AGREEMENT
TRUST AGREEMENT (hereinafter referred to as "the Agreement") made and entered
into this 1st day of August, 1999, by and between MICROAGE, INC. ("the Company")
and PRUDENTIAL TRUST COMPANY, a Pennsylvania Corporation ("the Trustee").
WHEREAS, the Company has adopted the non-qualified deferred compensation plan
known as MicroAge, Inc. Executive Supplemental Savings Plan ("the Plan"); and
WHEREAS, the Company has incurred or expects to incur liability under the terms
of such Plan with respect to the individuals participating in such Plan; and
WHEREAS, the Company wishes to establish a trust (hereinafter called "the
Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's creditors in the event of the Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan; and
WHEREAS, it is the intention of the parties hereto 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;
and
WHEREAS, it is the intention of the Company to make contributions to the Trust
to provide itself with a source of funds to assist it in meeting its liabilities
under the Plan;
NOW, THEREFORE, the parties hereto do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
SECTION I. ESTABLISHMENT OF TRUST.
(a) The Company will deposit with the Trustee an amount which shall be held in
trust and which shall become the principal of the Trust to be held,
administered and disposed of by the Trustee as provided in this Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the Company is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principle of the Trust, and any earnings thereon shall be held separate
and apart from other funds of the Company and shall be used exclusively for
the uses and purposes of Plan participants and 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 shall be mere
unsecured contractual rights of Plan participants and their beneficiaries
against the Company.
(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 Agreement. Neither the Trustee nor any
Plan participant or beneficiary shall have any right to compel such
additional deposits.
(f) The Trust shall at all times be subject to the claims of the Company's
general creditors as set forth in Section 3 of this Agreement.
SECTION 2. PAYMENTS BY THE TRUSTEE.
(a) The Company shall deliver to the Trustee instructions acceptable to the
Trustee for determining the amounts payable to each Plan participant
hereunder (including his or her beneficiaries), the form in which such
amount is to be paid (as provided for or available under the Plan), and the
time of commencement for payment of such amounts. Except as otherwise
2
provided herein, the Trustee shall make payments to Plan participants and
their beneficiaries in accordance with such instructions. The Trustee shall
deduct from each payment under this Agreement, based on information
provided to the Trustee by the Company, any federal, state or local
withholding or other taxes or charges which the Trustee may be required to
deduct under applicable laws.
(b) 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 forth in the Plan.
(c) The Company may make payment of benefits directly to Plan participants or
their beneficiaries as they become due under the terms of the Plan. The
Company shall notify the Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to participants or
their beneficiaries. In addition, if the principal of the Trust and any
earnings thereon, are not sufficient to make payment of benefits in
accordance with the terms of the Plan, the Company shall make the balance
of each such payment as it falls due. The Trustee shall notify the Company
in any event in which the principal and earnings are not sufficient.
(d) Notwithstanding any provision of this 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 is not treated as income of the Company pursuant to Sections 671-679
of the Code, or if a tax is finally determined by the IRS to be payable by
Plan participants or their beneficiaries with respect to the vested
interest in the entire value of the accounts maintained under the Trust
prior to the final distribution of the assets of such accounts to such Plan
participants or their beneficiaries, then the Trust shall immediately
continue to hold the assets in the Trust pending further instruction from
the Company.
3
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT.
(a) The Trustee shall cease payment of benefits to Plan participants and their
beneficiaries, as provided in 2(d) hereof, if the Company is Insolvent. The
Board of Directors and the Chief Executive Officer of the Company shall
have the duty to inform the Trustee, in writing, of the Company's
Insolvency. If the Trustee receives a written allegation that the Company
has become Insolvent, the Trustee shall contact the Company and the Company
shall have the duty to verify whether or not such allegation is true.
Pending such confirmation, the Trustee shall discontinue payment of
benefits to Plan participants and their beneficiaries, shall hold the Trust
assets for the benefit of the Company's general creditors, and shall resume
payment of benefits to Plan participants and their beneficiaries only after
the Trustee is informed by the Company that it is not Insolvent or after
receipt of an order of a court of competent jurisdiction. In performing its
duties hereunder, the Trustee may rely on a letter from the Company's
independent auditors as to the Company's financial status or upon the
representation of the Board of Directors and the Chief Executive Officer of
the Company. Prior to receipt of such notice from the Company or a written
allegation from a creditor of the Company, the Trustee shall have no duty
to inquire whether the Company is Insolvent and may rely on information
concerning the Company's solvency which has been furnished to the Trustee
by any person. Nothing in this Agreement shall in any way diminish any
rights of Plan participants and their beneficiaries to pursue their rights
as general creditors of the Company with respect to benefits payable
hereunder.
The Company shall be considered "Insolvent" for purposes of this 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, or (iii) the Company is determined to be Insolvent
by any applicable federal and/or state regulatory agency which has
jurisdiction in such determination.
(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 the general creditors of the Company under applicable federal and
state law as set forth below.
4
(c) Provided there are sufficient assets, if the Trustee discontinues payment
of benefits from the Trust pursuant to Section (a) above and subsequently
resumes such payments, the first payment following such discontinuance
shall include the aggregate amount of all payments due Plan participants
and 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 and their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, the Company shall have no right or
power to direct the Trustee to return to the Company or to divert to others
any of the Trust assets before all payment of benefits have been made to
Plan participants and their beneficiaries pursuant to the terms of the
Plan.
SECTION 5. INVESTMENT AUTHORITY.
(a) The Trustee shall hold, invest and re-invest the assets of the Trust solely
in accordance with the investment directions provided by the Company;
provided, however, that the Trustee may, in its discretion, delegate any
custodial responsibility under this Agreement to a corporate trustee or
insurance company.
(b) The Company shall be responsible for transmitting to the Trustee written
instructions for the investment and reinvestment of the principal and
income of the Trust in such shares and proportions as the Company, in its
discretion, and pursuant to the investment directions of the Plan
participants, shall deem advisable.
(c) The Company shall have the right and power at any time and from time to
time to direct the Trustee to (i) to enter into one or more contracts with
any one or more legal reserve life insurance companies, (ii) to transfer to
such insurance company such portion of the Trust Fund in accordance with
the terms of any such contract, and (iii) to hold any such contract as part
of the Trust until directed otherwise by the Company. The Company shall
have the right and power at any time and from time to time, in its sole
discretion, to direct the Trustee to (i) request any information from any
such insurance company necessary or appropriate to perform its duties under
5
this Agreement, or (ii) amend, modify or terminate any such contract. The
Trustee shall not exercise any of the foregoing powers, rights or
privileges except at the direction of the Company. In all respects any
insurance company issuing any contract as described above shall deal with
the Trustee as the absolute owner of any such contract and shall not be
required to inquire as to the authority of the Trustee to act with regard
to such contract. Any such insurance company may accept and rely upon any
written notice, instruction, direction, certificate or other communication
from the Trustee which is signed by an officer of the Trustee.
(d) The Trustee may invest in securities (including stock or rights to acquire
stock) or obligations issued by the Company. The Trustee may vote any
corporate stock belonging to the Trust and to give proxies or general or
limited powers of attorney for the purpose of such voting to other persons,
with or without power of substitution; provided that the Trustee shall vote
stock of the Company only as directed by the Company.
(e) The Company shall have the right at any time, and from time to time, in its
sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust. This right is exercisable by the Company in a
nonfiduciary capacity without the approval or consent of any person acting
in a fiduciary capacity.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Agreement, all income received by the Trust, net of
expenses and taxes, shall be accumulated and re-invested unless otherwise
directed by the Company.
SECTION 7. ACCOUNTING BY TRUSTEE.
The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and the Trustee. Within 30 days following the close of each calendar
year and within 30 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
6
including a description of all securities and investments purchased and sold
with the cost of 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.
SECTION 8. POWERS AND RESPONSIBILITIES OF THE TRUSTEE.
(a) The Trustee shall have no authority, control or responsibility with respect
to the Plan or Trust other than as specifically set forth in this
Agreement.
(b) 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
Agreement and is given in writing by the Company. In the event of a dispute
between the Company and a third party, the Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
(c) The Trustee may consult with legal counsel (who may also be counsel for the
Company generally) with respect to any of its duties or obligations
hereunder.
(d) The Trustee may hire agents, accountants, actuaries, investment advisors,
financial consultants or other professionals to assist it in performing any
of its duties or obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers conferred on Trustees
by applicable law, unless expressly provided otherwise herein, provided,
however, that if any insurance policy is held as an asset of the Trust, the
Trustee shall have no power to name a beneficiary of the policy other than
the Trust, to assign the policy (as distinct from conversion of the policy
to a different form) other than to a successor Trustee, or to loan to any
person the proceeds of any borrowing against such policy.
7
(f) However, notwithstanding the provisions of Section 8(e) above, the Trustee
may loan to the Company the proceeds of any borrowing against an insurance
policy held as an asset of the Trust.
(g) Notwithstanding any powers granted to the Trustee pursuant to this Trust
Agreement or to applicable law, the Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the
Internal Revenue Code.
SECTION 9. TAXES, EXPENSES AND COMPENSATION.
(a) The Company shall from time to time pay taxes of any and all kinds
whatsoever which at any time are lawfully levied or assessed upon or become
payable in respect of the Trust, 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 are not paid by the
Company, the Trustee shall pay such taxes out of the Trust. The Trustee may
contest the validity of taxes, at the direction of, and in any manner
deemed appropriate by, the Company or its counsel, but only at Company
expense and only if it has received an indemnity bond or other security
satisfactory to it to pay such expenses. Alternatively, the Company itself
may contest the validity of any such taxes.
(b) The Company shall pay the Trustee such reasonable compensation for its
services as may be agreed upon in writing from time to time by the Company
and the Trustee. The Company shall also pay the reasonable expenses
incurred by the Trustee in the performance of its duties under this
Agreement, including brokerage commissions and fees of counsel engaged by
the Trustee pursuant to section (a) above. Such compensation and expenses
shall be charged against and paid from the Trust to the extent the Company
does not pay such compensation.
8
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 60 days following receipt of such notice unless the
Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on 60 days notice or upon shorter
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. The transfer shall be completed within 90 days after receipt of
notice of resignation, removal or transfer, unless the Company extends the
time limit.
(d) If the Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 10 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b) of this section. If no such
appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All
expenses of the trustee in connection with the proceeding shall be allowed
as administrative expenses of the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If the Trustee resigns or is removed in accordance with Section 9(a) or
9(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 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, which shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets or shall make the
Trust revocable. The former Trustee shall execute any instrument necessary
or reasonably requested by the Company or the successor Trustee to evidence
the transfer.
(b) The successor Trustee need not examine the records and acts of any prior
Trustee and may retain or dispose of existing Trust assets subject to
Sections 6 and 7 hereof. The successor Trustee shall not be responsible
for, and the Company shall indemnify and defend the successor Trustee, from
9
any claim or liability resulting from any actions or inaction of any prior
Trustee or from any other past event, or any condition existing at the time
it becomes successor Trustee.
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.
(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.
(c) Upon written approval of participants or beneficiaries entitled to payment
of benefits pursuant to the terms of the Plan, the Company may terminate
this Trust prior to the time all benefit payments under the Plan have been
made. All assets in the Trust at termination shall be returned to the
Company.
SECTION 13. INDEMNIFICATION.
In consideration of the Trustee's agreeing to enter into this Agreement, the
Company hereby agrees to hold harmless Prudential Trust Company, individually
and as Trustee under said Agreement, and its directors, officers, employees,
from and against all amounts, including without limitation taxes, expenses,
liabilities, claims, damages, actions, suits or other charges, incurred by or
assessed against Prudential Trust Company, individually or as Trustee, or its
directors, officers, or employees, (i) as a direct or indirect result of
anything done in good faith, or alleged to have been done, by or on behalf of
the Prudential Trust Company in reliance upon the directions of the Company or
any person or committee authorized to act on behalf of 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 direct or indirect result of the failure
of the Company or any person or committee to adequately, carefully or diligently
discharge its responsibilities under the Plan, this Agreement, or applicable
Department of Labor or Treasury regulations or rulings, or (iii) if the Trustee
is named as a defendant in any lawsuit or other proceeding involving the Plan or
the Fund for any reason including, without limitation, an alleged breach by the
10
Trustee of its responsibilities under this Agreement, unless the final judgment
entered in the lawsuit or proceeding holds the Trustee guilty of gross
negligence, willful misconduct, or an intentional breach of fiduciary
responsibility under ERISA. If the final judgment holds the Trustee guilty of
gross negligence, willful misconduct, or an intentional breach of fiduciary
responsibility under ERISA, the Company hereby agrees to indemnify the Trustee
only against liability in excess of the Trustee's allocable share of such
liability. The Company further agrees that the undertaking made by it in this
Agreement 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.
If the Trustee undertakes or defends any litigation arising in connection with
the 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 to be primarily liable for such payments. If
the Company does not pay such costs, expenses and liabilities in a timely
manner, the Trustee may obtain payment from the Trust.
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 Commonwealth of Pennsylvania.
11
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the day and year set forth on the first page hereof.
MICROAGE, INC.
By: _____________________________
Title:
Date: _____________________, 19____
ATTEST
By: _______________________
Title:
PRUDENTIAL TRUST COMPANY
By: _____________________________
Title:
Date: _____________________, 19____
ATTEST
By: _______________________
Title:
12
