RE:

My point on ERISA was that if we pay and then terminate, we have an ERISA issue. I'm sure that's not the intent but just wanted to bring up.

Michelle, if we can't set up with the respective employers, tax deductibility will be a key issue to resolve. When will we know whether this has to be set up in a new employer entity or not?

Pam

-----Original Message-----
From: Cash, Michelle
Sent: Wednesday, November 14, 2001 4:47 PM
To: Butler, Pam; Oxley, David
Cc: Joyce, Mary
Subject: RE:

The intent is not to include 16b officers. Payments will not be made if termination occurs prior to payment date. I'll get back with you on the other issues. Michelle

-----Original Message-----
From: Butler, Pam
Sent: Wednesday, November 14, 2001 4:44 PM
To: Cash, Michelle; Oxley, David
Cc: Joyce, Mary
Subject:

Just got off conference call with Wachovia to review trust arrangement particularly to ensure that this is effective in not triggering tax until time of payment rather than triggering tax at funding of trust. We think this arrangement does that as long as the following is true:
Funds put in trust should not be paid out until 2002 to provide for "service period/vesting" requirement
Must be irrevocable i.e. funds can never come back to employer so need to be careful not to overfund

Also, to keep from being subject to ERISA, need to assume that payments are not delayed until termination. (IF subject to ERISA, creates ugly reporting/compliance issues and discrimination testing.....)

The issue of whether to set up a new employer i.d. to hold the trust is a question - might provide more security and protection in the event of bankruptcy but might create tax deductibility issues. Might be better if we could set up subparts for different employers to ensure tax deductibility. I will run by external tax counsel with utmost discretion.

If this is to be used for non-U.S. employees, need to ensure arrangement doesn't trigger taxable event at funding due to local tax law. May not be an issue.

Are we contemplating including any insiders?