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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to
Section 14(d)(4)
of the Securities Exchange Act of 1934
(Amendment No. 1)
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Gibson Greetings, Inc.
(Name of Subject Company)
Gibson Greetings, Inc.
(Name of Person(s) Filing Statement)
Common Stock, par value $0.01 per share
(Including the associated Preferred Share Purchase Rights)
(Title of Class of Securities)
374827103
(CUSIP Number of Class of Securities)
Frank J. O'Connell
Chairman of the Board, Chief Executive Officer
and President
Gibson Greetings, Inc.
2100 Section Road
Cincinnati, Ohio 45237
(513) 841-6600
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
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Copies to:
Phillip R. Mills
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
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This Amendment No. 1 amends and supplements the Solicitation/
Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") originally
filed with the Securities and Exchange Commission on November 9, 1999 by Gibson
Greetings, Inc., a Delaware corporation (the "Company"), in connection with the
offer by Granite Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of American Greetings Corporation, an Ohio corporation
("Parent"), to purchase all outstanding Shares of the Company, at $10.25 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer To Purchase dated November 9, 1999 and the related
Letter of Transmittal (which together constitute the "Offer"), copies of which
are attached as Exhibits 11(a)(1) and 11(a)(2), respectively, to the Schedule
14D-1 dated November 9, 1999 as amended by Amendment No. 1 filed December 7,
1999 (as so amended, the "Schedule 14D-1") of Purchaser and Parent.
All capitalized terms used in this Amendment No. 1 without definition have
the meanings attributed to them in the Schedule 14D-9.
The Schedule 14D-9 is hereby amended and/or supplemented as provided
below:
ITEM 3.
Item 3 is amended and supplemented by inserting the following in the
Section entitled The Offer as the third sentence of the paragraph designated
Terms of the Offer:
"E-Greetings Network ("EGN") has filed for an initial public offering and
the Company has agreed not to sell any of its interest in EGN for a period
which will expire 180 days following the consummation of EGN's initial
public offering. Therefore, the company is not currently engaged in any
efforts to sell its interest in EGN."
Item 3 is further amended and supplemented by inserting the following in
the Section entitled Fees and Expenses at the end of the paragraph designated
Benefit Program Funded by Parent:
"The incentives are provided pursuant to an employee retention program
covering over 500 employees of the Company. The Company selected the
employees to participate in the retention program and determined the
benefit to be provided to each employee in a manner intended to offer
sufficient retention incentives to individuals most critical to the
Company's business. The retention program has two components. The first
component is a Key Employee Retention Incentive Plan, under which certain
salaried employees will be entitled to receive a bonus payment, payable in
installments through May 2001 or upon the completion of designated
business goals, subject to the employee's continued employment with the
Company and the terms of the plan. The installments will be payable
whether or not the Offer or the Merger are completed, but are subject to
accelerated payment after a change in control. The bonuses vary in amount,
depending on the employee's position and contemplated contribution to the
Company's business plan. The second component of the program provides
enhanced severance benefits to certain hourly employees in the event of an
involuntary termination of employment following a change in control of the
Company. The enhancements vary in amount, depending upon the employee's
length of service and base salary. The consummation of the Offer will
constitute a change in control for purposes of the retention program."
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
Item 7(a) is amended and supplemented by inserting the following at the
end of the first paragraph:
"See the paragraph designated Terms of the Offer under the Section
entitled The Offer in Item 3(b)."
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Item 8 is amended and supplemented by amending and restating the second
and third paragraphs under the Section entitled (f) Antitrust to read as
follows:
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"Parent and the Company each filed a Premerger Notification and
Report Form with the FTC and the Antitrust Division in connection with the
purchase of Shares pursuant to the Offer and the Merger under the HSR Act
on December 2, 1999, and the required 15-day waiting period with respect
to the Offer and the Merger will expire at 11:59 p.m., New York City time,
on December 17, 1999, unless earlier terminated by the FTC or the
Antitrust Division, or Parent receives a request for additional
information or documentary material prior thereto. If, within the
15-calendar day waiting period described above, either the Antitrust
Division or the FTC requests additional information or documentary
material from Parent, the waiting period could be extended for an
additional 10 calendar days following substantial compliance by Parent
with such request. Thereafter, such waiting period can be extended only by
court order.
A second Premerger Notification and Report Form was also filed by
Parent on December 2, 1999, in connection with its indirect acquisition of
the Company's equity interest in EGN. Under the provisions of the HSR Act
applicable to the acquisition, the acquisition may not be consummated
until the expiration of a 30-calendar day waiting period following the
filing by Parent, unless both the Antitrust Division and the FTC terminate
the waiting period prior thereto. If, within such 30-calendar day waiting
period, either the Antitrust Division or the FTC requests additional
information or documentary material from Parent or any other person
required to file notification with respect to such acquisition, the
waiting period could be extended for an additional 20 calendar days
following substantial compliance by the relevant party(ies) with such
request. Thereafter, such waiting period can be extended only by court
order."
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is amended and supplemented by adding the following exhibits:
H. Gibson Greetings, Inc. Key Employee Retention Incentive Plan
I. Rabbi Trust under the Gibson Greetings, Inc. Retention Program
ANNEX A.
The first sentence of the eighth paragraph of Annex A is hereby amended
and restated in its entirety to read as follows:
"This letter is provided to the board of directors of the Company in
connection with and for the purposes of its evaluation of the Transaction."
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 to the Statement
is true, complete and correct.
GIBSON GREETINGS, INC.
Date: December 7, 1999
By: /s/ James T. Wilson
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Name: James T. Wilson
Title: Executive Vice President, Finance
and Operations and Chief Financial
Officer
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EXHIBIT H
GIBSON GREETINGS, INC.
KEY EMPLOYEE RETENTION INCENTIVE PLAN
WHEREAS, the Board of Directors of the Company has determined that it is
essential and in the best interest of the Company and its stockholders to
retain the services of its key personnel and to ensure their continued
dedication and efforts without undue concern for their personal financial and
employment security.
NOW, THEREFORE, in order to fulfill the above purposes, the following plan
has been developed and is hereby adopted.
ARTICLE 1
DEFINITIONS
"Administrator" shall have the meaning set forth in Section 2.01(b).
"Award" means a Cash Award or an Option Award.
"Board" means the Board of Directors of the Company.
"Cash Award" means an incentive award made by the Company under the Plan
which is payable in cash.
"Cash Award Participant" means an Employee designated by the Administrator
to receive a Cash Award.
"Cause" means (a) the willful and continued refusal by a Participant to
perform substantially his or her reasonably assigned duties with the Company
(other than any such failure resulting from his or her incapacity due to
physical or mental illness) or (b) the willful engaging by the Participant in
conduct which is demonstrably and materially injurious to the Company,
financially or otherwise.
"Change in Control" means:
(a) An acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "Person" as the term
person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), immediately after which
such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
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promulgated under the Exchange Act) together with all affiliates and associates
(as such terms are used in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act) of such person, directly or indirectly, of securities
of the Company representing thirty percent (30%) or more of the combined voting
power of the Company's then outstanding Voting Securities; provided further,
however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any Subsidiary,(ii) the Company or its Subsidiaries, or (iii)
any Person in connection with a "Non-Control Transaction" (as hereinafter
defined); or
(b) During any period of two consecutive years commencing after October 1,
1999 individuals who at the beginning of such two-year period are members of
the Board (the "Incumbent Board"), cease for any reason to constitute a
majority of the members of the Board; provided, however, that if the election,
or nomination for election by the Company's common stockholders, of any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (d) of
this definition) was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(c) At any duly conducted election of directors at a special or annual
meeting of stockholders of the Company, the stockholders of the Company fail to
elect at least one (1) person to serve as a director of the Company who is
both: (i) a nominee of, and endorsed by, the Company and (ii) not an employee
of the Company or any Affiliate of the Company at the time of such election; or
(d) Consummation of:
(i) A merger, consolidation or reorganization involving the Company,
unless such merger, consolidation or reorganization is a "Non-Control
Transaction." A "Non-Control Transaction" shall mean a merger,
consolidation or reorganization of the Company where:
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(A) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or reorganization,
at least seventy percent (70%) of the combined voting power of the
outstanding voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger,
consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or indirectly
owning a majority of the Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company, (ii) any Subsidiary,
or (iii) any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation, or any
Subsidiary, acquires Beneficial Ownership of thirty percent (30%) or
more of the combined voting power of the Surviving Corporation's then
outstanding voting securities.
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer to a
Subsidiary).
"Change in Control Date" means the date of occurrence of a Change in
Control.
"Company" means Gibson Greetings, Inc.
"Committee" means the Compensation Committee of the Board.
"Disability" means a physical or mental infirmity which impairs a
Participant's ability substantially to perform his or her duties for a period
of one hundred eighty (180) consecutive days.
"Employer" means, with respect to any Employee, the Company or any
Subsidiary employing such Employee.
"Employee" means any employee of the Company or any Subsidiary.
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"Option Award" means an incentive award made by the Company pursuant to
this Plan in the form of an option to purchase Shares granted under the
Company's 1999 Stock Incentive Plan. An option shall not be deemed to be an
incentive award made pursuant to this Plan unless such option is explicitly
designated as such in the applicable option agreement.
"Option Award Participant" means an Employee designated pursuant to this
Plan to receive an Option Award under the Option Plan.
"Option Plan" means the Company's 1999 Stock Incentive Plan.
"Participant" means an Employee selected by the Administrator to receive
an Award.
"Plan" means the Gibson Greetings, Inc. Key Employee Retention Incentive
Plan as set forth herein.
"Share" means a share of common stock, $0.01 par value, of the Company.
"Subsidiary" means any corporation, partnership, limited liability company
or other entity in which the Company beneficially owns a voting, capital or
profits interest of 50% or more.
"Termination Without Cause" means the termination of a Participant's
employment by each of the Participant's Employers, other than as a result of
Cause or the Participant's Disability (or death), where the Participant is not
offered immediate alternative employment with the Company or a Subsidiary at a
location within 25 miles of the Participant's then existing work location.
ARTICLE 2
PROVISIONS APPLICABLE TO CASH AWARDS
SECTION 2.01. Administration.
(a) Authority. The Cash Awards shall be administered by the Committee,
which shall have the power to select Participants to receive Cash Awards,
determine the amounts, vesting and payment dates and other terms and conditions
of Cash Awards, amend the amount, terms and conditions of Cash Awards, make and
amend rules applicable to Cash Awards and interpret the provisions of the Plan
applicable to Cash Awards and the provisions of each Cash Award.
Notwithstanding the foregoing, after a Cash Award has been issued to a Cash
Award Participant under a written award agreement signed by the Cash Award
Participant, such Cash Award may not be terminated, amended or modified in a
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manner adverse to the Cash Award Participant, unless the Cash Award Participant
consents in writing to such change.
(b) Delegation. With respect to the exercise of its powers under Section
2.01(a), the Committee may consult with the Chief Executive Officer or the
Chief Financial Officer of the Company, as determined by the Committee. In
addition, the Committee may delegate any or all of its powers under Section
2.01(a) to any party or parties selected by the Committee and, with respect to
any such power, all references hereinafter to the Administrator shall be deemed
to refer to the Committee or any party to whom the Committee has delegated such
power.
(c) Administration Following a Change in Control. Notwithstanding anything
to the contrary contained herein, in the event of a Change in Control, from and
after the date of the Change in Control, the Plan and all Cash Awards shall be
administered by a committee composed of the individuals who were serving as
Directors of the Company as of the date immediately preceding the Change in
Control Date and such committee will have sole and final responsibility and
authority for overseeing the payment by the Company of all Cash Awards payable
under the Plan and reviewing and deciding all claims for payment relating to
Cash Awards.
SECTION 2.02. Cash Awards.
(a) Cash Award Participation. The Administrator shall select the Cash
Award Participants and shall determine with respect to each Cash Award
Participant the number of Cash Awards granted to the Cash Award Participant,
the times at which each Cash Award shall be granted, the amount of each Cash
Award and all other terms and conditions applicable with respect to each Cash
Award.
(b) Award Amount. The amount of each Cash Award may be based on a Cash
Award Participant's compensation or position, or on any other factors or
criteria determined by the Administrator.
(c) Terms of Awards. The terms of each Cash Award, including, without
limitation, the date(s) and terms of the forfeiture, vesting and payment of
each Cash Award, shall be determined by the Administrator.
SECTION 2.03. Termination of Employment.
(a) Termination Without Cause. Notwithstanding anything to the contrary
contained herein, or in the terms of any Cash Award, in the event a Cash Award
Participant experiences a Termination Without Cause, any Cash Award granted to
the Cash Award Participant that has not been paid to the Cash Award Participant
as of the date of the Termination Without Cause shall be fully and irrevocably
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vested as of the date of the Termination Without Cause and shall be paid in
full to the Cash Award Participant within five (5) days thereafter.
(b) Other Termination. Except as provided in Section 2.04, or otherwise
explicitly provided by the Administrator with respect to a Cash Award, in the
event of a termination of a Cash Award Participant's employment with any
Employer, other than a Termination Without Cause (including any other
termination by an Employer or by the Cash Award Participant and any termination
due to disability or death) any portion of any Cash Award not previously paid
to the Cash Award Participant shall be forfeited and the Cash Award Participant
and his or her beneficiaries shall not be entitled to any further payments in
respect of such Cash Award.
SECTION 2.04. Change in Control.
(a) Change in Control. Notwithstanding anything to the contrary contained
herein or in the terms of any Cash Award, in the event of a Change in Control,
any portion of any Cash Award held as of the date immediately preceding the
Change in Control Date by any Cash Award Participant who was an Employee as of
the date immediately preceding the Change in Control Date shall be fully and
irrevocably vested as of the Change in Control Date and shall be paid to such
Cash Award Participant (or in the event of the Cash Award Participant's death
prior to the date of payment, to his or her estate) in the form of a lump sum
cash payment within sixty (60) days following the Change in Control or, if
sooner, within five (5) days following a termination of the Cash Award
Participant's employment by any Employer for any reason.
ARTICLE 3
PROVISION APPLICABLE TO OPTION AWARDS
SECTION 3.01. Administration. The Option Awards shall be made under, and
administered in accordance with, the terms of the Option Plan.
SECTION 3.02. Option Awards. The Option Award Participants shall be
selected in accordance with the terms of the Option Plan. The number of Option
Awards granted to each Option Award Participant, the number of Shares subject
to each Option Award, the exercise price, vesting and forfeiture terms and all
other terms and conditions applicable to each Option Award shall be determined
in accordance with the Option Plan.
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ARTICLE 4
PROVISIONS APPLICABLE TO CASH AWARDS AND OPTION AWARDS
SECTION 4.01. Maximum Amount of Awards. The aggregate value of all Awards
granted under the Plan shall not exceed $10,000,000. For purposes of
determining the aggregate value of all Awards granted under the Plan(A)(i) the
value of each Cash Award shall be the maximum cash amount payable under such
Cash Award and (ii) the value of each Option Award shall be equal to the amount
by which $10.25 exceeds the per Share exercise price of the Option Award,
multiplied by the number of Shares subject to the Option Award and (B) any
portion of any Cash Award or Option Award forfeited by a Participant prior to
the payment or exercise of such portion, as the case may be, shall thereafter
be deemed not to have been granted to the Participant, and the value of such
forfeited portion of the Award shall not be counted against the aggregate value
of the Awards granted under the Plan and, instead, value of the forfeited
portion of the Award may be applied toward increasing the value of other
outstanding Awards or the granting of additional Awards.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Amendment and Termination. Prior to a Change in Control, the
Plan may be amended or modified in any respect, and may be terminated, by
resolution adopted by two-thirds of the Board; provided, however, that no such
amendment, modification or termination may (A) adversely affect the rights or
benefits of any Participant except as explicitly permitted under the terms of
an Award or (B) increase the aggregate benefits payable under the Plan to an
amount in excess of $10 million; and provided, further, however, that the Plan
may not be amended, modified or terminated, at the request of a third party who
has indicated an intention or taken steps to effect a Change in Control. Any
amendment, modification or termination of the Plan shall be effected by a
written instrument signed by a duly authorized officer or officers of the
Company, certifying that the amendment or termination has been approved by
two-thirds of the Board. From and after the occurrence of a Change in Control,
the Plan may not be terminated or amended or modified in any manner.
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Employment Status. This Plan does not constitute a contract
of employment or impose on the Company any obligation to retain any Participant
as an employee or to change any employment policies of the Company.
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SECTION 6.02. Validity and Severability. The invalidity or
unenforceability of any provision of the Plan shall not affect the validity or
enforceability of any other provision of the Plan, which shall remain in full
force and effect, and any prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 6.03. Non-Exclusivity of Rights. Nothing in this Plan shall
prevent or limit any Participant's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by any Employer and
for which the Participant may qualify, nor shall anything herein limit or
reduce such rights as any Participant may have under any other agreements with
any Employer. Amounts which are vested benefits or which a Participant is
otherwise entitled to receive under any plan or program of the Company or any
of its Affiliates shall be payable in accordance with such plan or program.
SECTION 6.04. Settlement of Claims. The Company's obligation to make the
payments provided for under Cash Awards, honor the terms of any Option Awards
and otherwise to perform its obligations under this Plan shall not be affected
by any circumstances, including, without limitation, any set-off, counterclaim,
defense, recoupment, or other right which the Company may have against a
Participant or others.
SECTION 6.05. Governing Law. The validity, interpretation, construction
and performance of the Plan shall in all respects be governed by the laws of
the State of Ohio, without giving effect to the conflict of law principles
thereof.
SECTION 6.06. Successors. The Plan shall be binding on the Company and its
successors and assigns. No rights of a Participant under the Plan may be
transferred or assigned to any party.
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EXHIBIT I
RABBI TRUST AGREEMENT
Gibson Greetings, Inc. (the "Company") and U.S. Trust Company, N.A.
("Trustee"), have as of November 5, 1999 (the "Effective Date"), entered into a
grantor trust agreement as herein set forth ("Trust Agreement"), established
under Gibson Greetings, Inc. Key Employee Retention Incentive Plan (the
"Plan").
WHEREAS, Company has adopted non-qualified deferred compensation
Plan;
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such
Plan;
WHEREAS, Company wishes to establish a trust (the "Trust") and to
contribute to the Trust assets that shall be held therein, subject to the
claims of Company's creditors in the event of Company's Insolvency, as
herein defined, until paid to Plan participants and their beneficiaries in
such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that, this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Plan 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 ("ERISA");
WHEREAS, it is the intention of Company to make contributions to the Trust
to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan;
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 Trust
(a) The Company hereby deposits with the Trustee in trust $10,000,000, which
shall become the principal of the Trust to be held, administered and
disposed of by the Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
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(c) The Trust is intended to be a grantor trust, of which the Company is the
grantor, within the meaning of subpart E, part 1, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"),
and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon (the "Trust Fund")
shall be held separate and apart from the Company's other funds and shall
be used exclusively for the uses and purposes of Plan participants and
Company's general creditors as herein set forth. Plan 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 Plan and this Trust Agreement shall be mere unsecured contractual
rights of Plan participants and their beneficiaries against the Company.
Any assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the event the
Company is Insolvent, as defined in Section 3(a) herein.
(e) The Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with the
Trustee to augment the principal to be held, administered and disposed of
by the Trustee as provided in this Trust Agreement. Neither the Trustee
nor any Plan participant or beneficiary shall have any right or duty to
compel such additional deposits or determine the sufficiency thereof.
(f) The Company shall at all times ensure that the Plan and this Trust shall
have characteristics supporting a determination that it is an arrangement
constituting an unfunded Plan maintained for the purpose of providing
deferred compensation to a select group of management or highly
compensated employees for purposes of Title I of ERISA.
Section 2. Payments Under the Trust
(a) From time to time the Company may present to the Trustee a statement
indicating amounts paid by the Company under the Plan. Each such statement
shall set forth for the relevant period covered by the statement: the Plan
participant(s) to whom amounts have been paid under the Plan; the
amount(s) paid to each such participant under the Plan; and the aggregate
amount paid to all such participant(s) under the Plan. Within five (5)
days of the Trustee's receipt of each such statement and provided that
principal and earnings of the Trust are sufficient to make such payments,
the Trustee shall pay to the Company from the Trust Fund an amount equal
to the aggregate amount paid to all such participants under the Plan, as
set forth on such statement. The Trustee shall wire such amounts to the
account of the Company set forth on
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Schedule A. The Trustee shall not be required to make any determinations
as to the propriety of any payments made by the Company under the Plan and
shall not be responsible for any withholding or tax reporting with respect
to any such payments made by the Company under the Plan.
(b) The Company shall from time to time pay taxes of any and all kinds
whatsoever that at any time are lawfully levied or assessed upon or become
payable in respect of the Trust Fund, the income or any property forming a
part thereof or any security transaction pertaining thereto. To the extent
that any taxes lawfully levied or assessed upon the Trust Fund are not
paid by the Company, the Trustee shall have the power to pay such taxes
out of the Trust Fund and shall seek reimbursement from the Company. Prior
to making any payment, the Trustee may require such releases or other
documents from any lawful taxing authority as it shall deem necessary. The
Trustee shall contest the validity of taxes in any manner deemed
appropriate by the Company or its counsel, but at the Company's expense,
and only if it has received an indemnity bond or other security
satisfactory to it to pay any such expenses. The Trustee shall not be
liable for any non-payment of tax when it distributes an interest
hereunder on directions from the Company.
(c) The entitlement of a Plan participant or his or her beneficiaries to
benefits under the Plan shall be determined by the Company or such party
as it shall designate under the Plan, and any claim for such benefits
shall be considered and reviewed under the procedures set out in the Plan.
The Trustee and/or its agent shall not be required to make any such
determination.
(d) Notwithstanding anything contained in this Trust Agreement to the
contrary, if at any time the Trust is finally determined by the Internal
Revenue Service (the "IRS") not to be a "grantor trust" with the result
that the income of the Trust Fund is not treated as income of the Company
pursuant to Sections 671 through 679 of the Code, or if a tax is finally
determined by the IRS to be payable by one or more participants or
beneficiaries with respect to any interest in the Plan or the Trust Fund
prior to payment of such interest to such participant or beneficiary, then
the Trust shall immediately terminate. The Trustee shall immediately
distribute such interest in a lump sum to each vested participant or
beneficiary entitled thereto regardless of whether such participant's
employment has terminated and regardless of form and time of payments
specified in or pursuant to the Plan as directed by the Company. Any
remaining assets (less any expenses or costs due under Section 9 of this
Trust Agreement) shall then be paid by the Trustee to the Company in such
amounts, and in the manner instructed by the Company.
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Section 3. Trustee Responsibility Regarding Payments When Company is Insolvent
(a) The Trustee shall cease payment of benefits to Plan 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, as provided in Section
1(d) hereof, 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) Each member of the Company's Board of Directors acting in such
capacity shall have the duty to inform the Trustee in writing of the
Company's Insolvency. If a person claiming to be a creditor of the
Company notifies the Trustee that the Company has become Insolvent,
the Trustee shall provide the Board of Directors with a copy of such
writing and absent the Company's provision of an independent expert's
opinion satisfactory to the Trustee that the Company is not
Insolvent, the Trustee shall discontinue payment of benefits to Plan
participants or their beneficiaries.
(2) Unless the Trustee has actual knowledge of the Company's Insolvency,
or has received notice from a member of the Company's Board of
Directors 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.
(3) If at any time the Trustee has received a written notice containing
information or allegations described in Section 3(b)(1) that the
Company is Insolvent, the Trustee shall discontinue payments to Plan
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 Plan
participants or their beneficiaries to pursue their rights as general
creditors of the Company with respect to benefits due under the Plan
or otherwise,
(4) The Trustee shall resume the payment of benefits to Plan participants
or their beneficiaries in accordance with Section 2 of this Trust
Agreement
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only after it has been demonstrated to the Trustee's satisfaction
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
Plan participants or their beneficiaries under the terms of the Plan for
the period of such discontinuance, less the aggregate amount of any
payments made to Plan participants or their beneficiaries by the Company
in lieu of the payments provided for hereunder during any such period of
discontinuance.
Section 4. Payments to the Company.
Except as provided herein, 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
Fund assets before all payments of benefits have been made to Plan participants
and their beneficiaries pursuant to the terms of the Plan.
Section 5. Investment Authority
The Trustee shall have, without exclusion, all powers conferred on the Trustee
by applicable law, unless expressly provided otherwise herein, and all rights
associated with assets of the Trust shall be exercised by the Trustee, and
shall in no event be exercisable by or rest with participants or their
beneficiaries. Subject to the guidelines set forth in Schedule B, the Trustee
shall have full power and authority to invest and reinvest the Trust Fund in
any investment permitted by law, exercising the judgment and care that persons
of prudence, discretion and intelligence would exercise under the circumstances
then prevailing considering the probable income and safety of their capital,
including, without limiting the generality of the foregoing, the power:
(a) To invest and reinvest the Trust Fund. together with the income therefrom,
in accordance with the guidelines set forth in Schedule B.
(b) To have, respecting securities, all the rights, powers and privileges of
an owner, including the power to give proxies, pay assessments and other
sums deemed by the Trustee to be necessary for the protection of the Trust
Fund, to vote any corporate stock either in person or by proxy, with or
without power of substitution for any purpose. To participate in voting
trusts, pooling agreements, foreclosures, reorganizations, consolidations,
mergers and liquidations and, in connection therewith, to deposit
securities with and transfer title to any protective or other committee
under such terms as the
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Trustee may deem advisable; to exercise or sell stock subscriptions or
conversion rights; and regardless of any limitation elsewhere in this
document relative to investment by the Trustee, to accept and retain as an
investment any securities or other property received through the exercise
of any of the foregoing powers;
(c) To hold in cash, without liability for interest, such portion of the Trust
Fund which, in its discretion, shall be reasonable under the
circumstances, pending investments or payments of expenses, or the
distribution of benefits:
(d) To take such actions as may be necessary or desirable to protect the Trust
Fund from loss due to the default on mortgages held in the Trust including
the appointment of agents or trustees in such other jurisdictions as may
seem desirable, to transfer property to such agents or trustees, to grant
such powers as are necessary or desirable to protect the Trust or its
assets, to direct such agents or trustees, or to delegate such power to
direct and to remove such agents or trustees;
(e) To employ such agents, including investment advisors, custodians,
sub-custodians and counsel as may be reasonably necessary and to pay them
reasonable compensation; to settle, compromise or abandon all claims and
demands in favor of or against the Trust assets;
(f) To cause title to property of the Trust to be issued, held or registered
in the individual name of the Trustee or in the name of its nominee(s) or
agents, or in such form that title will pass by delivery;
(g) To exercise all, of the further rights, powers, options and privileges
granted, provided for or vested in trustees generally under the laws of
the State of New York, so that powers conferred upon the Trustee herein
shall not be in limitation of any authority conferred by law, but shall be
in addition thereto;
(h) To lend certificates representing stocks, bonds, or other securities to
any brokerage or other firm selected by the Trustee;
(i) To institute, compromise and defend actions and proceedings; to pay or
contest any claim; to settle a claim by or against the Trustee by
compromise, arbitration, or otherwise to release, in whole or in part, any
claim belonging to the Trust to the extent that the claim is
uncollectible;
(j) To use securities, depositories or custodians and to allow such securities
as may be held by a depository or custodian to be registered in the name
of such depository or its nominee or in the name of such custodian or its
nominee;
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(k) To invest the Trust Fund from time to time in one or more investment
funds, which funds shall be registered under the Investment Company Act of
1940 (including companies with respect to which the Trustee or an
affiliate is the investment adviser or provides other services); and
(l) To do all other acts necessary or desirable for the proper administration
of the Trust Fund, as if the Trustee were the absolute owner thereof.
However, nothing in this section shall be construed to mean the Trustee
assumes any responsibility for the performance of any investment made by
the Trustee in its capacity as trustee under this Trust Agreement.
Notwithstanding any powers granted to the Trustee pursuant to this Trust
Agreement or 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 Code.
Notwithstanding the foregoing, in no event may the Trustee invest the Trust
Fund in securities (including stock or rights to acquire stock) or obligations
issued by the Company, other than a de minimis amount held in common investment
vehicles in which the Trustee invests.
Section 6. Disposition of Income
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
Section 7. Accounting by the Trustee
The Trustee shall keep accurate and detailed records of 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 90 days after or following the close of each calendar year and
within 90 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 the case may be.
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<PAGE>
Section 8. 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 Plan or this
Trust Agreement and is given in writing by the Company in accordance
herewith. 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.
(b) If the Trustee undertakes or defends any administrative, adversarial or
other litigation or proceeding arising in connection with this Trust, the
Company agrees to indemnify the Trustee against the Trustee's costs,
expenses and liabilities (including without limitation, attorney's fees
and expenses) relating thereto and the Company shall be primarily liable
for such payments. The Company will, upon notice, pay monthly in arrears
to or on behalf of the Trustee, all reasonable attorneys' fees and
expenses incurred by this Trustee as provided in Section 9(b).
(c) The Trustee may consult with legal counsel (who may also, but need not, be
counsel for Company) generally with respect to any of its duties or
obligations hereunder at Company's expense payable as provided in Section
9(b). The Trustee shall incur no liability to any person for acting or
refraining from acting in accordance with the advice of such counsel.
(d) The Trustee may hire agents, accountants, and actuaries or other
professionals to assist it in performing any of its duties or obligations
hereunder at the Company's expense payable as provided in Section 9(b).
The Trustee shall incur no liability to any person for acting or
refraining from acting in accordance with the advice of such agents,
accountants, actuaries, investment advisors, financial consultants or
other professionals.
(e) Trustee shall have, without exclusion, all powers conferred on Trustees by
applicable law, unless expressly provided otherwise herein, provided,
however, that if an insurance policy is held as an asset of the Trust,
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 such policy. The Trustee
shall not be liable for the
8
<PAGE>
failure or inability of an insurance company to pay the proceeds of any
policy when due.
(f) The Company shall indemnify and hold the Trustee harmless from and against
all loss or liability (including expenses and reasonable attorneys' fees)
to which it may be subject by reason of its execution of its duties under
this Trust, or by reason of any acts taken in good faith in accordance
with any directions, or acts omitted in good faith due to absence of
directions, from the Company or a participant unless, and only to the
extent, such loss or liability is due to the Trustee's negligence or
willful misconduct.
(g) The Company has represented to the Trustee that each Plan qualities as
either (i) an excess benefit plan within the meaning of Section 4(b) of
ERISA or (ii) a "top-hat" plan maintained primarily for the purpose of
providing deterred compensation for a select group of management or highly
compensated employees, which is exempt from the provisions of Part 4 of
Title I or ERISA. The Trustee is entering into this Agreement in reliance
upon the Company's representation. Accordingly, in the event that any Plan
fails to qualify as an excess benefit plan or a top-hat plan exempt from
ERISA, then notwithstanding any other provision of this Agreement to the
contrary, the Company will indemnify and hold the Trustee harmless from
all liabilities, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) that the Trustee
incurs as a result of a breach of fiduciary duty under ERISA arising from
any action taken, or omitted to be taken, by the Trustee in good faith in
accordance with this Agreement. In such event, the Company will pay to or
on behalf of the Trustee, all reasonable attorneys' fees and expenses
incurred by the Trustee as provided in Section 9(b). In the event that the
Trustee is determined to have incurred any liability an a result of the
Trustee's negligence or willful misconduct, the Trustee will promptly
reimburse the Company for all legal fees and expenses paid by the Company
to or on behalf of the Trustee.
(h) In the event that the Trustee is named as a defendant in a lawsuit or
proceeding involving the Plan or the Trust Fund, the Trustee shall be
entitled to receive payments on a current basis pursuant to the indemnity
provisions provided for in this Section, provided however, that if the
final judgment entered in the lawsuit or proceeding holds that Trustee is
guilty of negligence or willful misconduct with respect to the Trust Fund,
the Trustee shall be required to refund the indemnity payments that it has
received.
(i) All releases and indemnities provided in this Trust Agreement shall
survive the termination of this Trust Agreement. The Company shall
indemnify and hold harmless the Trustee for any actions of a prior
trustee.
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Section 9. Compensation and Expenses of Trustee
(a) The Trustee shall be entitled to compensation for its services as agreed
upon between the Trustee and the Company and set forth from in Schedule C
hereto and for investment management services as set forth on Annex I to
the Investment Management Agreement attached hereto. The Trustee's
compensation and expenses, including investment management fees, shall be
deducted from the assets of the Trust provided, however, that if for any
reason the assets of the Trust are insufficient to pay such compensation,
expenses and investment management fees, the Company shall pay such
amounts within thirty (30) days from presentation of a statement of the
amounts due.
(b) The Trustee is authorized to incur reasonable expenses and third party
fees in connection with the administration of the Trust including but not
limited to, fees and expenses incurred pursuant to paragraphs (b),(c) and
(d) of Section 8. The Trustee shall present to the Company a written
statement of all such expenses and fees on a monthly basis. Such expenses
and fees shall be payable in arrears within 30 days after presentation by
the Trustee to the Company of a demand for payment. At the election of the
Company, provided the assets of the Trust Fund are sufficient to pay such
expenses and fees, such expenses and fees may be paid directly by the
Company or by the Company directing the Trustee to deduct such expense and
fees from the Trust Fund, in either case such payment or direction shall
be made within 30 days of the Company's receipt of demand for payment from
the Trustee. If 30 days after demand for payment, the Company has neither
paid such expenses and fees nor directed deduction of such expense and
fees from the Fund Trust, the Trustee is authorized to pay such amounts
from the Trust Fund. If the assets of the Trust Fund are inadequate to pay
such expenses and fees, the Company shall pay such expenses and fees
within 30 days after presentation by the Trustee to the Company of a
demand for payment.
Section 10. Resignation and Removal of Trustee
(a) The Trustee may resign at any time by written notice to the Company, which
shall be effective 30 days after receipt of such notice unless the Company
and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on 30 days written notice or
upon shorter written notice accepted by the Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a successor
Trustee, all assets shall subsequently be transferred to the successor
Trustee.
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The transfer shall be completed within 10 days after receipt of notice by
the Trustee of the appointment of a successor Trustee, unless the Company
extends the time limit.
(d) If the Trustee resigns or is removed. a successor shall be appointed, in
accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph (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 11. Appointment of Successor
(a) If the Trustee resigns (or is removed) in accordance with Section 10(a) or
(b) hereof, the Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers
under federal or state law, as a successor to replace the Trustee upon
resignation or removal. The appointment shall be effective when accepted
in writing by the new trustee, who shall have all of the rights and powers
of the former trustee, including ownership rights in the Trust assets upon
transfer of same to the new trustee. The former trustee shall execute any
instrument necessary or reasonably requested by the Company or the
successor trustee to evidence the transfer.
(b) If the Trustee resigns or is removed and selects a successor trustee
pursuant to the provisions of Section 10(d) hereof, the Trustee may
appoint any third party such as a bank trust department or other party
that may be granted corporate trustee powers under federal or state law.
The appointment of a successor trustee shall be effective when accepted in
writing by the new trustee. The now trustee shall have all the rights and
powers of the former trustee, including ownership rights in Trust assets
upon transfer of same to the new trustee. The former trustee shall execute
any instrument necessary or reasonably requested by the successor trustee
to evidence the transfer.
(c) 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
Sections 7 and 8 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.
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Section 12. 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 Plan or shall make the
Trust revocable after it has become irrevocable in accordance with Section
1(b) hereof.
(b) The Trust shall not terminate until the date on which Plan participants
and their beneficiaries are no longer entitled to benefits pursuant to the
terms of the Plan. Upon termination of the Trust, any assets remaining in
the Trust shall be returned to the Company. Such remaining assets shall be
paid by the Trustee to the Company in such amounts and in the manner
instructed by the Company, whereupon the Trustee shall be released and
discharged from all obligations hereunder. From and after the date of
termination, and until final distribution of the Trust Fund, the Trustee
shall continue to have all of the powers provided herein as are necessary
or expedient for the orderly liquidation and distribution of the Trust
Fund.
Section 13. Change in Control
The Company shall give written notice to the Trustee of any "Change in
Control", as such term is defined in the Plan within three (3) business
days of the occurrence of the Change in Control.
Section 14. 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) Benefits payable to Plan 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.
(c) This Trust Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(d) This Trust Agreement shall be binding on, and the powers granted to the
Company and the Trustee. respectively, shall. be exercisable by the
respective successors, and assigns of the Company and the Trustee. Any
corporation that succeeds to substantially all of the business of the
Trustee by merger,
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consolidation, purchase or otherwise shall upon succession and without
appointment or other action by the Company be and become successor Trustee
hereunder.
(e) Any communication to the Trustee from or on behalf of the Company,
including any notice, direction, designation, certification, order,
instruction or objection shall be in writing and signed by such person or
persons who are authorized to provide such communication to the Trustee by
signed written consent of the Committee under the Plan. The Trustee shall
be fully protected and indemnified by the Company in acting in accordance
with such written communications. Any notice required or permitted to be
given hereunder shall be deemed given if written and hand delivered,
mailed, postage prepaid, certified mail, return receipt requested or
transmitted by facsimile to the Company or the Trustee at the following
address or such other address as a party may specify:
(i) if to the Company:
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
Facsimile No._____________________________
Attn:_____________________________________
(ii) If to the Trustee:
U.S. Trust Company, N.A.,
114 West 47th Street
New York, New York 10036
Facsimile No. (212) 852-3086
Attention: Otis Sinnott
(f) Any obligation of the Company and/or the Trust to pay the Trustee amounts
pursuant to any Provision of this Trust Agreement shall survive any
amendment or termination hereof or the Trustee's resignation or removal.
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Section 16. Effective Date.
The effective date of this Trust Agreement shall be November 5, 1999.
IN WITNESS WHEREOF the Company and the Trustee have signed this Trust Agreement
as of the date first written above.
GIBSON GREETINGS, INC.
By: /s/ James T. Wilson
---------------------------------------
Title: Executive Vice President
------------------------------------
Finance and Operations
------------------------------------
U.S. TRUST COMPANY, N.A.
By: /s/ Otis A. Sinnott, Jr.
---------------------------------------
Title: Vice President
------------------------------------
