FIRST AMENDMENT
TO
TRUST UNDER CHARTWELL RE CORPORATION
EMPLOYMENT AGREEMENTS
This First Amendment to the Trust Under Chartwell Re Corporation Employment
Agreements, by and between Chartwell Re Corporation ("Chartwell") and Shawmut
Bank CT., the predecessor in interest to Fleet National Bank (the "Trustee") is
entered into as of August 4, 1998.
RECITALS
A. Chartwell entered into the Trust Under Chartwell Re Corporation Employment
Agreements (the "Trust Agreement") with the Trustee on June 20, 1994;
B. The Trust Agreement sets forth the terms and conditions of a trust (the
"Trust") established in order to assist Chartwell in meeting its
obligations to provide supplemental benefits under certain employment
agreements; and
C. Chartwell and the Trustee wish to amend certain provisions of the Trust
Agreement at this time.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Trustee hereby consent to
amend the Trust Agreement as follows:
1. The following Section 1(f) shall be added immediately following Section
1(e):
"(f) The Company acknowledges and agrees (i) that the Company's
obligation to pay to the Executives supplemental benefits pursuant to
the terms of the Employment Agreements shall not be limited, terminated
or reduced in any manner as a result of the Company making any
contributions to the Trust under this Trust Agreement, (ii) that any
contributions made by the Company to the Trust under this Trust
Agreement are solely for the purpose of providing to the Company a
source of funds through which it may satisfy its liability to pay
supplemental benefits to the Executives pursuant to the terms of the
Employment Agreements and (iii) that the Company is the exclusive
beneficial owner of the Trust."
2. The last sentence of Section 2(c) shall be deleted and the following
shall be inserted in its place:
"In the event that the Company pays the entire amount due to an
Executive (or his beneficiary) pursuant to the terms of the Executive's
Employment Agreement, then the Trustee, upon receipt of certification
from the Executive that such payment has been made, shall return to the
Company all Trust assets that have been credited to such Executive's
Account (as defined in Section 5(a) hereof)."
3. Section 5(c) shall be deleted and the following shall be inserted in
its place:
"For each taxable year of the Company, the Company shall be entitled to
instruct the trustee of the Rabbi Trust to deduct from each Account and
distribute to the Company as of the end of the first calendar quarter
following such taxable year an amount equal to the greater of zero and
the following:
Individual Trust Account Taxes
(Aggregate Taxes - $50,000) x ------------------------------
Aggregate Taxes
where "Aggregate Taxes" means all federal, state and local income or
franchise taxes deemed payable by the Company with respect to the
aggregate income or gains (offset by losses and loss carryforwards)
recognized by all of the Accounts held in the Trust and "Individual
Trust Account Taxes" means, with respect to each Account, all federal,
state and local income or franchise taxes deemed payable by the Company
with respect to the income or gains (offset by losses and loss
carryforwards) attributable to such Account. In the event the Account
does not have sufficient cash to make such distribution, the Company
may cause the Trustee to sell securities or property to provide
sufficient cash. Prior to making a payment to an Executive pursuant to
Section 2(a) hereof, the Trustee shall reduce the Executive's Account
by the amount by which the Trustee may deduct pursuant to the first
sentence of this Section 5(c) with respect to the period from the end
of the immediately preceding taxable year of the Company to the date of
the payment to the Executive, including any taxes payable as a result
of the distribution. For purposes of determining Aggregate Taxes and
Individual Trust Account Taxes pursuant to this Section 5(c), it shall
be assumed that the Company pays all taxes at the maximum marginal rate
of federal income taxes and state and local income and franchise taxes
applicable to business corporations in the jurisdictions in which the
Company is subject to state and local income and franchise taxes, with
such federal and state taxes reduced in order to reflect the
deductibility of any state and local income and franchise taxes in
determining federal taxes."
4. Except as expressly amended hereby, the Trust Agreement shall continue
in full force and effect in accordance with the provisions thereof on
the date hereof.
5. This First Amendment shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
6. This First Amendment may be executed in two or more counterparts, each
of which shall constitute an original, but all of which when taken
together shall constitute but one instrument.
7. This First Amendment shall be governed by and construed in accordance
with the laws of the State of Connecticut without regard to its
conflict of law principles.
IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed
by their duly authorized representatives.
CHARTWELL RE CORPORATION FLEET NATIONAL BANK,
as Trustee
By:__________________________ By:___________________________
Name: Name:
Title: Title:
