1998 AMENDED AND RESTATED TRUST AGREEMENT
OF
PACIFIC CAPITAL BANCORP
VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION
December 30, 1998
1998 AMENDED AND RESTATED TRUST AGREEMENT
OF
PACIFIC CAPITAL BANCORP
VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION
THIS AMENDED AND RESTATED TRUST AGREEMENT (the "agreement") is made and
entered into, effective on the date set forth below, by and between PACIFIC
CAPITAL BANCORP, a California corporation, in its capacity as the sponsor of the
Trust created in this Agreement ("Bancorp"), and SANTA XXXXXXX BANK & TRUST, a
California corporation, in its capacity as Trustee of that Trust (the
"Trustee"), with reference to the following facts:
RECITALS:
A. SANTA XXXXXXX BANK & TRUST, a California corporation (ASBBT"), (i)
on December 29, 1992, executed a "Trust Agreement" and a "First Amendment to
Trust Agreement" (together, the "Original Trust Agreement") in order to
establish the terms and conditions on which the Trustee would act as trustee of
a Trust holding contributions to pay the obligations of SBBT under that certain
"Santa Xxxxxxx Bank & Trust Retiree Health Plan" (the "Plan"), and (ii) amended
and restated that Prior Trust Agreement effective January 1, 1996, pursuant to
that certain "Amended and Restated Trust Agreement" (the "First Restated Trust
Agreement") (the Original Trust Agreement and the First Restated Trust Agreement
together are referred to as the "Prior Trust Agreement").
B. Effective December 30, 1998, (i) Pacific Capital Bancorp, a
California corporation ("target"), was merged with and into Bancorp, (ii)
Bancorp changed its name to "Pacific Capital Bancorp," and (iii) Bancorp became
the sponsor of the Plan for the benefit of Bancorp and all of its subsidiary
corporations.
C. Bancorp and the Trust have agreed to execute this Agreement in order
to reflect that Bancorp has become the sponsor of the Plan and the results of
the Merger Transaction.
AGREEMENTS:
NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. CREATION OF TRUST
1.1 Creation. Bancorp and the Trustee hereby confirm the establishment
of the Trust as of December 29, 1992, and that Bancorp has become sponsor of the
Trust as of December 30, 1998.
1.2 Purpose and Interpretation. The purpose of the Trust is to pay the
Post-Retirement Contribution toward the cost of Coverage pursuant to the terms
of the Plan. This Agreement shall be interpreted, and the Trust shall be
operated, in such manner as to ensure that the Trust qualifies as a VEBA
satisfying the requirements of Section 501(c)(9) of the Code and all regulations
promulgated thereunder, and the requirements of the Employee Retirement Income
Security Act of 1976, as amended (AERISA").
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2. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings indicated below:
2.1 "affiliate" shall mean each corporation in which Bancorp owns all
the outstanding capital stock.
2.2 "Bancorp" means PACIFIC CAPITAL BANCORP, a California corporation
formerly known as "Santa Xxxxxxx Bancorp."
2.3 "code" means the Internal Revenue Code of 1986, as amended.
2.4 "Coverage" means coverage under a Group Health Insurance Plan.
2.5 "Covered Key Employees" means each person who (a) has been a "key
employee," as that term is defined for purposes of Code Section 419A(d)(3),
during any plan year under any plan previously maintained by Bancorp or SBBT to
provide health insurance coverage to retired employees, (b) had terminated
employment with SBBT prior to adoption of the predecessor Plan on December 29,
1992, and (c) as of that date satisfied the eligibility requirements set forth
in Section 2.1.1A of the Plan (as then in effect).
2.6 "Effective Date" means December 30, 1998.
2.7 "Employee" means each person who is a common law employee of any
Employer.
2.8 "employer" means Bancorp and each Affiliate of Bancorp.
2.9 "ERISA" means the Employee Retirement Income Security Act of 1976,
as amended.
2.10 "Group Health Insurance Plan" means, in each Plan Year, each group
medical insurance plan and each group dental insurance plan under which any
Employer offers medical or dental insurance coverage to Employees in such Plan
Year.
2.11 "Key Employee" means each Employee other than an Excluded Key
Employee who, at any time during any Plan Year under this Plan or any plan year
under any plan previously maintained by the Employer to provide health insurance
coverage to retired employees, meets the requirements of Section 2.11.1, 2.11.2,
2.11.3, or 2.11.4, below:
2.11.1 Is an officer of the Employer having annual
compensation greater than fifty percent (50.0%) of the limit on the amount of
benefits payable under a defined benefit plan, as set forth in Code Section
415(b)(1)(A). For purposes of this Section 1.16.1, the term "officer" shall mean
only those persons who have officer-type titles and exercise administrative
executive authority, and the persons who qualify as "officers" under such
definition shall be determined by the board of directors of the Employer or its
designee;
2.11.2 Is one of the ten (10) employees of the Employer who
(a) has annual compensation from the Employer in an amount greater than the
limitation on the maximum contributions which can be made to defined
contribution plans under Code Section 415(c)(1)(A), and (b) owns (or by reason
of the
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constructive ownership rules of Code Section 318) is deemed to own the largest
portions of the outstanding shares of the Employer's common capital stock.
2.11.3 Is an Employee of the Corporation who owns more than
five percent (5.0%) of the outstanding capital stock of the Employer or capital
stock possessing more than five percent (5.0%) of the total combined voting
power of all capital stock of the Employer.
2.11.4 Is an Employee of the Corporation who both (a) owns
more than one percent (1.0%) of the outstanding capital stock of the Employer,
or owns capital stock of the Employer possessing more than one percent (1.0%) of
the total combined voting power of all outstanding shares of the Employer's
capital stock, and (b) receives from the Employer compensation of more than One
Hundred Fifty Thousand Dollars ($150,000) per year.
2.12 "participant" means each person who qualifies as a "participant"
under the terms of the Plan.
2.13 "plan" means the Pacific Capital Bancorp 1998 Amended and Restated
Retiree Health Plan (for Non-Key Employees) adopted effective December 30, 1998,
as amended from time to time.
2.14 "Plan Administrator" means the person serving as the "Plan
Administrator" of the Plan.
2.15 "Plan Year" shall have the same meaning ascribed to such term in
the Plan.
2.16 "SBBT" means SANTA XXXXXXX BANK & TRUST, a California corporation.
2.17 "trust" means the Trust established under this Agreement.
2.18 "Trustee" means SBBT, and each additional or successor trustee
serving as a trustee of the Trust.
2.19 "Trust Fund" means all contributions made by Bancorp to the Trust,
all earnings from the investment of such contributions, and all other assets
acquired by the Trustee in its capacity as Trustee or otherwise held by the
Trustee pursuant to this Agreement.
2.20 "VEBA" means a Voluntary Employees' Beneficiary Association
satisfying the requirements of Section 501(c)(9) of the Code, and the
regulations promulgated thereunder.
3. CONTRIBUTIONS
3.1 Receipt of Contributions. The Trustee shall receive such
contributions as are paid to it in cash or in kind, from time to time, by
Bancorp. Upon receipt, all such contributions, together with all income and
other gains from such contributions, shall be held, invested, reinvested, and
administered by the Trustee pursuant to the terms of this Agreement without
distinction between principal and income.
3.2 Limitation of Trustee Responsibility. The Trustee shall not be
responsible for the calculation or collection of any contribution under the
Plan, but rather shall be responsible only for such property as is actually
received by the Trustee pursuant to this Agreement.
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4. POWERS OF TRUSTEE
4.1 Investment of Funds. Pursuant to the Plan, Bancorp shall establish
and implement a funding policy consistent with the purposes of the Plan and the
requirements of law, and from time to time may direct the Trustee to exercise
its investment discretion in such manner as Bancorp determines to be
appropriate. Subject to such funding policy and periodic directions from
Bancorp, the Trustee shall invest the funds held in Trust as follows:
4.1.1 Permitted Investments. The Trustee shall invest and
reinvest the Trust Fund, without distinction between principal and income, in
such securities or other property, real or personal, wherever situated, as the
Trustee may deem advisable, including but not limited to stocks, common or
preferred, bonds, and other evidences of indebtedness, and real estate or any
interest therein. In making investments, the Trustee shall:
A. Consider, among other factors, the short-term and
long-term needs of the Plan; and
B. Not be restricted to securities or other property
of a character expressly authorized by applicable law for trust investments.
4.1.2 Employment of Custodian. The Trustee may employ a bank
or trust company pursuant to the terms of its usual and customary bank agency
agreement, under which the duties of such bank or trust company shall be of a
custodial, clerical, and record-keeping nature.
4.1.3 Pooled Funds. From time to time the Trustee may
transfer to a common, collective, or pooled trust fund maintained by any person
serving as a corporate trustee hereunder all or such part of the assets held
under this Agreement as the Trustee may deem advisable, and any such monies so
transferred shall be subject to all the terms of provisions of the common,
collective, or pooled trust fund which contemplate the commingling for
investment purposes of such Trust assets with the assets of other trusts. The
Trustee may, from time to time, withdraw from such common, collective, or pool
trust fund all or any part of the monies so invested.
4.1.4 Life Insurance Policies. The Trustee may apply for,
own, and pay premiums on life insurance policies insuring the lives of
Participants.
4.2 Other Powers. In addition to the powers expressly or impliedly
granted to the Trustee in other provisions of this Agreement, the Trustee shall
have the power:
4.2.1 Borrow. To borrow money upon such terms and
conditions, at any time or times, and for such purposes of the Trust, as the
Trustee may deem proper or desirable. For sums borrowed, the Trustee may issue
promissory notes and secure the payment thereof by mortgaging or pledging all or
any part of the assets of the Trust.
4.2.2 Real Estate. To buy, sell, and hold title to real
estate and interests therein in the name of the Trustee or in the name of the
Trustee's nominee. In accepting title to real estate, neither the Trustee nor
the Trustee's nominee shall be held to have assumed the obligation to make
payment of any encumbrances thereon from its personal assets, nor any
responsibility as to the validity of the title conveyed
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to or held by the Trustee's nominee. All conveyances executed and delivered by
the Trustee or the Trustee's nominee shall be made without covenants or
warranty, except as against the Trustee's own acts.
4.2.3 Voting. With respect to all stocks, bonds, and other
securities held in the Trust, (a) to exercise all voting rights with respect to
such securities; (b) to give general and special powers of attorney without
power of substitution in order to exercise such voting rights; (c) to exercise
any conversion privileges, subscription rights or other options and to make any
payments incidental thereto; (d) to consent to or otherwise participate in
corporate reorganizations and other changes affecting corporate securities held
by the Trust; (e) to delegate discretionary powers and to pay any assessments or
charges in connection therewith; and (f) generally to exercise any of the rights
and powers otherwise exercisable by any other owner of such securities.
4.2.4 Prosecute and Defend Claims. To xxx and defend in any
suit or legal proceedings by or against the Trust. The Trustee shall have full
power in the Trustee's discretion to compromise and adjust all claims and
demands in favor of or against the Trust upon such terms as the Trustee may deem
appropriate. In the administration of the Trust, the Trustee shall not be
obligated to take any action which may subject the Trustee to any expense or
liability unless the Trustee is first indemnified to the satisfaction of the
Trustee for all expenses and liabilities, including attorneys' fees, which the
Trustee may incur in connection with such action.
4.2.5 Nominee. To register in the name of the Trustee or the
Trustee's nominee any investment held by the Trust and to hold any investment in
bearer form; provided, however, (a) the books and records of the Trustee at all
times shall show that all such investments are part of the Trust Fund, and (b)
such form of registration or holding shall neither increase nor decrease the
liability of the Trustee.
4.2.6 Employment of Agents. To employ such agents,
attorneys-in-fact, experts, and investment and legal counsel, including any firm
or corporation with which the Trustee may be associated as a partner, director,
stockholder, or otherwise, and to delegate discretionary powers to or rely upon
information or advice furnished by, such agents, attorneys-in-fact, experts, or
counsel.
4.2.7 Execution of Instruments. To make, execute and deliver
any and all documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the powers granted
in this Agreement.
4.2.8 Necessary Acts. To do all acts, whether or not
expressly authorized in this Agreement, which may be necessary or proper for the
protection of the Trust Fund or for the carrying out of any duty under the Plan
or this Agreement.
5. ADMINISTRATION OF TRUST
5.1 Standard of Care. The Trustee shall discharge its duties under this
Agreement (a) in a manner which satisfies the duties imposed upon "fiduciaries"
by ERISA, and (b) subject to such duties, (1) in the best interests of
Participants, (2) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims, and (3) by diversifying the investments of
the Trust so as to minimize the risk of large losses, unless under the
circumstances it is clearly not prudent to do so.
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5.2 Accounts and Records. The Trustee shall maintain accurate and
detailed accounts of all investments, receipts, disbursements, and other
transactions under this Agreement, and all such accounts and other records
relating thereto shall be open to inspection and audit at all reasonable times
by Bancorp and any person designated by Bancorp.
5.2.1 Exclusion of Key Employees. Except for Covered Key
Employees, Bancorp and the Trustee acknowledge and agree that (a) under the
terms of the Plan, no Key Employee is entitled to receive Coverage or any other
benefits under the Plan or this VEBA; and (b) the Trustee shall not make any
payment from the Trust to or for the benefit of any Key Employee. With respect
to the Covered Key Employees, the Trustee at all times shall comply fully with
the requirements of Code Section 419A(d) (regarding the maintenance of separate
accounts for "key employees," as that term is defined in Code Section
419A(c)(3)) and any other provision of the Code requiring that contributions to
the Trust and benefits paid by the Trust with respect to "key employees" (as
that term is defined in Code Section 419A(c)(3)) be separately accounted for or
subject to other special restrictions.
5.2.2 Annual Accounting. Within sixty (60) days after the
end of each Plan Year, the Trustee shall furnish the Plan Administrator a
written statement of account setting forth all receipts and disbursements during
such Plan Year. The Plan Administrator shall acknowledge in writing receipt of
such statement, and shall advise the Trustee of its approval or disapproval of
the statement. If, within sixty (60) days after receiving such statement, the
Plan Administrator fails to disapprove the statement, then such statement shall
be deemed approved. The actual or deemed approval of the statement of account by
the Plan Administrator shall serve to release and discharge the Trustee from any
liability or accountability to the Plan Administrator with respect to the
propriety of the Trustee's acts or transactions shown on the statement of
account, except with respect to any acts or transactions as to which the Plan
Administrator shall file written objections with the Trustee within such 60-day
time period.
5.3 Exempt Function Income. Prior to filing the Trust's annual income
tax return for each taxable year, the Trustee shall designate that portion of
the Trust's income for such year as qualifies as "exempt function income" (as
such term is defined in Section 512(a)(3) of the Code). All such exempt function
income shall be segregated from the general assets of the Trust, accounted for
separately on the Trust's books and records, and used solely for the payment of
the cost of Coverage and those reasonable costs of administering the Trust which
are directly connected with the payment of the cost of the Coverage.
5.4 Payment of Benefits. Subject to Sections 5.2.1 and 8 hereof, the
Trustee shall apply the assets of the Trust to pay the Post Retirement
Contribution toward the cost of Coverage for Participants (as required by the
Plan) at such times, in such amounts, and to such persons, as the Plan
Administrator designates.
5.5 Expenses of Administration. Subject to Section 8.3, below, (a) the
Trustee's compensation, if any, shall be fixed from time to time by agreement
with Bancorp, provided, no such compensation shall be paid if the payment or
receipt of such funds would constitute a "prohibited transaction" under the Code
or ERISA; and (b) the Trustee shall be entitled to be reimbursed, by Bancorp or
from the Trust Fund, for its reasonable expenses.
6. RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
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6.1 Resignation or Removal. Bancorp may remove the Trustee at any time,
without cause, by delivering a written notice of removal to the Trustee. The
Trustee may resign as a trustee under this Agreement by delivering to Bancorp a
written notice of resignation. Any such removal or resignation shall be
effective on the later of (a) the date specified in the notice of removal or
resignation, or (b) the fifteenth (15th) day after the delivery of such notice.
6.2 Successor Trustee. Upon the removal, resignation, death, or
inability of any Trustee to serve under this Agreement, a successor shall be
appointed (a) by Bancorp, or (b) if Bancorp does not then exist or is in
bankruptcy proceedings or its assets are being managed by a receiver, then by a
majority of the Participants then having an interest in the Trust. Upon
accepting appointment as a successor Trustee, the successor Trustee shall be
vested with the same powers, duties, privileges, and immunities that such
Trustee would have possessed if it originally had been named as the initial
trustee in this Agreement. Upon acceptance of such appointment by the successor
Trustee, each Trustee who shall have resigned or been removed shall assign,
transfer, and pay over to the successor Trustee all funds and properties of the
Trust.
6.3 Report by Trustee. Within sixty (60) days after resigning or being
removed, the Trustee who has so resigned or been removed shall furnish to the
Plan Administrator a written statement of account with respect to the portion of
the Plan Year for which the Trustee has served. Upon receipt of such statement,
the Plan Administrator shall acknowledge receipt thereof in writing and shall
advise the Trustee whether the Plan Administrator approves or disapproves such
statement. If the Plan Administrator fails to approve any such statement of
account within sixty (60) days after receiving the statement, then such
statement shall be deemed to be approved. The actual or deemed approval of any
such statement shall serve to release and discharge such Trustee from any
liability or accountability to Bancorp with respect to the propriety of the
Trustee's acts or transactions as shown in the statement of account.
6.4 Waiver of Notice. The Trustee and Bancorp may, by mutual agreement,
waive any required advance notice of resignation or removal set forth in Section
6.1 above.
7. AMENDMENT AND TERMINATION OF AGREEMENT
Subject to the prohibitions set forth in Section 8, below:
7.1 Amendment. This Agreement may be amended at any time, in whole or
in part, by a written instrument executed by Bancorp and the Trustee.
7.2 Termination. This Agreement may be terminated at any time by
Bancorp. Upon such termination, the assets of the Trust shall be applied in the
manner directed by the Plan Administrator.
8. PROHIBITION AGAINST DISCRIMINATION, REVERSION OR INUREMENT
Notwithstanding any other provision of this Agreement to the contrary:
8.1 Discrimination. The assets of the Trust shall be applied in a
manner which satisfies the nondiscrimination requirements of Section 505 of the
Code;
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8.2 Exclusive Benefit. The assets of the Trust at all times shall be
applied and invested for the exclusive purpose of paying the Post-Retirement
Contribution toward the cost of Coverage under the Plan and the reasonable costs
of administering the Trust;
8.3 Prohibited Reversion and Inurement. Except to the extent Bancorp
may make a good faith mathematical or other computational error in determining
the amount of its contribution in any Plan Year and except as otherwise provided
in Section 9.1, below, under no circumstances shall any assets or net earnings
of the Trust, either during the existence of the Trust or at the termination
thereof:
8.3.1 Reversion. Revert to Bancorp or be applied to or from
the benefit of Bancorp (except to the extent the Trust Fund is applied to pay
the cost of Coverage pursuant to the Plan); or;
8.3.2 Inurement. Otherwise be paid to, or inure to the
benefit of, any private individual, shareholder or other person, except through
the payment of the cost of Coverage pursuant to the Plan and the costs of
administering the Trust.
9. MISCELLANEOUS
9.1 Qualification and Initial Contribution. Bancorp and the Trustee
shall cooperate in preparing and submitting to the Internal Revenue Service all
documents that may be necessary to obtain from the Internal Revenue Service a
letter determining that the Trust, in operation with the Plan, constitutes a
VEBA and is exempt from federal income taxes under Section 501(a) of the Code.
9.1.1 Amendment. Bancorp and the Trustee shall execute any
amendment to this Agreement that may be necessary to obtain such determination
letter, and any such amendment shall have retroactive effect to the extent
necessary to ensure the qualification of the Trust as a tax-exempt VEBA as of
the effective date of this Agreement.
9.1.2 Contributions. Bancorp and the Trustee acknowledge and
agree that all contributions made by Bancorp to the Trust are made on condition
that such contributions are deductible by Bancorp under Section 419 of the Code.
If a deduction is not allowable under that Section for any portion of any such
contribution for the taxable year of Bancorp with respect to which a
contribution is made, then the non-deductible portion of such contribution shall
be returned to Bancorp if Bancorp demands such portion within one year following
(a) the last day of Bancorp's taxable year with respect to which such
contribution was made, or (b) if later, the date on which the Internal Revenue
Service disallows a deduction for all or any portion of such contribution;
provided, no portion of the earnings on such excess contribution may be returned
to the Bank, and any losses attributable to such excess contribution shall
reduce the amount which otherwise would have been returned to Bancorp under this
Section 9.1.2.
9.2 No Employment Rights. Neither the adoption and maintenance of this
Agreement, nor any express or implicit provision of this Agreement, shall be
deemed:
9.2.1 Contract. To constitute a contract between any
Employer and any other person, or to be a consideration for or an inducement or
condition of, the employment of any person;
9.2.2 Right. To give any person the right to be retained in
the employ of any Employer;
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9.2.3 Discharge. To interfere with the right of any Employer
to discharge any Employee at any time; or
9.2.4 Continuing Employment. To give any Employer the right
to require an Employee to remain in the employ of any Employer, or to interfere
with an Employee's right to terminate employment with any Employer at any time.
9.3 Interpretation. As used in this Agreement, the masculine, feminine,
and neuter gender and the singular and plural numbers each shall be deemed to
include the other whenever the context so indicates or requires. The captions to
the Sections of this Agreement are only for reference purposes, and shall not
affect in any way the meaning or interpretation of this Plan. Any capitalized
term which is set forth in this Agreement and not defined herein shall have the
meaning ascribed to such term in the Plan.
9.4 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the state of California, in a manner consistent with
the requirements of the Code applicable to tax-exempt VEBAs and the requirements
of ERISA applicable to welfare benefit plans and the fiduciaries of such plans.
9.5 Effective Date. The effective date of this Agreement shall be
December 30, 1998.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective on the Effective Date set forth above.
"BANCORP" "TRUSTEE:"
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PACIFIC CAPITAL BANCORP, a California SANTA XXXXXXX BANK & TRUST, a
corporation California corporation
By ___________________________________ By __________________________________
Name: Name:
Title: Title:
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