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EXHIBIT 10.2
RSA SECURITY, INC.
GRANTOR TRUST AGREEMENT
This Grantor Trust Agreement (the "Trust Agreement") is made this 13th day of
March, 2000 by and between RSA Security, Inc. ("the Company") and Wachovia Bank,
N.A. ("the Trustee").
RECITALS
(a) WHEREAS, the Company has adopted the plans and severance or other
agreements (the "Arrangements") as listed in Attachment A;
(b) WHEREAS, the Company has incurred or expects to incur liability under
the terms of such Arrangements with respect to the individuals
participating in such Arrangements (the "Participants and
Beneficiaries");
(c) WHEREAS, the Company wishes to establish a Trust (hereinafter referred
to as the "Trust") and shall contribute to the Trust assets that shall
be held therein, subject to the claims of the Company's creditors in
the event of the Company's Insolvency, as herein defined, until paid to
Participants and their Beneficiaries in such manner and at such times
as specified in the Arrangements and in this Trust Agreement;
(d) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of
the Arrangements as an unfunded plan maintained for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees for purposes of Title I of the Employee
Retirement Income Security Act of 1974; and
(e) WHEREAS, it is the intention of the Company to make contributions to
the Trust to provide itself with a source of funds (the "Fund") to
assist it in satisfying its liabilities under the Arrangements.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF THE TRUST
(a) The Trust is intended to be a Grantor Trust, of which the Company and
any subsidiaries which adopt the Trust is the Grantor, within the
meaning
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of subpart E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue Code of 1986, as amended, and shall be construed
accordingly.
(b) The Company shall be considered a Grantor for the purposes of the
Trust.
(c) The Trust hereby established is irrevocable by the Company.
(d) The Company hereby deposits with the Trustee in the Trust one-thousand
dollars and zero cents ($1,000.00) which shall become the principal of
the Trust to be held, administered and disposed of by the Trustee as
provided in this Trust Agreement.
(e) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes of Participants and general
creditors as herein set forth. Participants and their Beneficiaries
shall have no preferred claim on, or any beneficial ownership interest
in, any assets of the Trust. Any rights created under the Arrangements
and this Trust Agreement shall be unsecured contractual rights of
Participants and their Beneficiaries against the Company. Any assets
held by the Trust will be subject to the claims of the general
creditors of the Company under federal and state law in the event the
Company is Insolvent, as defined in Section 3(a) herein.
(f) The Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property acceptable to
the Trustee in the Trust to augment the principal to be held,
administered and disposed of by the Trustee as provided in this Trust
Agreement. Prior to a Change in Control, neither the Trustee nor any
Participant or Beneficiary shall have any right to compel additional
deposits.
(g) The Chief Executive Officer, the Chief Financial Officer, or the
General Counsel of the Company shall notify the Trustee of an
occurrence of a Potential Change in Control, and the Company shall, as
soon as possible, but in no event longer than thirty (30) days
following the occurrence of a Potential Change in Control, as defined
herein, make a contribution to the Trust in an amount that is
sufficient to fund the Trust in an amount equal to no less than 100%
but no more than 120% of the amount necessary to pay each Participant
or Beneficiary the benefits to which Participants or their
Beneficiaries would be entitled pursuant to the terms of the
Arrangements as of the date on which the Potential Change in Control
occurred.
Notwithstanding Section 1 (f), prior to a Change in Control, the
Company, on or before June 1 of each year, shall make additional
deposits of cash or other property in trust with the Trustee, to
augment the
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principal to be held, administered and disposed of by the Trustee
as provided in this Trust Agreement, in an amount calculated to ensure
that the value of assets in the Trust shall be equal to at least 80% of
the present value, as of December 31 of the preceding year, of amounts
accrued as of December 31 of such preceding year. For purposes of this
Trust Agreement, "present value" shall be determined on the basis of
the assumptions contained in the payment schedule(s) as described in
Section 2 (c). If the Company fails to make the contribution required
under this subsection within 30 days, a Potential Change in Control
will be deemed to have occurred.
(h) In the event a Change in Control does not occur following a Potential
Change in Control, the Chief Executive Officer, the Chief Financial
Officer, or the General Counsel shall notify the Trustee, and the
Company shall have the right to recover any amounts contributed to and
remaining on hand plus earnings on such amounts in the Trust pursuant
to Section 1(g).
(i) Upon a Change in Control, the Chief Executive Officer, the Chief
Financial Officer, or the General Counsel of the Company shall notify
the Trustee. Also,upon a Change in Control, the Company shall, as soon
as possible, but in no event longer than thirty (30) days following the
occurrence of a Change in Control, as defined herein, make an
irrevocable contribution to the Trust in an amount that is sufficient
to fund the Trust in an amount equal to no less than 100 % but no more
than 120% of the amount necessary to pay each Participant or
Beneficiary the benefits to which Participants or their Beneficiaries
would be entitled pursuant to the terms of the Arrangements as of the
date on which the Change in Control occurred. The Company shall also
fund an expense reserve for the Trustee in the amount of $120,000.
SECTION 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES
(a) Prior to a Change in Control, distributions from the Trust shall be
made by the Trustee to Participants and Beneficiaries at the direction
of the Company. The entitlement of a Participant or his or her
Beneficiaries to benefits under the Arrangements shall be determined by
the Company or such party or professional administrator as it shall
designate under the Arrangements as the Company's agent, and any claim
for such benefits shall be considered and reviewed under the procedures
set out in the Arrangements.
(b) The Company may make payment of benefits directly to Participants or
their Beneficiaries as they become due under the terms of the
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Arrangements. The Company shall notify the Trustee of its decision to
make payment of benefits directly prior to the time amounts are payable
to Participants or their Beneficiaries. In addition, if the principal
of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Arrangements,
the Company shall make the balance of each such payment as it falls due
in accordance with the Arrangements. The Trustee shall notify the
Company where principal and earnings are not sufficient. Nothing in
this Agreement shall relieve the Company of its liabilities to pay
benefits due under the Arrangements except to the extent such
liabilities are met by application of assets of the Trust.
(c) After a Potential Change in Control and before a Change in Control, the
Company shall deliver to the Trustee a schedule of benefits due under
the Arrangements. Subsequent to a Change in Control, the Trustee shall
pay benefits due in accordance with such schedule. After a Change in
Control, the Company shall continue to make the determination of
benefits due to Participants or their Beneficiaries and shall provide
the Trustee with an updated schedule of benefits due; provided however,
a Participant or their Beneficiaries may make application to the
Trustee for an independent decision as to the amount or form of their
benefits due under the Arrangements. In making any determination
required or permitted to be made by the Trustee under this Section, the
Trustee shall, in each such case, reach its own independent
determination, in its absolute and sole discretion, as to the
Participant's or Beneficiary's entitlement to a payment hereunder. In
making its determination, the Trustee may consult with and make such
inquiries of such persons, including the Participant or Beneficiary,
the Company, legal counsel, actuaries or other persons, as the Trustee
may reasonably deem necessary. Any reasonable costs incurred by the
Trustee in arriving at its determination shall be reimbursed by the
Company and, to the extent not paid by the Company within a reasonable
time, shall be charged to the Trust. The Company waives any right to
contest any amount paid over by the Trustee hereunder pursuant to a
good faith determination made by the Trustee notwithstanding any claim
by or on behalf of the Company (absent a manifest abuse of discretion
by the Trustee) that such payments should not be made.
(d) The Trustee agrees that it will not itself institute any action at law
or at equity, whether in the nature of an accounting, interpleading
action, request for a declaratory judgment or otherwise, requesting a
court or administrative or quasi-judicial body to make the
determination required to be made by the Trustee under this Section 2
in the place
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and stead of the Trustee. The Trustee may institute an action to
collect a contribution due the Trust following a Change in Control or
in the event that the Trust should ever experience a short-fall in the
amount of assets necessary to make payments pursuant to the terms of
the Arrangements.
(e) In the event any Participant or his or her Beneficiary is determined to
be subject to federal income tax on any amount to the credit of his or
her account under any Arrangement prior to the time of payment
hereunder, whether or not due to the establishment of or contributions
to this Trust, a portion of such taxable amount equal to the federal,
state and local taxes (excluding any interest or penalties) owed on
such taxable amount, shall be distributed by the Trustee as soon
thereafter as practicable to such Participant or Beneficiary. The
Company shall promptly reimburse the Trust for any such distribution in
an amount certified by the Trustee to be needed for the Participant's
benefits. For these purposes, a Participant or Beneficiary shall be
deemed to pay state and local taxes at the highest marginal rate of
taxation in the state in which the Participant resides or is employed
(or both) where a tax is imposed and federal income taxes at the
highest marginal rate of taxation, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such
state and local taxes. Such distributions shall be at the direction of
the Company or the Trustee, or upon proper application of the
Participant or Beneficiary; provided that the actual amount of the
distribution shall be determined by the Company prior to a Change in
Control and the Trustee following a Change in Control. An amount to the
credit of a Participant's Account shall be determined to be subject to
federal income tax upon the earliest of: (a) a final determination by
the United States Internal Revenue Service addressed to the Participant
or his Beneficiary which is not appealed to the courts; (b) a final
determination by the United States Tax Court or any other federal court
affirming any such determination by the Internal Revenue Service; or
(c) an opinion by the Company's tax counsel, addressed to the Company
and the Trustee, to the effect that by reason of Treasury Regulations,
amendments to the Internal Revenue Code, published Internal Revenue
Service rulings, court decisions or other substantial precedent,
amounts to the credit of Participants hereunder are subject to federal
income tax prior to payment. The Company shall undertake at its sole
expense to defend any tax claims described herein which are asserted by
the Internal Revenue Service against any Participant or Beneficiary,
including attorney fees and cost of appeal, and shall have the sole
authority to determine whether or not to appeal any determination made
by the
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Service or by a lower court. The Company also agrees to reimburse any
Participant or Beneficiary for any interest or penalties in respect of
tax claims hereunder upon receipt of documentation of same Any
distributions from the Fund to a Participant or Beneficiary under this
Section 2(e) shall be applied in accordance with the provisions of the
Arrangement to reduce the Company liabilities to such Participant
and/or Beneficiary under the Arrangement with such reductions to be
made on a pro-rata basis over the term of benefit payments under the
Arrangement; provided, however, that in no event shall any Participant,
Beneficiary or estate of any Participant or Beneficiary have any
obligation to return all or any part of such distribution to the
Company if such distribution exceeds benefits payable under an
Arrangement. Any reduction in accordance with the foregoing sentence
and the Arrangements shall be determined by the Company prior to a
Change in Control . Following a Change in Control, the Company shall
continue to make such determination subject to the right of a
Participant to petition the Trustee under Section 2(c).
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO THE TRUST
BENEFICIARY WHEN THE COMPANY IS INSOLVENT
(a) The Trustee shall cease payment of benefits to Participants and their
Beneficiaries if the Company is Insolvent. The Company shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) the
Company is unable to pay its debts as they become due, or (ii) the
Company is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
(b) At all times during the continuance of this Trust, the principal and
income of the Trust shall be subject to claims of general creditors of
the Company under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer of the
Company shall have the duty to inform the Trustee in writing
that the Company is Insolvent. If a person claiming to be a
creditor of the Company alleges in writing to the Trustee that
the Company has become Insolvent, the Trustee shall determine
whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment of
benefits to Participants or their Beneficiaries.
(2) Unless the Trustee has actual knowledge that the Company is
Insolvent, or has received notice from the
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Company or a person claiming to be a creditor alleging that
the Company is Insolvent, the Trustee shall have no duty to
inquire whether the Company is Insolvent. The Trustee may in
all events rely on such evidence concerning solvency as may be
furnished to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning the
solvency of the Company.
(3) If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue payments to
Participants or their Beneficiaries and shall hold the assets
of the Trust for the benefit of the Company's general
creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Participants or their Beneficiaries to
pursue their rights as general creditors of the Company with
respect to benefits due under the Arrangements or otherwise.
(4) The Trustee shall resume the payment of benefits to
Participants or their Beneficiaries in accordance with Section
2 of this Trust Agreement only after the Trustee has
determined that the Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if the Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof
and subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all payments
due to Participants or their Beneficiaries under the terms of the
Arrangements for the period of such discontinuance plus earnings on
such amount based on the average interest rate in effect for 30-day
Treasury Bills over such period of discontinuance, less the aggregate
amount of any payments made to Participants or their Beneficiaries by
the Company in lieu of the payments provided for hereunder during any
such period of discontinuance.
SECTION 4. PAYMENTS WHEN A SHORT-FALL OF THE TRUST ASSETS OCCURS
(a) If there are not sufficient assets for the payment of benefits pursuant
to Section 2 or Section 3(c) hereof and the Company does not otherwise
make such payments within a reasonable time after demand from
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benefits the Trustee, the Trustee shall make payment of from the Trust
to the Participants or their Beneficiaries on a pro rata basis.
(b) Upon receipt of a contribution from the Company necessary to make up
for a shortfall in the payments due, the Trustee shall resume payments
to all the Participants and Beneficiaries under the Arrangements.
Following a Change in Control, the Trustee shall have the right to
compel a contribution to the Trust from the Company to make-up for any
shortfall.
SECTION 5. PAYMENTS TO THE COMPANY
Except as provided in Sections 3 hereof and Section 4 below, after the Trust has
become irrevocable, the Company shall have no right or power to direct the
Trustee to return to the Company or to divert to others any of the Trust assets
before all payment of all benefits have been made to Participants and their
Beneficiaries pursuant to the terms of the Arrangements and all fees and
expenses of the Trust have been paid.
In the event that the Company determines prior to a Change in Control that the
Trust Fund exceeds 125% of the anticipated benefit obligations and fees and
expenses that are to be paid under the Plan and Trust, the Trustee, shall , upon
the direction of the Company, distribute to the Company such excess portion of
the trust Fund.
SECTION 6. INVESTMENT AUTHORITY
(a) The Trustee shall not be liable in discharging its duties hereunder,
including without limitation its duty to invest and reinvest the Fund,
if it acts for the exclusive benefit of the Participants and their
Beneficiaries, in good faith and as a prudent person would act in
accomplishing a similar task and in accordance with the terms of this
Trust Agreement and any applicable federal or state laws, rules or
regulations.
(b) Subject to investment guidelines agreed to in writing from time to time
by the Company and the Trustee prior to a Change in Control, the
Trustee shall have the power in investing and reinvesting the Fund in
its sole discretion:
(1) To invest and reinvest in any readily marketable common and
preferred stocks, bonds, notes, debentures, certificates of
deposit or demand or time deposits (including any such
deposits with the Trustee) and shares of investment companies
and mutual funds, without being limited to the classes or
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property in which the Trustees are authorized to invest by any
law or any rule of court of any state and without regard to
the proportion any such property may bear to the entire amount
of the Fund;
(2) To commingle for investment purposes all or any portion of the
Fund with assets of any other similar trust or trusts
established by the Company with the Trustee for the purpose of
safeguarding deferred compensation or retirement income
benefits of its employees and/or directors;
(3) To retain any property at any time received by the Trustee;
(4) To sell or exchange any property held by it at public or
private sale, for cash or on credit, to grant and exercise
options for the purchase or exchange thereof, to exercise all
conversion or subscription rights pertaining to any such
property and to enter into any covenant or agreement to
purchase any property in the future;
(5) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation or other similar plan
relating to property held by it and to consent to or oppose
any such plan or any action thereunder or any contract, lease,
mortgage, purchase, sale or other action by any person;
(6) To deposit any property held by it with any protective,
reorganization or similar committee, to delegate discretionary
power thereto, and to pay part of the expenses and
compensation thereof any assessments levied with respect to
any such property to deposit;
(7) To extend the time of payment of any obligation held by it;
(8) To hold uninvested any moneys received by it, without
liability for interest thereon, but only in anticipation of
payments due for investments, reinvestments, expenses or
disbursements;
(9) To exercise all voting or other rights with respect to any
property held by it and to grant proxies, discretionary or
otherwise;
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(10) For the purposes of the Trust, to borrow money from others, to
issue its promissory note or notes therefor, and to secure the
repayment thereof by pledging any property held by it;
(11) To employ suitable contractors and counsel, who may be counsel
to the Company or to the Trustee, and to pay their reasonable
expenses and compensation from the Fund to the extent not paid
by the Company;
(12) To register investments in its own name or in the name of a
nominee; to hold any investment in bearer form; and to combine
certificates representing securities with certificates of the
same issue held by it in other fiduciary capacities or to
deposit or to arrange for the deposit of such securities with
any depository, even though, when so deposited, such
securities may be held in the name of the nominee of such
depository with other securities deposited therewith by other
persons, or to deposit or to arrange for the deposit of any
securities issued or guaranteed by the United States
government, or any agency or instrumentality thereof,
including securities evidenced by book entries rather than by
certificates, with the United States Department of the
Treasury or a Federal Reserve Bank, even though, when so
deposited, such securities may not be held separate from
securities deposited therein by other persons; provided,
however, that no securities held in the Fund shall be
deposited with the United States Department of the Treasury or
a Federal Reserve Bank or other depository in the same account
as any individual property of the Trustee, and provided,
further, that the books and records of the Trustee shall at
all times show that all such securities are part of the Trust
Fund;
(13) To settle, compromise or submit to arbitration any claims,
debts or damages due or owing to or from the Trust,
respectively, to commence or defend suits or legal proceedings
to protect any interest of the Trust, and to represent the
Trust in all suits or legal proceedings in any court or before
any other body or tribunal; provided, however, that the
Trustee shall not be required to take any such action unless
it shall have been indemnified by the Company to its
reasonable satisfaction against liability or expenses it might
incur therefrom;
(14) To hold and retain policies of life insurance, annuity
contracts, and other property of any kind which policies are
contributed
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to the Trust by the Company or any subsidiary of the Company
or are purchased by the Trustee;
(15) To hold any other class of assets which may be contributed by
the Company and that is deemed reasonable by the Trustee,
unless expressly prohibited herein;
(16) To loan any securities at any time held by it to brokers or
dealers upon such security as may be deemed advisable, and
during the terms of any such loan to permit the loaned
securities to be transferred into the name of and voted by the
borrower or others; and
(17) Generally, to do all acts, whether or not expressly
authorized, that the Trustee may deem necessary or desirable
for the protection of the Fund.
(c) Prior to a Change in Control, the Company shall have the right, subject
to this Section to direct the Trustee with respect to investments.
(1) The Company may at any time direct the Trustee to segregate
all or a portion of the Fund in a separate investment account
or accounts and may appoint one or more investment managers
and/or an investment committee established by the Company to
direct the investment and reinvestment of each such investment
account or accounts. In such event, the Company shall notify
the Trustee of the appointment of each such investment manager
and/or investment committee. No such investment manager shall
be related, directly or indirectly, to the Company, but
members of the investment committee may be employees of the
Company.
(2) Thereafter, the Trustee shall make every sale or investment
with respect to such investment account as directed in writing
by the investment manager or investment committee. It shall be
the duty of the Trustee to act strictly in accordance with
each direction. The Trustee shall be under no duty to question
any such direction of the investment manager or investment
committee, to review any securities or other property held in
such investment account or accounts acquired by it pursuant to
such directions or to make any recommendations to the
investment managers or investment committee with respect to
such securities or other property.
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(3) Notwithstanding the foregoing, the Trustee, without obtaining
prior approval or direction from an investment manager or
investment committee, shall invest cash balances held by it
from time to time in short term cash equivalents including,
but not limited to, through the medium of any short term
common, collective or commingled trust fund established and
maintained by the Trustee subject to the instrument
establishing such trust fund, U.S. Treasury Bills, commercial
paper (including such forms of commercial paper as may be
available through the Trustee's Trust Department),
certificates of deposit (including certificates issued by the
Trustee in its separate corporate capacity), and similar type
securities, with a maturity not to exceed one year; and,
furthermore, sell such short term investments as may be
necessary to carry out the instructions of an investment
manager or investment committee regarding more permanent type
investment and directed distributions.
(4) The Trustee shall neither be liable nor responsible for any
loss resulting to the Fund by reason of any sale or purchase
of an investment directed by an investment manager or
investment committee nor by reason of the failure to take any
action with respect to any investment which was acquired
pursuant to any such direction in the absence of further
directions of such investment manager or investment committee.
(5) Notwithstanding anything in this Agreement to the contrary,
the Trustee shall be indemnified and saved harmless by the
Company from and against any and all personal liability to
which the Trustee may be subjected by carrying out any
directions of an investment manager or investment committee
issued pursuant hereto or for failure to act in the absence of
directions of the investment manager or investment committee
including all expenses reasonably incurred in its defense in
the event the Company fails to provide such defense; provided,
however, the Trustee shall not be so indemnified if it
participates knowingly in, or knowingly undertakes to conceal,
an act or omission of an investment manager or investment
committee, having actual knowledge that such act or omission
is a breach of a fiduciary duty; provided further, however,
that the Trustee shall not be deemed to have knowingly
participated in or knowingly undertaken to conceal an act or
omission of an investment manager or investment committee with
knowledge that such act or omission was a breach of fiduciary
duty by merely complying with directions of an investment
manager or
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investment committee or for failure to act in the absence of
directions of an investment manager or investment committee.
The Trustee may rely upon any order, certificate, notice,
direction or other documentary confirmation purporting to have
been issued by the investment manager or investment committee
which the Trustee believes to be genuine and to have been
issued by the investment manager or investment committee. The
Trustee shall not be charged with knowledge of the termination
of the appointment of any investment manager or investment
committee until it receives written notice thereof from the
Company.
(d) Following a Change in Control, the Trustee shall have the sole and
absolute discretion in the management of the Trust assets and shall
have all the powers set forth under Section 6(b). In investing the
Trust assets, the Trustee shall consider:
(1) the needs of the Arrangements;
(2) the need for matching of the Trust assets with the liabilities
of the Arrangements; and
(3) the duty of the Trustee to act solely in the best interests of
the Participants and their Beneficiaries.
(e) The Trustee shall have the right, in its sole discretion, to delegate
its investment responsibility to an investment manager who may be an
affiliate of the Trustee. In the event the Trustee shall exercise this
right, the Trustee shall remain, at all times responsible for the acts
of an investment manager. The Trustee shall have the right to purchase
an insurance policy or an annuity to fund the benefits of the
Arrangements.
(f) Prior to a Change in Control, the Company shall have the right at any
time, and from time to time in its sole discretion, to substitute
assets of equal fair market value for any asset held by the Trust. This
right is exercisable by the Company in a nonfiduciary capacity without
the approval or consent of any person in a fiduciary capacity.
Following a Change in Control, the substitution of assets is subject to
the acceptance of the Trustee.
SECTION 7. INSURANCE CONTRACTS
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(a) To the extent that the Trustee is directed by the Company prior to a
Change in Control to invest part or all of the Trust Fund in insurance
contracts, the type and amount thereof shall be specified by the
Company. The Trustee shall be under no duty to make inquiry as to the
propriety of the type or amount so specified.
(b) Each insurance contract issued shall provide that the Trustee shall be
the owner thereof with the power to exercise all rights, privileges,
options and elections granted by or permitted under such contract or
under the rules of the insurer. The exercise by the Trustee of any
incidents of ownership under any contract shall, prior to a Change in
Control, be subject to the direction of the Company. After a Change in
Control, the Trustee shall have all such rights.
(c) The Trustee shall have no power to name a beneficiary of the policy
other than the Trust, to assign the policy (as distinct from conversion
of the policy to a different form) other than to a successor Trustee,
or to loan to any person the proceeds of any borrowing against an
insurance policy held in the Trust Fund.
(d) No insurer shall be deemed to be a party to the Trust and an insurer's
obligations shall be measured and determined solely by the terms of
contracts and other agreements executed by the insurer.
SECTION 8. DISPOSITION OF INCOME
(a) During the term of this Trust, all income received by the Trust, net of
expenses and taxes shall be accumulated and reinvested within the Trust
SECTION 9. ACCOUNTING BY THE TRUSTEE
The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and the Trustee within forty-five (45) days following the close of each
calendar year and within forty-five (45) days after the removal or resignation
of the Trustee. The Trustee shall deliver to the Company a written account of
its administration of the Trust during such year or during the period from the
close of the last preceding year to the date of such removal or resignation
setting forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at the end of such year or
as of the date of such removal or resignation, as
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the case may be. The Company may approve such account by an instrument in
writing delivered to the Trustee. In the absence of the Company's filing with
the Trustee objections to any such account within one hundred and eighty (180)
days after its receipt, the Company shall be deemed to have so approved such
account. In such case, or upon the written approval by the Company of any such
account, the Trustee shall, to the extent permitted by law, be discharged from
all liability to the Company for its acts or failures to act described by such
account. The foregoing, however, shall not preclude the Trustee from having its
accounting settled by a court of competent jurisdiction. The Trustee shall be
entitled to hold and to commingle the assets of the Trust in one Fund for
investment purposes but at the direction of the Company prior to a Change in
Control, the Trustee shall create one or more sub-accounts.
SECTION 10. RESPONSIBILITY OF THE TRUSTEE
(a) The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in
like capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims, provided,
however, that the Trustee shall incur no liability to any person for
any action taken pursuant to a direction, request or approval given by
the Company which is contemplated by, and in conformity with, the terms
of the Arrangements or this Trust and is given in writing by the
Company. In the event of a dispute between the Company and a party, the
Trustee may apply to a court of competent jurisdiction to resolve the
dispute, subject, however to Section 2(d) hereof.
(b) The Company hereby indemnifies the Trustee against losses, liabilities,
claims, costs and expenses in connection with the administration of the
Trust, unless resulting from the negligence or misconduct of Trustee.
To the extent the Company fails to make any payment on account of an
indemnity provided in this paragraph 10(b), in a reasonably timely
manner, the Trustee may obtain payment from the Trust. If the Trustee
undertakes or defends any litigation arising in connection with this
Trust or to protect a Participant's or Beneficiary's rights under the
Arrangements, the Company agrees to indemnify the Trustee against the
Trustee's costs, reasonable expenses and liabilities (including,
without limitation, attorneys' fees and expenses) relating thereto and
to be primarily liable for such payments. If the Company does not pay
such costs, expenses and liabilities in a reasonably timely manner, the
Trustee may obtain payment from the Trust.
(c) Prior to a Change in Control, the Trustee may consult with legal
counsel (who may also be counsel for the Company generally) with
respect to any
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of its duties or obligations hereunder. Following a Change in Control
the Trustee shall select independent legal counsel and may consult with
counsel or other persons with respect to its duties and with respect to
the rights of Participants or their Beneficiaries under the
Arrangements.
(d) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder and may rely on
any determinations made by such agents and information provided to it
by the Company.
(e) The Trustee shall have, without exclusion, all powers conferred on the
Trustee by applicable law, unless expressly provided otherwise herein.
(f) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or to applicable law, the Trustee shall not have any
power that could give this Trust the objective of carrying on a
business and dividing the gains therefrom, within the meaning of
section 301.7701-2 of the Procedure and Administrative Regulations
promulgated pursuant to the Internal Revenue Code.
SECTION 11. COMPENSATION AND EXPENSES OF THE TRUSTEE
The Trustee's compensation shall be as agreed in writing from time to time by
the Company and the Trustee. The Company shall pay all administrative expenses
and the Trustee's fees and shall promptly reimburse the Trustee for any fees and
expenses of its agents. If not so paid, the fees and expenses shall be paid from
the Trust.
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SECTION 12. RESIGNATION AND REMOVAL OF THE TRUSTEE
(a) Prior to a Change in Control, the Trustee may resign at any time by
written notice to the Company, which shall be effective sixty (60) days
after receipt of such notice unless the Company and the Trustee agree
otherwise. Following a Change in Control, the Trustee may resign only
after the appointment of a successor Trustee.
(b) The Trustee may be removed by the Company on sixty days (60) days
notice or upon shorter notice accepted by the Trustee prior to a Change
in Control. Subsequent to a Change in Control, the Trustee may only be
removed by the Company with the consent of a majority of the
Participants, both in number and account balances.
(c) If the Trustee resigns within two years after a Change in Control, as
defined herein, the Company with the consent of a majority both in
number and account balances of the Participants may appoint a successor
trustee. If the Company fails to act within a reasonable period of time
following such resignation, the Trustee shall apply to a court of
competent jurisdiction for the appointment of a successor Trustee or
for instructions.
(d) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within sixty (60)
days after receipt of notice of resignation, removal or transfer,
unless the Company extends the time limit.
(e) If the Trustee resigns or is removed, a successor shall be appointed by
the Company, in accordance with Section 13 hereof, by the effective
date of resignation or removal under paragraph(s) (a) or (b) of this
section. If no such appointment has been made, 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.
SECTION 13. APPOINTMENT OF SUCCESSOR
(a) If the Trustee resigns or is removed in accordance with Section 12
hereof, the Company may appoint, subject to Section 12, any third party
national banking association with a market capitalization exceeding
$100,000,000 to replace the Trustee upon resignation or removal. The
successor Trustee shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust. The former Trustee
shall execute
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any instrument necessary or reasonably requested by the Company or the
successor Trustee to evidence the transfer.
(b) 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 Section 8 and 9 hereof. The successor Trustee shall not be
responsible for and the Company shall indemnify and defend the
successor Trustee from any claim or liability resulting from any action
or inaction of any prior Trustee or from any other past event, or any
condition existing at the time it becomes successor Trustee.
SECTION 14. AMENDMENT OR TERMINATION
(a) This Trust Agreement may be amended by a written instrument executed by
the Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Arrangements or shall
make the Trust revocable after it has become irrevocable in accordance
with Section 1 hereof.
(b) The Trust shall not terminate until the date on which Participants and
their Beneficiaries have received all of the benefits due to them under
the terms and conditions of the Arrangements.
(c) Upon written approval of all Participants or Beneficiaries entitled to
payment of benefits pursuant to the terms of the Arrangements, the
Company may terminate this Trust prior to the time all benefit payments
under the Arrangements have been made. After payment of all fees and
expenses of the Trust, any remaining assets in the Trust at termination
shall be returned to the Company.
(d) This Trust Agreement may not be amended by the Company for two (2)
years following a Change in Control without the written consent of a
majority of the Participants, except when necessary to comply with
legal or regulatory requirements necessary to maintain the tax deferred
status of the Arrangements.
SECTION 15. CHANGE IN CONTROL
(a) For purposes of this Trust, the following terms shall be defined as set
forth below:
(1) "Potential Change in Control" shall mean, as determined by the
Company in its discretion, any pending offer for the Company's outstanding
shares of common stock, or any pending offer to acquire the Company by merger or
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consolidation, or any other pending action or plan to effect a Change in Control
of the Company.
(2) Change in Control shall mean:
(A) the acquisition by an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of the Company if, after such
acquisition, such Person beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) 50% or more of either (x) the
then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or - (y) the combined voting power
of the then-outstanding securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection
(i), the following acquisitions shall not constitute a Change in
Control Event: (A) any acquisition directly from the Company (excluding
an acquisition pursuant to the exercise, conversion or exchange of any
security exercisable for, convertible into or exchangeable for common
stock or voting securities of the Company, unless the Person
exercising, converting or exchanging such security acquired such
security directly from the Company or an underwriter or agent of the
Company), (B) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (C) any acquisition by any corporation
pursuant to a Business Combination (as defined below) which complies
with clauses (x) and (y) of subsection (C) of this definition; or
(B) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term
"Continuing Director" means at any date a member of the Board (x) who
was a member of the Board on the date of the initial adoption of this
Plan by the Board or (y) who was nominated or elected subsequent to
such date by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election or whose election
to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination
or election; provided, however, that there shall be excluded from this
clause (y) any individual whose initial assumption of office occurred
as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other
than the Board; or
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(C) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), unless, immediately following
such Business Combination, each of the following two conditions is
satisfied: (x) all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors, respectively, of the
resulting or acquiring corporation in such Business Combination (which
shall include, without limitation, a corporation which as a result of
such transaction owns the Company or substantially all of the Company's
assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the
"Acquiring Corporation") in substantially the same proportions as their
ownership of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, respectively, immediately prior to such
Business Combination and (y) no Person (excluding the Acquiring
Corporation or any employee benefit plan (or related trust) maintained
or sponsored by the Company or by the Acquiring Corporation)
beneficially owns, directly or indirectly, 50% or more of the
then-outstanding shares of common stock of the Acquiring Corporation,
or of the combined voting power of the then-outstanding securities of
such corporation entitled to vote generally in the election of
directors (except to the extent that such ownership existed prior to
the Business Combination).
For purposes of the Section 15, Board approval shall be considered the same as
"shareholder or shareowner" approval as may be required under federal or state
law.
SECTION 16. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating
the remaining provisions hereof.
(b) The Company hereby represents and warrants that all of the Arrangements
have been established, maintained and administered in accordance with
all applicable laws, including without limitation, ERISA. The Company
hereby indemnifies and agrees to hold the Trustee harmless from all
liabilities, including attorney's fees, relating to or arising out of
the
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establishment, maintenance and administration of the Arrangements.
To the extent the Company does not pay any of such liabilities in a
reasonably timely manner, the Trustee may obtain payment from the
Trust.
(b) Benefits payable to Participants and their Beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(d) This Trust Agreement shall be governed by and construed in accordance
with the laws of Massachusetts.
IN WITNESS WHEREOF, this Grantor Trust Agreement has been executed on behalf of
the parties hereto on the day and year first above written.
RSA SECURITY, INC. TRUSTEE
By: /S/ JOHN F. KENNEDY By: /S/ BEVERLY H. WOOD
----------------------------- --------------------------
Its: CHIEF FINANCIAL OFFICER Its: SENIOR VICE PRESIDENT
ATTEST: ATTEST:
By: /S/ KATHRYN L. LEACH By: /S/ JOHN N. SMITH, III
----------------------------- --------------------------
Its: ASSISTANT SECRETARY Its: ASSISTANT SECRETARY
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