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EXHIBIT 10.25.
TRUST AGREEMENT
BETWEEN
BIOCHEM INTERNATIONAL INC.
AND
XXXXX X. XXXXXXX
This Agreement is made this 24th day of February, 1996 (the "Effective
Date"), by and between Biochem International Inc., a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxx as trustee (the "Trustee").
ARTICLE I
The Trust and the Plan
1.1 Name and Grantor. This Trust Agreement and Trust hereby
evidenced shall be known as the "Katarow Employment Trust." The grantor of the
Trust shall be the Company.
1.2 Plan. The Trust has been established by the Company to
provide compensation and benefits to a key employee of the Company under the
terms of the compensation agreement listed in Schedule A of this Agreement,
which compensation agreement is sometimes referred to below as the "Plan." The
rights, powers and duties of the Trustee, however, shall be governed solely by
the terms of this Trust Agreement without reference to the provisions of the
Plan. A payment under the Trust to any individual with respect to the Plan
shall be deemed a payment under the Plan by the Company. In addition, under
circumstances described more fully in paragraph 4 of Article IV, the assets of
the Trust shall be applied in partial or total satisfaction of claims of
certain creditors of the Company.
1.3 Advisor. The accounting and tax advisor to the Trust (the
"Advisor") shall be the Company or such other individual, committee, firm,
corporation or entity as the Company may from time to time appoint in writing;
provided, however in no event shall the Beneficiary, or any person who is a
member of the Beneficiary's family, as defined in Section 267(c)(4) of the
Internal Revenue Code of 1986, be the Advisor. The Advisor shall advise the
Trustee as to when a Beneficiary (as defined in Section 1.4) has fulfilled the
conditions for payment of benefits and the amount and form of such benefits.
The Trustee shall be responsible for making all benefit payments, and may rely
on advice from the Advisor with respect to the commencement date and the amount
and the manner of payment from the Trust of each Beneficiary's benefits under
the Plan. The Advisor may rely on advice of legal counsel as to any terms of
the Plan. The Advisor may rely on information provided by the Trustee with
respect to statements of account balances and transactions under the Trust.
The Company shall timely provide the Advisor with certified copies of each Plan
and with all information within its control which the Advisor may reasonably
require to provide advice to the Trustee. Each Beneficiary of the Trust shall
provide the Advisor with all information which the Advisor may reasonably
request with respect to determining the Beneficiary's benefits. The Advisor
shall not be required to independently verify such information or seek
additional information. To the extent that any dispute shall arise between a
Beneficiary and the Company with respect to the Beneficiary's entitlement to a
benefit under the Plan, such dispute shall be resolved under the provisions of
that Plan. In the event that the Advisor is unable or unwilling to render
advice or opinions to the Trustee under this Trust Agreement, the Trustee shall
have no duty or responsibility to assume the role or responsibilities of the
Advisor and shall have no liability for any loss or damage incurred by a
Beneficiary because no Advisor is acting hereunder.
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1.4 Beneficiaries. For purposes of this Trust, the term
"Beneficiary" or "Beneficiaries" shall include the Executive under the Plan
whose benefits under such Plan may be payable in whole or in part by this Trust
and each other person entitled to receive such benefits with respect to the
Executive as of the date on which the Executive becomes eligible to have his
benefits payable under this Trust.
1.5 Contribution. Company agrees to fund this Trust by depositing
with the Trustee One Million Eight Hundred Seventy Thousand Two Hundred Dollars
($1,870,200), no later than Thirty (30) days after the date hereof.
ARTICLE II
Management and Control of Trust Fund Assets
2.1 The Trust Fund. The "Trust Fund" as of any date means all
property of every kind then held by the Trustee under this Trust Agreement.
2.2 Company Contributions. The Company shall contribute to the
Trust such amounts as are necessary to fund the benefits payable to
Beneficiaries under the Plan. In addition, the Company shall contribute
sufficient funds to the Trust to provide for the expenses of its administration
or shall make such other arrangements with the Trustee to provide for such
expenses as agreed upon by the Trustee and the Company. The Company may
contribute additional amounts to the Trust at such times and in such amounts as
it determines in its sole discretion.
2.3 Investment Guidelines and Investment Funds. The Trustee shall
invest the Trust Fund assets at the direction of the Advisor. In the event the
Advisor shall fail to direct the Trustee or the Advisor shall instruct the
Trustee to directly manage investment of the Trust Fund assets then the Trustee
shall invest the assets of the Trust Fund with the principal goal of preserving
capital and obtaining a reasonable return on investments in accordance with the
restrictions on Eligible Investments set forth in Section 1.6 and 2.4 of the
Plan. The Trustee shall not be required to make any separate investment of the
Trust Fund for the account of any Beneficiary but shall invest the Trust Fund
as a single investment fund.
2.4 Exercise of Trustee's Duties. The Trustee shall discharge its
duties hereunder solely in the interest of the Beneficiaries, and:
(a) for the exclusive purpose of:
(i) providing benefits to the Beneficiaries; and
(ii) defraying the reasonable expenses of
administering the Plan;
(b) with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man
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; and
(c) subject to the provisions of Section 2.3, by
diversifying the investment of the Trust Fund so as
to minimize the risk of large losses, unless under
the circumstances it is clearly prudent not to do so.
2.5 General Powers. Subject to the provisions of Sections 2.3 and
2.4, with respect to the Trust Fund, the Trustee shall have the following
powers, rights and duties in addition to those provided elsewhere in this Trust
Agreement or by law:
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(a) to invest and reinvest the Trust Fund in bonds,
stocks, mortgages, notes, bank deposits, options,
futures contracts, limited partnership interests,
shares of registered investment companies, or other
property of any kind, real or personal, domestic or
foreign, suitable for the investment of trust funds;
(b) to receive and hold all contributions paid to it
under the Plan; except that the Trustee shall have no
duty to require any contributions to be made, or to
determine that any of the contributions received
comply with the conditions and limitations of the
Plan;
(c) to deposit any part or all of the Trust Fund in any
common trust fund or other collective investment fund
maintained by the Trustee for trust investment
purposes;
(d) to manage, operate, sell, contract to sell, convey,
exchange, partition, transfer, abandon and otherwise
deal with all property, real or personal, in such
manner, for such considerations, and on such terms
and conditions as the Trustee shall decide;
(e) to retain in cash (pending investment, reinvestment
or payment of benefits) any reasonable portion of the
Trust Fund and to deposit cash in any depository;
(f) to compromise, contest, arbitrate, settle or abandon
claims and demands;
(g) to begin, maintain or defend any litigation necessary
in connection with the administration of the Trust;
(h) to have all rights of an individual owner, including
the power to give proxies, to vote stocks, to join in
or oppose (alone or jointly with others) voting
trusts, mergers, consolidations, foreclosures,
reorganizations, recapitalizations or liquidations,
and to exercise or sell stock subscription or
conversion rights;
(i) to hold securities or other property in the name of
the Trustee or any nominee or nominees of the
Trustee, or in such other form as the Trustee shall
determine, including corporate depositories, with or
without disclosing the Trust relationship, provided
that the records of the Trustee shall indicate the
actual ownership of such securities or other
property;
(j) to participate in and use a book-entry system for the
deposit and transfer of securities;
(k) to retain any funds or property subject to any
dispute without liability for the payment of
interest, or to decline to make payment or delivery
thereof until final adjudication is made by a court
of competent jurisdiction;
(l) to employ agents, attorneys, investment counsel,
accountants, actuaries or other persons for such
purposes as the Trustee considers desirable subject
to consent by the Company, which consent will not be
unreasonably withheld;
(m) to furnish the Company and the Advisor with such
information in the Trustee's possession as the
Company or Advisor may need for tax or other
purposes; and
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(n) to perform any and all other acts which are, in the
reasonable judgment of the Trustee, necessary or
appropriate for the proper and advantageous
management, investment and distribution of the Trust
Fund.
ARTICLE III
Accounting
3.1 Separate Accounts. The following accounts shall be maintained
by the Advisor for the Trust: (i) a separate account for the Beneficiary with
respect to his benefits under the Plan which are payable in whole or in part by
the Trust; (ii) such other accounts as may be required for the administration
of the Trust Fund.
3.2 Allocation of Company Contributions. Subject to the following
provisions of this paragraph, Company contributions shall be allocated and
credited to the Beneficiary's account under the Plan by the Advisor as directed
by the Company at the time of the contribution.
3.3 Distributions. Distributions from the Trust Fund shall be
charged by the Advisor to the accounts with respect to which they are made or
allocated in accordance with Article IV.
3.4 Statement of Accounts. As soon as practicable after each
periodic reporting period agreed upon by the Company and the Trustee (the
"Accounting Date"), the Trustee shall furnish to the Company and the Advisor a
written report showing the fair market value of the Trust Fund as of that
Accounting Date, all investments of the Trust Fund, and receipts and
disbursements and other transactions made by the Trustee since the preceding
Accounting Date, with respect to the Trust Fund and such other information as
the Trustee may possess which the Company requires for the administration of
the Plan or the Advisor requires to advise the Trustee, the Beneficiaries or
the Company. After receipt of the Trustee's statement of account, and based on
such statement, the Advisor shall furnish such statement to the Beneficiary.
ARTICLE IV
Distribution of Trust Assets
4.1 Benefit Payments. Subject to the following provisions of this
Article, as of the commencement date (as determined under Section 4.2) of the
Beneficiary's benefit, the Trustee shall commence distribution of such benefit
to the Beneficiary as directed by the Advisor provided that:
(a) In no event shall the Trustee make a distribution to
or on account of the Beneficiary in excess of the
amount then allocated to his account in accordance
with the provisions of Article III.
(b) The Trustee shall have no responsibility to inquire
whether a payee is entitled to the payment, or
whether a payment is proper, and shall have no
liability for a payment made in good faith without
actual notice or knowledge of the changed condition
or status of the payee.
(c) If any check for any payment directed to be made from
the Trust Fund is mailed by the Trustee by regular
United States mail to the last address of the payee
furnished to the Trustee and is returned unclaimed,
the Trustee shall notify the Advisor of that fact and
such check or funds shall be retained
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in the Trust. The Trustee and Advisor shall be
required to make reasonable efforts to ascertain the
location of any Beneficiaries.
(d) The Trustee may reserve such reasonable amount from
any payment as it shall deem necessary to pay any
estate, inheritance, income or other tax, charge or
assessment attributable to any payment or may require
such release or other document from any taxing
authority and such indemnity from the intended payee
as the Trustee shall deem necessary for its
protection.
4.2 Commencement Date. Subject to the provisions of Sections 4.3
and 5.3, the commencement date and the form of payment from the Trust of the
Beneficiary's benefits with respect to the principal amount held by the Trust
shall be determined in accordance with the terms of the Plan, including any
rights thereunder to disclaim, defer the commencement date or extend the
payment period for all or any portion of the benefits payable to him under this
Trust. Any amount of Trust principal not paid pursuant to Article IV of the
Plan due to the limitations of Article VI of the Plan shall be paid to the
Company. Notwithstanding the foregoing, the Trustee shall distribute to the
Beneficiary the current investment earnings of the Trust on a yearly basis as
soon as practicable following the close of each calendar year.
4.3 Reversion to Company.
(a) Subject to the provisions of Sections 4.2, this 4.3,
and 4.4, no part of the corpus or income of the Trust
Fund shall revert to the Company or be used for, or
diverted to, purposes other than the exclusive
benefit of the Beneficiaries.
(b) If Executive resigns from the Company, is dismissed
for "Cause" (as such term is defined in paragraph 4.3
of the Plan), or dies prior to any Change in Control
(as such term is defined in the Plan), all funds held
by the Trust shall revert to the Company.
4.4 Insolvency of the Company. If the Company becomes insolvent
or its affairs become the subject of a reorganization or liquidation proceeding
under federal bankruptcy laws, then notwithstanding any other provisions of
this Trust, the Trustee shall cease all benefit payments and hold Trust assets
for the benefit of the Company's general creditors, including the Beneficiaries
of the Plan. Beneficiaries with claims against the Company by virtue of
participation in the Plan shall be granted no greater rights to Trust assets
than are other creditors. The Trustee shall transfer Trust assets to satisfy
the claims of the Company's general creditors as directed by a court of
competent jurisdiction. The Company shall have the duty to inform the Trustee
promptly if the Company becomes unable to pay its debts as they mature or
becomes subject to proceedings as a debtor under federal bankruptcy laws.
4.5 Benefits May Not Be Assigned or Alienated. Subject to the
provisions of Section 4.4, the interests of the Beneficiaries under the Trust
may not be voluntarily or involuntarily assigned, alienated or encumbered.
ARTICLE V
Tax Matters
5.1 Nature of Trust. This Trust Agreement is intended to
constitute a grantor trust, as described in section 671 et seq. of the Internal
Revenue Code of 1986, as amended from time to time. The Company agrees that
all income of the Trust is attributable to it as owner for income tax purposes
and will be income to the Company.
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5.2 Federal and State Reporting Requirements. The Trustee shall
withhold Federal, state and local taxes which are assessable on amounts paid to
a Beneficiary at such rate as may be certified by the Company at the
appropriate rate under applicable laws or such larger amounts as may be
requested by the Beneficiary, and shall transmit the amount withheld to the
applicable taxing authority at the direction of the Company.
5.3 Taxation Prior to Receipt. If the Internal Revenue Service
determines that a Beneficiary is subject to federal income taxation on any
amounts held in the Trust for his benefit in a calendar year prior to the
calendar year in which he would otherwise receive such benefits, the Advisor
shall, at the written request of the Beneficiary accompanied by evidence
satisfactory to the Advisor of such tax treatment, notify the Trustee thereof
and, based upon such notification, the Trustee shall distribute the amount of
the benefits determined to be taxable to the Beneficiary as soon as
practicable.
ARTICLE VI
Compensation, Expenses and Liability
6.1 Compensation and Expenses. The Company shall pay the Trustee
reasonable compensation, if any, as agreed upon from time to time by the
Trustee and the Company and shall reimburse the Trustee for all expenses, taxes
and charges incurred by it in connection with the collection, administration,
management and distribution of the Trust Fund. If the Company fails to pay any
such compensation or expense due, if any, under this paragraph the Trustee may
charge such compensation or expense to the Trust Fund.
6.2 Liability of Trustee and Advisor. Neither the Trustee nor the
Advisor shall be liable for any act or failure to act under this Agreement,
except for willful misconduct or gross negligence. In no event shall the
Trustee or the Advisor be liable for any act or failure to act of the other.
6.3 Indemnification. The Company hereby agrees to indemnify the
Trustee for, and hold it harmless against, and defend it against any and all
liabilities, losses, costs or expenses (including reasonable attorneys' fees)
of whatsoever kind and nature which may be imposed on, incurred by or asserted
against it at any time by reason of carrying out in good faith the
responsibilities delegated to or directions given it under this Agreement, or
by reason of any act or failure to act under this Agreement.
ARTICLE VII
Changes of Trustee
7.1 Resignation. A Trustee may resign at any time by giving
fourteen (14) days' advance written notice to the Company. A copy of such
notice shall be promptly provided to the Advisor and the Beneficiaries by the
Company.
7.2 Removal of Trustee. The Company, by action of its Board of
Directors or a person designated by resolutions of its Board of Directors, may
remove the Trustee or any successor Trustee by giving fourteen (14) days'
advance written notice to the Trustee, subject to providing the removed Trustee
with satisfactory written evidence of the appointment of a successor Trustee
and of the successor Trustee's acceptance of the trusteeship. Copies of such
notice of removal shall be promptly provided to the Advisor by the Company.
7.3 Appointment of Successor Trustee. In the event of the
resignation or removal of the Trustee then a successor Trustee shall be
appointed by the Company. Notwithstanding the foregoing provisions of this
paragraph, a successor Trustee shall not be appointed under this Trust unless
it (i) is a corporate
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trustee which has trust assets in excess of one hundred million dollars and
such successor Trustee specifically agrees in writing to comply with the
provisions of this Agreement or (ii) the Beneficiary consents to appointment of
other than a corporate trustee as specified in clause (i); provided, however,
in no event shall the Beneficiary, or any person who is a member of the
Beneficiary's family, as defined in Internal Revenue Code Section 267(c)(4), be
the Trustee. In the event that the Company appoints a successor Trustee in
accordance with the foregoing provisions of this paragraph, the Advisor and the
Beneficiaries shall be promptly notified of such appointment by the Company.
7.4 Duties of Resigned or Removed Trustee and of Successor
Trustee. If the Trustee resigns or is removed, such resigned or removed
Trustee shall promptly transfer and deliver the assets of the Trust Fund to the
successor Trustee, after reserving such reasonable amount as it shall deem
necessary to provide for expenses and any sums chargeable against the Trust
Fund. Within 120 days, the resigned or removed Trustee shall furnish to the
Company, the successor Trustee and the Advisor an account of the administration
of the Trust from the date of the last account with respect to the resigned or
removed Trustee and any records or reports which the resigned or removed
Trustee may possess which the Company may require to administer any Plan or the
Advisor may require to advise the successor Trustee, the Beneficiaries or the
Company. Each successor Trustee shall succeed to the Trust Fund vested in his
predecessor without the signing or filing of any further instrument, but any
resigned or removed Trustee shall execute all documents and do all acts
necessary to vest the Trust Fund in any successor Trustee. Each successor
Trustee shall have all the powers, rights and duties conferred by this
Agreement as if originally named as Trustee. No successor Trustee shall be
personally liable for any act or failure to act of a predecessor Trustee.
7.5 Approval of Accounts. An account of the Trustee may be
approved by the Company by written notice delivered to the Trustee or by
failure to object to the account by written notice delivered to the Trustee
within six months of the date upon which the account was delivered to the
Company. The approval of an account shall constitute a full and complete
discharge to the Trustee as to all matters set forth in that account as if the
account had been settled by a court of competent jurisdiction in an action or
proceeding to which the Company and the Trustee were parties. In no event
shall the Trustee be precluded from having its accounts settled by judicial
proceeding.
ARTICLE VIII
Miscellaneous
8.1 Persons Dealing with Trustee. No person dealing with the
Trustee shall be required to see to the application of any money paid or
property delivered to the Trustee, or to determine whether or not the Trustee
is acting pursuant to any authority granted under this Trust Agreement.
8.2 Evidence. Evidence required of anyone under this Trust
Agreement may be by certificate, affidavit, document or other instrument which
the person acting in reliance thereon considers pertinent and reliable, and
signed, made or presented by the proper party.
8.3 Notice and Waiver of Notice. Any notice or document required
to be filed under this Trust will be properly filed if delivered or mailed by
registered mail postage prepaid, and: (i) if to the Company, in care of
President at W 238 N 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx 00000, (ii) if to
the Trustee, to Xxxxx X. Xxxxxxx and (iii) if to the Advisor, in care of
President at W 238 N 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx 00000. Any
notice required under this Trust Agreement may be waived by the person entitled
thereto.
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8.4 Counterparts. This Trust Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and no other
counterpart need be produced.
8.5 Words of Gender. Words of the masculine gender may, and where
necessary shall, be construed as denoting the feminine and neuter gender.
8.6 Governing Laws. This Trust Agreement shall be construed and
administered according to the laws of the State of Illinois.
8.7 Successors, Etc. The provisions of this Trust Agreement shall
be binding on the Company and the Trustee and their successors and on all
persons entitled to benefits under the Plan or the Trust and their respective
heirs and legal representatives.
8.8 Terms. Capitalized words not otherwise defined in this
Agreement shall have the meaning ascribed to them under the Plan.
ARTICLE IX
Amendment, Revocation and Termination
9.1 Amendment and Revocation. This Trust Agreement shall be
revocable by the Company at any time prior to 30 days following the Company's
receipt of a favorable ruling by the Internal Revenue Service; thereafter, this
Trust Agreement shall be irrevocable. In the event that a ruling by the
Internal Revenue Service is not requested within 60 days after execution of
this Trust Agreement this Trust Agreement shall become irrevocable upon
expiration of the 60-day period.
9.2 Termination. If the Plan is terminated, all of the provisions
of the Trust evidenced by this Trust Agreement, as applied to the Plan,
nevertheless shall continue in effect until the portion of the Trust Fund
attributable to the Plan has been distributed by the Trustee. This Trust
Agreement shall terminate on the earlier of the date of which all assets of the
Trust have been paid to Beneficiaries in satisfaction of all benefit
obligations under the Plan or twenty years from the Effective Date. On
termination of the Trust, the Trustee, as directed by the Advisor, shall make a
payment to each Beneficiary of the lump sum value of all remaining benefits
with respect to which the Beneficiary has an interest based upon calculations
by the Advisor.
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Agreement to be signed and attested to by their duly authorized officers the
day and year first above written.
Biochem International Inc.
By
-------------------------------
Its
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ATTEST:
--------------------------
Its
----------------------
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Xxxxx X. Xxxxxxx, as Trustee
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SCHEDULE A
Compensation Agreement,
dated February 24, 1996
by and between Biochem International Inc. and
Xxxxx Xxxxxxx
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