AMENDED AND RESTATED SERP RABBI TRUST
THIS AGREEMENT, made as of the 1st day of November,
1998 (the "Trust Agreement"), among SCHERING-PLOUGH
CORPORATION, a corporation organized and existing under
the laws of New Jersey (the "Company"), THE NORTHERN
TRUST COMPANY, having its principal offices in Chicago,
Illinois (the "Trustee") and BUCK CONSULTANTS, INC.
having its principal offices in New York, New York (the
"Trustee's Agent").
W I T N E S S E T H
WHEREAS, the Trust Agreement was originally entered
into as of March 31, 1987 by and among the Company, The
Chase Manhattan Bank (National Association) as trustee,
and The Xxxxx Company as trustee's agent (the "Original
Trust Agreement");
WHEREAS, the Original Trust Agreement was amended and
restated through October 1, 1993, further amended as of
October 1, 1995, and amended and restated through
January 22, 1997;
WHEREAS, the Company wishes to amend and restate the
Original Trust Agreement, as so amended and restated,
to provide for mandatory contributions upon a potential
change of control;
WHEREAS, the Company has incurred and expects to
continue to incur certain unfunded retirement income,
deferred compensation liability and other obligations
to or with respect to certain key management employees
and directors pursuant to the terms of the following
plans and employment agreements of the Company: (i)
the Supplemental Executive Retirement Plan (the
"SERP"); (ii) the Retirement Benefits Equalization Plan
(the "BEP"); (iii) the Pension Plan for Directors (the
"Directors Pension Plan"); (iv) the Employment
Agreement with Xxxx X. X'Xxxxxxx dated as of June 28,
1994, as amended by the First Amendment thereto dated
as of March 1, 1995, the Second Amendment thereto dated
as of December 11, 1995, the Third Amendment thereto
dated as of February 25, 1998, the Fourth Amendment
thereto dated as of November 1, 1998, and as
subsequently amended from time to time the (the
"X'Xxxxxxx Agreement"); (v) the Employment Agreement
with Xxxxxxx X. Xxxxx dated as of September 26, 1989,
as amended by the First Amendment thereto dated as of
June 28, 1994, the Second Amendment thereto dated as of
March 1, 1995, the Third Amendment thereto dated as of
October 24, 1995, the Fourth Amendment thereto dated as
of February 25, 1998, the Fifth Amendment thereto dated
as of November 1, 1998, and as subsequently amended
from time to time (the "Xxxxx Agreement"); (vi) the
Employment Agreement with Xxxxxx X. Xxxxxxx dated as of
September 26, 1989, as amended by the First Amendment
thereto dated as of June 28, 1994, the Second Amendment
thereto dated as of March 1, 1995, the Third Amendment
thereto dated as of February 25, 1998, and as
subsequently amended from time to time (the "Luciano
Agreement"); (vii) the Employment Agreement with Xxxx
X. Xxxxx dated as of November 1, 1998 (the "Cesan
Agreement"); (viii) the Deferred Compensation Plan (the
"Deferred Compensation Plan") (the plans and employment
agreements listed in clauses (i) through (viii) being
hereinafter collectively referred to as the "A Plans");
(ix) the Directors Deferred Stock Equivalency Program
(the "Directors Equivalency Program" or the "S Plan");
and (x) such other plans and employment agreements for
the Corporation as the Executive Compensation and
Organization Committee may designate from time to time
as A Plans or S Plans (all such plans and employment
agreements being hereinafter individually called a
"Plan" or collectively the "Plans");
WHEREAS, the Company desires to provide additional
assurance to some or all such key management employees
and directors (the "Participants") and their surviving
spouses, beneficiaries or estates under the Plans
(collectively, the "Beneficiaries") that their unfunded
retirement benefit and deferred compensation rights
under the Plans will in the future be met or
substantially met by application of the procedures set
forth herein;
WHEREAS, the Company wishes to establish separate
accounts (hereinafter the "Accounts") with respect to
some or all of the Participants in the Plans in order
to provide a source of payments as such are required
under the terms of such Plans;
WHEREAS, the Company shall, in its discretion or as
expressly required by the provisions of this Agreement,
make contributions to the Trust on behalf of the
Accounts;
WHEREAS, amounts in each separate Account, and the
earnings thereon, shall be used by the Trustee to
satisfy the liabilities of the Company under the Plan
or Plans with respect to the Participant for whom such
separate Account has been established and such
utilization shall be in accordance with the procedures
set forth herein;
WHEREAS, upon satisfaction of all liabilities of the
Company under the Plan or Plans with respect to a
Participant and Beneficiary in respect of whom a
separate Account has been established, the balance, if
any, remaining in such Account shall be allocated to
the Accounts of other Participants and Beneficiaries
for whom such Accounts have been established in
accordance with the procedures set forth herein; and
WHEREAS, upon satisfaction of all liabilities of the
Company under the Plans with respect to all
Participants in respect of whom separate Accounts have
been established, the balance, if any, remaining in
such Accounts shall revert to the Company, except that
all amounts in all such Accounts shall at all times be
subject under this Agreement to the claims of the
Company's creditors as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and
mutual and independent promises herein, the parties
hereto covenant and agree as follows:
ARTICLE I
1.1 The Company hereby establishes with the Trustee
an irrevocable Trust consisting of such sums of money
and such property acceptable to the Trustee as shall
from time to time be paid or delivered to the Trustee
and the earnings and profits thereon. All such money
and property, all investments made therewith and
proceeds thereof, less the payments or other
distributions which, at the time of reference, shall
have been made by the Trustee, as authorized herein,
are referred to herein as the "Trust Property" and
shall be held by the Trustee collectively in two
separate funds (the "SERP A Fund" and the "SERP S
Fund"; each individually a "Fund" and collectively, the
"Funds"), IN TRUST, in accordance with the provisions
of this Agreement. The Trust Property relating to each
Fund may be held by the Trustee without distinction or
separation by virtue of Plan Participants' interests in
their Accounts maintained by the Trustee's Agent as
hereinafter provided. The SERP A Fund shall be
utilized to fund the retirement income, deferred
compensation liability and other obligations to or with
respect to certain key management employees and
directors pursuant to the terms of the A Plans. The
SERP S Fund shall be utilized to fund the deferred
compensation liability to directors pursuant to the
terms of the S Plans.
1.2 The Trustee shall hold, manage, invest and
otherwise administer each Fund pursuant to the terms of
this Agreement. The Trustee shall be responsible only
for contributions actually received by it hereunder.
The amount of each contribution by the Company to each
Fund shall be determined in the sole discretion of the
Company and the Trustee shall have no duty or
responsibility with respect thereto.
1.3 The Trustee's Agent shall maintain in an
equitable manner a separate Account record for each
Participant for each applicable Plan. Each account
record shall indicate the Participant's share of the
relevant Fund under such Plan. The Company shall
certify to the Trustee's Agent at the time of each
contribution to a Fund the amount of such contribution
being made in respect of each Participant under each
Plan. Each such contribution shall be credited to the
Participant's Account in SERP A Fund or SERP S Fund as
of the last business day of the calendar quarter in
which such contribution is made. Each Fund shall be
revalued by the Trustee as of the last business day of
each calendar quarter ("Valuation Date") at current
market values, as determined by the Trustee, and the
Trustee shall certify the value thereof to the
Trustee's Agent. The Trustee's Agent shall apportion
each Fund as revalued as of such Valuation Date less
any contributions made by the Company during the
preceding quarter among the Accounts of Participants in
proportion to their respective interests in each Fund
on the immediately preceding Valuation Date, except
that for purposes of such apportionment the Accounts of
Participants as of the Valuation Date shall not include
any contributions or forfeitures credited to their
Accounts as of such Valuation Date and any payments to
the Participants made after the immediately preceding
Valuation Date shall be charged to their Accounts as of
the immediately preceding Valuation Date. Where a
Participant's Account within a Fund may be applied to
provide benefits to or in respect of such Participant
under more than one Plan, the separate account record
for such Participant under each such Plan shall be
maintained by the Trustee's Agent in such manner as the
Trustee's Agent, in its sole discretion, considers to
be appropriate.
ARTICLE II
2.1 Notwithstanding any provision in this Agreement
to the contrary, if at any time while the Trust is
still in existence the Company becomes insolvent (as
defined herein), the Trustee shall upon written notice
thereof suspend the payment of all benefits from each
Fund and shall thereafter hold each Fund in suspense
for the benefit of the Company's creditors until it
receives a court order directing the disposition of
each Fund; provided, however, the Trustee may deduct or
continue to deduct its fees and expenses and other
expenses of the Trust, including taxes, pending the
receipt of such court order. The Company shall be
considered to be insolvent if (a) it is unable to pay
its debts as they fall due or (b) bankruptcy or
insolvency proceedings are initiated by its creditors
or the Company or any third party under the Bankruptcy
Act of the United States or the bankruptcy laws of any
State alleging that the Company is insolvent or
bankrupt. By its approval and execution of this
Agreement, the Company represents and agrees that its
Board of Directors and Chief Executive Officer, as from
time to time acting, shall have the fiduciary duty and
responsibility on behalf of the Company's creditors to
give to the Trustee prompt written notice of any event
of the Company's insolvency and the Trustee shall be
entitled to rely thereon to the exclusion of all
directions or claims to pay benefits thereafter made.
If the Trust Department of the Trustee receives written
allegations of an event of insolvency from a third
party, the Trustee shall request that the Company's
independent auditors determine whether the Company is
insolvent; the Trustee may conclusively rely on written
certification of solvency or insolvency received from
such auditors. If, after an event of insolvency, the
Company later becomes solvent without the entry of a
court order concerning the disposition of the Trust
Property or any bankruptcy or insolvency proceedings
referred to in (b) above are dismissed, the Company
shall by written notice so inform the Trustee and the
Trustee shall thereupon resume all its duties and
responsibilities under this Agreement without regard
for this Section 2.1 until and unless the Company again
becomes insolvent as such term is defined herein.
2.2 The Company represents and agrees that the Trust
established under this Agreement does not fund and is
not intended to fund the Plans or any other employee
benefit plan or program of the Company. Such Trust is
and is intended to be a depository arrangement with the
Trustee for the setting aside of cash and other assets
of the Company as and when it so determines in its sole
discretion for the meeting of part or all of its future
retirement obligations and deferred compensation
liability to or with respect to some or all of the
Participants and their Beneficiaries under the Plans.
Except as set forth in Article XI, contributions by the
Company to the Trust shall be in amounts determined
solely by the Company and shall be in respect of only
those Plan Participants selected by the Company from
time to time as it determines. The purpose of this
Trust is to provide funds from which retirement
benefits and deferred compensation may be payable under
the Plans and as to which Plan Participants with
Accounts hereunder and their Beneficiaries may, by
exercising the procedures set forth herein, have access
to some or all of their benefits as such become due
without having the payment of such benefits subject to
the administrative control of the Company unless the
Company is adjudicated to be bankrupt or insolvent.
The Company further represents that each of the SERP,
the Deferred Compensation Plan and the BEP is an
unfunded deferred compensation plan for a select group
of management and highly compensated employees and as
such is exempt from the application of the Employee
Retirement Income Security Act of 1974 ("ERISA") except
for the disclosure requirements applicable to such Plan
for which the Company bears full responsibility as to
compliance; and that each of the Directors Pension
Plan, Directors Equivalency Program and the employment
agreements with each of Messrs. Cesan, X'Xxxxxxx, Xxxxx
and Xxxxxxx is not an employee benefit plan and is not
subject to ERISA. The Company further represents that
the Plans are not qualified under Section 401 of the
United States Internal Revenue Code and therefore are
not subject to any of the Code requirements applicable
to tax-qualified plans.
ARTICLE III
3.1 By their acceptance of this Trust the Trustee
hereby agrees to the designation by the Company of Buck
Consultants, Inc. as the Trustee's Agent and Buck
Consultants, Inc. agrees to act as such Trustee's Agent
under this Trust Agreement. It is herein recognized
that said Trustee's Agent is also acting as the
independent consulting actuary of the Company with
respect to the Plans and that the Trustee shall have no
responsibility hereunder for the continued retention of
such Trustee's Agent and/or any responsibility assigned
to said Agent or its performance thereof. In the event
the Company replaces or no longer uses said firm as its
independent consulting actuary, the Trustee in its sole
discretion may, but need not, designate a new Trustee's
Agent or may continue to use the same Trustee's Agent.
Buck Consultants, Inc. and any successor Trustee's
Agent appointed hereunder may resign at any time by
delivering sixty (60) days advance written notice to
the Company and to the Trustee, in which event the
Trustee shall designate a new Trustee's Agent;
provided, however, any Trustee's Agent appointed by the
Trustee shall be independent of the Company. The
Company shall pay or reimburse the Trustee for all fees
and expenses of the Trustee's Agent and shall indemnify
and hold the Trustee harmless for any liability, loss,
suit or expense (including attorneys' fees) in
connection with or arising out of actions or omissions
of said Trustee's Agent (including any direction to or
failure to direct the Trustee) and shall indemnify and
hold the Trustee's Agent harmless for any actions or
omissions of the Trustee.
3.2 Except for the records dealing solely with the
Funds and their respective investments, which shall be
maintained by the Trustee, the Trustee's Agent shall
maintain all the Plan Participant records contemplated
by this Agreement, including the maintenance of the
separate Accounts of each Participant under this
Agreement and the maintenance of the data necessary to
determine, from time to time, the benefits of
Participants under the Plans. The Trustee's Agent
shall also prepare and distribute Participants'
statements when requested by the Company or a
Participant and shall be responsible for information
with respect to payments to Participants and their
Beneficiaries and shall perform such other duties and
responsibilities as the Trustee determines is necessary
or advisable to achieve the objectives of this
Agreement and the Trustee shall have no responsibility
therefor and shall be entitled to rely fully upon the
information provided by the Trustee's Agent.
3.3 Upon the establishment of this Trust or as soon
thereafter as practicable, the Company shall furnish to
the Trustee's Agent all the information necessary to
determine the benefits payable to or with respect to
each Participant in the Plans, including any benefits
payable after the Participant's death and the recipient
of same. The Company shall regularly, at least
annually, furnish revised up-dated information to the
Trustee's Agent. Based on the foregoing information
the Trustee's Agent shall prepare an annual benefits
statement in respect of each Participant and shall
furnish a copy of same to the Participant or his
Beneficiary and to the Company. In the event the
Company refuses or neglects to provide up-dated
Participant information, as contemplated herein, the
Trustee's Agent shall be entitled to rely upon the most
recent information furnished to it by the Company.
3.4 Upon the direction of the Company or upon the
proper application of a Participant or Beneficiary of a
deceased Participant, the Trustee's Agent shall
determine a Participant's or Beneficiary's eligibility
for benefits and the amount thereof and, if benefits
are payable, shall prepare a certification of same to
the Trustee. Such certification shall include the
amount of such benefits, the manner of payment and the
name, last known address and social security number of
the recipient and shall be updated annually and upon
receipt by the Trustee's Agent of a notice of a benefit
change under the Plan from the Company. Upon the
receipt of such certified statement and appropriate
federal, state and local tax withholding information,
the Trustee shall commence cash distributions from the
relevant Fund or Funds in accordance therewith to the
person or persons so indicated and to the Company with
respect to taxes required to be withheld and the
Trustee's Agent shall charge the Participant's Account
or Accounts established hereunder. The Trustee's Agent
shall also furnish a copy of such certification to the
Participant or to the Beneficiary of a deceased
Participant. The Trustee's Agent shall also give
written notice to the Trustee that a Participant's
Account balance has been reduced to a certain minimum
agreed to by the Trustee and the Trustee's Agent under
procedures which will enable the Trustee to cease
payment when such Account balance has been reduced to
zero. The Company shall have full responsibility for
the payment of all withholding taxes to the appropriate
taxing authority and shall furnish each Participant or
Beneficiary with the appropriate tax information form
evidencing such payment and the amount thereof.
3.5 All benefits payable from either Fund to a
Participant or his Beneficiary under a Plan or Plans
shall be charged solely against the relevant Account of
such Participant. When the Trustee's Agent determines
that all Company liabilities under all Plans to a
Participant and Beneficiary have been satisfied, the
Trustee's Agent shall prepare a certification to the
Trustee and to the Company showing the balance, if any,
remaining in such Participant's Account or Accounts
(the "Balance"). In making such determination the
Trustee's Agent may rely upon written certification
from the Company that the Participant or his
Beneficiary has died or that such Company liabilities
have been satisfied by cash payments made by the
Company or otherwise; provided, however, the Trustee's
Agent may require additional documentation of any such
Company confirmation if the Trustee's Agent considers
such to be appropriate under the circumstances. Any
Balance remaining in such Participant's Account or
Accounts shall be reallocated by the Trustee's Agent to
the Accounts of the other Participants and
Beneficiaries in the manner set forth below; provided,
however, in no event shall any Balance be allocated to
the Account of any Participant or Beneficiary
established after the Company delivers a written notice
to the Trustee and the Trustee's Agent that Accounts
established after the date of such notice shall not be
entitled to share in any reallocations under this
Section 3.5. Any such notice shall be irrevocable by
the Company notwithstanding any amendments to this
Trust Agreement made thereafter and any attempt to
revoke such notice shall be disregarded by the Trustee
and the Trustee's Agent.
Each Balance determined in accordance with the
preceding paragraph shall be maintained as a separate
Participant's Account subject to quarterly revaluation
pursuant to Section 1.3 until the following or
coinciding December 31st, as of which date the
Trustee's Agent shall aggregate and revalue all such
Balances and reallocate such amount ("Total Balances")
to the eligible Accounts of the remaining Participants
and Beneficiaries in both Funds, including Accounts
which may have previously been reduced to a zero
balance. Such reallocation shall be made:
a) by determining the amount by which the value of
each Participant's and Beneficiary's accrued
benefits under the Plan or Plans exceed the value
of his Account or Accounts as of such December
31st;
b) by adding all the amounts determined under (a);
and
c) by allocating to each Participant's and
Beneficiary's Account or Accounts the amount of
the Total Balances (not in excess of the amount
computed under (b)) in the ratio of the amount
computed for each Account under (a) to the total
amount computed under (b).
If the amount of the Total Balances exceeds the amount
computed under (b), the excess shall be maintained as a
separate Account until the following December 31st or
until any earlier termination of the Trust, at which
date the value of such Account shall be treated as an
additional Balance for purposes of this Section 3.5.
For defined benefit type plans, the value of each
Participant's and Beneficiary's accrued benefits under
the Plan or Plans shall be calculated using the
procedures and actuarial assumptions used in
terminating a single employer plan under 29 CFR Part
4044, Subpart B of the Pension Benefit Guaranty
Corporation regulations. For defined contribution type
plans and employment agreements, the value of each
Participant's and Beneficiary's accrued benefits shall
be determined in accordance with the relevant Plan or
Plans.
Upon the satisfaction of all liabilities of the
Company under the Plans to Participants and
Beneficiaries for whom Accounts have been established
hereunder, the Trustee's Agent shall prepare a
certification to the Trustee and to the Company and the
Trustee shall thereupon hold or distribute the Trust
Property in accordance with the written instructions of
the Company. At no time except (a) to the extent used
to satisfy claims of the Company's creditors in the
event of the Company's insolvency, as defined in
Section 2.1, (b) after the satisfaction of all
liabilities of the Company under the Plans in respect
of Participants and Beneficiaries having Accounts
hereunder, or (c) after a Potential Change of Control
(as defined in Section 11.1) in accordance with Section
11.2 hereof, shall any part of the Trust Property
revert to the Company. The Trustee and the Trustee's
Agent shall have no responsibility for determining
whether any Participant or Beneficiary has died and
shall be entitled to rely upon information furnished by
the Company.
3.6 Nothing provided in this Agreement shall relieve
the Company of its liabilities to pay the retirement
benefits and deferred compensation liabilities provided
under the Plans except to the extent such liabilities
have been satisfied. It is the intent of the Company
to have each Account established hereunder treated as a
separate trust designed to satisfy in whole or in part
the Company's legal liability under the Plans in
respect of the Participant for whom such Account has
been established and to have the balance of each Fund
revert to the Company only after its legal liability
under the relevant Plan or Plans has been met. The
Company, therefore, agrees that all income, deductions
and credits of each such Account belong to it as owner
for income tax purposes and will be included on the
Company's income tax returns.
ARTICLE IV
4.1 The Company shall provide the Trustee's Agent
with a certified copy of the Plans and all amendments
thereto and of the resolutions of the Board of
Directors of the Company or the relevant subsidiary
approving the Plans and all amendments thereto,
promptly upon their adoption. Any action by the
Company pursuant to the terms of this Trust Agreement
shall, except as otherwise provided herein, be by
written instrument signed by an officer of the Company
authorized to act hereunder or any delegee authorized
to act for the Company. After the execution of this
Agreement, the Company shall promptly file with the
Trustee and the Trustee's Agent a certified list of the
names and specimen signatures of the officers of the
Company and any delegee authorized to act for it. The
Company shall promptly notify the Trustee and the
Trustee's Agent of the addition or deletion of any
person's name to or from such list, respectively.
Until receipt by the Trustee and/or the Trustee's Agent
of notice that any person is no longer authorized so to
act, the Trustee or the Trustee's Agent may continue to
rely on the authority of the person. All
certifications, notices and directions by any such
person or persons to the Trustee or the Trustee's Agent
shall be in writing signed by such person or persons.
The Trustee and the Trustee's Agent may rely on any
such certification, notice or direction purporting to
have been signed by or on behalf of such person or
persons that the Trustee or the Trustee's Agent
believes to have been signed thereby. The Trustee and
the Trustee's Agent may rely on any certification,
notice or direction of the Company that the Trustee or
the Trustee's Agent believes to have been signed by a
duly authorized officer or agent of the Company. The
Trustee and the Trustee's Agent shall have no
responsibility for acting or not acting in reliance
upon any notification believed by the Trustee or the
Trustee's Agent to have been so signed by a duly
authorized officer or agent of the Company. The
Company shall be responsible for keeping accurate books
and records with respect to the employees and Directors
of the Company, their compensation and their rights and
interests in the Funds under the Plans.
4.2 The Company shall make its contributions to the
Trust in accordance with appropriate corporate action
and the Trustee shall have no responsibility with
respect thereto, except to add such contributions to
the appropriate Fund or Funds.
4.3 The Company shall indemnify and hold harmless
the Trustee for any liability or expenses, including
without limitation reasonable attorneys' fees, incurred
by the Trustee with respect to holding, managing,
investing or otherwise administering the Funds or
carrying out its duties hereunder, except to the extent
that such liabilities or expenses arise from actions
constituting gross negligence or willful misconduct by
the Trustee under this Agreement.
4.4 The Company shall indemnify and hold harmless
the Trustee's Agent for any liability or expenses,
including without limitation reasonable attorneys'
fees, incurred by the Trustee's Agent with respect to
keeping the records for Participants' Accounts,
reporting thereon to Participants, certifying benefit
information to the Trustee, determining the status of
Accounts and benefits hereunder and otherwise carrying
out its obligations under this Agreement, except to the
extent that such liabilities or expenses arise from
actions constituting negligence or willful misconduct
by the Trustee's Agent.
ARTICLE V
5.1 The Trustee shall not be liable in discharging
its duties hereunder, including without limitation its
duty to invest and reinvest the Trust Property relating
to each Fund, if it acts in good faith and in
accordance with the terms of this Agreement with
respect to the Trustee's responsibilities under this
Agreement.
5.2 Subject to investment guidelines agreed to in
writing from time to time by the Company and the
Trustee, the Trustee shall have the power in investing
and reinvesting the Trust Property with respect to each
Fund, in its sole discretion:
(a) To invest and reinvest in any property, real,
personal or mixed, wherever situated and whether
or not productive of income or consisting of
wasting assets, including without limitation,
common and preferred stocks, bonds, notes,
debentures (including convertible stocks and
securities but not including any stock or security
of the Trustee, the Company or any affiliate
thereof), futures, option and forward contracts,
leaseholds, mortgages, certificates of deposit or
demand or time deposits (including any such
deposits with the Trustee), shares of investment
companies and mutual funds, interests in
partnerships and trusts, insurance policies and
annuity contracts, and oil, mineral or gas
properties, royalties, interests or rights,
without being limited to the classes of property
in which 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 each Fund; provided,
however, the Trustee is authorized to receive and
hold any stock or security of the Company which is
contributed by the Company to either Fund and the
Trustee shall not sell any such stock or security
of the Company until the Company so directs;
(b) To invest and reinvest all or any portion of the
Trust Property held in the Funds collectively
through the medium of any common, collective or
commingled trust fund that may be established and
maintained by the Trustee, subject to the
instrument or instruments establishing such trust
fund or funds and with the terms of such
instrument or instruments, as from time to time
amended, being incorporated into this Agreement to
the extent of the equitable share of the Funds in
any such common collective or commingled trust
fund;
(c) To retain any property at any time received by
the Trustee;
(d) Subject to subsection (a) above, 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;
(e) 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;
(f) 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
and any assessments levied with respect to any
such property so deposited;
(g) To extend the time of payment of any obligation
held by it;
(h) To hold uninvested any moneys received by it,
without liability for interest thereon, until such
moneys shall be invested, reinvested or disbursed;
(i) To exercise all voting or other rights with
respect to any property held by it and to grant
proxies, discretionary or otherwise;
(j) 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;
(k) To manage, administer, operate, insure, repair,
improve, develop, preserve, mortgage, lease or
otherwise deal with, for any period, any real
property or any oil, mineral or gas properties,
royalties, interests or rights held by it directly
or through any corporation, either alone or by
joining with others, using other Trust assets for
any such purposes, to modify, extend, renew, waive
or otherwise adjust any provision of any such
mortgage or lease and to make provision for
amortization of the investment in or depreciation
of the value of such property;
(l) To employ suitable agents and counsel, who may
be counsel to the Company or the Trustee and to
pay their reasonable expenses and compensation
from the relevant Fund to the extent not paid by
the Company;
(m) To cause any property held by it to be
registered and held in the name of one or more
nominees, with or without the addition of words
indicating that such securities are held in a
fiduciary capacity, and to hold securities in
bearer form;
(n) 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;
(o) To organize under the laws of any state a
corporation or trust for the purpose of acquiring
and holding title to any property which it is
authorized to acquire hereunder and to exercise
with respect thereto any or all of the powers set
forth herein; and
(p) Generally, to do all acts, whether or not
expressly authorized, that the Trustee may deem
necessary or desirable for the protection of the
Trust Property.
Notwithstanding the foregoing, the Trustee shall upon
the written direction of the Company invest all or part
of the amount to the credit of any Participant's
Account in a commercial annuity or insurance contract
selected by the Company and the Trustee shall have no
responsibility for any such investment other than as
owner and custodian thereof; provided, however, that
following a Change of Control (a "Change of Control"
for purposes of any one of the SERP, BEP, Cesan
Agreement, X'Xxxxxxx Agreement or Xxxxx Agreement shall
constitute a Change of Control for purposes of this
Agreement), the Company may only direct the Trustee to
invest in a commercial annuity or insurance contract of
an insurance company that is rated at least AA (or its
equivalent) by Standard & Poor's or Moody's. The
Trustee shall have no duty or obligation to review or
confirm such rating. The Company shall promptly notify
Trustee of any Change of Control or Potential Change of
Control (as defined in Section 11.1). Trustee may
conclusively rely upon such notice and shall have no
duty to determine whether a Change of Control or
Potential Change of Control has occurred.
5.3 The Company may at any time direct the Trustee
to segregate all or a portion of each Fund in a
separate investment account or accounts and may appoint
one or more investment managers 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. Thereafter, the Trustee shall make
every sale or investment with respect to such
investment account as directed in writing by the
investment manager. 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,
to review any securities or other property held in any
such investment account or accounts acquired by it
pursuant to such directions or to make any
recommendations to the investment managers with respect
to such securities or other property. Notwithstanding
the foregoing, the Trustee, without obtaining prior
approval or direction from an investment manager, 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, and similar type
securities, with a maturity not to exceed fifteen
months; and, furthermore, sell such short term
investments as may be necessary to carry out the
instructions of an investment manager regarding more
permanent type investment and directed distributions.
The Trustee shall not be liable or responsible for any
loss resulting to either Fund by reason of any sale or
purchase of an investment directed by an investment
manager 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
solely as a result of the performance by the Trustee or
its officers, employees or agents, of any custodial,
reporting, recording or bookkeeping functions with
respect to any such investment account, except to the
extent that such performance constituted gross
negligence or willful misconduct on the part of the
Trustee. 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 issued pursuant hereto or for
failure to act in the absence of directions of the
investment manager 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, 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 with knowledge
that such act or omission was a breach of fiduciary
duty by merely complying with directions of an
investment manager or for failure to act in the absence
of directions of an investment manager. The Trustee
may rely upon any order, certificate, notice, direction
or other documentary confirmation purporting to have
been issued by the investment manager which the Trustee
believes to be genuine and to have been issued by the
investment manager. The Trustee shall not be charged
with knowledge of the termination of the appointment of
any investment manager until it receives written notice
thereof from the Company.
5.4 No person dealing with the Trustee shall be
under any obligation to see to the proper application
of any money paid or property delivered to the Trustee
or to inquire into the Trustee's authority as to any
transaction. The Trustee's Agent's obligations are
limited solely to those explicitly set forth herein and
the Trustee's Agent shall have no responsibility,
authority or control, direct or indirect, over the
maintenance or investment of the Trust Property and
shall have no obligation in respect of the Trustee or
the Trustee's compliance with the Trustee's Agent's
certifications to the Trustee.
5.5 The Trustee shall distribute cash or property
from the Funds in accordance with Article III hereof.
The Trustee may make any distribution required
hereunder by mailing its check for the specified
amount, or delivering the specified property, to the
person to whom such distribution or payment is to be
made, at such address as may have been last furnished
to the Trustee, or if no such address shall have been
so furnished, to such person in care of the Company, or
(if so directed by the Company) by crediting the
Account of such person or by transferring funds to such
person's Account by bank or wire transfer.
5.6 If at any time there is no person authorized to
act under this Agreement in behalf of the Company, the
Board of Directors of the Company shall have the
authority to act hereunder.
ARTICLE VI
6.1 The Company shall pay any Federal, state or
local taxes on the Trust Property, or any part thereof,
and on the income therefrom.
6.2 The Company shall pay to the Trustee its
reasonable expenses for the management and
administration of the Funds, including without
limitation reasonable expenses of counsel and other
agents employed by the Trustee, and reasonable
compensation for its services as Trustee hereunder in
accordance with its Published Schedule of Compensation
in effect from time to time. The Company shall also
pay to the Trustee for transmission to the Trustee's
Agent the fees and expenses of the Trustee's Agent,
unless the Company pays such directly to the Trustee's
Agent. Such expenses, fees and compensation shall be a
charge on the Funds and shall constitute a lien in
favor of the Trustee and Trustee's Agent until paid by
the Company.
ARTICLE VII
7.1 The Trustee shall maintain records with respect
to each Fund that show all its receipts and
disbursements hereunder. The records of the Trustee
with respect to the Funds shall be open to inspection
by the Company, or its representatives, at all
reasonable times during normal business hours of the
Trustee and may be audited not more frequently than
once each fiscal year by an independent certified
public accountant engaged by the Company; provided,
however, the Trustee shall be entitled to additional
compensation from the Company in respect of audits or
auditors' requests which the Trustee determines to
exceed the ordinary course of the usual scope of such
examinations of its records.
7.2 Within a reasonable time after the close of each
fiscal year of the Company (or as agreed to by the
Company and Trustee), or upon termination of the duties
of the Trustee hereunder, the Trustee shall prepare and
deliver to the Company a statement of transactions
reflecting its acts and transactions as Trustee during
such fiscal year, portion thereof or during such period
from the close of the last fiscal year or last
statement period to the termination of the Trustee's
duties, respectively, including a statement of the then
current value of each Fund. The Trustee's Agent shall
also prepare and furnish to the Company a statement of
the then current value of each Account. Any such
statement shall be deemed an Account stated and
accepted and approved by the Company, and the Trustee
shall be relieved and discharged, as if such Account
had been settled and allowed by a judgment or decree of
a court of competent jurisdiction, unless protested by
written notice to the Trustee within sixty (60) days of
receipt thereof by the Company.
The Trustee shall have the right to apply at any time
to a court of competent jurisdiction for judicial
settlement of any Account of the Trustee not previously
settled as herein provided or for the determination of
any question of construction or for instructions. In
any such action or proceeding it shall be necessary to
join as parties only the Trustee and the Company
(although the Trustee may also join such other parties
as it may deem appropriate), and any judgment or decree
entered therein shall be conclusive.
ARTICLE VIII
8.1 The Trustee may resign at any time by delivering
written notice thereof to the Company; provided,
however, that no such resignation shall take effect
until the earlier of (i) sixty (60) days from the date
of delivery of such notice to the Company or (ii) the
appointment of a successor trustee.
8.2 Subject to Section 11.3, the Trustee may be
removed at any time by the Company, pursuant to a
resolution of the Board of Directors of the Company,
upon delivery to the Trustee of a certified copy of
such resolution and sixty (60) days' written notice,
unless such notice period is waived in whole or in part
by the Trustee, of (i) such removal and (ii) the
appointment of a successor trustee.
8.3 Except as otherwise provided in Section 11.3,
upon the resignation or removal of the Trustee, a
successor trustee shall be appointed by the Company.
Such successor trustee shall be a bank or trust company
which is established under the laws of the United
States or a State within the United States and which is
not related, directly or indirectly, to the Company.
Such appointment shall take effect upon the delivery to
the Trustee of (a) a written appointment of such
successor trustee, duly executed by the Company, and
(b) a written acceptance by such successor trustee,
duly executed thereby. Any successor trustee shall
have all the rights, powers and duties granted the
Trustee hereunder.
8.4 If, within sixty (60) days of the delivery of
the Trustee's written notice of resignation, a
successor trustee shall not have been appointed, the
Trustee may apply to any court of competent
jurisdiction for the appointment of a successor
trustee.
8.5 Upon the resignation or removal of the Trustee
and the appointment of a successor trustee, and after
the acceptance and approval of the Trustee's accounting
of the Trust Property, the Trustee shall transfer and
deliver the Trust Property to such successor. Under no
circumstances shall the Trustee transfer or deliver the
Trust Property to any successor which is not a bank or
trust company as hereinabove defined.
ARTICLE IX
9.1 The Trust established pursuant to this Agreement
may not be terminated by the Company prior to the
satisfaction of all liabilities with respect to all
Participants in the Plans and their Beneficiaries.
Upon receipt of a written certification from the
Trustee's Agent that all liabilities have been
satisfied with respect to all Participants in the Plans
and their Beneficiaries, the Company pursuant to a
resolution of its Board of Directors may terminate the
Trust upon delivery to the Trustee of (a) a certified
copy of such resolution, (b) an original certification
of the Trustee's Agent that all such liabilities have
been satisfied and (c) a written instrument of
termination duly executed and acknowledged in the same
form as this Agreement.
9.2 Upon the termination of the Trust in accordance
with Section 9.1, the Trustee shall, after the
acceptance and approval of its account, distribute the
Trust Property to the Company. Upon completing such
distribution, the Trustee shall be relieved and
discharged. The powers of the Trustee shall continue
as long as any part of either Fund remains in its
possession.
9.3 The Company may at any time liquidate the
Account of any Participant under this Agreement in the
event the amount to the credit of such Account falls
below $5,000. In such event, the Trustee, upon receipt
of written instructions from the Company, shall
distribute in cash the amount to the credit of any such
terminated Account, as determined by the Trustee's
Agent, to the Participant in respect of whom such
Account was established or, if such Participant is dead
or incompetent, to his Beneficiary.
ARTICLE X
10.1 This Agreement may be amended, in whole or in
part, at any time and from time to time, by the
Company, pursuant to a resolution of the Board of
Directors thereof by delivery to the Trustee and the
Trustee's Agent of a certified copy of such resolution
and a written instrument duly executed and acknowledged
in the same form as this Agreement, except that the
duties and responsibilities of the Trustee and the
Trustee's Agent shall not be increased without the
Trustee's or the Trustee's Agent's written consent;
provided, however, any such amendment affecting any
Account, the procedures for distribution thereof or the
reallocation of Balances under Section 3.5 shall not
become effective until sixty (60) days after a copy of
such amendment has been delivered by registered mail by
the Company or the Trustee's Agent to each Participant
or his Beneficiary. In the event the Company, Trustee
or Trustee's Agent receives written objections to such
amendment from such person within such sixty (60) day
period, the party receiving such objections shall
provide a copy of same to the other parties and such
amendment shall be ineffective and void in respect of
the Participant or Beneficiary so objecting to the
amendment.
ARTICLE XI
11.1 Notwithstanding anything to the contrary
herein, in the event of a Potential Change of Control
(as defined below), the Company shall contribute to
Fund A an amount (the "Change of Control Contribution")
as determined by Trustee's Agent sufficient to fund one
hundred percent (100%) of (a) each Participant's and
Beneficiary's projected benefits under the SERP and the
BEP, based on the assumptions that each of the
Participants under those Plans is retiring immediately
following the Change of Control and has elected a lump
sum payout, and (b) any and all benefits (cash and non-
cash) payable under the employment agreements of
Messrs. Cesan, Xxxxx and X'Xxxxxxx, assuming
termination immediately following the Change of
Control, payable as a lump sum, whether or not such
Participant then has an account in either of the Funds.
For purposes of this Agreement, "Potential Change of
Control" means (x) the public announcement by any
person (including without limitation the Company) of an
intention, commitment or agreement to take any actions
that, if consummated, would result in a Change of
Control, or (y) the adoption by the Board of Directors
of the Company of a resolution to the effect that for
purposes of this Trust a "Potential Change of Control"
has occurred.
11.2 At any time after the earlier of (a) the second
anniversary of a Potential Change of Control, so long
as the Board has not determined that it is reasonably
certain that a Change of Control will in fact be
consummated as a result of the Potential Change of
Control or any subsequent event, and (b) the date on
which it first becomes reasonably certain that a Change
of Control will not be consummated as a result of the
Potential Change of Control or any subsequent event, as
determined by the Board of Directors of the Company or
its delegee, the Company, at its written request to the
Trustee, shall be entitled to have the Change of
Control Contribution, as adjusted for gains and losses,
returned. Trustee shall have no duty or obligation to
make such determination or review the Company's
determination with regard to the occurrence or status
of a Potential Change of Control.
11.3 Following a Change of Control, the Company
shall not be permitted to remove the Trustee or the
Trustee's Agent for three years. During this three-
year period, in the event of the fraud, gross
negligence or willful misconduct of the Trustee or the
Trustee's Agent, the Company shall be permitted to
apply to a court of competent jurisdiction for
replacement of such Trustee or Trustee's Agent. All
fees charged by the Trustee and the Trustee's Agent
during this three-year period must be customary for
similar accounts of Trustee or Trustee's Agent, as the
case may be. If the Trustee or Trustee's Agent resigns
during this three-year period, the appointment by the
Company of a new Trustee or Trustee's Agent would be
subject to approval by a majority in interest of all
affected Participants.
ARTICLE XII
12.1 This Agreement shall be construed and
interpreted under, and the Trust hereby created shall
be governed by, the laws of the State of Illinois
insofar as such laws do not contravene any applicable
Federal laws, rules or regulations.
12.2 Neither the gender nor the number (singular or
plural) of any word shall be construed to exclude
another gender or number when a different gender or
number would be appropriate.
12.3 No right or interest of any Participant under
a Plan in either Fund shall be transferable or
assignable, except by will or the laws of descent and
distribution, or shall be subject to alienation,
anticipation or encumbrance, and no right or interest
of any Participant or Beneficiary in any Plan or in
either Fund shall be subject to any garnishment,
attachment or execution. A Participant may designate in
writing a Beneficiary of such Participant's right or
interest in the event of his or her death in accordance
with the terms of the relevant Plan. Notwithstanding
the foregoing, the Trust Property shall at all times
remain subject to claims of creditors of the Company in
the event the Company is adjudicated to be bankrupt or
insolvent as provided herein and Participants and
Beneficiaries shall have no claims to either Fund
superior to that of any other unsecured creditors in
such event.
12.4 The Company agrees that by the establishment
of this Trust it hereby forgoes any judicial review of
certifications by the Trustee's Agent as to the benefit
payable to any persons hereunder. If a dispute arises
as to the amounts or timing of any such benefits or the
persons entitled thereto under a Plan or this
Agreement, the Company agrees that such dispute shall
be resolved by binding arbitration proceedings
initiated in accordance with the rules of the American
Arbitration Association and that the results of such
proceedings shall be conclusive and shall not be
subject to judicial review. It is expressly understood
that pending the resolution of any such dispute,
payment of benefits shall be made and continued (except
in the event of the Company's insolvency) by the
Trustee in accordance with the certification of the
Trustee's Agent and that the Trustee and the Trustee's
Agent shall have no liability with respect to such
payments. The Company also agrees to pay the entire
cost of any arbitration or legal proceeding including
the legal fees of the Trustee, the Trustee's Agent and
the Plan Participant or the Beneficiary of any deceased
Plan Participant regardless of the outcome of any such
proceeding and until so paid the expenses thereof shall
be a charge on and lien against the Funds.
12.5 This Agreement shall be binding upon and inure
to the benefit of any successor to the Company or its
business as the result of merger, consolidation,
reorganization, transfer of assets or otherwise and any
subsequent successor thereto. In the event of any such
merger, consolidation, reorganization, transfer of
assets or other similar transaction, the successor to
the Company or its business or any subsequent successor
thereto shall promptly notify the Trustee and Trustee's
Agent in writing of its successorship and furnish the
Trustee and the Trustee's Agent with the information
specified in Section 4.1 of this Agreement. In no
event shall any such transaction described herein
suspend or delay the rights of Plan Participants or the
Beneficiaries of deceased Participants to receive
benefits hereunder.
12.6 This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original, but all of which shall together constitute
only one Agreement.
12.7 Communications to the Trustee shall be sent to
The Northern Trust Company, 00 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 or to such other address as the
Trustee may specify in writing. Communications to the
Trustee's Agent shall be sent to Buck Consultants,
Inc., Xxx Xxxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-
4798 or to such other address as the Trustee's Agent
may specify in writing. No communication shall be
binding upon the Trustee or Trustee's Agent until it is
received by the Trustee or Trustee's Agent.
Communications to the Company shall be sent to the
Company's principal offices or to such other address as
the Company may specify in writing.
12.8 In the event any Participant or his
Beneficiary is determined to be subject to Federal
income tax on any amount to the credit of his Account
under this Agreement prior to the time of payment
hereunder, the entire amount so taxable shall be
distributed by the Trustee as of the next Valuation
Date to such Participant or Beneficiary. Such
distribution shall be at the direction of the Company
or the Trustee's Agent upon receipt of documentation
from the Company or the Trustee's Agent indicating that
an amount to the credit of a Participant's account is
subject to Federal income tax. 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 counsel, satisfactory to the Company,
addressed to the Company, the Trustee and the Trustee's
Agent, 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' Accounts 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 costs 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 either Fund to a Participant or Beneficiary under
this Section 12.8 shall be applied in accordance with
the provisions of the relevant Plan or Plans to reduce
Company liabilities to such Participant and/or
Beneficiary under such Plan or Plans; 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 the relevant Plan or
Plans.
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Agreement to be duly executed and their
respective corporate seals to be hereto affixed this
1st day of November, 1998.
Attest: THE NORTHERN TRUST COMPANY
By_____________________________
Its Vice President
Attest: SCHERING-PLOUGH CORPORATION
By_____________________________
Its Vice President
Attest: BUCK CONSULTANTS, INC.
By____________________________
Its
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