1
Exhibit 10.27
KEYCORP
UMBRELLA TRUST(TM) FOR EXECUTIVES
JULY 1, 1990
KeyCorp
Xxx XxxXxxx Xxxxx
X.X. Xxx 00
Xxxxxx, Xxx Xxxx 00000-0000 Company
NBD Bank, N.A.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Trustee
2
TABLE OF CONTENTS
PAGE
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INDEX OF TERMS
TERMS SECTION PAGE
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KEYCORP
UMBRELLA TRUST(TM) FOR EXECUTIVES
This Trust Agreement is made and entered into by and between KeyCorp, a
New York corporation (the "Company"), and NBD Bank, N.A., a Michigan banking
corporation (the "Trustee").
The Company hereby establishes with the Trustee a trust to hold all
monies and other assets, together with the income thereon, as shall be paid or
transferred to it hereunder in accordance with the terms and conditions of this
Trust Agreement. The Trustee hereby accepts the trust established under this
Trust Agreement and agrees to hold, IN TRUST, all monies and other assets
transferred to it hereunder for the uses and purposes and upon the terms and
conditions set forth herein, and the Trustee further agrees to discharge and
perform fully and faithfully all of the duties and obligations imposed upon it
under this Trust Agreement.
PREAMBLE
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The Company has adopted the following plans (the "Plan") which shall be
subject to this trust:
Employment Contracts
Severance Plans
Supplemental Retirement Benefits Plan
Supplemental Survivor Benefit Plan
Executive Deferred Compensation Plan
If only one Plan is subject to this trust at any time, references in this Trust
Agreement to the Plans shall refer to such Plan.
The Plans are administered by an administrative committee (the
"Committee") appointed by the Company. If the Plans are administered by more
than one Committee at any time, reference in this Trust Agreement to the
Committee which relate to a particular Plan shall refer to the Committee which
administers that Plan and, if the reference does not relate to a particular
Plan, shall refer to all of such Committees. All references in this Trust
Agreement to the Committee shall refer to the administrative committee(s) which
administers the Plan(s), unless
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the Company appoints a separate administrative committee to administer this
Trust Agreement. If the Company appoints a separate administrative committee to
administer this Trust Agreement, references in this Trust Agreement to the
Committee shall refer to such administrative committee which is appointed to
administer this Trust Agreement, unless the context clearly indicates otherwise.
The Plan participants who are covered by this Trust Agreement
("Participants") shall be all persons who are Plan participants prior to a
Special Circumstance, unless the Company specifically designates only specified
individuals or groups of Plan participants as Participants covered by this Trust
Agreement. After a person becomes a Participant covered by this Trust Agreement,
such person will continue to be a Participant at all times thereafter (including
after retirement or other termination of service) until all Plan benefits
payable to such Participant have been paid, the Participant ceases to be
entitled to any Plan benefits, or the Participant's death, whichever occurs
first. The term "Participants" shall not include any beneficiaries of
Participants.
At any time prior to a Special Circumstances, the Company may, by
written notice to the Trustee, cause additional plans to become Plans subject to
this Trust Agreement or cause additional Plan participants to become
Participants covered by this Trust Agreement. Upon and after a Special
Circumstance, the Company shall not add any additional plans or Plan
participants to this Trust Agreement.
The Company shall provide the Trustee with certified copies of the
following items: (i) the Plan documents; (ii) all Plan amendments promptly upon
their adoption; and (iii) lists and specimen signatures of the members of the
Committee(s) which administer the Plan(s) and this Trust Agreement and any other
Company representatives authorized to take action in regard to the
administration of the Plan(s) and this trust, including any changes in the
members of such Committee(s) and of such other representatives promptly
following any such change. The Company shall also provide the Trustee at least
annually with a list of all Participants in each Plan who are covered by this
Trust Agreement.
The purpose of this trust is to give Participants greater security by
placing assets in trust for use only to pay Plan benefits to Participants or, if
the Company becomes insolvent, to pay creditors. The Company shall continue to
be liable to Participants to make all payments required
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under the terms of the Plans to the extent such payments are not made from this
trust. Distributions made from this trust to Participants or their beneficiaries
shall, to the extent of such distributions, satisfy the Company's obligations to
pay benefits to Participants and their beneficiaries under the Plans.
The Company and the Trustee agree that the trust hereby created has
been established to pay obligations of the Company pursuant to the Plans and is
subject to the rights of general creditors of the Company, and accordingly is a
grantor trust under the provisions of Sections 671 through 677 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Company hereby agrees to
report all items of income, deductions and credits of the trust on its own
income tax returns; and the Company shall have no right to any distributions
from the trust or any claim against the trust for funds necessary to pay any
income taxes which the Company is required to pay on account of reporting the
income of the trust on its income tax returns. No contribution to or income of
the trust is intended to be taxable to Participants until benefits are
distributed to them.
The Plans are intended to be "unfunded" and maintained "primarily for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees" for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and as such are intended not to be
covered by Parts 2 through 4 of Subtitle B of Title I of ERISA (relating to
participation and vesting, funding and fiduciary responsibility). The existence
of this trust is not intended to alter this characterization of the Plans.
ARTICLE I
EFFECTIVE DATE; DURATION
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1.01 Effective Date and Trust Year
-----------------------------
This trust shall become effective when the Trust Agreement has
been executed by the Company and the Trustee and the Company has made a
contribution to the trust. For tax purposes the trust year shall be the calendar
year. For financial reporting purposes the trust year shall coincide with the
Company's fiscal year. The Company shall report any change in its fiscal year
to the Trustee.
1.02 Duration
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1.02-1 This trust shall continue in effect until all assets of
the trust fund are exhausted through distribution of benefits to Participants,
payment to creditors in the event of insolvency, payment of fees and expenses of
the Trustee, and return of remaining funds to the Company pursuant to 1.02-2.
Notwithstanding the foregoing, this trust shall terminate on the day before
twenty-one years after the death of the last survivor of all present or future
Participants who are now living and those persons now living who are designated
as beneficiaries of any such Participants in accordance with the terms of any of
the Plans.
1.02-2 Except as otherwise provided in 1.02 and 1.03, the
trust shall be irrevocable until all benefits payable under the Plans to
Participants who are covered by this Trust Agreement are paid. The Trustee
shall then return to the Company any assets remaining in the trust.
1.02-3 If the existence of this trust or any Subtrust is held
to be ERISA Funding or Tax Funding by a federal court and appeals from that
holding are no longer timely or have been exhausted, this trust or such Subtrust
shall terminate. The Board of Directors of the Company (the "Board") may also
terminate this trust or any Subtrust if it determines, that either (i) judicial
authority or the opinion of the U.S. Department of Labor, Treasury Department or
Internal Revenue Services (as expressed in proposed or final regulations,
advisory opinions or rulings, or similar administrative announcements) creates a
significant risk that the trust or any Subtrust will be held to be ERISA Funding
or Tax funding or (ii) ERISA or the Code requires the trust or any Subtrust to
be amended in a way that creates a significant risk that the trust or such
Subtrust will be held to be ERISA Funding or Tax Funding, and failure to so
amend the trust or such Subtrust could subject the Company to material
penalties. Upon any such termination, the assets of each terminated Subtrust
remaining after payment of the Trustee's fees and expenses shall be distributed
as follows:
(a) Such assets shall be transferred to a new trust
established by the Company which is not deemed to be ERISA
Funding or Tax Funding, but which is similar in all other
respects to this trust, if the Company determines that it is
possible to establish such a trust.
(b) If the Company determines that it is not possible
to establish the trust in (a) above, then the assets shall be
distributed to the Company if the
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Written Consent of Participants, as defined in 1.02-5, is
obtained for such distribution.
(c) If the Company determines that it is not possible
to establish the trust in (a) above and the Written Consent of
Participants is not obtained to distribute the assets to the
Company, then the assets of the terminated Subtrust shall be
allocated in proportion to (i) the vested accrued benefits and
(ii) then, if any assets remain, the unvested (if any) accrued
benefits of Participants under the applicable Plan and shall
be distributed to such Participants in lump sums. Any assets
remaining shall be distributed to other Subtrusts or the
Company in accordance with 2.04.
Notwithstanding the foregoing, the Trustee shall distribute
Plan benefits to a Participant to the extent that a federal court or IRS has
held that the interest of the Participant in this trust causes such Plan
benefits to be includible for federal income tax purposes in the gross income of
the Participant prior to actual payment of such Plan benefits to the Participant
and appeals from that holding are no longer timely or have been exhausted. The
Trustee may also distribute Plan benefits to a Participant, upon direction of
the Committee, if the Trustee reasonably believes that there is a significant
risk that the Participant's interest in the trust fund will be held to be ERISA
Funding or Tax Funding with respect to such Participant or that such Participant
will be determined not to be a "management or highly compensated employee" for
purposes of ERISA. The provisions of this paragraph shall also apply to any
beneficiary of a Participant.
1.02-4 This trust is "Tax Funding" if it causes the interest
of a Participant in this trust to be includible for federal income tax purposes
in the gross income of the Participant prior to actual payment of Plan benefits
to the Participant.
This trust is "ERISA Funding" if it prevents any of the Plans
from meeting the "unfunded" criterion of the exceptions to application of the
provisions of Parts 2 through 4 of Subtitle B of Title I of ERISA for plans that
are unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
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1.02-5 "Written Consent of Participants" means, for the
purposes of this Trust Agreement, consent in writing by Participants who (i) are
a majority in number and (ii) have more than fifty percent (50%) in value of the
accrued benefits, of the Participants in each Subtrust under this Trust
Agreement on the date of such consent.
1.03 Irrevocability
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1.03-1 Subject to 1.02, this trust shall become irrevocable
upon the issuance by the Internal Revenue Service of a private letter ruling
establishing that its existence and ownership of assets do not cause the trust
to be deemed to be Tax Funding. If such a ruling is denied or the Company is
informed that a ruling will not be forthcoming, the Company may revoke the trust
and take possession of all assets held by the Trustee for the trust. This trust
shall also become irrevocable if such a ruling is not requested by the Company
within ninety (90) days after the date of establishing this trust.
1.03-2 Notwithstanding the provisions of 1.03-1, if a Special
Circumstance occurs, the Company may declare the trust to be irrevocable.
1.04 Special Circumstance
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1.04-1 Upon the occurrence of a Special Circumstance described
in 1.04-2, the trust assets shall be held for Participants who had accrued
benefits under the Plans before the Special Circumstance occurred, including
benefits accrued for such Participants after the Special Circumstance.
1.04-2 A "Special Circumstance" shall mean a Change in Control
(as defined in 1.04-3) or a Default (as defined in 1.04-6).
1.04-3 A "Change in Control" shall mean a Change in Control of
a nature that would be required to be reported (assuming such event has not been
"previously reported") in response to Item 1(a) of the current report on Form
8-X, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
successor thereto; provided that, without limitation, such a Change in Control
shall be deemed to have occurred at such time as:
(a) Any person is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of twenty five percent
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(25%) or more of the combined voting power of the Company's
Voting Securities;
(b) Individuals who constitute the Board of the
Company on the date hereof (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board of
the Company or the Board of any corporation with which the
Company merges, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least three quarters (3/4) of the directors
comprising the Incumbent Board (either by a specific vote or
by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without
objection to such nomination) shall be, for purposes of this
clause (b), considered as though such person were a member of
the Incumbent Board;
(c) If any person or entity acquires an interest
which is determined by the Federal Reserve Board to constitute
a controlling interest in the Company;
(d) The sale by the Company of more than fifty
percent (50%) of the book value of its assets to a single
purchaser or to a group of affiliated purchasers; or
(e) The merger or consolidation of the Company in a
transaction in which the shareholders of the Company receive
less than fifty percent (50%) of the outstanding voting shares
of the continuing corporation. Notwithstanding anything in the
foregoing to the contrary, no Change in Control shall be
deemed to have occurred by virtue of any transaction which
results in a Participant, or group of Participants, acquiring,
directly or indirectly, twenty five percent (25%) or more of
the combined voting power of the Company's Voting Securities.
1.04-4 For purposes of this Trust Agreement, a Change in
Control shall be deemed to have occurred when the Trustee makes a determination
to that effect on its own initiative or upon receipt by the Trustee of written
notice to that effect from the Company. The Chief Executive Officer of the
Company or the Board shall furnish written notice to the Trustee when a Change
in Control occurs under 1.04-3.
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1.04-5 "Voting Securities" shall mean any securities of the
Company which vote generally in the election of directors.
1.04-6 A "Default" shall mean a failure by the Company to
contribute, within thirty (30) days of receipt of written notice from the
Trustee, any of the following amounts:
(a) The full amount of any insufficiency in assets of
any Subtrust that is required to pay any premiums or loan
interest payments on insurance contracts which are held in the
Subtrust;
(b) The full amount of any insufficiency in assets of
any Subtrust that is required to pay any Plan benefit that is
payable upon a direction from the Committee pursuant to 3.02-3
or upon resolution of a disputed claim pursuant to 3.03-2; or
(c) Any contribution which is then required under
2.01. If, after the occurrence of a Default, the Company at any time cures such
Default by contributing to the trust all amounts which are then required under
subparagraphs (a), (b) and (c) above, it shall then cease to be deemed that a
Default has occurred or that a Special Circumstance has occurred by reason of
such Default.
ARTICLE II
TRUST FUND AND FUNDING POLICY
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2.01 Contributions
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2.01-1 The Company shall contribute to the trust such amounts
as are required to purchase or hold insurance contracts in the trust and to pay
premiums and loan interest payments thereon, all as described in 2.02-1. The
Company shall also contribute to the trust such amounts as are necessary to
enable the Trustee to make all Plan benefit payments to Participants when due,
unless the Company makes such payments directly, whenever the Trustee advises
the Company that the assets of the trust or Subtrust, other than insurance
contracts or amounts needed to pay future premiums or loan interest payments on
insurance contracts, are insufficient to make such payments. In its discretion,
the Company may contribute to the trust such additional amounts or assets as the
Committee may reasonably decide are necessary to provide security for all Plan
benefits payable to Participants covered by this trust.
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2.01-2 Whenever the Company makes a contribution to the trust,
the Company shall designate the Plan(s) and Subtrust(s) to which such
contribution (or designated portions thereof) shall be allocated. The Company
may also make contributions to a special reserve for payment of future fees and
expenses of the Trustee and future trust fees and expenses for legal and
administrative proceedings. The Company shall designate a separate Subtrust to
receive such contributions, which shall be distinct from the other Subtrust(s)
established for the Plan(s).
A trust funding deposit for payment of future insurance
premiums ("Trust Funding Deposit") shall be established in each Subtrust which
holds insurance contracts. The Company shall designate the portion of each
contribution which shall be allocated to the Trust Funding Deposit for a
particular Subtrust. The Trust Funding Deposit for a Subtrust shall normally be
used only to pay premiums on insurance contracts which are held in that
Subtrust. However, if necessary, the Trust Funding Deposit may be used to pay
Plan benefits which are payable to Participants from the Subtrust in the sole
discretion of the Trustee.
2.01-3 The Company shall, immediately upon the occurrence of a
Special Circumstance (as defined in 1.04-2) or a Potential Change in Control (as
defined in 2.01-7), and at least annually following a Special Circumstance,
contribute to the trust the sum of the following:
(a) The present value of the remaining premiums and
the interest on any policy loans on insurance contracts held
in the trust to the extent the Trust Funding Deposit is
determined to be inadequate to pay such remaining premiums and
policy loan interest.
(b) The amount by which the present value of all
benefits (vested and unvested) payable under the Plans on a
pre-tax basis to Participants covered by this trust exceeds
the value of all trust assets. Each Participant's benefit
under any Plan for purposes of calculating present value shall
be the highest benefit the Participant would have accrued
under the Plan within the twenty four (24) months following
such event, assuming that the Participant's service continues
for twenty four (24) months at the same rate of compensation,
that the Participant continues to make future deferrals under
deferred compensation plans in accordance with his prior
elections, and that the Participant is terminated at a time
when he is entitled
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to receive any benefit enhancement provided by the Plan upon a
Change in Control. Any benefit enhancement or right with
respect to the Plans which is provided under employment or
severance agreements of Participants shall be taken into
account in making the foregoing calculation.
(c) The present value of a reasonable estimate
provided by the Trustee of its fees and expenses due over the
remaining duration of the trust. Unless the Trustee estimates
a greater amount, such amount shall be presumed to be equal to
two percent (2%) of the present value of all accrued benefits
(vested and unvested) payable under the Plans on a pre-tax
basis to Participants covered by this trust.
(d) The present value of a reasonable estimate
provided by the Trustee of the anticipated fees and expenses
for the purpose of commencing or defending lawsuits or legal
or administrative proceedings over the remaining duration of
the trust. Unless the Trustee estimates a greater amount, such
amount shall be presumed to be equal to two percent (2%) of
the present value of all accrued benefits (vested and
unvested) payable under the Plans on a pre-tax basis to
Participants covered by this trust.
2.01-4 The calculations required under 2.01-3 shall be based
on the terms of the Plans and the actuarial assumptions and methodology set
forth in Appendix A attached hereto. Before a Special Circumstance, Appendix A
may be revised by the Committee from time to time. After a Special Circumstance,
Appendix A may be revised only with the Written Consent of Participants.
2.01-5 Whenever the Company makes a contribution to the trust
pursuant to 2.01-3, it shall furnish the Trustee with a written statement
setting forth the computation of all required amounts contributed under
subparagraphs (a), (b), (c) and (d) of 2.01-3.
Whenever a Special Circumstance occurs or the Company makes a
contribution pursuant to 2.01-3, the Company shall deliver to the Trustee,
contemporaneously with or immediately prior to such event, a schedule (the
"Payment Schedule") indicating the amounts payable under each Plan in respect of
each Participant, or providing a formula or instructions acceptable to the
Trustee for determining the amounts so payable, the form in which such
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amounts are to be paid (as provided for or available under the Plans) and the
time of commencement for payment of such amounts. The Payment Schedule shall
include any other necessary instructions with respect to Plan benefits
(including legal expenses) payable under the Plans and any conditions with
respect to any Participant's entitlement to, and the Company's obligation to
provide, such benefits, and such instructions may be revised from time to time
to the extent so provided under the Plans or this Trust Agreement.
A modified Payment Schedule shall be delivered by the Company
to the Trustee at each time that (i) additional amounts are required to be paid
by the Company to the Trustee pursuant to 2.01-3, (ii) Excess Assets are
returned to the Company pursuant to 2.04, and (iii) upon the occurrence of any
event requiring a modification of the Payment Schedule. The Company shall also
furnish a Payment Schedule or modified Payment Schedule for any or all Plan(s)
upon request by the Trustee at any other time. Whenever the Company is required
to deliver to the Trustee a Payment Schedule or a modified Payment Schedule, the
Company shall also deliver at the same time to each Participant the respective
portion of the Payment Schedule or modified Payment Schedule that sets forth the
amount payable to that Participant.
2.01-6 Any contribution to the trust which is made by the
Company under 2.01-3 on account of a Potential Change in Control shall be
returned to the Company following one year after delivery of such contribution
to the Trustee unless a Change in Control shall have occurred during such
one-year period, if the Company requests such return within sixty (60) days
after such one-year period. If no such request is made within this 60-day
period, the contribution shall become a permanent part of the trust fund. The
one-year period shall recommence in the event of and upon the date of any
subsequent Potential Change in Control.
2.01-7 A "Potential Change in Control" shall be deemed to
occur if:
(a) Any person, as defined in Section 13(d)(3) of the
Act, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company
delivers to the Company a statement containing the information
required by Schedule 13-D under the Act, or any amendment to
any such statement, that shows that such person has acquired,
directly or indirectly, the beneficial ownership of (i) more
than twenty four and nine tenths percent (24.9%) of any class
of equity security of the Company entitled to vote as single
class in
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the election or removal from office of directors, or
(ii) more than twenty four and nine tenths percent (24.9%) of
the voting power of any group of classes of equity securities
of the Company entitled to vote as a single class in the
election or removal from office of directors;
(b) The Company becomes aware that preliminary or
definitive copies of a proxy statement and information
statement or other information have been filed with the
Securities and Exchange Commission pursuant to Rule 14a-6,
Rule 14a-11, Rule 14c-5, or Rule 14f-1 under the Act relating
to a Potential Change in Control of the Company;
(c) Any person delivers to the Company pursuant to
Rule 14d-3 under the Act a Tender Offer Statement relating to
Voting Securities of the Company;
(d) Any person (other than the Company) publicly
announces an intention to take actions which if consummated
would constitute a Change in Control;
(e) The Company enters into an agreement or
arrangement, the consummation of which would result in the
occurrence of a Change in Control;
(f) The Board approves a proposal, or the Company
enters into an agreement, which if consummated would
constitute a Change in Control; or
(g) The Board adopts a resolution to the effect that,
for purposes of this Trust Agreement, a Potential Change in
Control has occurred.
Notwithstanding the foregoing, a Potential Change in Control shall not be deemed
to occur as a result of any event described in (a) through (f) above, if
directors who were a majority of the members of the Board prior to such event
determine that the event shall not constitute a Potential Change in Control and
furnish written notice to the Trustee of such determination.
2.01-8 For purposes of this trust, a Potential Change in
Control shall be deemed to have occurred when the Trustee makes a determination
to that effect on its own initiative or upon receipt by the Trustee of written
notice to that effect from the Company. The Chief Executive Officer of the
Company or the Board shall furnish written notice to the Trustee when a
Potential Change in Control occurs under 2.01-7.
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2.01-9 The Trustee shall accept the contributions made by the
Company and hold them as a trust fund for the payment of benefits under the
Plans. The Trustee shall not be responsible for determining the required amount
of contributions or for collecting any contribution not voluntarily paid, nor
shall the Trustee be responsible for the adequacy of the trust fund to meet and
discharge all liabilities under the Plans. Contributions may be in cash or in
other assets specified in 2.02.
2.02 Investments and Valuation
-------------------------
2.02-1 The trust fund shall be invested primarily in insurance
contracts ("Contracts"). Such Contracts may be purchased by the Company and
transferred to the Trustee as in-kind contributions or may be purchased by the
Trustee with the proceeds of cash contributions (or may be purchased upon
direction by the Committee pursuant to 2.02-2 or an Investment Manager pursuant
to 2.02-4). The Company's contributions to the trust shall include sufficient
cash to make projected premium payments on such Contracts and payments of
interest due on loans secured by the cash value of such Contracts, unless the
Company makes these payments directly. The Trustee shall have the power to
exercise all rights, privileges, options and elections granted by or permitted
under any Contract or under the rules of the insurance company issuing the
Contract ("Insurer"), including the right to obtain policy loans against the
cash value of the Contract. Prior to a Special Circumstance, the exercise by the
Trustee of any incidents of ownership under any Contract shall be subject to the
direction of the Committee. The Committee may from time to time direct the
Trustee in writing as to the designation of the beneficiary of a Participant
under a Contract for any part of the death benefits payable to such beneficiary
thereunder, and the Trustee shall file such designation with the Insurer.
Notwithstanding anything contained herein to the contrary,
neither the Company nor the Trustee shall be liable for the refusal of any
Insurer to issue or change any Contract or Contracts or to take any other action
requested by the Trustee; nor for the form, genuineness, validity, sufficiency
or effect of any Contract or Contracts held in the trust; nor for the act of any
person or persons that may render any such Contract or Contracts null and void;
nor for failure of any Insurer to pay the proceeds of any such Contract or
Contracts as and when the same shall become due and payable; nor for any delay
in payment resulting from any provision contained in any such Contract or
Contracts; nor for the fact that for any reason whatsoever (other than its
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own negligence or willful misconduct) any Contracts shall lapse or otherwise
become uncollectible.
2.02-2 Prior to a Special Circumstance, the Trustee shall
invest the trust fund in accordance with written directions by the Committee,
including directions for exercising rights, privileges, options and elections
pertaining to Contracts and for borrowing from Contracts or other borrowing by
the Trustee. The Trustee shall act only as an administrative agent in carrying
out directed investment transactions and shall not be responsible for the
investment decision. If a directed investment transaction violates any duty to
diversify, to maintain liquidity or to meet any other investment standard under
this trust or applicable law, the entire responsibility shall rest upon the
Company. The Trustee shall be fully protected in acting upon or complying with
any investment objectives, guidelines, restrictions or directions provided in
accordance with this paragraph.
After a Special Circumstance the Committee shall no longer be
entitled to direct the Trustee with respect to the investment of the trust fund,
unless the Written Consent of Participants is obtained for the Committee to
continue to have this right pursuant to 2.02-2. If such Written Consent of
Participants is not obtained, the trust fund shall be invested by the Trustee
pursuant to 2.02-3 or by an Investment Manager pursuant to 2.02-4. The Trustee
or Investment Manager shall have the right to invest the Trust Fund primarily in
insurance contracts pursuant to 2.02-1.
Notwithstanding the foregoing, no investments shall be made at
any time in any securities, instruments, accounts or real property of the
Company, and the Trustee may not loan trust fund assets to the Company, or
permit the Company to pledge trust fund assets as collateral for loans to the
Company.
The Committee may not direct the Trustee to make any
investments, and the Company may not make any contributions to the trust fund,
which are not permissible investments under 2.02-2 and 2.02-3.
2.02-3 If the Trustee does not receive instructions from the
Committee for the investment of part or all of the trust fund for a period of at
least sixty (60) days, the Trustee shall invest and reinvest the assets of the
trust fund as the Trustee, in its sole discretion, may deem
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appropriate, in accordance with applicable law. Permissible investments shall be
limited to the following:
(a) Insurance or annuity contracts;
(b) Preferred or common stocks, bonds, notes,
debentures, commercial paper, certificates of deposit, money
market funds, obligations of governmental bodies, or other
securities;
(c) Interest-bearing savings or deposit accounts with
any federally-insured bank or savings and loan association
(including the Trustee or an affiliate of the Trustee); or
(d) Shares or certificates of participation issued by
investment companies, investment trusts, mutual funds, or
common or pooled investment funds (including any common or
pooled investment fund now or hereafter maintained by the
Trustee or an affiliate of the Trustee).
2.02-4 The Company may appoint one or more investment managers
("Investment Manager") subject to the following provisions:
(a) The Company may appoint one or more Investment
Managers to manage (including the power to acquire and dispose
of) a specified portion of the assets of the trust
(hereinafter referred to as that Investment Manager's
"Segregated Fund"). Any Investment Manager so appointed must
be either (A) an investment adviser registered as such under
the Investment Advisers Act of 1940, (B) a bank, as defined in
that Act, or (C) an insurance company qualified to perform
services in the management, acquisition or disposition of the
assets of trusts under the laws of more than one state; and
any Investment Manager so appointed must acknowledge in
writing to the Company and to the Trustee that it is a
fiduciary with respect to the Plans. The Trustee, until
notified in writing to the contrary, shall be fully protected
in relying upon any written notice of the appointment of an
Investment Manager furnished to it by the Company. In the
event of any vacancy in the office of Investment Manager, the
Trustee shall be deemed to be the Investment Manager of that
Investment Manager's Segregated Fund until an Investment
Manager thereof shall have been duly appointed; and in
PAGE 15 - UMBRELLA TRUST(TM) FOR EXECUTIVES
19
such event, until an Investment Manager shall have been so
appointed and qualified, references herein to the Trustee's
acting in respect of that Segregated Fund pursuant to
direction from the Investment Manager shall be deemed to
authorize the Trustee to act in its own discretion in managing
and controlling the assets of that Segregated Fund, and
subparagraphs (b) and (c) below shall have no effect with
respect thereto and shall be disregarded.
(b) Each Investment Manager appointed pursuant to
subparagraph (a) above shall have exclusive authority and
discretion to manage and control the assets of its Segregated
Fund and may invest and reinvest the assets of the Segregated
Fund in any investments in which the Trustee is authorized to
invest under 2.02-3, subject to the terms and limitations of
any written instruments pertaining to its appointment as
Investment Manager. Copies of any such written instruments
shall be furnished to the Trustee. In addition, each
Investment Manager from time to time and at any time may
delegate to the Trustee (or in the event of any vacancy in the
office of Investment Manager, the Trustee may exercise in
respect of that Investment Manager's Segregated Fund)
discretionary authority to invest and reinvest otherwise
uninvested cash held in its Segregated Fund temporarily in
bonds, notes or other evidences of indebtedness issued or
fully guaranteed by the United States of America or any agency
or instrumentality thereof, or in other obligations of a
short-term nature, including prime commercial paper
obligations or part interests therein.
(c) Unless the Trustee knowingly participates in, or
knowingly undertakes to conceal, an act or omission of an
Investment Manager, knowing such act or omission to be a
breach of the fiduciary responsibility of the Investment
Manager with respect to the Plans, the Trustee shall not be
liable for any act or omission of any Investment Manager and
shall not be under any obligation to invest or otherwise
manage the assets of the Plans that are subject to the
management of any Investment Manager. Without limiting the
generality of the foregoing, the Trustee shall not be liable
by reason of its taking or refraining from taking at the
direction of an Investment Manager any action in respect of
that
PAGE 16 - UMBRELLA TRUST(TM) FOR EXECUTIVES
20
Investment Manager's Segregated Fund. The Trustee shall
be under no duty to question or to make inquiries as to any
direction or order or failure to give direction or order by
any Investment Manager; and the Trustee shall be under no duty
to make any review of investments acquired for the trust at
the direction or order of any Investment Manager and shall be
under no duty at any time to make any recommendation with
respect to disposing of or continuing to retain any such
investment.
2.02-5 The values of all assets in the trust fund shall be
reasonably determined by the Trustee and may be based on the determination of
qualified independent parties or Experts (as described in 2.06-2). At any time
before or after a Special Circumstance, the Trustee shall have the right to
secure confirmation of value by a qualified independent party or Expert for all
property of the trust fund, as well as any property to be substituted for other
property of the trust fund pursuant to 2.05. Before a Special Circumstance the
Company may designate one or more independent parties, who are acceptable to the
Trustee, to determine the fair market value of any notes, securities, real
property or other assets.
Any insurance or annuity contracts held in the trust fund
shall be valued at their cash surrender value, except for purposes of
substituting other property for such Contracts pursuant to 2.05-2. All
securities shall be valued net of costs to sell, or register for sale, such
securities. All real property shall be valued net of costs to sell such real
property. All other assets of the trust fund shall be valued at their fair
market value.
The Company shall pay all costs incurred in valuing the assets
of the trust fund, including any assets to be substituted for other assets of
the trust fund pursuant to 2.05. If not so paid, these costs shall be paid from
the trust fund. The Company shall reimburse the trust fund within thirty (30)
days after receipt of a xxxx from the Trustee for any such costs paid out of the
trust fund.
2.03 Subtrusts
---------
2.03-1 The Trustee shall establish a separate subtrust
("Subtrust") for each Plan to which it shall credit contributions it receives
which are earmarked for that Plan and Subtrust. The Trustee shall also establish
a separate Subtrust to which it shall credit contributions it receives which are
earmarked to the special reserve for payment of future fees and expenses of
PAGE 17 UMBRELLA TRUST(TM) FOR EXECUTIVES
21
the Trustee and future trust fees and expenses for legal and administrative
proceeding. Each Subtrust shall reflect an undivided interest in assets of the
trust fund and shall not require any segregation of particular assets. except
that an insurance contract covering benefits of a particular Plan shall be held
in the Subtrust for the Plan. All contributions shall be designated by the
Company for a particular Subtrust. However, any contribution received by the
Trustee which is not earmarked for a particular Subtrust shall be allocated
among the Subtrusts as the Trustee may determine in its sole discretion.
The Committee may direct the Trustee to maintain a separate
sub-account within each Subtrust for a Plan for each Participant who discovered
by the Subtrust. Each sub-account in a Subtrust shall reflect an individual
interest in assets of the Subtrust and, as much as possible, shall operate in
the same manner as if it were a separate Subtrust.
2.03-2 The Trustee shall allocate investment earnings and
losses and expenses of the trust fund among the Subtrusts in proportion to their
balances, except that changes in the value of an insurance contract (including
premiums and interest on loans on an insurance contract) shall be allocated to
the Subtrust for which it is held. Payments to creditors during Insolvency
Administration under 5.02 shall be charged against the Subtrusts in proportion
to their balances, except that payment of Plan benefits to a Participant as a
general creditor shall be charged against the Subtrust for that Plan.
2.03-3 Assets allocated to a Subtrust for one plan may not be
utilized to provide benefits under any other Plans until all benefits under such
Plan have been paid in full, except that Excess Assets of a Subtrust may be
transferred to other Subtrusts pursuant to 2.04-5.
2.04 Recapture of Excess Assets
--------------------------
2.04-1 In the event the trust shall hold Excess Assets, the
Committee, at its option, may direct the Trustee to return part or all of such
Excess Assets to the Company.
2.04-2 "Excess Assets" are assets of the trust exceeding one
hundred twenty five percent (125%) of the amounts described in subparagraphs
(a), (b), (c) and (d) of 2.01-3.
2.04-3 The calculation required by 2.04-2 shall be based on
the terms of the plans and the actuarial assumptions and methodology set forth
in Appendix A. Before a Special Circumstance, the calculation shall be made by
the Company or a qualified actuary or consultant selected by the Committee.
After a Special Circumstances, the calculation shall be made by a
PAGE 18 - UMBRELLA TRUST(TM) FOR EXECUTIVES
22
qualified actuary or consultant selected by the Trustee, provided the Committee
may select a qualified actuary or consultant with the Written Consent of
Participants.
2.04-4 Excess Assets shall be returned to the Company in the
following order of priority, unless the Trustee determines otherwise to protect
the participants:
(a) Cash and cash equivalents;
(b) All taxable investments of the trust (other than
cash and cash equivalents and Contracts with Insurers), in
such order as the Committee may request;
(c) All non-taxable investments of the trust (other
than cash and cash equivalents and Contracts with Insurers),
in such order as the Committee may request; and
(d) Contracts with Insurers, proceeding in order of
Contracts on insureds from the youngest to the oldest ages
based on the insured's attained age on the date of return of
Excess Assets.
Notwithstanding the foregoing, Excess Assets may be returned
in any other order of priority directed by the Committee with the Written
Consent of Participants.
2.04-5 If any Subtrust holds Excess Assets, the Committee may
direct the Trustee to transfer such Excess Assets to other Subtrusts, either
ratably in proportion to the unfunded liabilities to Participants for Plan
benefits of all other Subtrusts or first to the other Subtrust(s) with the
largest percentage of such unfunded liabilities. After a Special Circumstance
the Trustee may also transfer Excess Assets of a Subtrust to other Subtrusts
upon its own initiative in such amounts as it may determine in its sole
discretion.
Excess Assets of a Subtrust for a Plan shall be determined in
the same manner as Excess Assets of the trust are determined pursuant to 2.04-2
and 2.04-3. In making this determination each Subtrust for a Plan shall bear its
allocable share of the amounts described in subparagraphs (a) and (b) of 2.01-3
which relate to that Plan. The Trustee, in its sole discretion, shall determine
whether there are Excess Assets in the separate Subtrust which constitutes the
reserve for payment of future fees and expenses of the Trustee and future trust
fees and expenses for legal and administrative proceedings. Excess Assets for
this Subtrust shall be any amounts
PAGE 19 - UMBRELLA TRUST(TM) FOR EXECUTIVES
23
which the Trustee reasonably determines will not be needed in the future for
payment of such fees and expenses.
2.05 Substitution of Other Property
------------------------------
2.05-1 The Company shall have the power to reacquire part or
all of the assets or collateral held in the trust found at any time, by
simultaneously substitution for it other readily marketable property of
equivalent value, net of any costs of disposition; provided that, if the trust
holds Excess Assets, the property which is substituted shall not be required to
be of equivalent value, but only of sufficient value so that the trust will
retain Excess Assets of not less than $10,000 after such substitution. The
property which is substituted must be among the types of investments authorized
under 2.02 and may not be less liquid or marketable or less well secured than
the property for which it is substituted, as determined by the Trustee. such
power is exercisable in a nonfiduciary capacity and may be exercised without the
approval or consent of Participants or any other person.
2.05-2 Except for insurance contracts, the value of any assets
reacquired under 2.05-1 shall be determined as provided in 2.02-5. The value of
any insurance contract reacquired under 2.05-1 shall be the present value of
future projected cash flow or benefits payable under the Contract, but not less
than the cash surrender value. The projection shall include death benefits based
on reasonable mortality assumptions, including know facts specifically relating
to the health of the insured and the terms of the Contract to be reacquired.
Values shall be reasonably determined by the Trustee and may be based on the
determination of qualified independent parties and Experts, as described in
2.02-5 and 2.06-2. The Trustee shall have the right to secure confirmation of
value by a qualified independent party or Expert for all property to be
substituted for other property.
2.05-3 The Company shall pay all costs incurred in valuing the
assets of the trust fund, including any assets to be substituted for other
assets of the trust fund pursuant to 2..05. If not so paid, these costs shall be
paid from the trust fund. The Company shall reimburse the trust fund within
thirty (30) days after receipt of a xxxx from the Trustee for any such costs
paid out of the trust fund.
2.06 Administrative Powers of Trustee
--------------------------------
PAGE 20 UMBRELLA TRUST(TM) FOR EXECUTIVES
24
2.06-1 Subject in all respects to applicable provisions of
this Trust Agreement and the Plans, including limitations on investment of the
trust fund, the Trustee shall have the rights, powers and privileges of an
absolute owner when dealing with property of the trust, including (without
limiting the generality of the foregoing) the powers listed below:
(a) To sell, convey, transfer, exchange, partition,
lease, and otherwise dispose of any of the assets of the trust
at any time held by the Trustee under this Trust Agreement;
(b) To exercise any option, conversion privilege or
subscription right given the Trustee as the owner of any
security held in the trust; to vote any corporate stock either
in person or by proxy, with or without power of substitution;
to consent to or oppose any reorganization, consolidation,
readjustment of financial structure, sale, lease or other
disposition of the assets of any corporation or other
organization, the securities of which may be an asset of the
trust; and to take any action in connection therewith and
receive and retain any securities resulting therefrom;
(c) To deposit any security with any protective or
reorganization committee, and to delegate to such committee
such power and authority with respect thereto as the Trustee
may deem proper, and to agree to pay out of the trust such
portion of the expenses and compensation of such committee as
the Trustee, in its discretion, shall deem appropriate;
(d) To cause any property of the trust to be issued,
held or registered in the name of the Trustee as trustee, or
in the name of one or more of its nominees, or one or more
nominees of any system for the central handling of securities,
or in such form that title will pass by delivery, provided
that the records of the Trustee shall in all events indicate
the true ownership of such property, or to deposit any
securities held in the trust with a securities depository;
(e) To renew or extend the time of payment of any
obligation due or to become due;
(f) To commence or defend lawsuits or legal or
administrative proceedings; to compromise, arbitrate or settle
claims, debts or damages in favor
PAGE 21 UMBRELLA TRUST(TM) FOR EXECUTIVES
25
of or against the trust; to deliver or accept, in either total
or partial satisfaction of any indebtedness or other
obligation, any property; to continue to hold for such period
of time as the Trustee may deem appropriate any property so
received; and to pay all costs and reasonable attorneys' fees
in connection therewith out of the assets of the trust;
(g) To foreclose any obligation by judicial
proceeding or otherwise;
(h) Subject to 2.02, to borrower money from any
person in such amounts, upon such terms and for such purposes
as the Trustee, in its discretion, may deem appropriate; and
in connection therewith, to execute promissory notes,
mortgages or other obligations and to pledge or mortgage any
trust assets as security; and to lend money on a secured or
unsecured basis to any person other than a party in interest;
(i) To manage any real property in the trust in the
same manner as if the Trustee were the absolute owner thereof,
including the power to lease the same for such terms or terms
within or beyond the existence of the trust and upon such
conditions as the Trustee may deem proper; and to grant
options to purchase or acquire options to purchase any real
property;
(j) To appoint one or more persons or entities as
ancillary trustee or sub-trustee for the purpose of investing
in and holding title to real or personal property or any
interest therein located outside the State of Michigan;
provided than any such ancillary trustee or sub-trustee shall
act with such power, authority, discretion, duties, and
functions of the Trustee as shall be specified in the
instrument establishing such ancillary trust or sub-trust,
including (without limitation) the power to receive, hold and
manage property, real or personal, or undivided interest
therein; and the Trustee may pay the reasonable expenses and
compensation of such ancillary trustees or sub-trustees out of
the trust;
(k) To hold such part of the assets of the trust
uninvested for such limited periods of time as may be
necessary for purposes of orderly trust administration or
pending required directions, without liability for payment of
interest;
PAGE 22 - UMBRELLA TRUST(TM) FOR EXECUTIVES
26
(l) To determine how all receipts and disbursements
shall be credited, charged or apportioned as between income
and principal, and the decision of the Trustee shall be final
and not subject to question by any Participant or beneficiary
of the trust;
(m) Generally to do all acts, whether or not
expressly authorized, which the Trustee may deem necessary or
desirable for the orderly administration or protection of the
trust fund.
2.06-2 The Trustee may engage one or more qualified
independent attorneys, accountants, actuaries, appraisers, consultants or other
experts (an "Expert") for any purpose, including the determination of Excess
Assets pursuant to 2.04 or disputed claims pursuant to 3.03. The determination
of an Expert shall be final and binding on the Company, the Trustee, and all of
the participants unless, within thirty (30) days after receiving a determination
deemed by an Participant to be adverse, any Participant initiates suit in a
court of competent jurisdiction seeking appropriate relief. The Trustee shall
have no duty to oversee or independently evaluate the determination of the
Expert. The Trustee shall be authorized to pay the fees and expenses of any
Expert out of the assets of the trust fund.
2.06-3 The Company shall from time to time pay taxes
(references in this Trust Agreement to the payment of taxes shall include
interest and applicable penalties ) of any and all kinds whatsoever which at any
time are lawfully levied or assessed upon or become payable in respect of the
trust fund, the income or any property forming a part thereof, or any security
transaction pertaining thereto. To the extent that any taxes levied or assessed
upon the trust fund are not paid by the Company or contested by the Company
pursuant to the last sentence of this paragraph, the Trustee shall pay such
taxes out of the trust fund, and the Company shall upon demand by the Trustee
deposit into the trust fund an amount equal to the amount paid from the trust
fund to satisfy such tax liability. If requested by the Company, the Trustee
shall, at the Company's expense, contest the validity of such taxes in any
manner deemed appropriate by the Company or its counsel, but only if it has
received an indemnity bond or other security satisfactory to it to pay any
expenses of such contest. Alternatively, the Company may itself contest the
validity of such taxes, but any such contest shall not affect the Company's
obligation to reimburse the trust fund for taxes paid from the trust fund.
PAGE 23 - UMBRELLA TRUST(TM) FOR EXECUTIVES
27
2.06-4 Notwithstanding any provisions in the Plans or this
Trust Agreement to the contrary, the Company and Trustee may withhold any
benefits payable to a beneficiary as a result of the death of the Participant or
any other beneficiary until such time as (a) the Company or Trustee is able to
determine whether a generation-skipping transfer tax, as defined in Chapter 13
of the Code, or any substitute provision therefor, is or may become payable by
the Company or Trustee as a result of benefit payments to the beneficiary; and
(b) the Company or Trustee has determined the amount of generation-skipping
transfer tax that is or may become due, including interest thereon. If any such
tax is or may become payable, the Company or Trustee feels are reasonably
necessary to pay any generation-skipping transfer tax and interest thereon which
is or may become due.
Any excess amounts so withheld from a beneficiary, which are
not used to pay generation-skipping transfer tax and interest thereon, shall be
payable to the beneficiary as soon as there is a final determination of the
applicable generation-skipping transfer tax and interest thereon. Whenever any
amounts which were withheld are paid to any beneficiary, interest shall be
payable by the Company or Trustee to such beneficiary for the period of time
between the date when such amounts would otherwise have been paid to the
beneficiary and the date when such amounts are actually paid to the beneficiary
after the aforementioned generation-skipping transfer tax determinations are
made and the amount of benefits payable to the beneficiary is finally
determined. Interest shall be payable at the same rate as provided under 5.03-2.
ARTICLE III
ADMINISTRATION
--------------
3.01 Committee; Company Representatives
----------------------------------
3.01-1 The Committee is the plan administrator for the Plans
and has general responsibility to interpret the Plans and determine the rights
of Participants and beneficiaries.
3.01-2 The Trustee shall be given the names and specimen
signatures of the members of the Committee and any other Company representatives
authorized to take action in regard to the administration of the Plans and this
trust. The Trustee shall accept and rely upon the names and signatures until
notified of any change. Instructions to the Trustee shall be signed for the
Committee by the Chairman or such other person as the Committee may designate
and for the Company by any officer or such other representative as the Company
may designate.
PAGE 24 - UMBRELLA TRUST(TM) FOR EXECUTIVES
28
3.02 Payment of Benefits
-------------------
3.02-1 Benefit payments shall normally be made directly by the
Company. If such payments are not made when due, after sixty (60) days written
notice to the Company to permit the Company to cure any such Default, unless
such notice is waived by the Company, the Trustee shall pay benefits to
Participants and beneficiaries on behalf of the Company in satisfaction of its
obligations under the Plans. Benefit payments from a Subtrust shall be made in
full until the assets of the Subtrust are exhausted. Payments due on the date
the Subtrust is exhausted shall be covered pro rata. The Company's obligation
shall not be limited to the trust fund, and a Participant or beneficiary shall
have a claim against the Company for any payment not made by the Trustee.
3.02-2 A Participant's entitlement to benefits under the Plans
shall be determined by the Committee. Any benefit enhancement or right with
respect to the Plans which is provided under employment or severance agreements
of Participants shall be taken into account in making the foregoing
determination. Any claim for such benefits shall be considered and reviewed
under the claims procedures established for the Plans.
3.02-3 The Trustee shall make payments in accordance with
written directions from the Committee or consultant designated by the Committee,
except as provided in 3.03. The Trustee may request such directions from the
Committee or consultant designated by the Committee. If the Committee or
consultant designated by the Committee fails to furnish written directions to
the Trustee, within sixty (60) days after receiving a written request for
directions from the Trustee, the Trustee may make payments in accordance with
written directions from Participants or may determine the amounts due under the
terms of the Plans in reliance upon the most recent Payment Schedule furnished
to it by the Company.
The Trustee shall make any required income tax withholding and
shall pay amounts withhold to taxing authorities on the Company's behalf or
determine that such amounts have been paid by the Company.
3.02-4 The Trustee shall use the assets of the trust or any
Subtrust to make benefit payments or other payments in the following order of
priority, unless the Trustee determines otherwise to protect the Participants:
PAGE 25 - UMBRELLA TRUST(TM) FOR EXECUTIVES
29
(a) Cash contributions from the Company which are
specifically designated to enable the Trustee to make such
benefit payments or other payments when due;
(b) Cash and cash equivalents of the trust or
Subtrust;
(c) All taxable investments of the trust or Subtrust
(other than cash and cash equivalents and Contracts with
Insurers), in such order as the Trustee may determine;
(d) All non-taxable investments of the trust or
Subtrust (other than cash and cash equivalents and Contracts
with Insurers), in such order as the Trustee may determine;
and
(e) Contracts with Insurers held in the trust or
Subtrust, in such order and manner (for example, making
tax-free withdrawals prior to any taxable withdrawals from
Contracts) as the Trustee may determine. Unless the Trustee
determines otherwise to protect the Participants, the Trustee
shall make tax-free withdrawals prior to any taxable
withdrawals from Contracts; shall make withdrawals from
Contracts to the premium vanish point before surrendering any
Contracts; and shall surrender Contracts, only if necessary,
proceeding in order of Contracts o insureds from the youngest
to the oldest ages based on the insured's age on the date of
surrender of the Contract.
Notwithstanding the foregoing, the Trustee may use the assets
of the trust or any Subtrust in any other order of priority directed by the
Committee with the Written Consent of Participants affected thereby.
3.03 Disputed Claims
---------------
3.03-1 A Participant covered by this Trust whose claim has
been denied by the Committee, or who has received no response to the claim
within sixty (60) days after submission, may submit the claim to the Trustee.
The Trustee shall give written notice of the claim to the Committee. If the
Trustee receives no written response from the Committee within thirty (30) days
after the date the Committee is given written notice of the claim, the Trustee
shall pay the Participant the amount claimed, unless it determines that a lessor
amount is due under the terms of the Plans. If a written response is received
within such thirty (30) days, the Trustee shall
PAGE 26- UMBRELLA TRUST(TM) FOR EXECUTIVES
30
consider the claim, including the Committee's response. If a written response is
received within such thirty (30) days, the Trustee shall consider the claim,
including the Committee's response. If the merits of the claim depend on
compensation, service or other data in the possession of the Company and it is
not provided, the Trustee may rely upon information provided by the Participant.
Any benefit enhancement or right with respect to the Plans which is provided
under employment or severance agreements of Participants shall be taken into
account in making the foregoing determination.
3.03-2 The Trustee shall give written notice to the
Participant and the Committee of its decision on the claim. If the decision is
to grant the claim, the Trustee shall make payment to the Participant. The
Trustee may decline to decide a claim and may file suit to have the matter
resolved by a court of competent jurisdiction. All of the Trustee's expenses in
the court proceeding, including attorneys fees, shall be allowed as
administrative expenses of the trust.
Either the Participant or the Company may challenge the
Trustee's decision by filing suit in a court of competent jurisdiction. If no
such suit is filed within sixty (60) days after delivery of written notice of
the Trustee's decision, the decision shall become final and binding on all
parties.
Notwithstanding the two preceding paragraphs, after the
Trustee decides a claim or declines to decide a claim, any dispute between a
Participant and the Company or the Trustee as to the interpretation or
application of the provisions of this Trust Agreement and amounts payable
hereunder may, at the election of any party to such dispute (or, if more than
one Participant is such a party, at the election of two-thirds of such
Participants) be determined by binding arbitration in New York in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court of competent jurisdiction.
All fees and expenses of such arbitration shall be paid by the Trustee and
considered an expense of the trust under 3.06.
If the Participant is not satisfied with the decision of the
Arbitrator, the Participant may appeal the Arbitrator's decision by filing suit
in a court of competent jurisdiction. If no such suit is filed within sixty (60)
days after delivery of written notice of the Arbitrator's decision, the decision
shall become final and binding on all. If the Participant appeals the
PAGE 27- UMBRELLA TRUST(TM) FOR EXECUTIVES
31
Arbitrator's decision and the decision is ultimately upheld, the Participant
shall reimburse the Trustee for all expenses incurred in defending the
Arbitrator's decision.
3.03-3 If the Committee opposes a claim presented under 3.03-1
and the Trustee ultimately pays the claim from trust assets, the Trustee shall
reimburse the Participant's expenses in pursuing the claim, including attorneys
fees at the trial and appellate level. The Company shall reimburse the trust
fund within thirty (30) days after receipt of a xxxx from the Trustee for any
such Participant's expenses which are reimbursed by the Trustee.
3.04 Records
-------
3.04-1 The Trustee shall keep complete records on the trust
fund open to inspection by the Company, Committee and Participants at all
reasonable times. In addition to accountings required below, the Trustee shall
furnish to the Company, Committee and Participants any information reasonably
requested about the trust fund.
3.05 Accountings
-----------
3.05-1 The Trustee shall furnish the Company with a complete
statement of accounts annually within sixty (60) days after the end of the trust
year showing assets and liabilities and income and expense for the year of the
trust and each Subtrust. The Trustee shall also furnish the Company with
accounting statements at such other times as the Company may reasonably request.
The form and content of the statement of accounts shall be sufficient for the
Company to include in computing its taxable income and credits the income,
deductions and credits against tax that are attributable to the trust fund. The
Trustee shall also allow, upon the Company's request, access to the statements
of accounts by the Company's independent public accountant.
3.05-2 The Company may object to an accounting within one
hundred eighty (180) days after it is furnished and require that it be settled
by audit by a qualified, independent certified public accountant. The auditor
shall be chosen by the Trustee from a list of at least five such accountants
furnished by the Company at the time the audit is requested. Either the Company
or the Trustee may require that the account be settled by a court of competent
jurisdiction, in lieu of or in conjunction with the audit. All expenses of any
audit or court proceedings, including reasonable attorneys' fees, shall be
allowed as administrative expenses of the trust.
PAGE 28- UMBRELLA TRUST(TM) FOR EXECUTIVES
32
3.05-3 If the Company does not object to an accounting within
the time provided, the account shall be settled for the period covered by it.
3.05-4 When an account is settled, it shall be final and
binding on all parties, including all Participants and persons claiming through
them.
3.06 Expenses and Fees
-----------------
3.06-1 The Trustee shall be reimbursed for all reasonable
expenses and shall be paid a reasonable fee fixed by agreement with the Company
from time to time. No increase in the fee shall be effective before sixty (60)
days after the Trustee gives Written notice to the Company of the increase. The
Trustee shall notify the Company periodically of expenses and fees.
3.06-2 The Company shall pay trustee and other administrative
and valuation fees and expenses. If not so paid, these fees and expenses shall
be paid from the trust fund. The Company shall reimburse the trust fund within
thirty (30) days after receipt of a xxxx from the Trustee for any fees and
expenses paid out of the trust fund.
ARTICLE IV
LIABILITY
---------
4.01 Indemnity
---------
4.01-1 Subject to such limitations as may be imposed by
applicable law, the Company shall indemnify and hold harmless the Trustee from
any claim, loss, liability or expense arising from any action or inaction in
administration of this trust based on direction or information from either the
Company, Committee, any Investment Manager or any Expert, or any action taken
with respect to Written Consent of Participants as defined in 1.02-5, except in
the case of willful misconduct or bad faith.
4.02 Bonding
-------
4.02-1 The Trustee need not give any bond or other security
for performance of its duties under this trust.
ARTICLE V
INSOLVENCY
----------
5.01 Determination of Insolvency
---------------------------
5.01-1 The Company is Insolvent for purposes of this trust
if:
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33
(a) The Company is unable to pay its debts as they
come due; or
(b) The Company is the subject of a pending
proceeding as a debtor under the federal Bankruptcy Code
(or any successor federal statute).
5.01-2 The Company shall promptly give written notice to the
Trustee upon becoming Insolvent. The Chief Executive Officer of the Company and
the Board shall be obligated to give such notice. If the Trustee receives such
notice or receives from any other person claiming to be a creditor of the
Company a written allegation that the Company is Insolvent, the Trustee shall
independently determine whether such insolvency exists. The expenses of such
determination shall be allowed as administrative expenses of the trust.
5.01-3 Upon receipt of the notice or allegation described in
5.01-2, the Trustee shall discontinue making payments from the trust fund to
Participants and beneficiaries under the Plans and shall commence Insolvency
Administration under 5.02.
5.01-4 The Trustee shall have no obligation to investigate the
financial condition of the Company prior to receiving a notice or allegation of
insolvency under 5.01-2.
5.02 Insolvency Administration
-------------------------
5.02-1 During Insolvency Administration, the Trustee shall
hold the trust fund for the benefit of the creditors of the Company and make
payments only in accordance with 5.02-2. The Participants and beneficiaries
shall have no greater rights than general creditors of the Company. The Trustee
shall continue the investment of the trust fund in accordance with 2.02.
5.02-2 The Trustee shall make payments out of the trust fund
in one or more of the following ways:
(a) To creditors in accordance with instructions from
a court, or a person appointed by a court, having jurisdiction
over the Company's condition of insolvency;
(b) To Participants and beneficiaries in accordance
with such instructions; or
(c) In payment of its own fees or expenses.
5.02-3 The Trustee shall have a priority claim against the
trust fund with respect to its own fees and expenses.
5.03 Termination of Insolvency Administration
----------------------------------------
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34
5.03-1 Insolvency Administration shall terminate when the
Trustee determines that the Company:
(a) Is not Insolvent, in response to a notice or
allegation of insolvency under 5.01-2;
(b) Has ceased to be Insolvent; or
(c) Has been determined by a court of competent
jurisdiction not to be Insolvent or to have ceased to be
Insolvent.
5.03-2 Upon termination of Insolvency Administration under
5.03-1, the trust fund shall continue to be held for the benefit of the
Participants and beneficiaries under the Plans. Benefit payments due during the
period of Insolvency Administration shall be made as soon as practicable,
together with interest from the due dates at the following rates:
(a) For the Executive Deferred Compensation Plan, the
rate credited on the Participant's account under the Plan.
(b) For the Supplemental Executive Benefit Plan, a
rate equal to the interest rate fixed by the Pension Benefit
Guaranty Corporation for valuing immediate annuities in the
preceding month.
(c) For the Severance Plans, a rate equal to the
interest rate fixed by the Pension Benefit Guaranty
Corporation for valuing immediate annuities in the preceding
month.
5.04 Creditors' Claims During Solvency
---------------------------------
5.04-1 During periods of Solvency the Trustee shall hold the
trust fund exclusively to pay Plan benefits and fees and expenses of the trust
until all Plan benefits have been paid. Creditors of the Company shall not be
paid during Solvency from the trust fund, which may not be seized by or
subjected to the claims of such creditors in any way.
5.04-2 A period of Solvency is any period not covered by 5.02.
ARTICLE VI
SUCCESSOR TRUSTEES
------------------
6.01 Resignation and Removal
-----------------------
6.01-1 The Trustee may resign at any time by notice to the
Company, which shall be effective in sixty (60) days unless the Company and the
Trustee agree otherwise.
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35
6.01-2 The Trustee may be removed by the Company on sixty (60)
days' written notice or shorter notice accepted by the Trustee. After a Special
Circumstance the Trustee may be removed only with the Written Consent of
Participants.
6.01-3 When resignation or removal is effective, the Trustee
shall begin transfer of assets to the successor Trustee immediately. The
transfer shall be completed within sixty (60) days, unless the Company extends
the time limit.
6.01-4 If the Trustee resigns or is removed, the Company shall
appoint a successor by the effective date of resignation or removal under 6.01-1
or 6.01-2. After a Special Circumstance a successor Trustee may be appointed
only with the Written Consent of Participants. 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 the trust.
6.02 Appointment of Successor
------------------------
6.02-1 The Company may appoint any national or state bank or
trust company that is unrelated to the Company as a successor to replace the
Trustee upon resignation or removal. The appointment shall be effective when
accepted in writing by the new Trustee, which 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 instruments necessary or reasonably
requested by the Company or the successor Trustee to evidence the transfer.
After a Special Circumstance a successor Trustee may be appointed only with the
Written Consent of Participants.
6.02-2 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 Article II. The successor Trustee shall not be responsible for, and
the Company shall indemnify and hold harmless the successor Trustee from any
claim or liability because of, any action or inaction of any prior Trustee or
any other past event, any existing condition or any existing assets.
6.03 Accountings; Continuity
-----------------------
6.03-1 A Trustee who resigns or is removed shall submit a
final accounting to the Company as soon as practicable. The accounting shall be
received and settled as provided in 3.05 for regular accountings.
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36
6.03-2 No resignation or removal of the Trustee or change in
identity of the Trustee for any reason shall cause a termination of the Plans or
this trust.
ARTICLE VII
GENERAL PROVISIONS
------------------
7.01 Interests Not Assignable
------------------------
7.01-1 The interest of a Participant in the trust fund may not
be assigned, pledged or otherwise encumbered, seized by legal process,
transferred or subjected to the claims of the Participant's creditors in any
way.
7.01-2 The Company may not create a security interest in the
trust fund in favor of any of its creditors. The Trustee shall not make payments
from the trust fund of any amounts to creditors of the Company other than
Participants, except as provided in 5.02.
7.01-3 The Participants shall have no interest in the assets
of the trust fund beyond the right to receive payment of Plan benefits and
reimbursement of expenses from such assets subject to the instructions during
Insolvency referred to in 5.02. During Insolvency Administration the
Participants' rights to trust assets shall not be superior to those of any other
general creditors of the Company.
7.02 Amendment
---------
7.02-1 The Company and the Trustee may amend this Trust
Agreement at any time by a written instrument executed by both parties. Except
as provided below, any such amendment after a Special Circumstance or more than
two years after the date hereof may be made only with the Written Consent of
Participants. Notwithstanding the foregoing, any such amendment may be made by
written agreement of the Company and the Trustee without the Written Consent of
Participants if such amendment will not have a material adverse effect on the
rights of any Participant hereunder or, prior to a Special Circumstance, is
necessary to comply with any laws, regulations or other legal requirements.
7.03 Applicable Law
--------------
7.03-1 This trust shall be governed, construed and
administered according to the laws of Michigan, except as preempted by ERISA.
7.04 Agreement Binding on All Parties
--------------------------------
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37
7.04-1 This Trust Agreement shall be binding upon the heirs,
personal representatives, successors and assigns of any and all present and
future parties.
7.05 Notices and Directions
----------------------
7.05-1 Any notice or direction under this Trust Agreement
shall be in writing and shall be effective when actually delivered or, if
mailed, when deposited postpaid as first-class mail. Mail to a party shall be
directed to the address stated below or to such other address as either party
may specify by notice to the other party. Notices to the Committee shall be sent
to the address of the Company. Notices to Participants who have submitted claims
under 3.03 shall be mailed to the address shown in the claim submission. Until
notice is given to the contrary, notices to the Company and the Trustee shall be
addressed as follows:
Company: KeyCorp
Xxx XxxXxxx Xxxxx
X.X. Xxx 00
Xxxxxx, Xxx Xxxx 00000-0000
Attention: Xxx Xxxxxx
Trustee: NBD Bank, N.A.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx
7.06 No Implied Duties
-----------------
7.06-1 The duties of the Trustee shall be those stated in this
trust, and no other duties shall be implied.
7.07 Gender, Singular and Plural
---------------------------
7.07-1 All pronouns and any variations thereof shall be deemed
to refer to the masculine or feminine, as the identity of the person or persons
may require. As the context may require, the singular may be read as the plural
and the plural as the singular.
ARTICLE VIII
INSURER
-------
8.01 Insurer Not a Party
-------------------
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38
8.01-1 The Insurer shall not be deemed to be a party to this
Trust Agreement, and its obligations shall be measured and determined solely by
the terms of its Contracts and other agreements executed by it.
8.02 Authority of Trustee
--------------------
8.02-1 The Insurer shall accept the signature of the Trustee
on any documents or papers executed in connection with such Contracts. The
signature of the Trustee shall be conclusive proof to the Insurer that the
person on whose life an application is being made is eligible to have such
Contract issued on his life and is eligible for a Contract of the type and
amount requested.
8.03 Contract Ownership
------------------
8.03-1 The Insurer shall deal with the Trustee as the sole and
absolute owner of the trust's interests in such Contracts and shall have no
obligation to inquire whether any action or failure to act on the part of the
Trustee is in accordance with or authorized by the terms of the Plans or this
Trust Agreement.
8.04 Limitation of Liability
-----------------------
8.04-1 The Insurer shall be fully discharged from any and all
liability for any action taken or any amount paid in accordance with the
direction of the Trustee and shall have no obligation to see to the proper
application of the amounts so paid. The Insurer shall have no liability for the
operation of this Trust Agreement or the Plans, whether or not in accordance
with their terms and provisions.
8.05 Change of Trustee
-----------------
8.05-1 The Insurer shall be fully discharged from any and all
liability for dealing with a party or parties indicated on its records to be the
Trustee until such time as it shall receive at its home office written notice of
the appointment and qualification of a successor Trustee.
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Trust Agreement to be executed by their respective duly authorized officers
on the dates set forth below.
COMPANY: By
-----------------------------------
Its
-----------------------------------
Executed: ___________________, 199_
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39
TRUSTEE: By
-----------------------------------
Its
-----------------------------------
Executed: ___________________, 199_
PAGE 36 UMBRELLA TRUST(TM) FOR EXECUTIVES
40
APPENDIX A
Assumptions and Methodology for
Calculations Required Under 2.01 and 2.04
1. The liability for benefits under each Plan will be calculated using two
different assumptions as to when Participants terminate service:
(a) As of the applicable date under 2.01-3 or 2.04.
(b) Twenty four (24) months after the applicable date, assuming
future compensation continues at current levels, and future
deferrals under deferred compensation plans continue pursuant
to prior elections.
The liability for accrued benefits under each Plan will be the greater
of the liabilities calculated in accordance with (a) and (b) above.
2. Calculations will be based upon the most valuable optional form of
payment available to the Participant.
3. The liability for benefits under deferred compensation or other defined
contribution Plans shall be equal to the deferral or other account
balances (vested and unvested) of Participants as of the applicable
date, plus projected deferrals expected to be made within twenty four
(24) months after the applicable date pursuant to prior elections.
Account balances of Participants under a Plan shall be calculated based
on crediting the highest rate of interest which may become payable to
Participants under the Plan.
4. The liability for benefits under other Plans shall be equal to the
present value of accrued benefits (vested and unvested) of Participants
as of the relevant dates under 1(a) and (b) above.
5. No mortality is assumed prior to the commencement of benefits, except
for purposes of calculating any additional accrued liability under 5
above. Future mortality is assumed to occur in accordance with the 1983
Group Annuity Table Male Rates after the commencement of benefits.
6. The present value of amounts shall be determined using a discount rate
equal to the then current Pension Benefit Guaranty Corporation
immediate annuity rate for a nonmultiemployer plan.
7. Where left undefined above, calculations will be performed in
accordance with generally accepted actuarial principles.
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