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Exhibit 10.36
TRUST II, FORM I
Trust Agreement
This Trust Agreement, dated as of this FIRST day of February, 1999
(the "Effective Date"), by and between XXXXX XXXXXX GROUP INC., a Delaware
corporation (hereinafter referred to as "PWG"), and THE CHASE MANHATTAN BANK
(hereinafter referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, PWG has previously established two separate grantor trusts
(respectively, "DCP Trust I" and "DCP Trust II") to fund the obligations of PWG
to [NAME] (the "Executive") under the Xxxxx Xxxxxx Group Inc. Senior Officer's
Deferred Compensation Plan, as amended (the "DCP"), and has separately
established a grantor trust (the "SERP Trust") to fund its obligations to the
Executive under the Xxxxx Xxxxxx Group Inc. Supplemental Employee's Retirement
Plan, as amended (the "SERP");
WHEREAS, as of the Effective Date, the Deferred Compensation
Agreement, a form of which will be delivered to the Trustee reasonably promptly
following the Effective Date (the "Deferred Compensation Agreement"), will
replace for the Executive the DCP and the SERP;
WHEREAS, in order to comply with applicable accounting
standards, PWG
established DCP Trust II to hold shares of common stock, par value $1.00 per
share (the "Common Stock"), resulting from the exercise by the Executive of
options granted prior to July 24, 1997 (a "Grandfathered Option") and any cash
or other assets resulting from the subsequent sale of such shares of Common
Stock;
WHEREAS, PWG now desires to amend and restate DCP Trust II ("Trust
II") to hold the assets previously contributed to Trust II together with any
shares of Common Stock subsequently contributed to Trust II in connection with
the exercise of a Grandfathered Option and the deferral of the profit shares
issued as a result of such exercise, as well as any amounts received upon the
subsequent sale of such shares;
WHEREAS, PWG wishes to establish and maintain Trust II to
continue the
original purpose of DCP Trust II of segregating the assets of DCP Trust II to
comply with the applicable accounting standards;
WHEREAS, effective as of the Effective Date, PWG has amended and
restated the terms of DCP Trust I ("Trust I") to hold the assets of Trust I and
the SERP Trust for the benefit of the Executive and also to hold the periodic
contributions of cash and other assets to Trust II to fund a portion of its
obligations to the Executive under the Deferred Compensation Agreement;
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WHEREAS, the combined assets of Trust I and Trust II shall be used
to satisfy PWG's obligations to the Executive and the Executive's Beneficiary
under the Deferred Compensation Agreement (the "DCA Obligation");
WHEREAS, the Deferred Compensation Agreement requires the
establishment by PWG of a deferred compensation account (the "Account") on its
books and records to record the DCA Obligation;
WHEREAS, PWG desires that the investment return on the assets of
Trust I and Trust II shall be utilized for purposes of calculating the
investment return credited on amounts allocated to the Account; and
WHEREAS, the assets of Trust II shall be held in Trust II subject to
the claims of the creditors of PWG and its Material Subsidiaries in the event of
the Insolvency (as hereinafter defined) of PWG or any such Material Subsidiary
until paid to the Executive or the Executive's Beneficiary in accordance with
the terms of the Deferred Compensation Agreement;
NOW, THEREFORE, the parties do hereby establish Trust II and agree
that Trust II shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) As of the Effective Date, PWG hereby deposits with the Trustee
IN TRUST all of the assets of Trust II, which shall become the principal of
Trust II to be held, administered and disposed by the Trustee as provided in
this Trust Agreement. At the time that PWG is required to credit any additional
amounts to the Account in accordance with the Deferred Compensation Agreement,
PWG shall deposit with the Trustee IN TRUST on the date that such amounts are
credited to the Account an additional amount of cash and other property with a
Fair Market Value equal to the value of the amount so credited. Shares of Common
Stock used by PaineWebber to fund a DCA Obligation arising out of the exercise
of a Grandfathered Option and the deferral of the profit shares associated
therewith shall be contributed to Trust II and not Trust I. If any of the Common
Stock is sold or otherwise disposed of, the assets of Trust II shall also
consist of cash or other property received by Trust II upon such sale or
disposition. The Trustee hereby accepts Trust II established under this Trust
Agreement on the terms and subject to the provisions set forth herein, and it
agrees to discharge and perform fully and faithfully all of the duties and
obligations imposed upon it under this Trust Agreement. Trust II shall be known
as the "[NAME] Deferred Compensation Agreement Trust II."
(b) The assets of Trust II may consist of shares of Common Stock. If
any shares of Common Stock are contributed to Trust II, PWG shall, by virtue of
such contribution, represent that the shares of Common Stock are validly issued,
nonassessable and transferable, subject to the requirements of applicable
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federal and state securities laws. PWG represents that the shares of Common
Stock have been registered on an appropriate form filed with the Securities and
Exchange Commission. PWG shall advise the Trustee of any limitations on sale of
the shares of Common Stock. PWG shall also use its reasonable efforts to
register or qualify such shares of Common Stock covered by such a registration
statement under the "blue sky" or securities laws of jurisdictions within the
United States.
(c) Trust II established hereby is irrevocable by PWG.
(d) Trust II is intended to be a grantor trust, of which PWG is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Code, and shall be construed accordingly.
(e) The principal of Trust II, and any earnings thereon, shall be
held separate and apart from other funds of PWG including, but not limited to,
the assets of Trust I, shall be held IN TRUST by the Trustee and shall be used
exclusively for the purpose of satisfying the DCA Obligation and the obligations
of PWG and its Material Subsidiaries (collectively, the "Companies") to their
general creditors as hereinafter set forth. The Executive and the Executive's
Beneficiary shall have no preferred claim on, or any beneficial ownership
interest in, any assets of Trust II. Any rights created under the Deferred
Compensation Agreement and this Trust Agreement shall be mere unsecured
contractual rights of the Executive and the Executive's Beneficiary against PWG.
Any assets held by Trust II will be subject to the claims of PWG's general
creditors under U.S. federal and state law in the event of Insolvency.
(f) Within ten days following the end of each month while Trust II
is in effect (and as of each Valuation Date if required by the terms of the
Deferred Compensation Agreement), the Trustee shall determine the Fair Market
Value of the assets of Trust II and communicate the results of such valuation to
PWG.
(g) Reasonably promptly following the Effective Date, PWG shall
deliver to the Trustee a copy of the Deferred Compensation Agreement. Following
the occurrence of a Change in Control, the Deferred Compensation Agreement and
any amendments thereto that have been delivered to the Trustee in accordance
with this Section 1(g) shall constitute a part of this Trust Agreement. If the
Deferred Compensation Agreement is amended, PWG shall promptly deliver a copy of
the Deferred Compensation Agreement to the Trustee within ten days of the date
of the amendment. On and after the date the Trustee is notified by PWG, the
Executive or the Executive's Beneficiary of a Change in Control or otherwise has
actual knowledge of the occurrence of a Change in Control (the "Change in
Control Notice Date"), the Trustee shall have an obligation to determine whether
actions undertaken by the Trustee hereunder are consistent with, and do not
violate any of, the terms of the Deferred Compensation Agreement (including,
without limitation, any amendments to the Deferred Compensation Agreement that
have been delivered to the Trustee in accordance with this Section 1(g)), and,
in the event of any conflict between any instruction or direction to the Trustee
from PWG and the Deferred Compensation Agreement, the Trustee shall be
authorized to rely on the terms of the Deferred Compensation Agreement as
reasonably construed by the Trustee. No amendment to the Deferred Compensation
Agreement shall affect in any material respect the duties and obligations of the
Trustee hereunder without the Trustee's prior written consent.
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(h) Capitalized words which are not otherwise defined in this Trust
Agreement have the meanings assigned thereto in the Deferred Compensation
Agreement.
Section 2. Payments to Executive or The Executive's Beneficiary.
(a) PWG shall deliver to the Trustee a payment schedule (the
"Payment Schedule") that indicates the amounts payable to the Executive and the
times at which such amounts are payable. The Committee or any individual to whom
the Committee delegates its responsibility under the Deferred Compensation
Agreement (together with the Committee, the "Administrator") shall determine
whether an event set forth on the Payment Schedule has occurred and shall advise
the Trustee of such event. The Payment Schedule shall be consistent with the
terms of Section 7 of the Deferred Compensation Agreement and shall be delivered
to the Trustee as soon as practicable after the Executive's termination of
employment with PWG or after any other event entitling the Executive or the
Executive's Beneficiary to a payment of amounts credited to the Account. On and
after the Change in Control Notice Date, in the event of any conflict between
the Payment Schedule and the Deferred Compensation Agreement, the Trustee shall
be authorized to rely on the Deferred Compensation Agreement. Except as
otherwise provided herein, the Trustee shall make payments to the Executive and
the Executive's Beneficiary in accordance with such Payment Schedule and Section
2(b) below. The Trustee shall make provisions for the reporting and withholding
of any taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Deferred Compensation Agreement and shall
(i) pay amounts withheld to the appropriate taxing authorities or (ii) remit
such withheld amounts to PWG for payment to the applicable taxing authorities
upon written agreement from PWG that PWG shall be responsible for the applicable
tax reporting and payments.
(b) Subject to the provisions of Sections 2(c), 2(d) and 2(e), on
and after the Change in Control Notice Date, the Trustee shall pay the amounts
due to the Executive and the Executive's Beneficiary in respect of PWG's DCA
Obligation upon receipt of either (i) a Payment Schedule from PWG authorizing
such payment or (ii) an affidavit from the Executive, in substantially the form
of Exhibit A hereto (an "Affidavit"), attesting to the amount of such payment
and setting forth the circumstances giving rise to the obligation to make such
payment under the Deferred Compensation Agreement. The Trustee shall be
authorized to rely on the Payment Schedule, written instructions from PWG or any
such Affidavit, and in the event of a conflict between the written instructions
from PWG and the Affidavit, the provisions of the Affidavit shall be
controlling. Notwithstanding the foregoing, unless the Payment Schedule provides
otherwise, the Trustee shall satisfy payment obligations first from the assets
of Trust I. To the extent the assets of Trust I do not satisfy the payment
obligation, the assets of Trust II shall be used to satisfy such obligation. The
Trustee shall coordinate all payments with the trustee of Trust I to ensure that
no duplicate payments are paid to the Executive or the Executive's Beneficiary.
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(c) To the extent that (i) the Trustee is notified in writing by PWG
that PWG's DCA Obligation has been paid in full and (ii) following the Change in
Control Notice Date, the notice from PWG is confirmed in writing by the
Executive or the Executive's Beneficiary (which confirmation may be waived by
the Trustee if the Trustee determines in good faith after reasonable inquiry
that such confirmation is being unreasonably withheld by the Executive or the
Executive's Beneficiary), then the Trustee shall promptly pay to PWG the then
remaining assets of Trust II.
(d) PWG may make payment of benefits directly to the Executive or
the Executive's Beneficiary as they become due under the terms of Section 7 of
the Deferred Compensation Agreement. In the event any amount referred to in a
Payment Schedule is paid by PWG to the Executive, PWG shall notify the Trustee
in writing of such event. Such notice shall include a Payment Schedule revised
in accordance with such notice and, following the Change in Control Notice Date,
such revised Payment Schedule shall be confirmed in writing by the Executive or
the Executive's Beneficiary (which confirmation may be waived by the Trustee if
the Trustee determines in good faith after reasonable inquiry that such
confirmation is being unreasonably withheld by the Executive or the Executive's
Beneficiary). Upon receipt of such notice, the Trustee shall amend the Payment
Schedule to reduce the amount payable thereunder as set forth in such notice
and, if applicable, confirmed by the Executive or the Executive's Beneficiary
and shall distribute to PWG an amount of assets from Trust II equal to the fair
market value of the amount so paid by PWG; provided, however, that no such
payment shall be made to PWG if such payment would cause the assets of Trust II
to be less than the Account Balance as of the date such payment would otherwise
be due hereunder.
(e) Trust I and Trust II are established as a means of facilitating
the payment of PWG's DCA Obligation. If the principal of Trust I and Trust II
and any earnings thereon are not sufficient to make payments of benefits in
accordance with the terms of the Deferred Compensation Agreement and the Payment
Schedule, PWG shall make the balance of each such payment as it falls due. The
Trustee shall, upon reasonable request, provide the trustee of Trust I with
information concerning the assets of Trust II. The Trustee shall notify PWG
where the principal and earnings of Trust I and Trust II are not sufficient to
satisfy the DCA Obligation. Nothing in this Trust Agreement or in the Payment
Schedule shall be construed in any way as relieving PWG of the DCA Obligation if
the DCA Obligation is not satisfied from the assets of Trust I and Trust II.
(f) Whenever it is contemplated that PaineWebber shall make a
payment or contribution under this Trust Agreement, such payment or contribution
shall be made by PWG or any Subsidiary thereof designated by PWG, but no such
designation by PWG shall in any way relieve PWG of its obligation to make such
payment.
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary when Company is Insolvent.
(a) The Trustee shall cease payment of benefits to the Executive and
the Executive's Beneficiary if PWG or any Material Subsidiary is Insolvent. PWG
or any Material Subsidiary shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) PWG or any Material Subsidiary is unable to pay its debts
as they become due or (ii) PWG or any Material Subsidiary is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code or the
comparable provisions of any other applicable jurisdiction to which PWG is then
subject.
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(b) At all times during the continuance of this Trust II, as
provided in Section 1(e) hereof, the principal and income of Trust II shall be
subject to claims of general creditors of PWG and its Material Subsidiaries
under U.S. federal and state law as set forth below and the laws of any other
applicable jurisdiction to which PWG is then subject.
(1) The Chief Financial Officer of PWG shall have the duty to inform
the Trustee in writing of PWG's or any Material Subsidiary's Insolvency.
If a person claiming to be a creditor of PWG or any Material Subsidiary
alleges in writing to the Trustee that PWG or any Material Subsidiary has
become Insolvent, the Trustee shall promptly determine whether PWG or any
Material Subsidiary is Insolvent and, pending such determination, the
Trustee shall discontinue payment of benefits to the Executive or the
Executive's Beneficiary.
(2) Unless the Trustee has actual knowledge of PWG's or any Material
Subsidiary's Insolvency, or has received notice from PWG or any Material
Subsidiary or a person claiming to be a creditor alleging that PWG or any
Material Subsidiary is Insolvent, the Trustee shall have no duty to
inquire whether PWG or any Material Subsidiary is Insolvent. The Trustee
may in all events rely on such evidence concerning PWG's or any Material
Subsidiary's solvency as may be furnished to the Trustee and that provides
the Trustee with a reasonable basis for making a determination concerning
PWG's or any Material Subsidiary's solvency.
(3) If at any time the Trustee has determined that PWG or any
Material Subsidiary is Insolvent, the Trustee shall discontinue payments
to the Executive or the Executive's Beneficiary and shall hold the assets
of Trust II for the benefit of PWG's or any Material Subsidiary's general
creditors. Nothing in this Trust Agreement shall in any way diminish any
rights of the Executive or the Executive's Beneficiary to pursue their
rights as general creditors of PWG or any Material Subsidiary with respect
to benefits due under the Deferred Compensation Agreement or otherwise.
(4) The Trustee shall resume the payment of benefits to the
Executive or the Executive's Beneficiary in accordance with Section 2 of
this Trust Agreement only after the Trustee has determined that PWG or any
Material Subsidiary is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from Trust II 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 the
Executive or the Executive's Beneficiary under the terms of Section 7 of the
Deferred Compensation Agreement for the period of such discontinuance, less the
aggregate amount of any payments made to the Executive or the Executive's
Beneficiary by PWG under the terms of the Deferred Compensation Agreement in
lieu of the payments provided for hereunder during any such period of
discontinuance.
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(d) As used herein, "Material
Subsidiary" shall mean any significant subsidiary of PWG as
determined in accordance with Regulation S-X under the Securities Exchange Act
of 1934. PWG shall from time to time provide the Trustee with a list of Material
Subsidiaries.
Section 4. Payments to PWG. Except as provided in Sections 2 and 3
above, PWG shall have no right or power to direct the Trustee to return to PWG
or to divert any of the assets of Trust II to any purpose other than the payment
of the DCA Obligation before all payment of benefits has been made to the
Executive and the Executive's Beneficiary pursuant to the terms of the Deferred
Compensation Agreement. Following a determination by the Trustee in accordance
with Sections 2(c) and 2(d) that PWG's DCA Obligation has been paid in full, the
Trustee shall pay to PWG any remaining assets of Trust II, net of any unpaid
Trustee's fees and expenses and a reserve for accrued but unpaid expenses of
Trust II.
Section 5. Investment Authority.
(a) The Trustee shall, upon written instructions received from
an investment
manager appointed by PWG, hold, dispose, invest and reinvest the assets of Trust
II (including the Common Stock), without distinction between principal and
income, in Securities; provided, however, that with respect to the purchase or
sale of Mutual Funds, the Trustee shall be authorized to purchase or sell such
Mutual Funds at the direction of either the Director of Human Resources of
PaineWebber Incorporated or his designee. Notwithstanding the foregoing, in no
event may assets of Trust II be invested in PWG Securities except to the extent
Common Stock has been deposited in Trust II pursuant to Section 1(a). Upon the
prior approval of the Committee, PWG shall have the right at any time, and from
time to time, in its sole discretion, to substitute assets of equal market value
for any Common Stock held by Trust II. The right of PWG to substitute assets
held in Trust II is exercisable by PWG in a nonfiduciary capacity.
(b) Subject to Section 5(a), all rights associated with assets of
Trust II shall be
exercised by the Trustee or the person designated by the Trustee, and shall in
no event be exercisable by or rest with the Executive or the Executive's
Beneficiary.
(c) On and after the Change in Control Notice Date, the Trustee
shall invest the assets of Trust II solely at the direction of one or more
independent investment managers who are unaffiliated with PWG and who are
appointed by PaineWebber and approved in advance by the Executive in writing.
The fees and expenses of such investment managers shall be paid by PWG and not
from the assets of Trust II.
(d) The Trustee shall have the absolute discretion to vote or
abstain from voting the Common Stock with respect to any matters brought before
shareholders. The Committee shall direct the Trustee with respect to the
tendering of the Common Stock held in Trust II.
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(e) When the Trustee delivers Securities against payment, delivery
of the property and receipt of payment may not be simultaneous. Trust II shall
bear the risk of nonreceipt of payment, and the Trustee shall have no liability
therefor, unless such nonreceipt of payment is a result of the Trustee's (or its
officers', directors', employees', nominees' or agents') gross negligence or
willful misconduct. All credits to Trust II of the anticipated proceeds of sales
and redemptions of Securities shall be conditional upon receipt by the Trustee
of final payment and may be reversed to the extent final payment is not
received. At the discretion of the Trustee, Trust II may make use of such
conditional credits. To the extent such credits do not become unconditional by
receipt of final payment, Trust II shall reimburse the Trustee upon demand for
the amount of such conditional credits so used. When the Trustee is to receive
Securities, it is authorized to accept documents in lieu of such Securities as
long as such documents contain the agreement of the issuer thereof to hold such
Securities subject to the Trustee's sole order. The Trustee may, in its
discretion, advance funds to Trust II to facilitate the settlement of any trade.
In the event of such an advance, Trust II shall immediately reimburse the
Trustee for the amount thereof, together with interest at the rate then charged
by the Trustee to similar accounts for similar advances.
(f) When disposing of assets held in Trust II, nothing shall prevent
the
Trustee, upon the direction of the Administrator, from selling such assets to
the Executive or the Executive's Beneficiary for the amount set forth in the
Trust II accounting.
Section 6. Disposition of Income. During the term of Trust II, all
income received by Trust II, net of expenses, shall be accumulated and
reinvested in accordance with the provisions of Section 5.
Section 7. Accounting by Trustee.
(a) (i) The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
PWG and the Trustee. Within ninety days following the close of each calendar
year and within ninety days after the removal or resignation of the Trustee, the
Trustee shall deliver to PWG (and, following the Change in Control Notice Date,
to the Executive or, in the event of the Executive's death, the Executive's
Beneficiary) a written account of its administration of Trust II 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 purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being separate), and
showing all cash, Securities and other property held in Trust II at the end of
such year or as of the date of such removal or resignation, as the case may be.
With respect to any Securities which do not have a readily ascertainable market
value, PWG shall provide the Trustee with periodic valuations of such
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Securities. The valuation method of each valuation report shall be done in a
manner consistent with valuations used by PWG on its inventory of Securities.
The Trustee may conclusively rely upon such valuations of PWG for all purposes
hereunder without inquiry. Following the Change in Control Notice Date, the
appropriate investment manager referred to in Section 5(c) shall be substituted
for PWG for purposes of the three preceding sentences.
(ii) Unless PWG, the Executive or the Executive's Beneficiary shall
have notified the Trustee of exceptions, objections, outstanding claims against
the Trustee or disputed items within 180 days following receipt of an annual
statement of account or final statement of account delivered in accordance with
Section 7(a)(i) above, PWG and the Executive and the Executive's Beneficiary, if
applicable, shall be deemed to have approved such statement of account and the
Trustee shall be relieved and discharged from all matters covered therein. This
Section 7(a)(ii) shall not apply to any matter which the Trustee willfully or
through gross negligence misstates, conceals or omits in the preparation of such
statement of account or to any acts of fraud by the Trustee.
(b) Nothing contained in this Trust Agreement or in the Deferred
Compensation Agreement shall deprive the Trustee of the right to have a judicial
settlement of its accounts. In any proceeding for a judicial settlement of the
Trustee's account or for instructions in connection with Trust II, the only
other necessary parties thereto in addition to the Trustee shall be PWG and the
Executive or the Executive's Beneficiary. No person interested in the Trust,
other than PWG and the Executive or the Executive's Beneficiary, shall have a
right to compel an accounting, judicial or otherwise.
Section 8. Responsibility of Trustee.
(a) The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aim; provided, however, that the
Trustee shall incur no liability to any person for any action taken (i) pursuant
to an Affidavit delivered to the Trustee by the Executive in accordance with
Section 2(b) above or (ii) pursuant to any written direction, request or
approval given by PWG, the Administrator or an investment manager that is in
conformity with the terms of the Deferred Compensation Agreement and this Trust
Agreement.
(b) Subject to Section 9, if the Trustee undertakes or defends any
litigation arising in connection with Trust II, PWG shall indemnify fully the
Trustee against the Trustee's costs, expenses and liabilities (including,
without limitation, attorneys' fees and expenses) relating thereto and shall be
primarily liable for such costs, expenses and liabilities.
(c) The Trustee may consult with legal counsel (who may also be
counsel for PWG generally) with respect to any of its duties or obligations
hereunder. The Trustee may retain and consult with counsel, who may be counsel
for PWG or for the Trustee in its individual capacity, and shall not be deemed
imprudent by reason of its taking or refraining from taking action in reasonable
reliance upon the opinion of such counsel. The Trustee shall not be required to
give any bond or any other security for the faithful performance of its duties
under this Trust Agreement, except as required by law. The Trustee may also
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retain one or more consultants to assist it in the performance of its duties
under the last sentence of Section 1(g) of this Trust Agreement. The Trustee
shall not be liable for any acts or omissions of any such consultant, provided
that the Trustee selects and supervises such consultant in accordance with the
standard of care set forth in Section 8(a) of this Trust Agreement.
(d) The Trustee may hire agents, accountants, actuaries, investment
advisers, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) The 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 Trust II,
the Trustee shall have no power to name a beneficiary of the policy other than
Trust II, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a Successor Trustee (as defined below) or to loan
to any person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or applicable law, the Trustee shall not have any power
that could give Trust II the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section 301.7701-2 of the Procedures
and Administrative Regulations promulgated pursuant to the Code.
(g) The Trustee shall be responsible for such duties as are
specifically set forth as such in this Trust Agreement or as otherwise agreed to
in writing by the Trustee. The Trustee shall not be compelled to take any action
toward the execution or performance of Trust II created hereunder or to
prosecute or defend any suit or claim in respect thereof, unless indemnified to
its satisfaction against loss, liability, and reasonable costs and expenses. The
Trustee shall be under no liability or obligation to anyone with respect to any
failure on the part of PWG to perform any of its obligations under this Trust
Agreement.
(h) PWG shall act in accordance with the Deferred Compensation
Agreement, and, prior to the Change in Control Notice Date, the Trustee shall
not be responsible in any respect for acting in accordance with the Deferred
Compensation Agreement. The Trustee shall not be responsible for the adequacy of
Trust II to meet and discharge all payments and liabilities under the Deferred
Compensation Agreement. Prior to the Change in Control Notice Date, the Trustee
shall be fully protected in relying upon any written notice, certificate,
instruction, direction or other communication of any investment manager
appointed by PWG, the Administrator or other duly authorized officers of PWG
that is not contrary to the express provisions of this Trust Agreement.
(i) The Trustee shall be entitled conclusively to rely upon any
written notice, instruction, direction, certificate or other communication
reasonable believed by it to be genuine and to be signed by the proper person or
persons, and the Trustee shall be under no duty to make investigation or inquiry
as to the truth or accuracy of any statement contained therein.
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(j) In no event shall the Trustee incur liability to any person for
any indirect, consequential or special damages (including, without limitation,
lost profits) of any form, whether or not foreseeable and regardless of the form
of action in which such a claim may be brought, with respect to Trust II or its
role as Trustee, except to the extent that such damages are the result of the
gross negligence or willful misconduct of the Trustee. The foregoing sentence
shall not apply with respect to any such indirect, consequential or special
damages to the extent that such damages are the result of the willful misconduct
or gross negligence of the Trustee to the extent such indirect, consequential or
special damages are otherwise recoverable at law or in equity.
(k) PWG shall pay and shall protect, indemnify and save harmless the
Trustee and its officers, directors or trustees, employees, agents and nominees
from and against any and all losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, damages, reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) of any nature arising from or relating to any action or failure to act
by the Trustee in connection with the transactions contemplated by this Trust
Agreement, except to the extent that any such loss, liability, action, suit,
demand, damage, cost or expense is the result of the gross negligence or willful
misconduct of the Trustee.
(l) For purposes of this Trust Agreement, acts or omissions of the
Trustee shall include those of its directors, trustees, officers, employees,
agents, appointees, nominees, consultants, advisers and assigns.
Section 9. Compensation and Expenses of Trustee.
(a) PWG shall pay (or make available to the Trustee to pay) any
federal, state, local or other taxes (including withholding taxes) imposed or
levied with respect to the corpus or income of Trust II or any part thereof
under existing or future laws, and PWG, in its discretion, may contest the
validity or amount of any transaction cost or any tax assessment, claim or
demand respecting Trust II or any part thereof. The Trustee shall maintain such
records and shall deliver such reports to PWG as may be necessary to permit the
proper allocation of taxes among investments and the proper payment of taxes by
PWG.
(b) PWG shall pay directly (and not from the assets of Trust II) to
the Trustee from time to time such reasonable compensation for its services as
trustee as shall be agreed upon by PWG and the Trustee. Prior to the occurrence
of a Change in Control, PWG shall also pay the reasonable and necessary expenses
(including reasonable fees of counsel engaged by the Trustee pursuant to Section
8(b) of this Trust Agreement) incurred by the Trustee in the performance of its
duties under this Trust Agreement; provided, however, that the aggregate amount
of any legal expenses incurred in any calendar year by the Trustee under Trust
II and any other trust between PWG and the Trustee that is established in whole
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or in part to fund PWG's obligations under the Deferred Compensation Agreement
or any similar agreement with any other executive of PaineWebber and that are
reimbursable to the Trustee under this Section 9(b) or the corresponding section
of each trust agreement entered into by the parties hereto in connection with
any such other trust shall not exceed $5,000, unless (i) the Trustee has
delivered written notice ("Notice") to PWG at least ten business days prior to
the date on which such legal fees or expenses are to be incurred or such other
time as may be agreeable by the parties and (ii) PWG has not notified the
Trustee in writing of its objection to the Trustee incurring such expenses prior
to the expiration of such ten-business-day period. To constitute Notice for
purposes of the previous sentence, the writing from the Trustee to PWG shall
specify in reasonable detail (i) the expenses to be incurred, (ii) the reason or
reasons why the Trustee believes it is necessary to incur such expenses, (iii)
the anticipated amount of such expenses and (iv) the legal counsel who will be
paid any amounts for which reimbursement will be sought by the Trustee under
this Section 9(b). If PWG notifies the Trustee in writing of its objection to
any expenses described in the Notice prior to the expiration of the
ten-business-day period, such expense shall not be reimbursable to the Trustee
either from the assets of Trust II or from PWG, regardless of whether the
Trustee determines to incur such expense. The ten-business-day notice period
described above shall begin on the date the Notice is received by PWG. Any
compensation and expenses which are otherwise reimbursable under this Section
9(b) and which are not paid by PWG may be deducted by the Trustee from the
assets of Trust II. If the Trustee satisfies such obligations out of the assets
of Trust II, PWG shall immediately, upon demand by the Trustee, deposit into
Trust II a sum equal to the amount paid by Trust II.
(c) During the Change in Control Period, PWG shall pay the
reasonable and necessary expenses (including, without limitation, the reasonable
fees and expenses of legal counsel and consultants) incurred by the Trustee in
the performance of its duties under this Trust Agreement.
Section 10. Resignation and Removal of Trustee.
(a) Subject to Section 11, the Trustee may resign at any time by
written notice to PWG, which shall be effective ninety days after receipt of
such notice by PWG, unless PWG and the Trustee agree in writing to a shorter or
longer period. Until such time as a Successor Trustee is duly appointed and
qualified to serve hereunder, such resignation shall not affect (i) the
Trustee's obligations to hold custody of the assets of Trust I, to make payments
contemplated by Section 2 of this Agreement, or to dispose of Securities in
order to make such payments, (ii) the Trustee's obligations or responsibilities
set forth in this Agreement or (iii) the Trustee's rights under Section 9 of
this Agreement.
(b) Subject to Section 11, the Trustee may be removed at any time by
written notice from PWG, which removal shall be effective ninety days after such
notice of removal is delivered to the Trustee by PWG. Such removal shall not be
effective until such time as a Successor Trustee is duly appointed and qualified
to serve hereunder.
(c) Upon the resignation or removal of the Trustee and appointment
of a Successor Trustee, all assets shall subsequently be transferred to the
Successor Trustee. The transfer shall be completed within thirty days after
receipt of notice of resignation, removal or transfer.
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(d) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal. If no such appointment has been made, the Trustee may
apply to a court of competent jurisdiction for appointment of a successor or for
instructions. All expenses of the Trustee in connection with the proceeding
shall be allowed as administrative expenses of Trust II.
(e) The resignation or removal of the Trustee shall not affect its
rights, obligations and privileges under Sections 7 and 8 of this Agreement.
Section 11. Appointment of Successor.
(a) If the Trustee resigns or is removed in accordance with the
provisions of this Trust Agreement, PWG shall appoint a bank or trust company
unaffiliated with PWG or any successor to all or substantially all of the assets
of PWG that has corporate trustee powers under applicable law and which has
trust assets under management at the time of such appointment of at least $10
billion, as a successor to replace the Trustee upon such resignation or removal
(the "Successor Trustee"). The appointment shall be effective when accepted in
writing by the Successor Trustee, which shall have all of the rights and powers
of the former Trustee, including ownership rights in Trust II assets. The former
Trustee shall execute any instrument necessary or reasonably requested by PWG or
the Successor Trustee to evidence the transfer. Following a Change in Control,
the Trustee may not be removed by PWG unless the then current Trustee approves
the Successor Trustee, which approval shall be granted only if the Trustee
reasonably determines that the appointment of the Successor Trustee will not
impair the rights of any Trust II beneficiary under the Deferred Compensation
Agreement and this Trust Agreement.
(b) The Successor Trustee need not examine the records and acts of
any prior Trustee. The Successor Trustee shall not be responsible for and PWG
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.
(c) When Trust II shall have been transferred and delivered to the
Successor Trustee and the accounts of the Trustee have been settled as provided
in Section 7 hereof, the Trustee shall be released and discharged from all
further accountability or liability for Trust II to the extent contemplated by
Section 7 hereof.
Section 12. Amendment or Termination.
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and PWG. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Deferred Compensation Agreement
or shall make Trust II revocable. Following the date of a Change in Control,
this Trust Agreement may not be amended in a manner which is adverse in any
respect to the Executive or, following the date of death of the Executive, the
14
Executive's Beneficiary without the prior written consent of the Executive or
the Executive's Beneficiary, as the case may be.
(b) Trust II shall not terminate until the earlier to occur of (i)
the date on which the Executive and the Executive's Beneficiary are no longer
entitled to benefits pursuant to the terms of the Deferred Compensation
Agreement and (ii) the twenty-first anniversary of the death of the Executive,
the Executive's Beneficiary and the spouse of any Beneficiary alive on the date
of Execution of Trust II. Upon termination of Trust II, any assets remaining in
Trust II shall be returned to PWG.
(c) The termination of Trust II shall not affect the respective
rights and obligations of PWG and the Trustee under Section 8 of this Trust
Agreement.
Section 13. Trust Effective Date. This Trust Agreement shall be
effective on the Effective Date.
Section 14. 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 the Executive and the Executive's
Beneficiary 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.
(c) Any notice required or
permitted to be given shall be deemed given if
directed to the person to whom addressed at such address and mailed by regular
United States mail, first-class postage.
(d) The headings and captions herein are provided for reference and
convenience only, shall not be considered part of this Trust Agreement and shall
not be employed in the construction of this Trust Agreement.
(e) PWG shall provide the Trustee with a written certification with
respect to any persons who may act on behalf of PWG and who are appointed as
investment managers, together with specimen signatures of such individuals. The
Trustee shall have no duty to inquire as to the authenticity of such
certification; provided, however, that the Trustee may reasonably require PWG to
provide additional information with regard to the authorized persons and their
specimen signatures.
(f) This Trust Agreement shall be construed and interpreted under,
and Trust II hereby created shall be governed by, the laws of the State of New
York insofar as such laws do not contravene any applicable federal laws, rules
15
or regulations. The United States District Court of the Southern District of New
York shall have the sole and exclusive jurisdiction over any lawsuit or other
judicial proceeding relating to or arising from this Trust Agreement. If that
court lacks federal subject matter jurisdiction, the Supreme Court of the State
of New York, New York County, shall have sole and exclusive jurisdiction. Either
of these courts shall have proper venue for any such lawsuit or judicial
proceeding, and the parties waive any objection to venue or their convenience as
a forum. The parties agree to submit to the jurisdiction of any of the courts
specified and to accept service of process to vest personal jurisdiction over
them in any of these courts. The parties further hereby knowingly, voluntarily
and intentionally waive, to the fullest extent permitted by applicable law, any
right to a trial by jury with respect to any such lawsuit or judicial proceeding
arising from or relating to this Agreement or the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the Effective Date.
XXXXX XXXXXX GROUP INC.
By:__________________________
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:__________________________
Title:
16
Exhibit A
Affidavit
I, ________________________, under penalties of perjury, do hereby
solemnly swear (i) that I make this affidavit in order to induce The Chase
Manhattan Bank, as Trustee under the Trust Agreement with Xxxxx Xxxxxx Group
Inc.("PWG"), dated as of ______________ (the "Trust Agreement"), to pay me the
benefits to which I am entitled under such Trust Agreement, (ii) that the amount
of the payment to which I am entitled is $________________, (iii) that such
payment is due on ________________ and (iv) that the events giving rise to PWG's
obligation to make such payment and the provisions of the agreement or
arrangements with PWG applicable thereto are accurately and fairly described on
the schedule attached hereto.
-------------------------
Executive's Signature
STATE OF )
: ss.:
COUNTY OF )
On the __ day of __________, 19__, before me personally came
____________________, to me known, who, being by me duly sworn, did depose and
say that he resides at _________________________________, and that the
statements herein are all true and correct.
------------------------
Notary Public
