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EXHIBIT 10.3
AMENDED AND RESTATED
BOWATER INCORPORATED
EXECUTIVE SEVERANCE GRANTOR TRUST
Effective April 15, 1998
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TABLE OF CONTENTS
ARTICLE I
Title-Purpose-Policy-Effect.....................................................................................1
1.1 Name.............................................................................................1
1.2 Definitions......................................................................................1
1.3 Purpose..........................................................................................5
1.4 Effect...........................................................................................6
ARTICLE II
Valuation 6
2.1 Valuation of Trust Fund..........................................................................6
ARTICLE III
Administration of the Contracts.................................................................................6
3.1 Payments From Trust Fund.........................................................................6
3.2 Executive Data...................................................................................7
3.3 Creditors........................................................................................8
3.4 Reliance on Company..............................................................................8
3.5 Trustee Not Responsible for Administration of Judgments..........................................8
ARTICLE IV
Investment of Trust Assets......................................................................................9
4.1 Asset Managers...................................................................................9
4.2 Investment Discretion...........................................................................10
4.3 Limitations on Investment Discretion............................................................10
4.4 Responsibility for Diversification..............................................................10
ARTICLE V
Responsibility for Directed Funds..............................................................................10
5.1 Responsibility for Selection of Agents..........................................................10
5.2 Trustee Not Responsible for Investments in Directed Funds.......................................10
5.3 Investment Vehicles.............................................................................11
5.4 Reliance on Asset Manager.......................................................................11
5.5 Merger of Funds.................................................................................11
5.6 Notification of Company in Event of Breach......................................................12
5.7 Definition of Knowledge.........................................................................12
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5.8 Duty to Enforce Claims..........................................................................12
5.9 Restrictions on Transfer........................................................................12
5.10 Section 4.1(b) Controlling......................................................................12
ARTICLE VI
Powers of Asset Managers.......................................................................................12
6.1 General Powers..................................................................................12
6.2 Additional Powers of Trustee....................................................................14
6.3 Letters of Credit...............................................................................15
ARTICLE VII
Records and Accounts of Trustees...............................................................................15
7.1 Records.........................................................................................15
7.2 Annual Account..................................................................................15
7.3 Account Stated..................................................................................15
7.4 Judicial Accountings............................................................................16
7.5 Necessary Parties...............................................................................16
ARTICLE VIII
Compensation, Taxes and Expenses...............................................................................16
8.1 Compensation and Expenses.......................................................................16
8.2 Taxes...........................................................................................17
ARTICLE IX
Resignation or Removal of Trustee..............................................................................17
9.1 Removal or Resignation..........................................................................17
9.2 Designation of a Successor......................................................................17
9.3 Reserve for Expenses............................................................................17
ARTICLE X
Amendment or Termination.......................................................................................18
10.1 Amendment of Agreement.........................................................................18
10.2 Termination of a Contract......................................................................18
10.3 Distribution of Residual Assets................................................................19
10.4 Distribution of Excess Assets..................................................................19
ARTICLE XI
Prohibition Against Diversion..................................................................................20
11.1 No Right of Alienation or Employment...........................................................20
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ARTICLE XII
Sufficiency of Trust Fund......................................................................................20
12.1 Payment of Benefits............................................................................20
12.2 Contribution to Fund...........................................................................20
ARTICLE XIII
Authorities....................................................................................................21
13.1 Company........................................................................................21
13.2 Investment Manager.............................................................................21
13.3 Form of Communications.........................................................................22
13.4 Continuation of Authority......................................................................22
13.5 No Obligation to Act on Unsatisfactory Notice..................................................22
ARTICLE XIV
General Provisions.............................................................................................22
14.1 Governing Law..................................................................................22
14.2 Entire Agreement...............................................................................22
14.3 Mistake........................................................................................22
14.4 Reliance on Experts............................................................................22
14.5 Successor to the Trustee.......................................................................22
14.6 Notices........................................................................................23
14.7 Contracts......................................................................................23
14.8 No Waiver; Reservation of Rights...............................................................23
14.9 Descriptive Headings...........................................................................23
14.10 Counterparts...................................................................................23
ARTICLE XV
Undertaking by Company.........................................................................................23
15.1 Undertaking....................................................................................23
15.2 Limitation on Undertaking......................................................................24
15.3 Survival of Undertakings.......................................................................24
LIST A .....................................................................................................25
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THIS GRANTOR TRUST AGREEMENT was initially made and entered into as of
the 1st day of September, 1989, by and between BOWATER INCORPORATED, a Delaware
corporation (the "Company"), and WACHOVIA BANK, N.A., a national banking
association organized and existing under the laws of the United States (the
"Trustee").
W I T N E S S E T H :
WHEREAS, the Company established this grantor trust to serve as a
funding vehicle for certain designated Contracts (as defined in Section 1.2(k)
hereof) and as a medium for holding amounts payable to eligible executives
party to the Contracts and their beneficiaries;
WHEREAS, the Trustee has agreed to hold and administer all sums of
money and such other property acceptable to the Trustee as shall from time to
time be contributed, paid or delivered to it hereunder, IN TRUST, upon all of
the terms and conditions of the Grantor Trust Agreement (the "Agreement"), and
WHEREAS, the Company and the Trustee desire to amend and restate the
Agreement governing this Grantor Trust.
NOW THEREFORE, the Company and the Trustee hereby agree to continue
the Bowater Incorporated Executive Severance Grantor Trust on the following
terms and conditions as of April 15, 1998:
ARTICLE I
Title-Purpose-Policy-Effect
1.1 Name. The trust established hereunder shall be known as the
Bowater Incorporated Executive Severance Grantor Trust and is sometimes
hereinafter referred to as the "Trust".
1.2 Definitions. Where used in this Agreement unless the context
otherwise requires or unless otherwise expressly provided:
(a) "Account Party" shall mean an officer of the Company designated
to represent the Company for this purpose and any Person to whom the Trustee
shall be instructed by the Company to deliver its annual account under Section
7.2.
(b) "Accounting Period" shall mean the twelve consecutive month
period coincident with the calendar year or the shorter period in any year in
which the Trustee accepts appointment as Trustee hereunder or ceases to act as
Trustee for any reason.
(c) "Agreement" shall mean all of the provisions of this instrument
and of all other instruments amendatory hereof.
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(d) "Asset Manager" shall mean the Trustee (other than for purposes
of Article V), Company or an Investment Manager, individually or collectively
as the context shall require, but only with respect to those assets held in an
Investment Account over which it exercises, or to the extent it is authorized
to exercise, discretionary investment authority or control.
(e) "Bank Business Day" shall mean a day on which the Trustee is
open for business.
(f) An individual or entity is a "beneficiary" if such individual or
entity is receiving benefits, or entitled to receive benefits solely upon the
lapse of time, under any of the Contracts in respect of a deceased executive
who was party to a Contract.
(g) "Board of Directors" shall mean the Board of Directors of the
Company.
(h) A "Change in Control" shall be deemed to have occurred upon:
(a) The date that any Person is or becomes an Acquiring
Person.
(b) The date that the Corporation's shareholders approve
a merger, consolidation or reorganization of the
Corporation with another corporation or other
Person, unless, immediately following such merger,
consolidation or reorganization, (i) at least 50% of
the combined voting power of the outstanding
securities of the resulting entity would be held in
the aggregate by the shareholders of the Corporation
as of the record date for such approval (provided
that securities held by any individual or entity
that is an Acquiring Person, or who would be an
Acquiring Person if 5% were substituted for 20% in
the definition of such term, shall not be counted as
securities held by the shareholders of the
Corporation, but shall be counted as outstanding
securities for purposes of this determination), or
(ii) at least 50% of the board of directors or
similar body of the resulting entity are Continuing
Directors.
(c) The date the Corporation sells or otherwise
transfers all or substantially all of its assets to
another corporation or other Person, unless,
immediately after such sale or transfer, (i) at
least 50% of the combined voting power of the
then-outstanding securities of the resulting entity
immediately following such transaction is held in
the aggregate by the Corporation's shareholders as
determined immediately prior to such transaction
(provided that securities held by any individual or
entity that is an Acquiring Person, or who would be
an Acquiring Person if 5% were substituted for 20%
in the definition of such term, shall not be counted
as securities held by the shareholders of the
Corporation, but shall be counted as
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outstanding securities for purposes of this
determination), or (ii) at least 50% of the board of
directors or similar body of the resulting entity
are Continuing Directors.
(d) The date on which less than two-thirds (2/3) of the
total membership of the Board consists of Continuing
Directors.
For purposes of this Section:
(i) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 (the "Act").
(ii) "Acquiring Person" means the Beneficial Owner,
directly or indirectly, of Common Stock representing
20% or more of the combined voting power of the
Corporation's then outstanding securities, not
including (except as provided in clause (i) of the
next sentence) securities of such Beneficial Owner
acquired pursuant to an agreement allowing the
acquisition of up to and including 50% of such
voting power approved by two-thirds of the members
of the Board who are Board members before the Person
becomes Beneficial Owner, directly or indirectly, of
Common Stock representing 5% or more of the combined
voting power of the Corporation's then outstanding
securities. Notwithstanding the foregoing, (i)
securities acquired pursuant to an agreement
described in the preceding sentence will be included
in determining whether a Beneficial Owner is an
Acquiring Person if, subsequent to the approved
acquisition, the Beneficial Owner acquires 5% or
more of such voting power other than pursuant to
such an agreement so approved and (ii) a Person
shall not be an Acquiring Person if such Person is
eligible to and files a Schedule 13G with respect to
such Person's status as a Beneficial Owner of all
Common Stock of the Corporation of which the Person
is a Beneficial Owner.
(iii) A "Beneficial Owner" of Common Stock means (A) a
Person who beneficially owns such Common Stock,
directly or indirectly, or (B) a Person who has the
right to acquire such Common Stock (whether such
right is exercisable immediately or only with the
passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights,
exchange rights, warrants, options or otherwise.
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(iv) "Continuing Directors" means any member of the Board
who (A) was a member of the Board prior to the date of
the event that would constitute a Change in Control,
and any successor of a Continuing Director while such
successor is a member of the Board, (B) is not an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person, and (C) is recommended or elected to
succeed the Continuing Director by a majority of the
Continuing Directors.
(v) "Person" means any individual, firm, corporation,
partnership, trust or other entity.
Notice to the Trustee from the Company that a Change in Control has
occurred shall be binding and conclusive on the Trustee. The Trustee shall have
no independent obligations or duty to investigate whether or not a Change in
Control has occurred. In performing any of its obligations or taking any
discretionary action under this Agreement which is dependent upon a Change in
Control having occurred, the Trustee may rely on such notice and such notice
shall be binding and conclusive on all Plan participants and beneficiaries.
(i) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and Regulations issued thereunder.
(j) "Company" shall mean Bowater Incorporated or any successor
thereto.
(k) "Contract" or "Contracts" shall mean, collectively, the
designated severance agreements between certain designated executives and the
Company, and such other plans, agreements or arrangements maintained by the
Company or to which the Company is a party and which have been designated by
the Board of Directors for participation in this Trust, as are set forth on
List A hereto.
(1) "Directed Fund" shall mean an Investment Account, or part
thereof, subject to the discretionary management and control of the Company or
any Investment Manager.
(m) "Discretionary Fund" shall mean any Investment Account, or part
thereof, subject to the discretionary management and control of the Trustee.
(n) "Executive Data" shall mean certain information regarding the
executives party to a Contract (or their beneficiaries) and such information as
is necessary to determine benefits under each Contract, including the following
information: (i) name, address, date of birth, date of hire and social security
number of each executive party to a Contract, (ii) the estimated payments under
each Contract, and (iii) any other information regarding each Contract which
the Trustee may reasonably request or which the Company may deem necessary.
(o) "Investment Account" shall mean each pool of assets in the Trust
in which the Contracts have an interest during an Accounting Period.
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(p) "Investment Manager" shall mean a bank, as defined under
Investment Advisers Act of 1940, insurance company or investment adviser
registered under the Investment Advisers Act of 1940.
(q) "Investment Vehicle" shall mean any common, collective or
commingled trust, mutual fund, investment company, corporation functioning as
an investment intermediary, insurance contract, letter of credit, partnership,
joint venture or other entity or arrangement to which, or pursuant to which,
assets of the Trust have been transferred or in which the Trust has an
interest, beneficial or otherwise.
(r) "Person" shall mean a natural person, trust, estate, corporation
of any kind or purpose, mutual company, joint-stock company, unincorporated
organization, association, partnership, joint venture, employee organization,
committee, board, executives, beneficiary, trustee, partner, or venturer acting
in an individual, fiduciary, or representative capacity, as the context may
require.
(s) "Trust Fund" shall mean all cash and other property contributed,
paid or delivered to the Trustee hereunder, all investments made therewith and
proceeds thereof and all earnings and profits thereon, less payments, transfers
or other distributions which, at the time of reference, shall have been made by
the Trustee as authorized herein. The Trust Fund shall include all evidences of
ownership, interest or participation in an Investment Vehicle, but shall not,
solely by reason of the Trust Fund's investment therein, be deemed to include
any assets of such Investment Vehicle.
(t) "Trust" shall mean the grantor trust established under this
Agreement.
(u) "Trustee" shall mean Wachovia Bank, N.A., as Trustee of the
Trust and its successors.
(v) "Valuation Date" shall mean the last day of the Accounting
Period, calendar quarter or any more frequent reporting date determined by the
Company and agreed to by the Trustee.
(w) "Wachovia" shall mean Wachovia Bank, N.A.
The plural of any term shall have a meaning corresponding to the
singular thereof as so defined and any neuter or masculine pronoun used herein
shall include the masculine and feminine, as the context may require.
1.3 Purpose. The Trust is established as a grantor trust within the
meaning of Sections 671 through 677 of the Code, to hold the interests under
the Contracts of executives party to Contracts and their beneficiaries. Except
as may otherwise be permitted by law and the terms of each Contract or pursuant
to the terms of this Agreement, at no time prior to the satisfaction of all
liabilities under the Contracts with respect to executives party to Contracts
and
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their beneficiaries shall any portion of the Trust Fund be used for, or
diverted to, any purposes other than for the exclusive benefit of such
executives and their beneficiaries, and for defraying the reasonable expenses
of administering each such Contract. The establishment of the Trust is intended
to provide a funding vehicle for the payment of benefits under the Contracts
and is not intended to relieve the Company of its duties under the Contracts to
the executives party thereto or to their beneficiaries.
1.4 Effect. All Persons at any time interested in the Contracts
shall be bound by the provisions of this Agreement and, in the event of any
conflict between this Agreement and the provisions of the Contracts or any
other instrument or agreement forming part of each such Contract, the
provisions of this Agreement shall control.
ARTICLE II
Valuation
2.1 Valuation of Trust Fund. The Trustee shall determine the value
of the assets of the Trust Fund as of each Valuation Date. In addition, prior
to a Change in Control and for the convenience of the Company and without
imposing any obligation on the Trustee, the Company may request the Trustee to
include in its periodic reports under this Article II or its annual account
under Section 7.2 assets which do not constitute part of the Trust Fund. Assets
will be valued at their market values at the close of business on the Valuation
Date, or, in the absence of readily ascertainable market values, at such values
as the Trustee shall determine in accordance with methods consistently followed
and uniformly applied. Anything in this Agreement to the contrary
notwithstanding, with respect to assets constituting part of a Directed Fund or
assets included at the request of the Company as hereinabove provided, the
Trustee may rely for all purposes of this Agreement on the latest valuation and
transaction information submitted to it by the Persons responsible for the
investment of such assets even if such information predates the Valuation Date.
The Company will cause such Persons to provide the Trustee with all information
needed by the Trustee to discharge its obligations to value such assets and to
account under this Agreement.
ARTICLE III
Administration of the Contracts
3.1 Payments From Trust Fund. (a) Subject to Sections 3.2 and 3.3,
the Trustee, upon receipt of direction from the Company prior to a Change in
Control, shall pay moneys directly to or for the benefit of executives party to
Contracts and their beneficiaries, or to a paying or disbursing agent (which
may be the Company) for the benefit of executives party to Contracts or their
beneficiaries. Prior to a Change in Control, the Company may direct that moneys
be paid to the Company or an affiliate or subsidiary thereof, however, only if
and only to the extent that such payment is for the reimbursement of moneys
paid under a Contract to an
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executive party to a Contract or his beneficiary which could have been paid
from the Trust Fund. After a Change in Control, the Trustee may follow the
directions of the Company as noted in the preceding sentence only upon receipt
of evidence that such amounts have been paid to an executive party to a
Contract or beneficiary in lieu of a payment from the Trust Fund. Any such
payment to the Company or an affiliate or subsidiary thereof shall be deemed a
payment for the benefit of an executive party to a Contract or his beneficiary.
Any assets disbursed or paid over by the Trustee pursuant to the foregoing
provisions of this Section 3.1, or pursuant to Section 3.3 hereof, shall no
longer be part of the Trust Fund.
(b)(1) In the event it shall be determined prior to a Change in
Control that the executives party to Contracts and/or beneficiaries of the
Trust Fund, prior to the payment of benefits hereunder, are subject to any tax
under the terms of the trust created hereunder, then the Trustee, upon a
receipt of written direction from the Company, shall make payments from the
Trust Fund to such persons, in such manner and in such amounts as the Company
shall direct, for the purpose of paying the amount of Federal, State and Local
tax and interest and any penalties thereon which such executives and/or
beneficiaries may incur arising out of such determination. In the event such a
determination is made after a Change in Control occurs, then each executive or
beneficiary who is subject to such tax, may direct the Trustee, in writing, to
make payments from the Trust Fund for the purpose set forth in the preceding
sentence and shall deliver to the Trustee evidence of such determination. In
the event a final judicial determination is made after a Change in Control
occurs that an executive party to a Contract or beneficiary, prior to the
payment of benefits hereunder, is subject to any tax under the terms of the
trust created hereunder and a governmental agency authorized to execute such
determination directs the Trustee to pay such tax from the Trust Fund, then the
Trustee may make such payment and shall incur no liability hereunder because of
the Trustee's compliance with such direction. The Trustee's decision as to
whether the final judicial determination referenced in the preceding sentence
has occurred shall be binding and conclusive on all executives party to
Contracts and their beneficiaries.
(b)(2) Any payment from the Trust Fund pursuant to paragraph (b)(1) of
this Section 3.1 attributable to a Contract shall actuarially reduce the
benefits of those executives and beneficiaries to whom such a distribution is
made under such Contract.
3.2 Executive Data. The Company has heretofore submitted Executive
Data to the Trustee and may, from time to time hereafter, furnish the Trustee
with updated Executive Data. In addition, the Company shall provide information
concerning executives party to a Contract to the Company's actuarial
consultants on a quarterly basis sufficient to permit such consultants to
assist the Company in determining Executive Data and the contributions to be
made hereunder upon a Change in Control and to discharge the Company's duties
under Section 12.2(b). The Company shall keep the Trustee informed of the
identity of the actuarial consultants responsible for such information, and
such consultants shall be formally retained on an ongoing basis to provide
these services. The Company shall, upon a Change in Control, furnish the
Trustee with Executive Data and, after a Change in Control, furnish the Trustee
with Executive Data at least once each Accounting Period. After a Change in
Control, all expenses of the actuarial consultants may be paid from the Trust
assets to the extent not paid by the
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Company. The Company shall maintain and provide to the Trustee at least
annually a current list (List A) of those executives party to a Contract. After
a Change in Control, executives party to a Contract and their beneficiaries
shall have the right to receive from the Company or the Trustee (i) a copy of
the most recent Executive Data that has been supplied to the Trustee on his or
her behalf, and (ii) a list of the names and addresses of all executives party
to a Contract or their beneficiaries, within thirty (30) days after a request
for such information is made.
In the event of a Change in Control and notwithstanding any other
provision of this Agreement, the Trustee shall, without direction from the
Company, make payments to executives party to a Contract or beneficiaries
thereof in such manner and in such amounts as the Trustee shall determine they
are entitled to be paid under the applicable Contract based upon the most
recent Executive Data furnished to the Trustee by the Company or its actuarial
consultants prior to or upon a Change in Control and any supplemental
information furnished to the Trustee by an executive party to a Contract, a
beneficiary thereof, the Company or its actuarial consultants upon which the
Trustee may reasonably rely in making such determination. The Trustee's
determination as to the amount of such payments after a Change in Control
occurs shall be binding and conclusive on all executives party to a Contract or
his or her beneficiary and the Trustee shall be fully protected under the terms
of the trust created hereunder in making such determination but the Trustee's
determination shall not relieve the Company of its obligations to such
executive or beneficiary under such Contract.
3.3 Creditors. The Company has the duty to inform the Trustee of the
Company's insolvency (i.e., its inability to pay debts as they mature) or
bankruptcy (i.e., the Company is subject to a pending proceeding under the
federal Bankruptcy Code). The insolvency or bankruptcy of a subsidiary of the
Company shall not be deemed to be the insolvency or bankruptcy of the Company
or any other subsidiary. When the Trustee is in receipt of a copy of a
bankruptcy petition relating to the Company or a notification from the Company
that it is insolvent, the Trustee will suspend payments to the executives and
beneficiaries under the Trust and will hold assets of the Trust for the benefit
of the Company's general creditors. Thereafter, the Trustee will deliver assets
of the Trust to satisfy claims of the Company's general creditors as directed
by a court of competent jurisdiction. However, if the Trustee makes a good
faith determination that the Company is solvent, it shall continue to make or
resume making payments that are due under any Contract until a final order to
the contrary is received by the Trustee.
3.4 Reliance on Company. Any directions pursuant to Section 3.1 may,
but need not, specify the application to be made of moneys so ordered. Each
direction to the Trustee under Section 3.1 or Section 3.3 shall constitute a
certification by the Company, as the case may be, that such direction is in
accordance with applicable law, or with the terms of the applicable Contract,
and with the terms of this Agreement. The Trustee shall have no duty to make
any independent inquiry or investigation as to any of the foregoing before
acting upon such direction.
3.5 Trustee Not Responsible for Administration of Judgments. The
Trustee shall not be responsible in any way respecting the administration,
computation, payment or application of any payment, satisfaction, or for any
other matter affecting the response of the
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Company to any creditor in the event of insolvency, other than for the
execution of any documents incidental thereto and transfer or receipt of funds
thereunder on the directions of the Company.
ARTICLE IV
Investment of Trust Assets
4.1 Asset Managers. (a) Prior to a Change in Control, discretionary
authority for the management and control of assets from time to time held in
the Trust Fund may be retained, allocated or delegated, as the case may be, for
one or more purposes, to and among the Asset Managers by the Company, in its
absolute discretion. To the extent an Asset Manager is the Trustee, the assets
shall be part of the Discretionary Fund; to the extent an Asset Manager is
either the Company or an Investment Manager, the assets shall be part of a
Directed Fund. Prior to a Change in Control, the terms and conditions of
appointment, authority and retention of any Asset Manager shall be the sole
responsibility of the Company. The Company shall promptly notify the Trustee in
writing of the appointment or removal of an Asset Manager. Any notice of
appointment pursuant to this Section 4.1 shall constitute a representation and
warranty that the Asset Manager has been appointed in accordance with the
provisions of each Contract and that any Asset Manager (other than the Trustee
or the Company) is an Investment Manager.
(b) After a Change in Control, discretionary authority for the
management and control of assets from time to time held in the Trust Fund shall
be in the Trustee. After a Change in Control occurs and subject to paragraph
(b) of Section 6.3, the Trustee shall continue to manage the assets of the
Trust in accordance with Section 4.1(a). The Trustee may appoint, terminate or
continue the appointment of Asset Managers for all permissible types of
securities, until such time as at least fifty-one (51) percent in number of the
executives party to Contracts or beneficiaries thereof request that the assets
of the Trust be invested and reinvested, without distinction between principal
and income, in an immunized or dedicated portfolio of bonds, debentures,
equipment or collateral trust certificates, notes or other evidences of
indebtedness, unsecured or secured by mortgages on real or personal property
wherever situated (including any part interest in a bond and mortgage or note
and mortgage whether insured or uninsured) and any portfolio of other property,
or part interest in property, real or personal, foreign or domestic in which
such event the Trustee shall have the power to appoint Asset Manager(s) solely
for such specified investments. The rates of return and maturity dates of the
instruments of such portfolio shall reasonably be expected to yield assets of
the Trust Fund sufficient to discharge the Company's obligations under the
Contracts as set forth in the most recent Executive Data furnished to the
Trustee prior to or upon such Change in Control.
(c) After a Change in Control, the Trustee, subject to Section 4.1
(b), shall have full discretion and responsibility for investment of Trust
assets, including responsibility for the appointment of Asset Managers and for
formulation of funding, investment and diversification policies and shall have
all the duties and responsibilities of the Company set forth in Sections
4.1(a), 4.3 and 4.4.
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4.2 Investment Discretion. Subject to Section 4.1(b), the Trust Fund
shall be invested and reinvested, without distinction between principal and
income, at such time or times in such investments and pursuant to such
investment strategies or courses of action and in such shares and proportions,
as the Asset Managers, in their sole discretion, shall deem advisable.
4.3 Limitations on Investment Discretion. Prior to a Change in
Control, the Company may limit, restrict or impose guidelines affecting the
exercise of the discretion hereinabove conferred in Section 4.2 on any Asset
Manager. Any limitations, restrictions or guidelines applicable to the Trustee,
as Asset Manager, shall be communicated in writing to the Trustee. Prior to a
Change in Control, the Trustee shall have no responsibility with respect to the
formulation of any funding policy or any investment or diversification policies
embodied therein. Prior to a Change in Control, the Company shall be
responsible for communicating, and monitoring adherence to, any limitations or
guidelines imposed on any other Asset Manager.
4.4 Responsibility for Diversification. Prior to a Change in
Control, the Company shall be responsible for determining the diversification
policy of the Trust Fund and for monitoring adherence by the Asset Managers to
such policy.
ARTICLE V
Responsibility for Directed Funds
5.1 Responsibility for Selection of Agents. Prior to a Change in
Control, all transactions of any kind or nature in or from a Directed Fund
shall be made upon such terms and conditions and from or through such
principals and agents as the responsible Asset Manager shall direct. No such
transactions shall be executed through the facilities of the Trustee except
where the Trustee shall make available its facilities solely for the purpose of
temporary investment of cash reserves of a Directed Fund. (However, nothing in
the preceding sentence shall confer any authority upon the Trustee to invest
the cash balances of any Directed Fund unless and until it receives directions
from the responsible Asset Manager.)
5.2 Trustee Not Responsible for Investments in Directed Funds. Prior
to a Change in Control, and except as provided in Section 5.6, the Trustee
shall be under no duty or obligation to review or to question any direction of
any Asset Manager, or to review securities or any other property held in any
Directed Fund with respect to prudence or proper diversification or compliance
with any limitation on the Asset Manager's authority under the terms of any
Contract, any agreement entered into between the Company and the Asset Manager
or imposed by applicable law, or to make any suggestions or recommendations to
the Company or the Asset Managers with respect to the retention or investment
of any assets of any Directed Fund, and shall have no authority to take any
action or to refrain from taking any action with respect to any asset of a
Directed Fund unless and until it is directed to do so by the Asset Manager.
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5.3 Investment Vehicles. Any Investment Vehicle, or interest
therein, acquired by or transferred to the Trustee upon the directions of the
Asset Manager shall be allocated to the appropriate Directed Fund, and the
Trustee's duties and responsibilities under this Agreement shall not be
increased or otherwise affected thereby. The Trustee shall be responsible
solely for the safekeeping of the evidence of the Trust's ownership of or
interest or participation in such Investment Vehicle.
5.4 Reliance on Asset Manager. The Trustee shall be required under
this Agreement to execute documents, to settle transactions, to take action on
behalf of or in the name of the Trust and to make and receive payments on the
direction of the Asset Manager. Any direction of the Asset Manager shall
constitute a certification to the Trustee (i) that the investment is authorized
under the terms of this Agreement and any other agreement or law affecting the
Asset Manager's authority to deal with the Directed Fund, (ii) that any
contract, agency, joinder, adoption, participation or partnership agreement,
deed, assignment or other document of any kind which the Trustee is required to
execute to effectuate the transaction has been reviewed by the Asset Manager
and, to the extent it deems advisable and prudent, its counsel, (iii) that such
instrument or document is in proper form for execution by the Trustee, (iv)
that, where appropriate, insurance protecting the Trust against loss or
liability has been or will be maintained in the name of or for the benefit of
the Trustee, and (v) that all other acts to perfect and protect the Trust's
rights have been taken, and the Trustee shall have no duty to make any
independent inquiry or investigation as to any of the foregoing before acting
upon such direction. In addition, the Trustee shall not be liable for the
default of any Person with respect to any investment in a Directed Fund or for
the form, genuineness, validity, sufficiency or effect of any document executed
by, delivered to or held by it for any Directed Fund on account of such
investment, or if, for any reason (other than the negligence or willful
misconduct of the Trustee) any rights of the Trust therein shall lapse or shall
become unenforceable or worthless.
5.5 Merger of Funds. Except pursuant to Section 4.1(b), the Trustee
shall not have any discretionary responsibility or authority to manage or
control any asset held in a Directed Fund upon the resignation or removal of an
Asset Manager unless and until it has been notified in writing by the Company
that the Asset Manager's authority has terminated and that such Directed Fund's
assets are to be integrated with the Discretionary Fund. Such notice shall not
be deemed effective until two Bank Business Days after it has been received by
the Trustee unless the Trustee shall agree otherwise. The Trustee shall not be
liable for any losses to the Trust Fund resulting from the disposition of any
investment made by the Asset Manager or for the retention of any illiquid or
unmarketable investment or any investments which are not actively traded
publicly held securities or for the holding of any other investment acquired by
an Asset Manager if the Trustee is unable to dispose of such investment because
of any restrictions imposed by the Securities Act of 1933 or other federal or
state law, or if an orderly liquidation of such investment is impractical under
prevailing conditions imposed pursuant to Section 4.2, or for any other
violation of the terms of this Agreement, each Contract or applicable law as a
result of the addition of Directed Fund assets to the Discretionary Fund.
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5.6 Notification of Company in Event of Breach. Prior to a Change in
control, if the Trustee has knowledge of a breach committed by an Asset
Manager, it shall notify the Company thereof, and the Company shall thereafter
assume full responsibility to all Persons interested in each Contract to remedy
such breach. After a Change in Control, if the Trustee has knowledge of a
breach committed by an Asset Manager, it shall thereafter assume full
responsibility to all Persons interested in each Contract to remedy such
breach.
5.7 Definition of Knowledge. While the Trustee will perform certain
duties (such as custodial, reporting, recording, valuation and bookkeeping
functions) with respect to Directed Funds, such duties will not involve the
exercise of any discretionary authority to manage or control the assets of the
Directed Funds and such certain duties will be the responsibility of officers
or other employees of the Trustee who are not familiar with and have no
responsibility for investment management. Therefore, the Company agrees that in
the event that knowledge of the Trustee shall be a prerequisite to imposing a
duty upon or to determining liability of the Trustee under this Agreement or
any statute regulating the conduct of the Trustee with respect to such Directed
Funds or relieving the Company of its undertakings under Section 15.2, the
Trustee will not be deemed to have knowledge of, or to have participated in,
any act or omission of an Asset Manager involving the investment of assets
allocated to the Directed Funds solely as a result of the receipt and
processing of information in the course of performing such duties.
5.8 Duty to Enforce Claims. Prior to a Change in Control, the
Trustee shall have no duty to commence or maintain any action, suit or legal
proceeding on behalf of the Trust on account of or growing out of any
investment made in or for a Directed Fund unless the Trustee has been directed
to do so by the Asset Manager and unless the Trustee is either in possession of
funds sufficient for such purpose or unless it has been indemnified by the
Company or the Investment Manager, to its satisfaction, for counsel fees, costs
and other expenses and liabilities to which it, in its sole judgment, may be
subject by beginning or maintaining such action, suit or legal proceeding.
5.9 Restrictions on Transfer. Nothing herein shall be deemed to
empower any Asset Manager to direct the Trustee to transfer any asset of a
Directed Fund to itself except for purposes enumerated in Section 6.1(a).
5.10 Section 4.1(b) Controlling. All provisions of this Article V are
subject to Section 4.1(b).
ARTICLE VI
Powers of Asset Managers
6.1 General Powers. Subject to Section 4.1(b) hereof and without in
any way limiting the powers and discretions conferred upon any Asset Manager by
the other provisions of this Agreement or by law, each Asset Manager, including
the Trustee, shall be vested with the following powers and discretions with
respect to the assets of the Trust subject to its
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management and control, and, upon the directions of the Asset Manager of a
Directed Fund, the Trustee shall make, execute, acknowledge and deliver any and
all documents of transfer and conveyance and any and all other instruments that
may be necessary or appropriate to enable such Asset Manager to carry out such
powers and discretions:
(a) to hold marketable securities subject to appropriate objectives
and guidelines set by the Company, including stocks, bonds and money market
instruments. However, the Trustee shall have no responsibility or obligation to
monitor objectives and guidelines set forth by the Company;
(b) to sell, exchange, convey, transfer or otherwise dispose of any
property by private contract or at public auction, and no person dealing with
the Asset Manager shall be bound to see to the application of the purchase
money or to inquire into the validity, expediency or propriety of any such sale
or other disposition;
(c) to enter into contracts or to make commitments either alone or
in company with others to sell or acquire property;
(d) to delegate to a manager or holder or holders of a majority
interest in any real property, the management and operation of any part
interest in such property or properties (including the authority to sell such
part interests or otherwise carry out the decision of such manager or the
holder or holders of such majority interest);
(e) to lease to others for any term without regard to the duration
of the Trust any real property or part interest in real property;
(f) to vote upon any stocks, bonds or other securities (but subject
to the suspension of any voting rights as a result of any broker loan or
similar agreement); to give general or special proxies or powers of attorney
with or without power of substitution; to exercise any conversion privileges,
subscription rights or other options and to make any payments incidental
thereto; to consent to or otherwise participate in corporate reorganizations or
other changes affecting corporate securities and to delegate discretionary
powers and to pay any assessments or charges in connection therewith; and
generally to exercise any of the powers of an owner with respect to stocks,
bonds, securities or other property;
(g) to organize corporations under the laws of any state for the
purpose of acquiring or holding title to property (or to direct the Trustee to
organize such corporations or to appoint any ancillary trustee acceptable to
the Trustee for such purpose);
(h) to invest in a fund consisting of securities issued by
corporations and selected and retained solely because of their inclusion in,
and in accordance with, one or more commonly used indices of such securities,
with the objective of providing investment results for the fund which
approximate the overall performance of such designated index;
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(i) to enter into any partnership, as a general or limited partner,
or joint venture;
(j) to purchase units or certificates issued by an investment
company or pooled trust or comparable entity;
(k) to transfer money or other property to an insurance company
issuing an insurance contract; and
(l) to be reimbursed for the expenses incurred in exercising any of
the foregoing powers or for paying the reasonable expenses incurred by any
agent, manager or trustee appointed pursuant hereto.
6.2 Additional Powers of Trustee. In addition, the Trustee is hereby
authorized:
(a) to register any securities held in the Trust Fund in its own
name or in the name of a nominee and to hold any securities in bearer form, and
to combine certificates representing such securities with certificates of the
same issue held by the Trustee in other fiduciary or representative capacities
or as agent for customers, or to deposit or to arrange for the deposit of such
securities in any qualified central depository even though, when so deposited,
such securities may be merged and held in bulk in the name of the nominee of
such depository with other securities deposited therein by other depositors, or
to deposit or arrange for the deposit of any securities issued by the United
States Government, or any agency or instrumentality thereof, with a Federal
Reserve Bank, but the books and records of the Trustee shall at all times show
that all such investments are part of the Trust Fund;
(b) to employ suitable agents, depositories and counsel, domestic or
foreign, and to charge their reasonable expenses and compensation against the
Trust Fund, and to confer upon any such depository the powers conferred upon
the Trustee by paragraph (a) of this Section 6.2 as well as the power to
appoint subagents and depositories, wherever situated, in connection with the
retention of securities or other property;
(c) to borrow money from any source as may be necessary or advisable
to effectuate the purposes of the Trust on such terms and conditions as the
Trustee, in its absolute discretion, may deem advisable;
(d) to deposit funds in interest bearing account deposits maintained
by or savings certificates issued by Wachovia, in its separate corporate
capacity, or in any other banking institution;
(e) to compromise or otherwise adjust all claims in favor of or
against the Trust Fund other than claims solely affecting the right of any
Person to benefits under each Contract;
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(f) to make any distribution or transfer of assets authorized under
the terms of this Agreement in cash or in kind as the Trustee, in its absolute
discretion, shall determine and, in furtherance thereof, to value such assets,
which valuation shall be conclusive and binding on all Persons;
(g) upon the direction of the Company, to maintain and operate one
or more market inventory funds as a vehicle to exchange securities among
Discretionary and Directed Funds without alienating the property from the
Trust; and
(h) to hold uninvested cash awaiting investment and such additional
cash balances as it shall deem reasonable or necessary, without incurring any
liability for the payment of interest thereon.
6.3 Letters of Credit. The Trustee, upon written direction of the
Company prior to a Change in Control, shall pay from the Trust Fund sums to
such banking company or companies as the Company may direct for purposes of
establishing a letter of credit to fund the Company's obligations under the
Contracts. The Trustee shall receive and hold in the Fund all letters of credit
so obtained.
ARTICLE VII
Records and Accounts of Trustees
7.1 Records. The Trustee shall keep accurate and detailed accounts
of all investments, receipts, disbursements and other transactions in the Trust
Fund and all accounts, books and records relating thereto shall be open to
inspection and audit at all reasonable times during normal business hours by
any Person designated by the Company.
7.2 Annual Account. Within ninety (90) days following the close of
each Accounting Period, the Trustee shall file with the Account Party a written
account setting forth the receipts and disbursements of the Trust Fund and the
investments and other transactions effected by it upon its own authority or
pursuant to the directions of any Person as herein provided during the
Accounting Period.
7.3 Account Stated. Upon the expiration of ninety (90) days from the
date of filing its annual account with the Account Party, the Trustee shall be
forever released and discharged from all liability and further accountability
to the Company, the Account Party or any other Person with respect to the
accuracy of such accounting and the propriety of all acts and failures to act
of the Trustee reflected in such account, except with respect to any such acts
or transactions as to which the Account Party shall, within such ninety (90)
day period, file with the Trustee specific written objections.
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7.4 Judicial Accountings. Nothing herein shall in any way limit the
Trustee's right to bring any action or proceeding in a court of competent
jurisdiction to settle its account or for such other relief as it may deem
appropriate.
7.5 Necessary Parties. In order to protect the Trust Fund from the
expense of litigation, no Person other than the Company shall be a necessary
party in any proceeding under Section 7.4 or may require the Trustee to account
or may institute any other action or proceeding against the Trustee or the
Trust.
ARTICLE VIII
Compensation, Taxes and Expenses
8.1 Compensation and Expenses. (a) Prior to a Change in Control, the
Trustee shall, upon receipt of written direction from the Company, pay out of
the Trust Fund any expenses incurred by the Trustee in connection with its
administration of the Trust including, but not limited to, fees for legal
services rendered to the Trustee (whether or not rendered in connection with a
judicial or administrative proceeding), such compensation to the Trustee as
shall be agreed upon from time to time between the Trustee and the Company, and
all other proper charges and disbursements of the Trustee.
(b) After a Change in Control occurs, (i) the Trustee shall, without
any direction from the Company, pay out of the Trust Fund any reasonable
expenses incurred by the Trustee including, but not limited to, amounts
assessed against the Trustee in connection with liability incurred by the
Trustee as a result of any discretionary action which the Trustee may take
under the Trust after such Change in Control occurs, fees for legal services
rendered to the Trustee (whether or not rendered in connection with a judicial
or administrative proceeding), fees for actuarial and/or accounting services
rendered to the Trustee for purposes of determining benefits under a Contract,
such compensation to the Trustee as was agreed upon between the Trustee and the
Company prior to such Change in Control or as shall be agreed upon from time to
time between the Trustee and the Company after such Change in Control occurs,
and all other proper charges and disbursements of the Trustee, and (ii) such
expenses shall be paid prior to any other payments required to be made under
the terms of the trust created hereunder.
(c) In accordance with Section 9.3, the Trustee shall be authorized
after a Change in Control occurs to reserve such amount as it may deem
advisable for payments of its fees and expenses as set forth in paragraph (b)
of this Section 8.1.
(d) Anything in preceding paragraph (a), (b) or (c) of this Section
8.1 to the contrary notwithstanding, the Company shall reimburse the Trustee
for any such reasonable expenses if for any reason such expenses are not paid
out of the Trust Fund. The Trustee's entitlement to reimbursement hereunder
shall not be affected by the resignation or removal of the Trustee or by the
termination of the Trust.
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8.2 Taxes. The Company shall pay from its own assets any Federal,
State, Local or other taxes imposed or levied with respect to the corpus and/or
income of the Trust Fund or any part thereof under existing or future laws and
the Company, in its discretion, or the Trustee, in its discretion, may contest
the validity or amount of any tax, assessment, claim or demand respecting the
Trust Fund or any part thereof.
ARTICLE IX
Resignation or Removal of Trustee
9.1 Removal or Resignation. Prior to a Change in Control, the
Trustee may be removed by the Company at any time upon sixty (60) days' notice
in writing to the Trustee. After a Change in Control occurs, (i) the Trustee
may be removed by the Company through action of its Board of Directors at any
time upon sixty (60) days' notice in writing to the Trustee except that the
Trustee may be not so removed by the Company, except with the consent of
seventy-five (75) percent in number of the executives party to Contracts and
their beneficiaries, or (ii) the Trustee may be removed by the executives party
to Contracts and their beneficiaries upon sixty (60) days' notice in writing to
the Trustee, provided such notice is executed by at least fifty-one (51)
percent in number of the executives party to Contracts and their beneficiaries.
The Trustee may resign at any time upon sixty (60) days' notice in writing to
the Company.
9.2 Designation of a Successor. Upon the removal or resignation of
the Trustee, the Company, by action of its Board of Directors, shall appoint a
successor trustee which shall be a bank as defined under the Investment
Advisers Act of 1940, having a net worth in excess of $100,000,000 or having
assets in excess of $2,000,000,000 to act hereunder after the effective date of
such removal or resignation. Each successor trustee shall have the same powers
and duties as those conferred upon the Trustee hereunder, and upon acceptance
of such appointment by the successor trustee, the Trustee shall assign,
transfer and pay over the Trust Fund to such successor trustee. If, for any
reason, the Company cannot or does not act promptly to appoint a successor
trustee in the event of the resignation or removal of the Trustee, the Trustee
may apply to a court of competent jurisdiction for the appointment of a
successor trustee. Any expenses incurred by the Trustee in connection therewith
shall be charged to and paid from the Trust Fund as an expense of
administration.
9.3 Reserve for Expenses. Prior to a Change in Control, the Trustee
is authorized to reserve such amount as is agreed by the Company for payment of
its fees and expenses in connection with the settlement of its account or
otherwise, and any balance of such reserve remaining after payment of its fees
and expenses shall be paid over in accordance with the directions of the
Company. After a Change in Control occurs, the Trustee is authorized to reserve
such amount as it may deem advisable and reasonable at any time for payment of
its fees and expenses in connection with the settlement of its account or
otherwise, and any balance of such reserve remaining after payment of such fees
and expenses shall be paid over in accordance with the directions of the
Company under the last sentence of Section 10.4. The Trustee is authorized to
invest such reserve in any investment authorized under the terms of this
Agreement
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appropriate for the temporary investment of cash reserves of trusts, the
earnings on which are to be credited to each Contract and the executives'
accounts. After a Change in Control, the Company agrees to keep the Trust
sufficiently funded at all times to allow for a reserve for the fees and
expenses and to enable the Trustee to reimburse itself in accordance with the
terms of this section and the terms of Article XV hereof.
ARTICLE X
Amendment or Termination
10.1 Amendment of Agreement. (a) This Agreement is irrevocable by the
Company. Subject to paragraph (b) hereof, the Company expressly reserves the
right at any time to amend this Agreement and the trust created thereby by
action of its Board of Directors to any extent that it may deem advisable. No
such amendment shall be made that affects the duties or responsibilities of the
Trustee without its consent thereto in writing; and provided, further, that no
amendment may be made unless the Company, in its reasonable judgment, believes
that such amendment would have no material adverse impact on executives party
to Contracts or their beneficiaries or that such amendment is necessary to
avoid a greater adverse impact on the executives party to Contracts or their
beneficiaries. Such amendment shall become effective upon delivery to the
Trustee of a written instrument of amendment, duly executed and acknowledged by
the Company and accompanied by a certified copy of a resolution of the Board of
Directors of the Company authorizing such amendment.
(b) Notwithstanding any other provisions of this Agreement, the
provisions of this Agreement and the trust created thereby may not be amended
after the date a Change in Control occurs without the written consent of
seventy-five (75) percent in number of the executives party to Contracts and
their beneficiaries. The Trustee may request that the Company furnish evidence
to establish that such a percentage of executives and beneficiaries have
granted written consent to such an amendment. The Company reserves the right to
amend or eliminate this paragraph (b) prior to the date of a Change in Control.
10.2 Termination of a Contract. In the event a Contract is terminated
in whole or in part prior to a Change in Control, the Trustee (subject to the
provisions of Articles XI and XII hereof and reserving such sums as the Trustee
shall deem reasonably necessary in settling its accounts and to discharge any
obligation of the Trust Fund for which the Trustee may be liable) shall apply
or distribute the Trust Fund attributable to such Contract in accordance with
the written directions of the Company. After the date a Change in Control
occurs, a Contract may not be terminated without the written consent of the
executive party to such Contract or his beneficiary. In case a Contract is
terminated in whole or in part after a Change in Control occurs, then the
Trustee (subject to the provisions of Articles XI and XII hereof and reserving
such sums as the Trustee shall deem reasonably necessary in settling its
accounts and to discharge any obligation of the Trust Fund for which the
Trustee may be liable) shall apply or distribute a portion of the Trust Fund
attributable to such Contract in such manner and in such amounts as the Trustee
shall determine based upon the most recent Executive Data with respect to such
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Contract forwarded by the Company to the Trustee prior to or upon such Change
in Control and any supplemental information furnished to the Trustee by an
executive party to a Contract, beneficiary, the Company or its actuaries upon
which the Trustee may reasonably rely in making such a determination. Upon such
termination of a Contract in whole or in part, the Trustee shall have a right
to have its accounts settled with respect to such Contract as provided in
Article VII hereof. When the Trust Fund shall have been so applied or
distributed and the accounts of the Trustee shall have been so settled, the
Trustee shall be released and discharged from all further accountability or
liability respecting the Trust Fund with respect to such Contract (or that part
of the Trust Fund so applied or distributed, if such Contract is terminated
only in part) and shall not be responsible in any way for the further
disposition of the Trust Fund with respect to such Contract (or that part of
the Trust Fund so applied or distributed, if the Contract is terminated only in
part). Notwithstanding the above, no distribution shall be made from the Trust
to an executive party to a Contract or beneficiary thereof attributable to the
termination of that Contract during the ninety (90) day period following such
termination of that Contract. Any distribution made thereafter shall be subject
to the provisions of Section 3.3 hereof.
10.3 Distribution of Residual Assets. In the event of the termination
of a Contract prior to a Change in Control, any residual assets with respect to
such Contract shall be distributed to the Company if all liabilities under such
Contract and all other Contracts to executives party to Contracts and their
beneficiaries have been satisfied and the distribution does not contravene any
provision of law.
10.4 Distribution of Excess Assets. (a) In the event that the fair
market value of the assets of the Trust, determined as of the close of each
calendar year by an actuary chosen by the Company, exceeds one hundred ten
(110) percent of the present value of the aggregate benefits payable to
executives under each Contract, the Company may, in its sole discretion prior
to a Change in Control, direct the Trustee to distribute such excess assets, in
whole or in part, to the Company provided such distribution does not contravene
any provisions of law. After a Change in Control, subject to Section 3.3 and
paragraph (b) of this Section 10.4, no assets may be distributed to the Company
until all obligations as to all executives party to Contracts, or their
beneficiaries, have been satisfied, and (ii) provision has been made for (A)
the payment of expenses incurred or reasonably projected by the Trustee to be
incurred under the terms of this Agreement and (B) the establishment and
maintenance of reserves as contemplated hereunder.
(b) If, after seventy-eight (78) months following a Change in Control
there are outstanding no claims for benefits under any Contract and all
obligations under the Contracts as to executives party to Contracts, or their
beneficiaries, have been satisfied, all assets remaining in the Trust shall be
transferred to the Company.
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ARTICLE XI
Prohibition Against Diversion
11.1 No Right of Alienation or Employment. The assets of the Trust
Fund shall not be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge by any executive or beneficiary. The
executives and beneficiaries have no beneficial ownership in or preferred claim
on the assets of the Trust. Amounts payable under the Contracts consist of the
Company's unsecured promise to pay such amounts when due under the terms of
such Contracts and, with respect to such amounts, the executives have the
status of unsecured creditors. Except as otherwise provided in such Contract,
being a party to a Contract does not give any employee a right to continued
employment with the Company or any subsidiary or affiliate except as otherwise
provided in such Contract.
ARTICLE XII
Sufficiency of Trust Fund
12.1 Payment of Benefits. At least annually, after a Change in
Control occurs, if the assets of the Trust Fund are, as of any Valuation Date,
including, without limitation, at the time of termination of a Contract or as a
result of the payment of expenses as set forth in paragraph (b) of Section 8.1,
when taking into account the maximum total amount of potential obligations
(based on the most recent Executive Data) under all Contracts then in effect,
insufficient to fulfill such potential obligations as of such date under all
such Contracts, then the Trustee shall so notify the Company, setting forth the
additional aggregate amount required to pay all such potential obligations
under the Contracts then in effect and the Company shall, within ten (10) days
of the receipt of such notice, pay to the Trustee the amount set forth in such
notice.
12.2 Contribution to Fund. (a) After the execution of this Agreement
and prior to a Change in Control, the Company may, but is not required to, make
a single contribution of a sinking fund of actuarially determined contributions
in an amount as shall be necessary, as determined by the Company, to ensure
that the assets of the Fund shall be sufficient to discharge the Company's
obligations under the Contracts.
During a calendar year, the Company may, but is not required to, make
contributions to the Trust to insure that the assets of the Trust exceed as a
minimum the present value of the maximum potential obligations as of the end of
that year under the Contracts then in effect. In lieu of the foregoing, the
Company may make such provisions for the funding of the Trust as it deems
appropriate.
(b) After a Change in Control occurs, the Company shall make such
contributions within ten (10) days of the Change in Control, and thereafter as
of the first day of each calendar month, to the trust created hereunder as
shall be necessary to ensure that the assets
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of the Trust shall at all times be sufficient to discharge the Company's
maximum potential obligations under the Contracts and this Agreement. The
Company's maximum obligations under the Contracts shall be equal to the
aggregate amount payable under the Contracts assuming that the employment of
all executives party to a Contract was terminated other than for cause
following a Change in Control, which termination of employment gives rise to
severance benefits under the Contracts. Notwithstanding the foregoing however,
the Company shall have no obligation to fund the Trust to the extent that an
executive or a beneficiary waives the funding obligation with respect to his
Contract. Any imputed retirement benefits included as a severance benefit under
the Contracts shall be computed on a lump sum basis by using the 1983 Group
Annuity Mortality Table (weighted 50% male), and the lower of (A) the
"applicable interest rate" under Section 417(e)(3)(A)(ii)(II) of the Code which
would be used for purposes of such Section for the last full month before the
month for which such present value is being calculated, and (B) the interest
rate used in the Company's most recent qualified plan valuation for funding
purposes.
Anything herein to the contrary notwithstanding, the Trustee shall
under no circumstances be responsible for the adequacy of the Trust, whether
before or after a Change in Control, as the result of the distribution of
excess Trust assets to the Company, the payment of claims of judgment creditors
of the Company, the payment of taxes of the Trust or of the executives and/or
beneficiaries, the payment of expenses of the Trust or the Trustee or otherwise
to fulfill the obligations of the Company under the Contracts to executives and
beneficiaries.
(c) For purposes of calculating the contribution that the Company may
or is required to make under this Section 12.2, the Company and the Trustee
shall make reasonable projections of (i) increases in the obligations under the
Contracts, including but not limited to those caused by increases in
compensation and increases in tax rates, and (ii) potential future expenses or
reserves that may be payable or required to be maintained under the terms of
this Agreement.
ARTICLE XIII
Authorities
13.1 Company. Whenever the provisions of this Agreement specifically
require or permit any action to be taken by "the Company", such action must be
authorized by an officer of the Company, who has been duly authorized by the
Board of Directors to act on the Company's behalf. The Company shall furnish
the Trustee from time to time with a list of the names and signatures of all
individual officers authorized to act for the Company hereunder and certified
by the Secretary or an Assistant Secretary of the Company, and the Trustee
shall be fully protected in acting upon any notices or directions received from
any of them.
13.2 Investment Manager. The Company shall cause each Investment
Manager to furnish the Trustee from time to time with the names and signatures
of those persons authorized to direct the Trustee on its behalf hereunder.
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13.3 Form of Communications. Any agreement between the Company and
any Person (including an Investment Manager) or any other provision of this
Agreement to the contrary notwithstanding other than Section 14.6, all notices,
directions and other communications to the Trustee shall be in writing or in
such other form, including transmission by electronic means through the
facilities of third parties or otherwise, specifically agreed to in writing by
the Trustee, and the Trustee shall be fully protected in acting in accordance
therewith. Notice of a Change in Control shall be communicated to the Trustee
in a writing signed by an officer of the Company, which notice shall be
conclusive and binding on the Trustee and on which the Trustee shall be
entitled to rely.
13.4 Continuation of Authority. The Trustee shall have the right to
assume, in the absence of written notice to the contrary, that no event
constituting a change in the Company's officers or terminating the authority of
any Person, including any Investment Manager, has occurred.
13.5 No Obligation to Act on Unsatisfactory Notice. The Trustee shall
incur no liability under this Agreement for any failure to act pursuant to any
notice, direction or any other communication from any Asset Manager, the
Company, or any other Person or the designee of any of them unless and until it
shall have received instructions in a form satisfactory to it.
ARTICLE XIV
General Provisions
14.1 Governing Law. This Agreement shall be administered, construed
and enforced according to the laws of the State of Delaware. Nothing in this
Agreement shall be construed to subject either the Trust or the Contracts to
ERISA.
14.2 Entire Agreement. The Trustee's duties and responsibilities with
respect to any Contract or any Person interested therein shall be limited to
those specifically set forth in this Agreement.
14.3 Mistake. No mistake made in good faith and in the exercise of
due care in connection with the administration of the Trust Fund shall be
deemed to be a breach of the Trustee's duties if, promptly after discovery of
the mistake, the Trustee takes whatever action may be practicable in the
circumstances to remedy the mistake.
14.4 Reliance on Experts. The Trustee and the Company may consult
with experts (who may be experts employed by the Company), including legal
counsel, appraisers, pricing services, accountants or actuaries, selected by
them with due care with respect to the meaning and construction of this
Agreement or any provision hereof, or concerning their powers and duties
hereunder, and shall be protected for any action taken or omitted by them in
good faith pursuant to or on the basis of the opinion of any such expert.
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14.5 Successor to the Trustee. Any successor, by merger or otherwise,
to substantially all of the trust business of Wachovia shall automatically and
without further action become the Trustee hereunder if and only if such
successor meets the requirements of Section 9.2. If the successor does not meet
such requirements, then the Trustee shall be deemed to have resigned as of the
date of such merger or other event and the provisions of Section 9.2 shall
apply. Any successor shall be subject to all the terms and conditions and
entitled to all the benefits and immunities hereof.
14.6 Notices. All notices, reports, annual accounts and other
communications to the Company, Investment Manager, or any other Person shall be
deemed to have been duly given if mailed, postage prepaid, electronically
delivered or delivered in hand to such Person at its address appearing on the
records of the Trustee, which address shall be filed with the Trustee at the
time of the establishment of the Trust and shall be kept current hereafter by
the Company. All directions, notices, statements, objections and other
communications to the Trustee shall be deemed to have been given when received
by the Trustee at its offices.
14.7 Contracts. The Company shall provide the Trustee with a
complete, current copy of each Contract. The Company also shall deliver to the
Trustee a copy of any modifications or amendments to any Contract. The Trustee
shall be entitled to rely upon the Company's attention to this obligation and
shall be under no duty to inquire of any Person as to the existence of any
documents not provided hereunder.
14.8 No Waiver; Reservation of Rights. The rights, remedies,
privileges and immunities expressed herein are cumulative and are not
exclusive, and the Trustee shall be entitled to claim all other rights,
remedies, privileges and immunities to which it may be entitled under
applicable law.
14.9 Descriptive Headings. The captions in this Agreement are solely
for convenience of reference and shall not define or limit the provisions
hereof.
14.10 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute together but one and the same document.
ARTICLE XV
Undertaking by Company
15.1 Undertaking. In consideration of Wachovia's agreeing to enter
into this Agreement, the Company hereby agrees to hold harmless Wachovia,
individually and as Trustee ("Wachovia" or "Trustee" within this Section 15.1
shall include any parent or subsidiary of Wachovia and any corporation the
stock of which is wholly owned by Wachovia Corporation as well as any successor
corporation to those previously described) and Wachovia's directors, officers,
and employees, from and against all amounts, including without limitation
taxes, expenses (including reasonable counsel fees), liabilities, claims,
damages, actions, suits or other
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charges, incurred by or assessed against Wachovia, individually or as Trustee,
or its directors, officers or employees, (i) as a result of anything done in
good faith, or alleged to have been done, by or on behalf of Wachovia in
reliance upon the directions of any Investment Manager or the Company or
anything omitted to be done in good faith, or alleged to have been omitted, in
the absence of such directions; (ii) as a result of the failure of the Company,
directly or indirectly, to adequately, carefully and diligently discharge its
fiduciary responsibilities, if any, with respect to a Contract; (iii) as a
result of any other event or occurrence beyond the Trustee's control,
including, but not limited to, claims, actions, or suits which challenge the
authority of the Company to enter into this Agreement, which challenge the
validity of a Contract and the liabilities of the Company thereunder, or which
make other similar challenges or allegations; or (iv) as a result of any
discretionary action taken by the Trustee after a Change in Control occurs
pursuant to the terms of the Trust, except for the Trustee's negligence or
willful misconduct.
15.2 Limitation on Undertaking. Anything hereinabove to the contrary
notwithstanding, the Company shall have no responsibility to Wachovia under
Section 15.1 if Wachovia knowingly participated in or knowingly concealed any
act or omission of any Person described in such Section knowing that such act
or omission constituted a breach of such Person's fiduciary responsibilities,
or if Wachovia fails to perform any of the duties specifically undertaken by it
under the provisions of this Agreement, or if Wachovia fails to act in
conformity with duly given and authorized directions hereunder.
15.3 Survival of Undertakings. The Company further agrees that the
undertakings made in this Article XV shall be binding on its successors or
assigns and shall survive termination, amendment or restatement of this
Agreement, or the resignation or removal of the Trustee, and that this Article
shall be construed as a contract between the Company and the Trustee according
to the laws of the State of Delaware in effect from time to time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
15th day of April 1998.
BOWATER INCORPORATED
By: /s/ David G. Maffucci
----------------------------------------------
Name: David G. Maffucci
----------------------------------------------
Title: Sr. Vice President and Chief Financial Officer
----------------------------------------------
Date signed: May 7, 1998
-----------------------------------------
WACHOVIA BANK, N.A.
By: /s/ Beverly H. Wood
----------------------------------------------
Name: Beverly H. Wood
----------------------------------------------
Title: Senior Vice President
----------------------------------------------
Date signed: May 14, 1998
-----------------------------------------
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List A
Participating Contracts, Agreements or Arrangements
As Of April 15, 1998
BOWATER INCORPORATED CHANGE IN CONTROL AGREEMENTS WITH:
NAME DATE OF AGREEMENT
---- -----------------
Anthony H. Barash 04/01/96
Owen Cardell 08/01/97
James H. Dorton 08/06/96
E. Patrick Duffy 11/01/95
Curtis Randolph Ellington 08/01/97
Richard F. Frisch 11/01/95
Arthur D. Fuller 08/01/97
Harry F. Geair 11/01/95
Richard G. Gilbert 11/18/96
Jerry R. Gilmore 08/01/97
Richard K. Hamilton 08/01/97
D. Alvin Humphrey 01/01/96
Steven G. Lanzl 10/21/96
David G. Maffucci 11/01/95
Donald G. McNeil 11/01/95
Robert A. Moran 11/01/95
William C. Morris 08/01/97
Stephen L. Naman 11/01/95
Arnold M. Nemirow 11/01/95
R. Donald Newman 11/01/95
Michael F. Nocito 11/01/95
Ben L. Pelton 11/01/95
Philip Pirovitz 11/01/95
Wendy C. Shiba 05/21/97
Craig B. Stevens 11/01/95
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