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SAGE INSURANCE GROUP
RABBI TRUST AGREEMENT
Effective May 6, 1999
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TABLE OF CONTENTS
Section Page
I Establishment Of Trust................................................................................................1
2. Payments to Plan Participants and their Beneficiaries................................................................2
3. Trustee Responsibility regarding payments to Trust Beneficiary When Company
Is Insolvent.........................................................................................................2
4. Payments to Company..................................................................................................4
5. Investment Authority.................................................................................................4
6. Disposition of Income................................................................................................4
7. Accounting by Trustee................................................................................................5
8. Responsibility of Trustee............................................................................................5
9. Compensation and Expenses of Trustee.................................................................................5
10. Resignation and Removal of Trustee..................................................................................6
11. Appointment of Successor............................................................................................6
12. Amendment or Termination............................................................................................6
13. Miscellaneous.......................................................................................................7
14. Effective Date......................................................................................................7
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SAGE INSURANCE GROUP
RABBI TRUST AGREEMENT
This Agreement, made and declared this 6th of May, 1999, by Sage Insurance
Group, Inc. ("Company"), a Delaware corporation with its office and principal
place of business in Stamford, Connecticut, and Central Bank & Trust Co., a
banking corporation with its office and principal place of business in
Lexington, Kentucky ("Trustee").
The Company has adopted the non-qualified deferred compensation Plan for the
benefit of eligible employees. Company has incurred or expects to incur
liability under the terms of such Plan with respect to the individuals
participating in such Plan. The Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the Trust assets that shall be held
therein, subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan.
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 plan
maintained for the purpose of providing deferred compensation for a select group
of management or highly compensated employees for purposes of Title I of the
Employee Retirement Income Security Act of 1974.
It is the intention of Company to make contributions to the Trust to provide
itself with a source of funds to assist it in the meeting of its liabilities
under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
1. ESTABLISHMENT OF TRUST. The Company will make an initial deposit in trust,
which shall become the initial principal of the. Trust to be held, administered
and disposed of by Trustee as provided in this Trust Agreement.
(a) The Trust shall become irrevocable upon issuance of a favorable private
letter ruling regarding the Trust from the Internal Revenue Service.
(b) The Trust is intended to be a grantor trust, of which Company is the
grantor, within the meaning of subpart E, part 1, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(c) The principal of the Trust, and any earnings thereon shall be held separate
and apart from other funds of Company and shall be used exclusively for the uses
and purposes of Plan participants and general creditors as herein set forth.
Plan participants and their 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 Plan participants and their beneficiaries against Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency.
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(d) The Company, in its sole discretion, may at any time, or from time to time,
make additional deposits of cash or other property in trust with Trustee to
augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the "Payment Schedule") that
indicates the amounts payable in respect of each Plan participant (and his or
her beneficiaries), that provides a formula or other instructions acceptable to
Trustee for determining the amounts so payable, the form in which such amount is
to be paid (as provided for or available under the Plan, and the time
commencement for payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the 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 a Plan participant or his or her beneficiaries to
benefits under the Plan shall be determined by Company or such party as it shall
designate under the Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Plan participants or their
beneficiaries as they become due under the terms of the Plan. Company shall
notify Trustee of its decision to make payment of benefits directly prior to the
time amounts are payable to participants or their beneficiaries. In addition, if
the principal of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Plan, Company shall
make the balance of each such payment as it falls due. Trustee shall notify
Company where principal and earnings are not sufficient.
3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS To TRUST BENEFICIARY WHEN COMPANY
IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and their
beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this trust Agreement if Company is unable to pay its
debts as they become due, or 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 I
(d) hereof, the principal and income of the Trust shall be subject to claims of
general creditors of 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 Trustee in writing of Company's Insolvency. If a person
claiming to be a creditor of Company alleges in writing to Trustee that Company
has become Insolvent, Trustee
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shall determine whether Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or their
beneficiaries.
(2) Unless Trustee has actual knowledge of Company's Insolvency, or has received
notice from Company or a person claiming to be a creditor alleging that Company
is Insolvent, Trustee shall have no duty to inquire whether Company is
Insolvent. Trustee may in all events rely on such evidence concerning Company's
solvency as may be furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is Insolvent, Trustee
shall discontinue payments to Plan participants or their beneficiaries and shall
hold the assets of the Trust for the benefit of Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any rights of Plan
participants or their beneficiaries to pursue their rights as general creditors
of Company with respect to benefits due under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Plan participants or their
beneficiaries in accordance with Section 2 of this Trust Agreement only after
Trustee has determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues the
payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
4. PAYMENTS TO COMPANY. Except as provided in Section 3 hereof, after the Trust
has become irrevocable, Company shall have no right or power to direct Trustee
to return to Company or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan participants and their beneficiaries
pursuant to the terms of the Plan.
5. INVESTMENT AUTHORITY.
(a) In no event may Trustee invest in securities (including stock or rights to
acquire stock) or obligations issued by Company, other than a de minimis amount
held in common investment vehicles in which Trustee invests. 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 Plan
participants.
(b) The Trustee shall invest and reinvest the principal and income of the Trust
Fund and keep the Trust Fund invested in accordance with the funding policy
established by the Company. In so investing the Trust Fund the Trustee shall
invest and reinvest, without distinction between principal and income, in such
securities or in such property, real or personal, wherever situated, as the
Trustee shall deem advisable, including, but not limited to, stocks (whether
common or
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preferred), bonds, debentures, mortgages and other evidences of indebtedness or
ownership, or common trust funds, or in a mutual fund or group annuities with
legal reserve life insurance companies.
(c) The Trustee shall be permitted to invest the Trust Fund in savings accounts,
passbook accounts, time deposit accounts or certificates of deposit which bear a
reasonable interest rate and are maintained, or issued, by it as a banking
organization to the extent it is prudent to do so or to the extent investments
of such nature are otherwise required under the Plan.
(d) The Trustee may sell or write options or calls on securities held in the
Trust Fund or sell or write other forms of options related to any such call
options outstanding and may enter into stand-by agreements for future
investments, either with or without stand-by fee, or otherwise dispose of any
securities or other property at any time held by it.
(e) No Investment in Assets Outside Jurisdiction of U. S. District Courts. No
investments shall be made in any assets the indicia of ownership of which is
outside the jurisdiction of the District Courts of the United States.
6. DISPOSITION OF INCOME. During the term of this Trust, all income received by
the Trust, net of expenses and taxes, shall be accumulated and reinvested.
7. ACCOUNTING By TRUSTEE. 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 Company and Trustee. Within 120 days following the close of each
calendar year and within 30 days after the removal or resignation of Trustee,
Trustee shall deliver to 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.
8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that Trustee shall incur no
liability to any person for any action taken pursuant to a direction, request or
approval given by Company which is contemplated by, and in conformity with, the
terms of the Plan or this Trust and is given in writing by Company. In the event
of a dispute between Company and a party, Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in connection with
this Trust, Company agrees to indemnify Trustee against Trustee's costs,
expenses and liabilities (including, without limitation, reasonable attorneys'
fees and expenses) relating thereto and to be primarily
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liable for such payments. If Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, Trustee may obtain payment from the
Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for Company)
with respect to any of its duties or obligations hereunder.
(d) Trustee shall have, without exclusion, all powers conferred on Trustees by
applicable law, unless expressly provided otherwise herein, provided, however,
that if an insurance policy is held as an asset of the Trust, Trustee shall have
no power to name a beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy.
(e) Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, Trustee shall not have any power that could give
this Trust the objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
9. COMPENSATION AND EXPENSES OF TRUSTEE. Company shall pay all administrative
and Trustee's fees and expenses. if not so paid, the fees and expenses shall be
paid from the Trust.
10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which shall be
effective 20 days after receipt of such notice unless Company and Trustee agree
otherwise.
(b) Trustee may be removed by Company on 10 days notice or upon shorter notice
acceptable by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a successor
Trustee, all assets shall subsequently be transferred to the successor Trustee.
The transfer shall be completed with 30 days after receipt of notice of
resignation, removal or transfer, unless Company extends the time limit.
(d) If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section II hereof, by the effective date of resignation or
removal under paragraph(s) (a) [or (b)] of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section 10(a) or (b)
hereof, Company may appoint any third party, such as a bank trust department or
other party that may be granted corporate trustee powers under state law, as a
successor to replace Trustee upon resignation
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or removal. The appointment shall be effective when accepted in writing by the
new Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust Assets. The former Trustee shall execute
any instrument necessary or reasonably requested by Company or the successor
Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the provisions of Section I
O(e) hereof and selects a successor Trustee, Trustee may appoint any third party
such as a bank trust department or other party that may be granted corporate
trustee powers under state law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new Trustee shall
have all the rights and powers of the form Trustee, including ownership rights
in Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the successor or Trustee to evidence the transfer.
(c) 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 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.
12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument executed by
Trustee and Company. Notwithstanding the foregoing, so such amendment shall
conflict with the terms of the Plan or shall make the Trust revocable after it
has become irrevocable in accordance with Section I(b) hereof
(b) The Trust shall not terminate until the date on which Plan participants and
their beneficiaries are no longer entitled to benefits pursuant to the terms of
the Plan unless sooner revoked in accordance with Section I(b) hereof. Upon
termination of the Trust any assets remaining in the Trust shall be returned to
Company.
(c) Upon written approval of participants or beneficiaries entitled to payment
of benefits pursuant to the terms of the Plan, 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 Company.
13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participant and their 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.
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laws of Kentucky.
(c) This Trust Agreement shall be governed by and construed in accordance with
the
14. EFFECTIVE DATE. The effective date of this Trust Agreement shall be May 6,
1999.
IN TESTIMONY WHEREOF, witness the signatures of the undersigned as of the date
set forth below their signatures.
SAGE INSURANCE GROUP, INC
By: XXXXX X. XXXXXXX
President and CEO
CENTRAL BANK & TRUST CO..
By: XXXXX X. XXXXXX
Vice President Trust Officer
Date Signed: May 6, 1999
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