T R U S T A G R E E M E N T
------------------------------
THIS AGREEMENT OF TRUST (the "Agreement") effective the 1st day of
September, 1998, by and between SEQUA CORPORATION (the "Company"), and VANGUARD
FIDUCIARY TRUST COMPANY, a trust company incorporated under Chapter 10 of the
Pennsylvania Banking Code (the "Trustee"),
WITNESSETH
WHEREAS, the Company has adopted and is maintaining the CHROMALLOY
INCENTIVE SAVINGS PLAN FOR SALARIED EMPLOYEES / SEQUA THRIFT PLAN (the "Plan")
for the exclusive benefit of its Employees; and
WHEREAS, the CRISP / STP PLAN ADMINISTRATIVE COMMITTEE (the "Plan
Administrator") is the fiduciary named in the Plan as having the authority to
control and manage the operation and administration of the Plan;
WHEREAS, the Company and the Trustee deem it necessary and desirable to
enter into a written agreement of trust;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree and
declare as follows:
ARTICLE I
ESTABLISHMENT OF THE TRUST
Section 1.1. The Company and the Trustee hereby agree to the
establishment of a trust consisting of such sums as shall from time to time be
paid to the Trustee under the Plan and such earnings, income and appreciation as
may accrue thereon, which, less payments made by the Trustee to carry out the
purposes of the Plan, are referred to herein as the "Fund". The Trustee shall
carry out the duties and responsibilities herein specified, but shall be under
no duty to determine whether the amount of any contribution by the Company or
any Participant is in accordance with the terms of the Plan nor shall the
Trustee be responsible for the collection of any contributions required under
the Plan. Notwithstanding the above, the Trustee shall calculate certain Company
matching contributions under the Plan according to the directions provided by
the Plan Administrator.
Section 1.2. The Fund shall be held, invested, reinvested and
administered by the Trustee in accordance with the terms of the Plan and this
Agreement solely in the interest of Participants and their Beneficiaries and for
the exclusive purpose of providing benefits to Participants and their
Beneficiaries and defraying reasonable expenses of administering the Plan.
Forfeitures under the Plan shall be used to reduce Company matching
contributions in accordance with the Plan document. Except as provided in
Section 5.2, no assets of the Plan shall inure to the benefit of the Company.
Section 1.3. The Trustee shall pay benefits and expenses from the Fund
only upon the written direction of the Plan Administrator. The Trustee may issue
such benefits under the Plan through an automated distribution system which
shall be programmed to distribute benefits according to the procedures furnished
by the Plan Administrator. The Trustee shall be fully entitled to rely on such
directions furnished by the Plan Administrator, and shall be under no duty to
ascertain whether the directions are in accordance with the provisions of the
Plan
ARTICLE II
INVESTMENT OF THE FUND
Section 2.1. The Company shall have the exclusive authority and
discretion to select the investment funds ("Investment Funds") available for
investment under the Plan. In making such selection, the Company shall use the
care, skill, prudence and diligence under the circumstances then prevailing that
a prudent person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims. The
available investments under the Plan shall be sufficiently diversified so as to
minimize the risk of large losses, unless under the circumstances it is clearly
prudent not to do so. The Company shall notify the Trustee in writing of the
selection of the Investment Funds currently available for investment under the
Plan, and any changes thereto.
Pg. 2
Section 2.2. Each Participant shall have the exclusive right, in
accordance with the provisions of the Plan, to direct the investment by the
Trustee of all amounts allocated to the separate accounts of the Participant
under the Plan among any one or more of the available Investment Funds. All
investment directions by Participants shall be timely furnished to the Trustee
by the Plan Administrator, except to the extent such directions are transmitted
telephonically or otherwise by Participants directly to the Trustee or its
delegate in accordance with rules and procedures established and approved by the
Plan Administrator and communicated to the Trustee. In making any investment of
the assets of the Fund, the Trustee shall be fully entitled to rely on such
directions furnished to it by the Plan Administrator or by Participants in
accordance with the Plan Administrator's approved rules and procedures, and
shall be under no duty to make any inquiry or investigation with respect
thereto. If the Trustee receives any contribution under the Plan that is not
accompanied by instructions directing its investment, the Trustee shall
immediately notify the Plan Administrator of that fact, and the Trustee may, in
its discretion, hold or return all or a portion of the contribution uninvested
without liability for loss of income or appreciation pending receipt of proper
investment directions. Otherwise, it is specifically intended under the Plan and
this Agreement that the Trustee shall have no discretionary authority to
determine the investment of the assets of the Fund.
Section 2.3. Subject to the provisions of Sections 2.1 and 2.2, the
Trustee shall have the authority, in addition to any authority given by law, to
exercise the following powers in the administration of the Trust:
(a) to invest and reinvest all or a part of the Fund in
accordance with Participants' investment directions in any
available Investment Fund selected by the Company without
restriction to investments authorized for fiduciaries, including,
without limitation on the amount that may be invested therein,
any common, collective or commingled trust fund maintained by the
Trustee. Any investment in, and any terms and conditions of, any
common, collective or commingled trust fund available only to
employee trusts which meets the requirements of the Internal
Revenue Code of 1986, as amended (the "Code"), or corresponding
provisions of subsequent income tax laws of the United States,
shall constitute an integral part of this Agreement and the Plan;
Pg. 3
(b) to dispose of all or any part of the investments,
securities, or other property which may from time to time or at
any time constitute the Fund in accordance with the investment
directions by Participants furnished to it pursuant to Section
2.2 or the written directions by the Plan Administrator furnished
to it pursuant to Section 1.3, and to make, execute and deliver
to the purchasers thereof good and sufficient deeds of conveyance
therefor, and all assignments, transfers and other legal
instruments, either necessary or convenient for passing the title
and ownership thereto, free and discharged of all trusts and
without liability on the part of such purchasers to see to the
application of the purchase money;
(c) to hold cash uninvested to the extent necessary to pay
benefits or expenses of the Plan;
(d) to cause any investment of the Fund to be registered in
the name of the Trustee or the name of its nominee or nominees or
to retain such investment unregistered or in a form permitting
transfer by delivery; provided that the books and records of the
Trustee shall at all times show that all such investments are
part of the Fund;
(e) except as provided further in Article IV hereof with
respect to shares of common stock of the Company ("Company
Stock") that are held by the Fund, to vote in person or by proxy
with respect to all mutual fund shares which are held by the Plan
solely in accordance with directions furnished to it by the
Company, and to vote in person or by proxy with respect to all
other securities credited to a Participant's separate accounts
under the Plan solely in accordance with directions furnished to
it by the Participant;
(f) upon the written direction of the Plan Administrator, to
apply for, purchase, hold or transfer any life insurance, retirement
income, endowment or annuity contract;
(g) to consult and employ any suitable agent to act on behalf
of the Trustee and to contract for legal, accounting, clerical and
other services deemed necessary by the Trustee to manage and
administer the Fund according to the terms of the Plan and this
Agreement;
(h) upon the written direction of the Plan Administrator, to
make loans from the Fund to Participants in amounts and on terms
approved by the Plan Administrator in accordance with the
provisions of the Plan; provided that the Plan Administrator
shall have the responsibility for collecting all loan repayments
required to be made under the Plan and for furnishing the Trustee
with copies of all promissory notes evidencing such loans; and
Pg. 4
(i) to pay from the Fund all taxes imposed or levied with
respect to the Fund or any part thereof under existing or future
laws, and to contest the validity or amount of any tax,
assessment, claim or demand respecting the Fund or any part
thereof.
Section 2.4. Except as may be authorized by regulations promulgated by
the Secretary of Labor, the Trustee shall not maintain the indicia of ownership
in any assets of the Fund outside of the jurisdiction of the district courts of
the United States.
ARTICLE III
DUTIES AND RESPONSIBILITIES
Section 3.1. The Trustee, the Company and the Plan Administrator shall
each discharge their assigned duties and responsibilities under this Agreement
and the Plan solely in the interest of Participants and their Beneficiaries in
the following manner:
(a) for the exclusive purpose of providing benefits to
Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan;
(b) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
(c) by diversifying the available investments under the Plan
so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(d) in accordance with the provisions of the Plan and this
Trust Agreement insofar as they are consistent with the
provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
Pg. 5
Section 3.2. The Trustee shall keep full and accurate accounts of all
receipts, investments, disbursements and other transactions hereunder, including
such specific records as may be agreed upon in writing between the Company and
the Trustee. All such accounts, books and records shall be open to inspection
and audit at all reasonable times by any authorized representative of the
Company or the Plan Administrator. A Participant may examine only those
individual account records pertaining directly to him.
Section 3.3. Within 120 days after the end of each Plan Year or within
120 days after its removal or resignation, the Trustee shall file with the Plan
Administrator a written account of the administration of the Fund showing all
transactions effected by the Trustee subsequent to the period covered by the
last preceding account to the end of such Plan Year or date of removal or
resignation and all property held at its fair market value at the end of the
accounting period. Upon approval of such accounting by the Plan Administrator,
neither the Company nor the Plan Administrator shall be entitled to any further
accounting by the Trustee. The Plan Administrator may approve such accounting by
written notice of approval delivered to the Trustee or by failure to express
objection to such accounting in writing delivered to the Trustee within 90 days
from the date on which the accounting is delivered to the Plan Administrator.
Section 3.4. In accordance with the terms of the Plan, the Trustee shall
open and maintain separate accounts in the name of each Participant in order to
record all contributions by or on behalf of the Participant under the Plan and
any earnings, losses and expenses attributable thereto. The Plan Administrator
shall furnish the Trustee with written instructions enabling the Trustee to
allocate properly all contributions and other amounts under the Plan to the
separate accounts of Participants. In making such allocation, the Trustee shall
be fully entitled to rely on the instructions furnished by the Plan
Administrator and shall be under no duty to make any inquiry or investigation
with respect thereto.
Section 3.5. The Trustee shall furnish each Participant with statements
quarterly, reflecting the current fair market value of the Participant's
separate Accounts under the Plan and any transactions which occurred during the
previous quarter.
Section 3.6. The Trustee shall not be required to determine the facts
concerning the eligibility of any Participant to participate in the Plan, the
amount of benefits payable to any Participant or Beneficiary under the Plan, or
the date or method of payment or disbursement. The Trustee shall be fully
entitled to rely solely upon the written advice and directions of the Plan
Administrator as to any such question of fact.
Pg. 6
Section 3.7. Unless resulting from the Trustee's negligence, willful
misconduct, lack of good faith, or breach of its fiduciary duties under this
Agreement or ERISA, the Company shall indemnify and save harmless the Trustee
from, against, for and in respect of any and all damages, losses, obligations,
liabilities, liens, deficiencies, costs and expenses, including without
limitation, reasonable attorney's fees incident to any suit, action,
investigation, claim or proceedings suffered, sustained, incurred or required to
be paid by the Trustee in connection with the Plan or this Agreement.
ARTICLE IV
VOTING AND OTHER RIGHTS OF COMPANY STOCK
Section 4.1. Each Participant (or Beneficiary of a deceased Participant)
shall have the right to direct the Trustee as to the manner of voting and the
exercise of all other rights which a shareholder of record has with respect to
shares (and fractional shares) of Company Stock which have been allocated to the
Participant's separate account in the Company Stock Fund (including, but not
limited to the right to sell or retain shares in a public or private tender
offer). Upon receipt of instructions from Participants, the Trustee shall vote
or exercise the right with respect to such stock in accordance with Participant
instructions. All shares (and fractional shares) of Company Stock in the Company
Stock Fund for which the Trustee has not received timely voting or exercise
directions shall be voted or exercised by the Trustee in the same proportion
that the shares (and fractional shares) of Company Stock in the Company Stock
Fund for which the Trustee received timely voting or exercise directions from
Participants are to be voted or exercised, except in the case where the Trustee
determines that to do so would be inconsistent with the provisions of Title I of
ERISA. Notwithstanding anything herein to the contrary, in the event of a tender
offer for Company Stock, the Trustee shall not tender any shares (or fractional
shares) of Company Stock in the Company Stock Fund for which it does not receive
timely directions to tender such shares (or fractional shares) from
Participants, except in the case where the Trustee determines that to do so
would be inconsistent with the provisions of Title I of ERISA.
Pg. 7
ARTICLE V
APPOINTMENT OF INVESTMENT MANAGERS
Section 5.1. The Plan Administrator may appoint one or more Investment
Managers with respect to some or all of the assets of the Fund as contemplated
by section 402(c)(3) of ERISA. Any such investment manager shall acknowledge to
the Plan Administrator in writing that it accepts such appointment and that it
is an ERISA fiduciary with respect to the Plan and the Fund. The Plan
Administrator shall provide the Trustee with a copy of the written agreement
(and any amendments thereto) between the Plan Administrator and the Investment
manager. By notifying the Trustee of the appointment of an Investment Manager,
the Plan Administrator shall be deemed to certify that such Investment Manager
meets the requirements of section 3(38) of ERISA. The authority of the
Investment Manager shall continue until the Plan Administrator rescinds the
appointment or the Investment Manager has resigned.
Section 5.2. The assets with respect to which a particular Investment
Manager has been appointed shall be specified by the Plan Administrator and
shall be segregated in a separate account for the Investment Manager (the
"Separate Account") and the Investment Manager shall have the power to direct
the Trustee in every aspect of the investment of the assets of the Separate
Account. The Investment Manager shall be responsible for making any proxy voting
or tender offer decisions with respect to securities held in the Separate
Account and the Investment Manager shall maintain a record of the reasons for
the manner in which it voted proxies or responded to tender offers. The Trustee
shall not be liable for the acts or omissions of an Investment manager and shall
have no liability or responsibility for acting or not acting pursuant to the
direction of, or failing to act in the absence of, any direction from an
Investment Manager, unless the Trustee knows that by such action or failure to
act it would be itself committing a breach of fiduciary duty or participating in
a breach of fiduciary duty by such Investment Manager, it being the intention of
the parties that the Trustee shall have the full protection of section 405(d) of
ERISA.
ARTICLE VI
PROHIBITION OF DIVERSION
Section 6.1. Except as provided in Section 6.2 of this Article, at no
time prior to the satisfaction of all liabilities with respect to Participants
and their Beneficiaries under the Plan shall any part of the corpus or income of
the Fund be used for, or diverted to, purposes other than for the exclusive
benefit of Participants or their Beneficiaries, or for defraying reasonable
expenses of administering the Plan.
Pg. 8
Section 6.2. The provisions of Section 6.1 notwithstanding,
contributions made by the Company under the Plan may be returned to the Company
under the following conditions:
(a) If a contribution is made by mistake of fact, such
contribution may be returned to the Company within one year of the
payment of such contribution;
(b) Contributions to the Plan are specifically conditioned
upon their deductibility under the Code. To the extent a deduction is
disallowed for any such contribution, it may be returned to the
Company within one year after the disallowance of the deduction.
Contributions which are not deductible in the taxable year in which
made but are deductible in subsequent taxable years shall not be
considered to be disallowed for purposes of this subsection; and
(c) Contributions to the Plan are specifically conditioned on
initial qualification of the Plan under the Code. If the Plan is
determined to be disqualified, contributions made in respect of any
period subsequent to the effective date of such disqualification may
be returned to the Company within one year after the date of denial
of qualification.
Pg. 9
ARTICLE VII
COMMUNICATION WITH PLAN ADMINISTRATOR AND COMPANY
Section 7.1. Whenever the Trustee is permitted or required to act upon
the directions or instructions of the Plan Administrator, the Trustee shall be
entitled to act upon any written communication signed by any person or agent
designated to act as or on behalf of the Plan Administrator. Such person or
agent shall be so designated either under the provisions of the Plan or in
writing by the Company and their authority shall continue until revoked in
writing. The Trustee shall incur no liability for failure to act on such
person's or agent's instructions or orders without written communication, and
the Trustee shall be fully protected in all actions taken in good faith in
reliance upon any instructions, directions, certifications and communications
believed to be genuine and to have been signed or communicated by the proper
person.
Section 7.2. The Company shall notify the Trustee in writing as to the
appointment, removal or resignation of any person designated to act as or on
behalf of the Plan Administrator. After such notification, the Trustee shall be
fully protected in acting upon the directions of, or dealing with, any person
designated to act as or on behalf of the Plan Administrator until it receives
notice to the contrary. The Trustee shall have no duty to inquire into the
qualifications of any person designated to act as or on behalf of the Plan
Administrator.
ARTICLE VIII
TRUSTEE'S COMPENSATION
Section 8.1. The Trustee shall be entitled to reasonable compensation
for its services as is agreed upon with the Company. If approved by the Plan
Administrator, the Trustee shall also be entitled to reimbursement for all
direct expenses properly and actually incurred on behalf of the Plan. Such
compensation or reimbursement shall be paid to the Trustee out of the Fund
unless paid directly by the Company.
Pg. 10
ARTICLE IX
RESIGNATION AND REMOVAL OF TRUSTEE
Section 9.1. The Trustee may resign at any time by written notice to the
Company which shall be effective 30 days after delivery unless prior thereto a
successor trustee shall have been appointed.
Section 9.2. The Trustee may be removed by the Company at any time upon
30 days written notice to the Trustee; such notice, however, may be waived by
the Trustee.
Section 9.3. The appointment of a successor trustee hereunder shall be
accomplished by and shall take effect upon the delivery to the resigning or
removed Trustee, as the case may be, of written notice of the Company appointing
such successor trustee, and an acceptance in writing of the office of successor
trustee hereunder executed by the successor so appointed. Any successor trustee
may be either a corporation authorized and empowered to exercise trust powers or
one or more individuals. All of the provisions set forth herein with respect to
the Trustee shall relate to each successor trustee so appointed with the same
force and effect as if such successor trustee had been originally named herein
as the Trustee hereunder. If within 30 days after notice of resignation shall
have been given under the provisions of this article a successor trustee shall
not have been appointed, the resigning Trustee or the Company may apply to any
court of competent jurisdiction for the appointment of a successor trustee.
Section 9.4. Upon the appointment of a successor trustee, the resigning
or removed Trustee shall transfer and deliver the Fund to such successor
trustee, after reserving such reasonable amount as it shall deem necessary to
provide for its expenses in the settlement of its account, the amount of any
compensation due to it and any sums chargeable against the Fund for which it may
be liable. If the sums so reserved are not sufficient for such purposes, the
resigning or removed Trustee shall be entitled to reimbursement for any
deficiency from the successor trustee and the Company who shall be jointly and
severally liable therefor.
Pg. 11
ARTICLE X
INSURANCE COMPANIES
Section 10.1. If any contract issued by an insurance company shall form
a part of the Trust assets, the insurance company shall not be deemed a party to
this Agreement. A certification in writing by the Trustee as to the occurrence
of any event contemplated by this Agreement or the Plan shall be conclusive
evidence thereof and the insurance company shall be protected in relying upon
such certification and shall incur no liability for so doing. With respect to
any action under any such contract, the insurance company may deal with the
Trustee as the sole owner thereof and need not see that any action of the
Trustee is authorized by this Agreement or the Plan. Any change made or action
taken by an insurance company upon the direction of the Trustee shall fully
discharge the insurance company from all liability with respect thereto, and it
need not see to the distribution or further application of any moneys paid by it
to the Trustee or paid in accordance with the direction of the Trustee.
ARTICLE XI
AMENDMENT AND TERMINATION OF THE TRUST AND PLAN
Section 11.1. The Company may, by delivery to the Trustee of an
instrument in writing, amend, terminate or partially terminate this Agreement at
any time; provided, however, that no amendment shall increase the duties or
liabilities of the Trustee without the Trustee's consent; and, provided further,
that no amendment shall divert any part of the Fund to any purpose other than
providing benefits to Participants and their Beneficiaries or defraying
reasonable expenses of administering the Plan.
Section 11.2. If the Plan is terminated in whole or in part, or if the
Company permanently discontinues its contributions to the Plan, the Trustee
shall distribute the Fund or any part thereof in such manner and at such times
as the Plan Administrator shall direct in writing. In the absence of receipt of
such written directions within 90 days after the effective date of such
termination, the Trustee shall distribute the Fund in accordance with the
provisions of the Plan.
Pg. 12
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1. Unless the context of this Agreement clearly indicates
otherwise, the terms defined in the Plan shall, when used herein, have the same
meaning as in the Plan.
Section 12.2. Except as otherwise required in the case of any qualified
domestic relations order within the meaning of Section 414(p) of the Code, the
benefits or proceeds of any allocated or unallocated portion of the assets of
the Fund and any interest of any Participant or Beneficiary arising out of or
created by the Plan either before or after the Participant's retirement shall
not be subject to execution, attachment, garnishment or other legal or judicial
process whatsoever by any person, whether creditor or otherwise, claiming
against such Participant or Beneficiary. No Participant or Beneficiary shall
have the right to alienate, encumber or assign any of the payments or proceeds
or any other interest arising out of or created by the Plan and any action
purporting to do so shall be void. The provisions of this Section shall apply to
all Participants and Beneficiaries, regardless of their citizenship or place of
residence.
Section 12.3. Nothing contained in this Agreement or in the Plan shall
require the Company to retain any Employee in its service.
Section 12.4. Any person dealing with the Trustee may rely upon a copy
of this Agreement and any amendments thereto certified to be true and correct by
the Trustee.
Section 12.5. The Trustee hereby acknowledges receipt of a copy of the
Plan. The Company will cause a copy of any amendment to the Plan to be delivered
to the Trustee.
Section 12.6. The construction, validity and administration of this
Agreement and the Plan shall be governed by the laws of the Commonwealth of
Pennsylvania, except to the extent that such laws have been specifically
superseded by ERISA.
Pg. 13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Attest: SEQUA CORPORATION
By: /s/ Xxxx Xxxxxxxxxx
---------------------------
Title: Director of Compensation
and Benefits
---------------------------
Attest: VANGUARD FIDUCIARY TRUST COMPANY
By:
---------------------------
Title: Secretary
---------------------------