EXHIBIT 4.2
XXXXXXXX GOVERNOR COMPANY
DEFERRED SHARES TRUST
This Grantor Trust AGREEMENT made and entered into this 3rd day of
February, 2003 by and between XXXXXXXX GOVERNOR COMPANY (the "Company") and
WACHOVIA BANK, N.A. (the "Trustee");
WITNESSETH THAT:
WHEREAS, the Company has adopted a nonqualified deferred compensation plan
known as the XXXXXXXX GOVERNOR COMPANY EXECUTIVE BENEFIT PLAN (the "Plan"),
effective as of January 1, 2001;
WHEREAS, the Company has incurred or expects to incur liability under the
terms of such Plan with respect to individuals who are eligible under the terms
of the Plan to participate in the Plan and to defer compensation (each of whom
shall be referred to as an "Employee");
WHEREAS, the Company wishes to establish this trust (hereinafter called the
"Trust") and to contribute to the Trust shares of Company common stock that
shall be held therein, subject to the claims of Company's creditors in the event
of Company's Insolvency (as herein defined), until paid to the Employee or his
or her beneficiary(ies) in such manner and at such times as specified in the
Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded arrangement maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended; and
WHEREAS, it is the intention of Company to make contributions of its common
stock to the Trust pursuant to the terms of the Plan to provide itself with a
source of shares of common stock to assist it in the meeting of its liabilities
under the Plan with respect to the deemed investment alternative based on the
Company's common stock.
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 Company hereby deposits with the Trustee in trust shares
of common stock of the Company ("Company Stock"), 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 is irrevocable by the Company.
(c) The Trust is intended to be a grantor trust, of which the
Company 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 to the
extent such earnings are paid in the form of Company Stock shall be held
separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes of the Employee and general creditors
as herein set forth. The Employee and his or her 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 unsecured contractual rights of the Employee and his or her
beneficiaries against the Company. Any assets held by the Trust will be
subject to the claims of the Company's general creditors under federal and
state law in the event of Insolvency (as defined in Section 3(a) herein).
(e) The Company, so long as consistent with the terms of the
Plan, may at any time, or from time to time, make additional deposits of
Company Stock in trust with the Trustee to augment the principal to be
held, administered and disposed of by the Trustee as provided in this Trust
Agreement. Neither the Trustee nor the Employee or his or her beneficiary
shall have any right to compel such additional deposits.
(f) Upon a Change in Control, the Company shall, as soon as
possible, but in no event longer than thirty (30) days following the
occurrence of a Change in Control, make an irrevocable contribution to the
Trust in an amount that is sufficient (taking into account the Trust
assets, if any, resulting from prior contributions) to fund the Trust in an
amount equal to no less than 100% but no more than 120% of the amount
necessary to pay each Participant or Beneficiary the benefits to which
Participants or their Beneficiaries would be entitled pursuant to the terms
of the Arrangements as of the date on which the Change in Control occurred.
The Company shall also fund an expense reserve for the Trustee in the
amount of $125,000.00.
SECTION 2. PAYMENTS TO EMPLOYEE AND HIS OR HER BENEFICIARIES.
(a) The Company shall deliver to the Trustee a schedule (the
"Payment Schedule"), which from time to time shall be attached hereto as
EXHIBIT A, that indicates the number of shares of Company Stock payable in
respect of the Employee (or his or her beneficiaries), that provides
instructions acceptable to the Trustee for determining the number of shares
so payable, and the time of commencement for payment of such shares. Except
as otherwise provided herein, the Trustee shall make payments to the
Employee and his or her beneficiaries in accordance with such Payment
Schedule. All payments
made from the Trust shall be made in the form of Company Stock. The Trustee
shall be responsible for the reporting and withholding of any federal,
state or local taxes that may be required to be withheld with respect to
the payment of benefits pursuant to the terms of the Plan and shall pay
amounts withheld to the appropriate taxing authorities or determine that
such amounts have been reported, withheld and paid by Company.
(b) The entitlement of the Employee or his or her beneficiaries
to benefits under the Plan shall be determined by the Company, and any
claim for such benefits shall be considered and reviewed under the
procedures set out in the Plan.
(c) The Company may make payment of benefits attributable to
Company Stock directly to the Employee or his or her beneficiaries as they
become due under the terms of the Plan. The Company shall notify the
Trustee of its decision to make payment of benefits directly prior to the
time amounts are payable to the Employee or his or her beneficiaries. In
addition, if the shares of Company Stock held in the Trust, , are not
sufficient to make payments of benefits required to be paid in the form of
Company Stock under the Plan, the Company shall make the balance of each
such payment as it falls due. The Trustee shall notify Company where shares
are not sufficient.
(d) Prior to a Change in Control, the Company shall deliver to
the Trustee a schedule of benefits due attributable to Company Stock under
the Arrangements. After a Change in Control, the Trustee shall pay benefits
due in accordance with such schedule. After a Change in Control, the
Committee appointed by the Company shall continue to make the determination
of benefits due to Participants or their Beneficiaries and shall provide
the Trustee with an updated schedule of benefits due; provided however, a
Participant or their Beneficiaries may make application to the Trustee for
an independent decision as to the amount or form of their benefits due
under the Arrangements. In making any determination required or permitted
to be made by the Trustee under this Section, the Trustee shall, in each
such case, reach its own independent determination, in its absolute and
sole discretion, as to the Participant's or Beneficiary's entitlement to a
payment hereunder. In making its determination, the Trustee may consult
with and make such inquiries of such persons, including the Participant or
Beneficiary, the Company, legal counsel, actuaries or other persons, as the
Trustee may reasonably deem necessary. Any reasonable costs incurred by the
Trustee in arriving at its determination shall be reimbursed by the Company
and, to the extent not paid by the Company within a reasonable time, shall
be charged to the Trust. The Company waives any right to contest any amount
paid over by the Trustee hereunder pursuant to a good faith determination
made by the Trustee notwithstanding any claim by or on behalf of the
Company (absent a manifest abuse of discretion by the Trustee) that such
payments should not be made.
(e) The Trustee agrees that it will not itself institute any
action at law or at equity, whether in the nature of an accounting,
interpleading action, request for a declaratory judgment or otherwise,
requesting a court or administrative or quasi-judicial body to make the
determination required to be made by the Trustee under this Section 2 in
the place and stead of the Trustee. The Trustee may (and, if necessary or
appropriate, shall) institute an action to collect a contribution due the
Trust following a Change in
Control or in the event that the Trust should ever experience a short-fall
in the amount of assets necessary to make payments pursuant to the terms of
the Arrangements.
(f) In the event any Participant or his or her Beneficiary is
determined to be subject to federal income tax on any amount to the credit
of his or her account under any Arrangement prior to the time of payment
hereunder, whether or not due to the establishment of or contributions to
this Trust, a portion of such taxable amount equal to the federal, state
and local taxes (excluding any interest or penalties) owed on such taxable
amount, shall be distributed by the Trustee as soon thereafter as
practicable to such Participant or Beneficiary. The Company shall promptly
reimburse the Trust for any such distribution in an amount certified by the
Trustee to be needed for the Participant's benefits. For these purposes, a
Participant or Beneficiary shall be deemed to pay state and local taxes at
the highest marginal rate of taxation in the state in which the Participant
resides or is employed (or both) where a tax is imposed and federal income
taxes at the highest marginal rate of taxation, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes. Such distributions shall be at the direction of
the Company or the Trustee, or upon proper application of the Participant
or Beneficiary; provided that the actual amount of the distribution shall
be determined by the Company prior to a Change in Control and the Trustee
following a Change in Control. An amount to the credit of a Participant's
Account shall be determined to be subject to federal income tax upon the
earliest of: (a) a final determination by the United States Internal
Revenue Service addressed to the Participant or his Beneficiary which is
not appealed to the courts; (b) a final determination by the United States
Tax Court or any other federal court affirming any such determination by
the Internal Revenue Service; or (c) an opinion by the Company's tax
counsel, addressed to the Company and the Trustee, to the effect that by
reason of Treasury Regulations, amendments to the Internal Revenue Code,
published Internal Revenue Service rulings, court decisions or other
substantial precedent, amounts to the credit of Participants hereunder are
subject to federal income tax prior to payment. The Company shall undertake
at its sole expense to defend any tax claims described herein which are
asserted by the Internal Revenue Service against any Participant or
Beneficiary, including attorney fees and cost of appeal, and shall have the
sole authority to determine whether or not to appeal any determination made
by the Service or by a lower court. The Company also agrees to reimburse
any Participant or Beneficiary for any interest or penalties in respect of
tax claims hereunder upon receipt of documentation of same. Any
distributions from the Fund to a Participant or Beneficiary under this
Section 2(e) shall be applied in accordance with the provisions of the
Arrangement to reduce the Company liabilities to such Participant and/or
Beneficiary under the Arrangement with such reductions to be made on a
pro-rata basis over the term of benefit payments under the Arrangement;
provided, however, that in no event shall any Participant, Beneficiary or
estate of any Participant or Beneficiary have any obligation to return all
or any part of such distribution to the Company if such distribution
exceeds benefits payable under an Arrangement. Any reduction in accordance
with the foregoing sentence and the Arrangements shall be determined by the
Company prior to a Change in Control. Following a Change in Control, the
Company shall continue to make such determination subject to the right of a
Participant to petition the Trustee under Section 2(d).
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Employee and his
or her beneficiaries if the Company is Insolvent. Company shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) Company
is unable to pay its debts as they become due, or (ii) Company 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 Company under
federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer
of the Company shall have the duty to inform the Trustee in
writing of the Company's Insolvency. 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 to Employee or
his or her beneficiaries.
(2) Unless the Trustee has actual knowledge of the Company's
Insolvency, 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
Employee or his or her beneficiaries 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
rights of Employee or his or her beneficiaries to pursue their
rights as general creditors of the Company with respect to benefits
due under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Employee
or his or her beneficiaries in accordance with Section 2 of this
Trust Agreement only after Trustee has determined that the Company
is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the 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 Employee or his
or her beneficiaries under the terms of the Plan for the period of such
discontinuance, less the aggregate amount of any payments made to Employee
or his or her beneficiaries by the Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS WHEN A SHORT-FALL OF THE TRUST ASSETS OCCURS
(a) If there are not sufficient shares for the payment of current and
expected future benefits pursuant to Section 2 or Section 3(c) hereof and
the Company does not otherwise make such payments within a reasonable time
after demand from the Trustee, the Trustee shall allocate the Trust shares
among the Participants or their Beneficiaries in the following order of
priority:
(1) vested Participants (regardless of whether they are
actively employed) and their Beneficiaries; and
(2) non-vested Participants (regardless of whether they are
actively employed) and their Beneficiaries
(b) Within each category, shares shall be allocated pro-rata with respect
to the total present value of benefits expected for each Participant or
Beneficiary within the category, and payments to each Participant or
Beneficiary shall be made to the extent of the shares allocated to each
Participant or Beneficiary.
(c) Upon receipt of a contribution, to be made in the form of Company
Stock, from the Company necessary to make up for a shortfall in the
payments due, the Trustee shall resume payments to all the Participants and
Beneficiaries under the Arrangements. Following a Change in Control, the
Trustee shall have the right and duty to compel a contribution to the Trust
from the Company to make-up for any shortfall.
SECTION 5. PAYMENTS TO COMPANY.
Except as provided in Sections 4 and 7 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 to be made in the
form of Company Stock have been made to Employee and his or her beneficiaries
pursuant to the terms of the Plan.
SECTION 6. INVESTMENT AUTHORITY.
(a) Prior to a Change in Control, the assets of the Trust shall
be invested solely in shares of Company Stock and the Trustee shall be
relieved in complying with the prudent investor rule. All rights
associated with assets of the Trust shall be exercised by Trustee
or the person designated by Trustee, and shall in no event be
exercisable by or rest with the Employee.
(b) The Trustee shall not be liable in discharging its duties hereunder,
including without limitation its duty to invest and reinvest the Fund, if
it acts for the exclusive benefit of the Participants and their
Beneficiaries, in good faith and as a prudent person would act in
accomplishing a similar task and in accordance with the terms of this Trust
Agreement and any applicable federal or state laws, rules or regulations;
provided however, the Trustee's ability to invest the assets of the Trust,
prior to a Change in Control, shall be limited exclusively to shares of
Company Stock and the Trustee shall not be liable for failing to comply
with the prudent investor rule.
(c) Subject to investment guidelines agreed to in writing from time to time
by the Company and the Trustee prior to a Change in Control, the Trustee
shall have the power in investing and reinvesting the Fund in its sole
discretion:
(1) To invest and reinvest in any readily marketable common
and preferred stocks, bonds, notes, debentures (including
convertible stocks and securities but not including any stock or
security of the Trustee or the Company other than a de minimis
amount held in a mutual fund), certificates of deposit or demand or
time deposits (including any such deposits with the Trustee) and
shares of investment companies and mutual funds, without being
limited to the classes or property in which the Trustees are
authorized to invest by any law or any rule of court of any state
and without regard to the proportion any such property may bear to
the entire amount of the Fund;
(2) To invest and reinvest all or any portion of the Fund
collectively through the medium of any proprietary mutual fund that
may be established and maintained by the Trustee;
(3) To retain any property at any time received by the
Trustee;
(4) To sell or exchange any property held by it at public or
private sale, for cash or on credit, to grant and exercise options
for the purchase or exchange thereof, to exercise all conversion or
subscription rights pertaining to any such property and to enter
into any covenant or agreement to purchase any property in the
future;
(5) To participate in any plan of reorganization,
consolidation, merger, combination, liquidation or other similar
plan relating to property held by it and to consent to or oppose
any such plan or any action thereunder or any contract, lease,
mortgage, purchase, sale or other action by any person;
(6) To deposit any property held by it with any protective,
reorganization or similar committee, to delegate discretionary
power thereto, and
to pay part of the expenses and compensation thereof any
assessments levied with respect to any such property deposited;
(7) To extend the time of payment of any obligation held by
it;
(8) To hold uninvested any moneys received by it, without
liability for interest thereon, but only in anticipation of
payments due for investments, reinvestments, expenses or
disbursements;
(9) To exercise all voting or other rights with respect to
any property held by it and to grant proxies, discretionary or
otherwise;
(10) For the purposes of the Trust, to borrow money from
others, to issue its promissory note or notes therefor, and to
secure the repayment thereof by pledging any property held by it;
(11) To employ suitable contractors and counsel, who may be
counsel to the Company or to the Trustee, and to pay their
reasonable expenses and compensation from the Fund to the extent
not paid by the Company;
(12) To register investments in its own name or in the name of
a nominee; to hold any investment in bearer form; and to combine
certificates representing securities with certificates of the same
issue held by it in other fiduciary capacities or to deposit or to
arrange for the deposit of such securities with any depository,
even though, when so deposited, such securities may be held in the
name of the nominee of such depository with other securities
deposited therewith by other persons, or to deposit or to arrange
for the deposit of any securities issued or guaranteed by the
United States government, or any agency or instrumentality thereof,
including securities evidenced by book entries rather than by
certificates, with the United States Department of the Treasury or
a Federal Reserve Bank, even though, when so deposited, such
securities may not be held separate from securities deposited
therein by other persons; provided, however, that no securities
held in the Fund shall be deposited with the United States
Department of the Treasury or a Federal Reserve Bank or other
depository in the same account as any individual property of the
Trustee, and provided, further, that the books and records of the
Trustee shall at all times show that all such securities are part
of the Trust Fund;
(13) To settle, compromise or submit to arbitration any
claims, debts or damages due or owing to or from the Trust,
respectively, to commence or defend suits or legal proceedings to
protect any interest of the Trust, and to represent the Trust in
all suits or legal proceedings in any court or before any other
body or tribunal; provided, however, that the Trustee shall not be
required to take any such action unless it shall have been
indemnified by the Company to its reasonable satisfaction against
liability or expenses it might incur therefrom;
(14) To hold and retain policies of life insurance, annuity
contracts, and other property of any kind which policies are
contributed to the Trust by the Company or any subsidiary of the
Company or are purchased by the Trustee;
(15) To hold any other class of assets which may be
contributed by the Company and that is deemed reasonable by the
Trustee, unless expressly prohibited herein;
(16) To loan any securities at any time held by it to brokers
or dealers upon such security as may be deemed advisable, and
during the terms of any such loan to permit the loaned securities
to be transferred into the name of and voted by the borrower or
others; and
(17) Generally, to do all acts, whether or not expressly
authorized, that the Trustee may deem necessary or desirable for
the protection of the Fund.
(c) Prior to a Change in Control, the Company shall have the right, subject to
this Section to direct the Trustee with respect to investments.
(1) The Company may at any time direct the Trustee to
segregate all or a portion of the Fund in a separate investment
account or accounts and may appoint one or more investment managers
and/or an investment committee established by the Company to direct
the investment and reinvestment of each such investment account or
accounts. In such event, the Company shall notify the Trustee of
the appointment of each such investment manager and/or investment
committee. No such investment manager shall be related, directly or
indirectly, to the Company, but members of the investment committee
may be employees of the Company.
(2) Thereafter (until a Change in Control), the Trustee shall
make every sale or investment with respect to such investment
account as directed in writing by the investment manager or
investment committee. It shall be the duty of the Trustee to act
strictly in accordance with each direction. The Trustee shall be
under no duty to question any such direction of the investment
manager or investment committee, to review any securities or other
property held in such investment account or accounts acquired by it
pursuant to such directions or to make any recommendations to the
investment managers or investment committee with respect to such
securities or other property.
(3) Notwithstanding the foregoing, the Trustee, without obtaining
prior approval or direction from an investment manager or
investment committee, shall invest cash balances held by it from
time to time in short term cash equivalents including, but not
limited to, through the medium of any short term common, collective
or commingled trust fund established and maintained by the Trustee
subject to the instrument establishing such trust fund, U.S.
Treasury Bills,
commercial paper (including such forms of commercial paper as may
be available through the Trustee's Trust Department), certificates
of deposit (including certificates issued by the Trustee in its
separate corporate capacity), and similar type securities, with a
maturity not to exceed one year; and, furthermore, sell such short
term investments as may be necessary to carry out the instructions
of an investment manager or investment committee regarding more
permanent type investment and directed distributions.
(4) The Trustee shall neither be liable nor responsible for
any loss resulting to the Fund by reason of any sale or purchase of
an investment directed by an investment manager or investment
committee nor by reason of the failure to take any action with
respect to any investment which was acquired pursuant to any such
direction in the absence of further directions of such investment
manager or investment committee.
(5) Notwithstanding anything in this Agreement to the
contrary, the Trustee shall be indemnified and saved harmless by
the Company from and against any and all personal liability to
which the Trustee may be subjected by carrying out any directions
of an investment manager or investment committee issued pursuant
hereto or for failure to act in the absence of directions of the
investment manager or investment committee including all expenses
reasonably incurred in its defense in the event the Company fails
to provide such defense; provided, however, the Trustee shall not
be so indemnified if it participates knowingly in, or knowingly
undertakes to conceal, an act or omission of an investment manager
or investment committee, having actual knowledge that such act or
omission is a breach of a fiduciary duty; provided further,
however, that the Trustee shall not be deemed to have knowingly
participated in or knowingly undertaken to conceal an act or
omission of an investment manager or investment committee with
knowledge that such act or omission was a breach of fiduciary duty
by merely complying with directions of an investment manager or
investment committee or for failure to act in the absence of
directions of an investment manager or investment committee. The
Trustee may rely upon any order, certificate, notice, direction or
other documentary confirmation purporting to have been issued by
the investment manager or investment committee which the Trustee
believes to be genuine and to have been issued by the investment
manager or investment committee. The Trustee shall not be charged
with knowledge of the termination of the appointment of any
investment manager or investment committee until it receives
written notice thereof from the Company.
(d) Following a Change in Control, the Trustee shall have, subject
to any investment guidelines delivered to it prior to a Change in Control,
the sole and absolute discretion in the management of the Trust assets and
shall have all the powers set forth under Section 6(b). In investing the
Trust assets, the Trustee shall consider:
(1) the needs of the Arrangements;
(2) the need for matching of the Trust assets with the
liabilities of the Arrangements; and
(3) the duty of the Trustee to act solely in the best
interests of the Participants and their Beneficiaries.
(e) The Trustee shall have the right, in its sole discretion, to
delegate its investment responsibility to an investment manager who may be
an affiliate of the Trustee. In the event the Trustee shall exercise this
right, the Trustee shall remain, at all times responsible for the acts of
an investment manager. The Trustee shall have the right to purchase an
insurance policy or an annuity to fund the benefits of the Arrangements.
(f) The Company shall have the right at any time, and from time to
time in its sole discretion, to substitute assets (other than securities
issued by the Trustee or the Company) of equal fair market value for any
asset held by the Trust. This right is exercisable by the Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity; provided, however, that, following a Change in Control,
no such substitution shall be permitted unless the Trustee determines that
the fair market values of the substituted assets are equal.
(g) The Trustee is authorized to use an affiliated broker,
Wachovia Securities Inc ("WSI") or its successor to execute purchases or
sales. WSI is authorized to collect and retain fees or commissions related
to its services.
SECTION 7. DISPOSITION OF INCOME.
Prior to a Change in Control, all dividends and other income payable with
respect to shares of Company Stock held in the Trust that are paid on a form
other than Company Stock shall be deposited in the Xxxxxxxx Governor Company
Executive Benefit Trust or such other Trust or fund designated by the Company
for this purpose.
SECTION 8. ACCOUNTING BY TRUSTEE.
The Trustee 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 the
Company and Trustee. Within forty-five (45) days following the close of each
calendar year and within forty-five (45) days after the removal or resignation
of the Trustee, Trustee shall deliver to the Company 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.
SECTION 9. 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 the Trustee shall incur no liability to any person for any
action taken pursuant to a direction, request or approval given by the
Company which is contemplated by, and in conformity with, the terms of the
Arrangements or this Trust and is given in writing by the Company. 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, subject,
however to Section 2(d) hereof.
(b) The Company hereby indemnifies the Trustee against losses,
liabilities, claims, costs and expenses in connection with the
administration of the Trust, unless resulting from the negligence or
misconduct of Trustee. To the extent the Company fails to make any payment
on account of an indemnity provided in this paragraph 10(b), in a
reasonably timely manner, the Trustee may obtain payment from the Trust. If
the Trustee undertakes or defends any litigation arising in connection with
this Trust or to protect a Participant's or Beneficiary's rights under the
Arrangements, the Company agrees to indemnify the Trustee against the
Trustee's costs, reasonable 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.
(c) Prior to a Change in Control, 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. Following a Change
in Control the Trustee shall select independent legal counsel and may
consult with counsel or other persons with respect to its duties and with
respect to the rights of Participants or their Beneficiaries under the
Arrangements.
(d) 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 and may rely on
any determinations made by such agents and information provided to it by
the Company.
(e) The Trustee shall have, without exclusion, all powers
conferred on the Trustee by applicable law, unless expressly provided
otherwise herein.
(f) Notwithstanding any powers granted to the 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 of 1986, as
amended.
SECTION 10. COMPENSATION AND EXPENSES OF TRUSTEE.
The Trustee's compensation shall be as agreed in writing from time to time
by the Company and the Trustee. The Company shall pay all administrative
expenses and the Trustee's fees and shall promptly reimburse the Trustee for any
fees and expenses of its agents. If not so paid within 45 days of being
invoiced, the fees and expenses shall be paid from the Trust.
SECTION 11. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Prior to a Change in Control, the Trustee may resign at any
time by written notice to the Company, which shall be effective sixty (60)
days after receipt of such notice unless the Company and the Trustee agree
otherwise. Following a Change in Control, the Trustee may resign only after
the appointment of a successor Trustee.
(b) The Trustee may be removed by the Company on sixty days (60)
days notice or upon shorter notice accepted by the Trustee prior to a
Change in Control. Subsequent to a Change in Control, the Trustee may only
be removed by the Company with the consent of a majority of the
Participants.
(c) If the Trustee resigns within two years after a Change in
Control, as defined herein, the Company, or if the Company fails to act
within a reasonable period of time following such resignation, the Trustee,
shall apply to a court of competent jurisdiction for the appointment of a
successor Trustee which satisfies the requirements of Section 13 or for
instructions.
(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 sixty (60) days
after receipt of notice of resignation, removal or transfer, unless the
Company extends the time limit.
(d) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 12 hereof, by the effective date of
resignation or removal under paragraph (a) or (b) of this Section 11. 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 12. APPOINTMENT OF SUCCESSOR.
(a) If the Trustee resigns or is removed in accordance with
Section 12 hereof, the Company may appoint, subject to Section 12, any
third party national banking association with a market capitalization
exceeding $100,000,000 to replace the Trustee upon resignation or removal.
The successor Trustee shall have all of the rights and
powers of the former Trustee, including ownership rights in the Trust. The
former Trustee shall execute any instrument necessary or reasonably
requested by the Company 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 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 13. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. Notwithstanding the foregoing, no
such amendment shall conflict with the terms of the Plan or shall make the
Trust.
(b) Following a Change in Control, the Trust shall not terminate
until the date on which the Employee and his or her beneficiaries are no
longer entitled to benefits payable in the form of Company Stock pursuant
to the terms of the Plan, unless sooner revoked in accordance with Section
1(b) hereof. Upon termination of the Trust any assets remaining in the
Trust shall be returned to Company.
(c) Upon written approval of the Employee or his or her beneficiaries entitled
to payment of benefits pursuant to the terms of the Plan, the Company may
terminate this 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
the Company.
(d) This Trust Agreement may not be amended by the Company
following a Change in Control without the written consent of a majority of
the Participants.
SECTION 14. MISCELLANEOUS.
(a) The General Counsel of the Company shall have the specific
authority to determine whether a Change in Control has transpired under the
guidance as such term is defined in Section 2.8 of the Plan or any
successor section thereto and shall be required to give the Trustee notice
of a Change in Control or a Potential Change in Control. The Trustee shall
be entitled to rely upon such notice, but if the Trustee receives notice of
a Change in Control from another source, the Trustee shall make its own
independent determination.
(b) 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.
(c) Benefits payable to Employee and his or her 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.
(d) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
IN WITNESS WHEREOF, the undersigned duly authorized individuals have caused
this Trust Agreement to be executed on behalf of the Company and Trustee as of
the date first above written.
XXXXXXXX GOVERNOR COMPANY
("COMPANY")
By: /s/Xxxxx X. Xxxxxxx
-----------------------------------------
Its: Corporate Secretary
--------------------
WACHOVIA BANK, N.A.
("TRUSTEE")
By:/s/Xxxxxx X. Xxxxx
-----------------------------------------
Its: Vice President & Assistant Secretary
--------------------------------------
EXHIBIT A
PAYMENT SCHEDULE
TO: [Trustee]
FROM: [Company]
In accordance with Section 2 of the Trust Agreement dated _______________, 2002
between the Trustee and the Company, the Company hereby submits the following
payment schedule:
EMPLOYEE BENEFIT AMOUNT
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This payment schedule shall supersede all previously delivered payment schedules
under the Trust with respect to the Employee listed above.
