TRUST AGREEMENT
This Trust Agreement (the "Trust Agreement") is made as of the _____ day of
__________ 1998, by and between PBOC Holdings, Inc., a Delaware corporation (the
"Company"), People's Bank of California (the "Bank") and
_________________________ (the "Trustee").
WITNESSETH:
WHEREAS, the Company has adopted a deferred compensation plan (the "Plan")
pursuant to which certain of its officers are granted the right to defer some or
all of their remuneration from the Company and/or the Bank;
WHEREAS, the Company wishes to establish this trust (the "Trust") to fund
the Company's obligations under the Plan, with the assets contributed to the
Trust to be subject to the claims of the Company's creditors in the event of the
Company's insolvency, as herein defined, until paid to the participants or their
respective beneficiaries in such manner and at such times as specified in the
Plan, and intends that the Trust shall satisfy the requirements of Revenue
Procedure 92-64 which sets forth a model grantor trust for use in executive
compensation arrangements; and
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
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;
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 $______________,
which shall become the initial principal of the Trust to be held, administered
and disposed of by the Trustee as provided in this Trust Agreement. The initial
principal of the Trust, together with any future contributions to the Trust and
any other assets held by the Trust, and earnings thereon, are collectively
referred to herein as the "Trust Assets."
(b) The Trust hereby established shall be irrevocable by the Company.
(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 (the "Code"), and
shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of the Company and shall be used exclusively
for the uses and purposes of the Plan and general creditors as herein set forth.
Participants and their beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any of the Trust Assets. Any rights created
under the Plan and this Trust Agreement shall be mere unsecured contractual
rights of the 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 of the Company's Insolvency,
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
participant or beneficiary of a participant shall have any right to compel such
additional deposits.
SECTION 2. PAYMENTS TO THE PARTICIPANTS AND THEIR BENEFICIARIES.
(a) The Company shall deliver to the Trustee a schedule (the "Payment
Schedule") consistent with the terms of the Plan in respect of each participant
(and his or her beneficiaries), or, if applicable, that provides a formula or
other instructions acceptable to the Trustee for determining the amounts so
payable, the form in which such amount is to be paid, and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
the Trustee shall make payments to the participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by the Company or the Bank.
(b) The entitlement of a 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, if any.
(c) The Company may make payment of benefits directly to 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.
Any such payments made by the Company directly to a participant shall be in lieu
of any payments otherwise required to be made by the Trustee under the terms of
the Plan or the Trust. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits in accordance
with the terms of the Plan, the Company shall make the balance of each such
payment as it falls due. The Trustee shall notify the Company where principal
and earnings are not sufficient.
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SECTION 3. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARIES WHEN THE COMPANY IS INSOLVENT.
(a) The Trustee shall cease payment of benefits to participants and their
beneficiaries if the Company becomes insolvent. The Company shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) either 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 the Federal Deposit
Insurance Corporation.
(b) At all times during the continuance of this Trust, the principal and
income of the Trust shall be subject to claims of general creditors of the
Company under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer of the
Company shall have the duty to inform the Trustee in writing of the
Company's Insolvency. If a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become insolvent,
the Trustee shall determine whether the Company is insolvent and, pending
such determination, the Trustee shall discontinue payment of benefits to
participants or their beneficiaries.
(2) Unless the Trustee has actual knowledge of the Company's
insolvency, or has received notice from the Company or a person claiming to
be a creditor alleging that the Company is insolvent, the Trustee shall
have no duty to inquire whether the Company is insolvent. The Trustee may
in all events rely on such evidence concerning the Company's solvency as
may be furnished to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning the Company's
solvency.
(3) If at any time the Trustee has determined that the Company is
insolvent, the Trustee shall discontinue payments to participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of the
Company's general creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of participants or their beneficiaries to pursue
their rights as general creditors of the Company with respect to benefits
due under the Plan or otherwise.
(4) The Trustee shall resume the payment of benefits to participants
or their beneficiaries in accordance with Section 2 of this Trust Agreement
only after the Trustee has determined that the Company is not insolvent (or
is no longer insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to
participants or their
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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 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
participants and their beneficiaries pursuant to the terms of the Plan.
SECTION 5. INVESTMENT AND OTHER AUTHORITY.
(a) The Trustee may invest in securities (including stock or rights to
acquire stock of the Company) or obligations issued by the Company,
interest-bearing accounts at the Bank, including Certificates of Deposit with
the Bank, U.S. government securities and agencies thereof and funds that invest
in such securities. All rights associated with assets of the Trust shall be
exercised by the Trustee or the person designated by the Trustee, and shall in
no event be exercisable by or rest with Plan participants, except that voting
rights with respect to Trust assets will be exercised by the Company. The
Company shall have the right at any time, and from time to time in its sole
discretion, to substitute assets of equal fair market value for any asset held
by the Trust. This right is exercisable by the Company in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
(b) Subject to the provisions of paragraph (a) above, the Trustee shall
have the following additional powers and duties with respect to the Trust:
(1) to sell at public or private sale, to exchange, to encumber, or
to lease any personal property;
(2) to commence or defend suits or legal proceedings and to represent
the Trust in all suits or legal proceedings; to settle, compromise or
submit to arbitration any claims, debts or damages due or owing to or from
the Trust;
(3) to exercise any right appurtenant to any securities or other such
property;
(4) to engage any legal counsel, including counsel to the Company, or
any other suitable agents; to consult with such counsel or agents with
respect to the construction of this Trust Agreement, the duties of the
Trustee hereunder, the transactions contemplated by this Trust Agreement,
or any act which the Trustee proposes to take or omit; to rely upon the
advice of such counsel or agents; and to pay the reasonable fees, expenses
and compensation thereof;
(5) to register any securities held by it in its own name or in the
name of any custodian of such property or of its nominee, including the
nominee of any system for the
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central handling of securities, with or without the addition of words
indicating that such securities are held in a fiduciary capacity; to
deposit or arrange for the deposit of any such securities with such a
system; and to hold any securities in bearer form;
(6) to make, execute and deliver, as Trustee, any and all leases,
notes, bonds, guarantees, mortgages, conveyances, contracts, waivers,
releases or other instruments in writing necessary or proper for the
accomplishment of any of the foregoing powers;
(7) to transfer assets of the Trust to a successor trustee as
provided in Section 10 (c) herein; and
(8) to exercise, generally, any of the powers which an individual
owner might exercise in connection with such property either real, personal
or mixed, and to do all other acts that Trustee may deem necessary or
proper to carry out any of the powers set forth in this Section or
otherwise in the best interests of the Trust.
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.
(a) The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made on both an aggregate basis and on behalf of each participant (or his or her
beneficiaries), 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 on both an aggregate basis and on behalf of each participant (or his or
her beneficiaries), including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest or dividends 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.
(b) With respect to each participant (or his or her beneficiaries), the
Trustee shall keep accurate and detailed records of (i) all contributions made
by the Company with respect to such participant, including the amount of each
such contribution and the date received, (ii) all securities and investments
purchased and sold with such contributions, including the cost or net proceeds
and the date of such purchases or sales, (iii) all dividends or interest paid on
the
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securities or investments and the reinvestment of such dividends or interest,
and (iv) such other matters as shall be agreed upon in writing between the
Company and the Trustee.
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 and is given in
writing by the Company. In the event of a dispute between the Company and a
party, the Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the Trustee against
the Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If the Company does not pay such costs, expenses and liabilities
in a reasonably timely manner, the Trustee may obtain payment from the Trust.
(c) 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.
(f) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or to applicable law, the Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.
SECTION 9. COMPENSATION AND EXPENSES OF THE TRUSTEE.
The Company shall pay all administrative fees and expenses. If not so
paid, the fees and expenses shall be paid from the Trust.
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SECTION 10. RESIGNATION AND REMOVAL OF THE 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 15 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 Trust Assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within 30 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 11 hereof, by the effective date of resignation or
removal under paragraphs (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 (other than the Company's 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, who shall have all of the rights
and powers of the former Trustee, including ownership rights in the Trust
Assets. 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 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.
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.
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(b) The Trust shall not terminate until the date on which participants and
their beneficiaries are no longer entitled to benefits pursuant to the terms of
the Plan.
SECTION 13. 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 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 California.
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be _________ ___, 1998.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Agreement to be signed, and their respective corporate seals to be hereto
affixed, the day and year first above written.
PBOC HOLDINGS, INC.
Attest:
____________________________ By:__________________________________
Chairman, Compensation Committee
Attest: PEOPLE'S BANK OF CALIFORNIA
____________________________ By:__________________________________
__________________________
Attest:
____________________________ By:__________________________________
Trustee
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