, the
form in which such amount is to be paid, and the dates for payment of such
amounts. Except as otherwise provided herein, the Trustee shall make payments
to the Executive and his beneficiaries in accordance with such Payment
Schedule. The Corporation may amend or modify such Payment Schedule from time
to time by providing the Trustee with written notice of such amendments. The
Trustee may conclusively rely on such Payment Schedule. 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 Deferral Agreement and shall pay amounts
withheld to the appropriate taxing authorities or determine that such amounts
have been reported, withheld and paid by the Corporation.
(b) The entitlement of the Executive or his beneficiaries to benefits
under the Deferral Agreement shall be determined by the Corporation in
accordance with the terms of the Deferral Agreement, and any claim for such
benefits shall be considered and reviewed under the terms of the Deferral
Agreement.
(c) The Corporation may make payment of benefits directly to the Executive
or his beneficiaries as they become due under the terms of the Deferral
Agreement. The Corporation shall notify the Trustee of its decision to make
payment of benefits directly prior to the time amounts are payable to the
Executive or his beneficiaries. Such payments by the Corporation shall not
amend the Payment Schedule unless the Corporation specifically amends said
Schedule in writing. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits in accordance
with the Payment Schedule, the Corporation shall make the balance of each such
payment as it falls due. The Trustee shall notify the Corporation where
principal and earnings are not sufficient.
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SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN THE CORPORATION IS INSOLVENT.
(a) The Trustee shall not make any payments to the Executive or his
beneficiaries if the Corporation is Insolvent. Notwithstanding any other
provision of this Trust Agreement, all determinations by the Trustee under this
Trust Agreement regarding whether the Corporation is solvent or Insolvent
should be based solely on the written representation to the Trustee from the
Corporation's Controller or Chief Financial Officer without independent
investigation by the Trustee. The Corporation shall be considered "Insolvent"
for purposes of this Trust Agreement if (i) the Corporation is unable to pay
its debts as they become due, or (ii) the Corporation 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 the Corporation under federal and state law as
set forth below.
(1) The Board of Directors and the Chief Executive Officer of the
Corporation shall have the duty to inform the Trustee in writing of the
Corporation's Insolvency. If a person claiming to be a creditor of the
Corporation alleges in writing to the Trustee that the Corporation has become
Insolvent, the Trustee shall determine whether the Corporation is Insolvent
and, pending such determination, the Trustee shall not make any payments to
Executive or his beneficiaries.
(2) Unless the Trustee has actual knowledge of the Corporation's
Insolvency, or has received notice from the Corporation or a person claiming to
be a creditor alleging that the Corporation is Insolvent, the Trustee shall
have no duty to inquire whether the Corporation is Insolvent. The Trustee may
in all events rely on such evidence concerning the Corporation's solvency as
may be furnished to the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning the Corporation's solvency.
(3) If at any time the Trustee has determined that the Corporation is
Insolvent, the Trustee shall not make any payments to the Executive or his
beneficiaries and shall hold the assets of the Trust for the benefit of the
Corporations's general creditors. Nothing in this Trust Agreement shall in any
way diminish or impair any rights of the Executive or his beneficiaries to
pursue their rights as general creditors of the Corporation with respect to
payments due under the Deferral Agreement or otherwise.
(4) The Trustee shall resume making payments to the Executive or his
beneficiaries in accordance with Section 2 of this Trust Agreement only after
the Trustee has determined that the Corporation is not Insolvent (or is no
longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee discontinues
making payments from the Trust pursuant to Section 3(b) hereof and subsequently
resumes such payments,
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the first payment following such discontinuance shall include the aggregate
amount of all payments due to the Executive or his beneficiaries under the
terms of the Deferral Agreement for the period of such discontinuance, less the
aggregate amount of any payments made to the Executive or his beneficiaries by
the Corporation in lieu of the payments provided for hereunder during any such
period of discontinuance.
SECTION 4. PAYMENTS TO THE CORPORATION.
Except as provided in Section 3 hereof, the Corporation shall have no right
or power to direct the Trustee to return to the Corporation or to divert to
others any of the Trust assets before all payments have been made to the
Executive or his beneficiaries pursuant to the terms of the Deferral Agreement.
SECTION 5. INVESTMENT AUTHORITY.
In no event may the Trustee invest in securities (including stock or rights
to acquire stock) or obligations issued by the Corporation, other than a de
minimis amount held in common investment vehicles in which the Trustee invests.
All rights associated with assets of the Trust shall be exercised, solely in
accordance with the directions of the Corporation, by the Trustee or the person
designated by the Trustee, and shall in no event be exercisable by or rest with
the Executive.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY THE TRUSTEE.
The Trustee shall keep records of such investments, receipts,
disbursements, and all other transactions required to be made, as shall be
agreed upon in writing between the Corporation and the Trustee. Within 60 days
following the close of each calendar year and within 60 days after the removal
or resignation of the Trustee, the Trustee shall deliver to the Corporation a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, 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 or as of the date of such removal or resignation, as the case may be.
In the event the Trustee delegates the obligations of this section to an
employee of the Corporation, such obligations shall be deemed to be fulfilled by
the Trustee.
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SECTION 8. RESPONSIBILITY OF THE 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 the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Corporation in connection,
directly or indirectly, with, the terms of the Deferral Agreement or this
Trust. In the event of a dispute between the Corporation and a party, the
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) The Corporation agrees to indemnify and hold the Trustee harmless from
any and all costs, fees, expenses (including without limitation attorney's fees
and expenses), claims or lawsuits by any person or entity, liabilities or
obligations of any type or nature arising or related, directly or indirectly,
to the Deferral Agreement, this Trust or any action or failure to act by the
Trustee in connection in any way with any of the foregoing. Futhermore, if the
Trustee undertakes or defends any litigation arising in connection with this
Trust, the Corporation 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 solely liable for such payments. If
the Corporation does not pay such costs, expenses and liabilities in a
reasonably timely manner, the Trustee may obtain payment from the Trust.
(c) The Trustee may consult with legal counsel (who may also be counsel
for the Corporation generally) with respect to any of its duties or obligations
hereunder.
(d) The Trustee may hire and the Corporation may make available to the
Trustee agents, accountants, actuaries, investment advisors, financial
consultants or other professionals to assist it in performing any of its duties
or obligations hereunder. In addition, the Trustee may delegate any of its
duties under this Trust to employees and management of the Corporation and the
Trustee may conclusively rely on the reports of such employees and management
without further investigation.
(e) The Trustee shall have, without exclusion, all powers conferred on the
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 Trustee 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 Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers 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.
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SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
The Corporation shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) The Trustee may resign at any time by written notice to the
Corporation, which shall be effective 15 days after receipt of such notice
unless the Corporation and the Trustee agree otherwise.
(b) The Trustee may be removed by the Corporation on 15 days notice to the
Trustee or upon shorter notice accepted by the Trustee.
(c) Upon a Change of Control, as defined herein, the Trustee may not be
removed by the Corporation for 18 months.
(d) 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 Corporation extends
the time limit.
(e) 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 (a) or (b) 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.
(a) If the Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, the Corporation 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 Corporation or
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
the Corporation 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.
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SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument executed
by the Trustee and the Corporation. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Deferral Agreement or shall make
the Trust revocable.
(b) The Trust shall not terminate until the date on which the Executive
and his beneficiaries are no longer entitled to any payments pursuant to the
terms of the Deferral Agreement. Upon termination of the Trust any assets
remaining in the Trust shall be returned to the Corporation.
SECTION 13. 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) No amount payable to the Executive or any of his beneficiaries under
this Trust Agreement may 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 Colorado.
(d) For purposes of this Trust, Change of Control shall mean the purchase
or other acquisition by any person, entity or group of persons, within the
meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined voting
power of the Corporation's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were stockholders of the Corporation immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
more than 50 percent of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated
Corporation's then outstanding securities, or a liquidation or dissolution of
the Corporation or of the sale of all or substantially all of the Corporation's
assets.
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be August 23, 1996.
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EXECUTED on the dates of the respective acknowledgments
hereto, to be effective as of the 23rd day of August, 1996.
/s/ Xxxxxx X. Xxxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxxx
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- TRUSTOR -
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
---------------------------------
- TRUSTEE -
THE STATE OF COLORADO )
)
COUNTY OF DENVER )
This instrument was acknowledged before me on the 23rd day of August,
1996, by Xxxxxx X. Xxxxxxxxxxx and Xxxxxx X. Xxxxxxxxx.
/s/ Cathrenine X. Xxxxxx
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Notary Public in and for
the State of COLORADO
My Commission Expires:
July 28, 1999
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