Exhibit 10.1
TBC CORPORATION
TRUST AGREEMENT FOR _________
____________ (date)
TABLE OF CONTENTS
Page
-----
ARTICLE I Name of Trust............................................. 4
1.1 Name............................................... 4
1.2 Purpose............................................ 4
ARTICLE II Definitions............................................... 5
ARTICLE III Company Obligations....................................... 6
ARTICLE IV Payment Schedules......................................... 6
4.1 Payment Schedule................................... 6
4.2 Modified Payment Schedule.......................... 7
4.3 Withholdings....................................... 7
4.4 Further Assurances................................. 7
4.5 Distributions in the Event of Taxability........... 8
ARTICLE V The Trust Fund and Funding................................ 8
5.1 Receipt and Holding of the Trust Funds............. 8
5.2 Initial Funding of Trust........................... 8
5.3 Additional Funding; Excess Assets.................. 9
5.4 Release of Trust Funds Unless a Change of
Control Occurs................................... 9
5.5 Transfer to Another Trustee........................ 9
5.6 Company's Right to Substitute Assets............... 10
ARTICLE VI Status of Trust........................................... 10
6.1 Grantor Trust...................................... 10
6.2 Subject to Claims Creditors of the Company......... 10
6.3 Notification of Bankruptcy or Insolvency........... 11
ARTICLE VII The Trustee's Accounting.................................. 12
7.1 Books and Records.................................. 12
7.2 Trustee's Report................................... 12
7.3 Additional Reports................................. 12
ARTICLE VIII Administration of the Trust Fund.......................... 13
8.1 Ownership and Investment of the Trust Fund......... 13
8.2 Powers of the Trustee.............................. 13
8.3 Situs of Assets.................................... 16
8.4 Entire Agreement................................... 16
2
ARTICLE IX Relating to the Trustee..................................... 16
9.1 Liability of the Trustee............................ 16
9.2 Obligations under Law............................... 17
9.3 Bond................................................ 17
9.4 Compensation........................................ 17
9.5 Indemnification..................................... 17
ARTICLE X Missing Persons, Incapacitated Executives, Death,
Directions and Notices................................... 18
10.1 Missing Persons..................................... 18
10.2 Incapacity; Death................................... 18
10.3 Form................................................ 18
10.4 Proof of any Matter................................. 18
10.5 Absence of Directions............................... 18
ARTICLE XI Resignation or Removal of Trustee.......................... 18
11.1 Successor Trustee................................... 18
11.2 Final Account....................................... 19
11.3 Transfer and Discharge.............................. 19
11.4 Effective Date of Appointment of Successor
Trustee............................................. 19
11.5 Merger or Consolidation............................. 19
ARTICLE XII Protection for Third Persons............................... 19
ARTICLE XIII Termination; Amendment; and Waiver......................... 20
13.1 Termination......................................... 20
13.2 Amendment and Waiver................................ 20
ARTICLE XIV General Provisions......................................... 20
14.1 Tennessee Trust..................................... 20
14.2 Severability........................................ 20
14.3 Arbitration......................................... 21
14.4 Notices............................................. 21
14.5 Trust Beneficiaries................................. 21
14.6 Headings............................................ 22
14.7 Counterparts........................................ 22
14.8 Nonalienation of Benefits........................... 22
3
TBC CORPORATION
TRUST AGREEMENT FOR ________
THIS AGREEMENT is established effective as of the ___ of ______,
____, by TBC CORPORATION (the "Company"), a Delaware corporation, as grantor,
and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as trustee, under the following
circumstances:
(A) The Company has executed an Executive Employment
Agreement, dated ___________, ____, with ("the Executive"), which
Agreement provides for the Company's employment of the Executive,
beginning _______, ____. The Executive Employment Agreement contains
provisions to pay the Executive compensation and benefits if the
Executive's employment with the Company is terminated for certain
reasons including, but not limited to, a Change of Control as defined
therein.
(B) Those compensation and benefit payments are not funded or
otherwise secured, and the Company desires by this Trust to provide
further assurance to the Executive that the provisions of the Employment
Agreement concerning termination of the Executive's employment with the
Company following a Change of Control of the Company (as defined in
Article II) will be satisfied and payments will be timely made when due,
by depositing assets for use in making such payments, in trust, upon the
occurrence of a Change of Control or Potential Change of Control of the
Company (as therein defined), subject only to the claims of the
Company's existing or future general creditors in the event of the
Company's insolvency or bankruptcy as defined in Section 6.3.
NOW, THEREFORE, in consideration of the agreements contained
herein and for other good and valuable considerations, the parties hereto agree
as follows:
ARTICLE I
NAME OF TRUST
1.1 Name. The Trust created by this Agreement may be referred to
as the "TBC CORPORATION TRUST FOR _____________ ".
1.2 Purpose. The Trust is established for the purposes set
forth in Preamble B to this Agreement.
4
ARTICLE II
DEFINITIONS
The following terms used in this Trust have the following
meanings:
"Board" means the Board of Directors of the Company.
"Change of Control" means any change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") as the same is construed by the Securities and Exchange
Commission on the date of execution of this Agreement or in accordance with any
change made with respect to said Item or construction thereof deemed more
favorable by the Executive; provided that, without limitation, such a change in
control shall be deemed to have occurred if (i) any "person" (as such term is
defined in Sections 13(d) and 14(d)(2) of the Exchange Act), other than the
Executive and/or an entity then controlled by the Executive or the Company, is
or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the Company's
then outstanding securities; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new Director was
approved by a vote of at least two-thirds of the Directors then still in office
who were Directors at the beginning of the period; (iii) the Company merges or
consolidates with another corporation and the Company or an entity controlled by
the Company or the Executive immediately prior to the merger or consolidation is
not the surviving entity; or (iv) a sale, lease, exchange, or other disposition
of all or substantially all of the assets of the Company takes place.
"Code" means the Internal Revenue Code of 1986 and the
regulations issued thereunder, as amended from time to time hereafter.
"Company" means TBC CORPORATION, a Delaware corporation, and any
successor to such entity.
"Employment Agreement" means the Executive Employment Agreement,
dated ___________, ____, between the Company and the Executive, as the same may
be hereafter modified, amended, or extended by mutual agreement of the Company
and the Executive, and shall include any Employment Agreement subsequently
executed by the Company and the Executive which supersedes or replaces such
Executive Employment Agreement.
5
"Executive" means ______________.
"Fiscal Year" means the fiscal year of the Company.
"Payment Schedule" has the meaning ascribed to it in Section
4.1.
"Potential Change of Control" means and shall be deemed to have
occurred if (i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change of Control of the Company, (ii) any
person, other than the Company, the Executive or an entity controlled by the
Company or the Executive, publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a Change of Control of
the Company, (iii) any person, other than the Executive and/or any entity
controlled by the Executive or the Company, increases his beneficial ownership
of the combined voting power of the Company's then outstanding securities by 5%
or more over the percentage so owned by such person on the date hereof and,
after such increase, is the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of such securities; or (iv)
the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change of Control of the Company has occurred.
"Trust" means the trust created by this Agreement.
"Trust Fund(s)" has the meaning ascribed to it in Section 5.1.
"Trustee" means any trustee from time to time serving as the
trustee of the Trust.
ARTICLE III
COMPANY OBLIGATIONS
The Company shall continue to be liable to make all payments to
the Executive required under the terms of the Employment Agreement to the extent
such payments have not been made pursuant to this Trust. Payments made from
Trust Funds to the Executive pursuant to Article IV shall, to the extent of such
payments, satisfy the Company's obligation to pay benefits to the Executive
under the Employment Agreement.
ARTICLE IV
PAYMENT SCHEDULES
4.1 Payment Schedule. Upon the occurrence of the termination of
Executive's employment with Company following any Change of Control or Potential
Change of Control, the Company
6
shall deliver to the Trustee a payment schedule (the "Payment Schedule") showing
as to the Executive the dates payments are to be made to the Executive and the
amount of each such payment or setting forth a formula or instructions
acceptable to the Trustee for determining the amounts so payable and the payment
dates. The Payment Schedule shall also be delivered by the Company to the
Executive.
4.2 Modified Payment Schedules. A Modified Payment Schedule
shall be delivered by the Company to the Trustee and to the Executive each time
that additional amounts are required to be paid by the Company to the Trustee
under Section 5.3, upon the occurrence of any event requiring a new Payment
Schedule under Section 4.1., or upon the death of the Executive. The Trustee
shall make payments from the Trust Funds to the Executive in accordance with the
provisions of the applicable Payment Schedule. In the event that the Executive
reasonably believes that the Payment Schedule, as modified, does not properly
reflect the amount payable to the Executive and/or dates of Payment under the
Employment Agreement, the Executive shall be entitled to deliver to the Trustee
written notice ("the Executive's Notice") setting forth payment instructions for
the amount the Executive believes is payable under the relevant terms of the
Agreement. The Executive shall also deliver a copy of the Executive's Notice to
the Company within three (3) business days of delivery to the Trustee. Unless
the Trustee receives written objection from the Company within thirty (30)
business days after receipt by the Trustee of such notice, the Trustee shall
make the payment in accordance with the payment instructions set forth in the
Executive's Notice.
4.3 Withholdings. The Trustee shall be permitted to withhold
from any payment due to the Executive hereunder the amount required by law to be
so withheld under Federal, state and local wage withholdings requirements or
otherwise, and shall pay over to the appropriate government authority the
amounts so withheld. The Trustee may rely on instructions from the Company
(consistent with the Executive's instructions to the Company) as to any required
withholding and shall be fully protected under Section 9.5 in relying on such
instructions.
4.4 Further Assurances. The Trustee shall, at any time and from
time to time, administer this Trust as may be necessary or proper to effectuate
the purposes of this Trust. If the Trust receives an unqualified opinion of tax
counsel selected by the Trustee, which opinion states that the Executive is
subject to Federal income tax on amounts held in Trust prior to the distribution
to the Executive of such amounts, the Trustee shall, to the extent practicable,
take such action and administer the Trust Fund in such a manner so as to prevent
the Trust Fund from becoming immediately taxable income to the Executive before
making any distributions pursuant to Section 4.5, provided that
7
the Trustee shall not return any portion of the Trust Fund to the Company.
4.5 Distributions in the Event of Taxability. In the event of
any final determination by the Internal Revenue Service or a court of competent
jurisdiction, which determination is not appealable or the time for appeal or
protest of which has expired, or the receipt by the Trustee of a substantially
unqualified opinion of tax counsel selected by the Trustee, which determination
determines, or which opinion opines, that the Executive is subject to Federal
income taxation on amounts held in the Trust prior to the distribution to the
Executive of such amounts and no curative action is available under Section 4.4,
the Trustee shall, on receipt by the Trustee of such opinion or notice of such
determination, pay to the Executive the portion of the Trust assets includable
in the Executive's Federal gross income; provided that, as a condition of
receiving such payment, the Executive has delivered to the Trustee a written
agreement stating that the payment being made is in satisfaction of the
obligations of the Company due to him in respect of which the payment is made,
after taking into consideration that such payment is being made prior to the
required distribution date, and the Company has concurred in such agreement,
which concurrence shall not be unreasonably withheld.
ARTICLE V
THE TRUST FUND AND FUNDING
5.1 Receipt and Holding of the Trust Funds. The Trustee will
accept and hold all contributions, insurance contracts, insurance policies and
other property transferred and delivered to the Trustee by the Company or at the
Company's direction. All contributions and property received by the Trustee,
plus income and appreciation, constitute the trust fund (the "Trust Fund(s)").
5.2 Initial Funding of Trust. Concurrently with the execution of
this Agreement, the Company is delivering to the Trustee the sum of One Hundred
Dollars to be held in trust hereunder. Upon the earlier of the occurrence of any
Change of Control or Potential Change of Control, the Company shall contribute
to the Trust, in cash or other property, the amount determined under accepted
actuarial principles to be necessary to fund the amounts payable to the
Executive under the Employment Agreement in accordance with a Payment Schedule
to be delivered to the Trustee pursuant to Section 4.1, assuming that, for
purposes of such Payment Schedule, the Executive's employment with the Company
had been terminated on the day following the occurrence of the Change of Control
or Potential Change of Control.
8
5.3 Additional Funding; Excess Assets. Unless the Trust Funds
have been released to the Company pursuant to Section 5.4, the Company shall, as
soon as practicable after the end of each Fiscal Year, recalculate the amount
determined under accepted actuarial principles to be necessary to fund any
amounts payable to the Executive under the Employment Agreement, in accordance
with any Payment Schedule delivered to the Trustee pursuant to Sections 4.1 and
4.2 during the most recently completed Fiscal Year (herein referred to as the
"Aggregate Payment Obligation"). If the Aggregate Payment Obligation exceeds the
fair market value of the Trust Funds at the end of the most recently completed
Fiscal Year, then there exists a funding deficiency to the extent of such
excess; and the Company shall contribute to the Trustee no later than 90 days
after the end of such Fiscal Year additional cash or property having a fair
market value equal to the amount of the funding deficiency. If the fair market
value of the Trust Funds at the end of the most recently completed Fiscal Year
is more than 125% of the Aggregate Payment Obligation, then there is an
overfunding to the extent of such excess; and the Trustee shall as soon as
practicable after the determination that an overfunding exists distribute to the
Company cash or other property having a fair market value equal to the amount of
the overfunding in excess of such 125%.
5.4 Release of Trust Funds Unless Change of Control Occurs. Any
funds delivered to the Trustee pursuant to Section 5.2 because of the occurrence
of a Potential Change of Control, together with any assets in the Trust Fund in
excess of $100, shall be returned to the Company six months after the date of
such delivery, unless a Change of Control shall have occurred or the Potential
Change of Control has not been abandoned or terminated. Each such initial
six-month period shall be renewed for an additional six-month period, if any
Potential Change of Control occurs during such initial six-month period. The
Company shall notify the Trustee of the occurrence of a Change of Control or
Potential Change of Control, and the Trustee may rely on such notice or on any
other actual notice satisfactory to the Trustee of such Change or Potential
Change which the Trustee may receive. Notwithstanding the foregoing, the Trustee
shall have no duty or obligation to make any independent determination that such
Change or Potential Change has occurred. In the event Trust Funds are released
to the Company pursuant to this Section 5.4, all Payment Schedules delivered to
the Trustee prior thereto pursuant to Section 4.1 shall be returned to the
Company and be of no further force or effect.
5.5 Transfer to Another Trustee. Upon the Executive's prior
written consent, the Company may direct the Trustee to transfer the Trust Fund
to a successor trustee as set forth in Section 11.1. The Trustee immediately
will comply with that
9
direction. When that transfer is completed, the Trustee will be relieved from
all further obligations in connection with the Trust Fund.
5.6 Company's Right to Substitute Assets. 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 Company in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity, including without
limitation, the Trustee.
ARTICLE VI
STATUS OF TRUST
6.1 Grantor Trust. The Trust is part of the Company's program
established for the purpose of providing certain compensation and retirement
benefits to the Executive, and is intended to be exempt from the participation,
vesting, funding and fiduciary requirements of the Employee Retirement Income
Security Act of 1974, as amended. The Company intends the Trust to be treated as
a grantor trust within the meaning of Section 671 of the Code and all income
attributable to the Trust Fund shall be reported by the Company. The Trust Fund
shall at all times be subject to the claims of the creditors of the Company as
set forth in Section 6.2.
6.2 Subject to Claims of Creditors of the Company. It is the
intent of the parties hereto that the Trust Fund is and shall remain at all
times subject to the claims of the creditors of the Company in the event of the
Company's insolvency or bankruptcy as set forth in this Article VI, including,
without limitation, its general creditors (including the Executive).
Accordingly, the Company shall not create a security interest in the Trust Fund
in favor of the Executive or any creditor. If the Trustee receives the notice
provided for in Section 6.3, or otherwise receives actual notice that the
Company is insolvent or bankrupt as defined in Section 6.3, the Trustee will
make no further distributions of the Trust Fund to the Executive but shall
deliver the Trust Funds only as a court of competent jurisdiction, or duly
appointed receiver or other person authorized to act by such a court, may
direct, in order to make the Trust Fund available to satisfy the claims of the
Company's creditors, including, without limitation, its general creditors. The
Trustee shall resume distribution of the Trust Fund to the Executive under the
terms hereof after receipt of notification from the Company, through its Board
of Directors and Chief Executive Officer, that the Company was not, or is no
longer, bankrupt or insolvent, or upon receipt of a decision to that effect by a
court of competent jurisdiction or a duly appointed receiver or other person
authorized by a court to so act.
10
Unless the Trustee has actual notice of the Company's bankruptcy or insolvency,
the Trustee shall have no duty to inquire whether the Company is bankrupt or
insolvent.
6.3 Notification of Bankruptcy or Insolvency. The Company,
through its Board of Directors and Chief Executive Officer, shall advise the
Trustee promptly in writing of the Company's bankruptcy or insolvency. The
Company shall be deemed to be bankrupt or insolvent upon the occurrence of any
of the following:
(i) The Company shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, petition or
apply to any tribunal for the appointment of a custodian,
receiver, liquidator, sequestrator, or any trustee for it or a
substantial part of its assets, or shall commence any case under
any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, or liquidation law or statute of any
jurisdiction (federal or state), whether now or hereafter in
effect; or if there shall have been filed any such petition or
application, or any such case shall have been commenced against
it, in which an order for relief is entered or which remains
undismissed; or the Company by any act or omission shall
indicate its consent to, approval of or acquiescence in any such
petition, application or case or order for relief or to the
appointment of a custodian, receiver or any trustee for it or
any substantial part of its property, or shall suffer any such
custodianship, receivership, or trusteeship to continue
undischarged; or
(ii) The Company shall generally not pay its debts as
such debts become due or shall cease to pay its debts in the
ordinary course of business; or
(iii) The sum of the Company's debts is greater than
all its property at a fair valuation; or
(iv) The present salable value of the Company's assets
is less than the amount that would be required to pay the
probable liability on its existing debts as they become
absolute, matured, due and payable.
11
ARTICLE VII
THE TRUSTEE'S ACCOUNTING
7.1 Books and Records. The Trustee will keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions in respect of the Trust Fund. Those accounts and related records
may be inspected by any person designated by the Company. The Trustee will
retain those records and supporting data for the period required by law. All
Trust assets may be commingled for purposes of investment. For recordkeeping
purposes only, an account will be maintained for the Executive. The account will
be credited with all contributions relating to the Executive and will be debited
with all payments to the Executive.
7.2 Trustee's Report. Within 60 days after the end of each
Fiscal Year, the Trustee shall file a written report with the Company
containing:
(a) A description of investments, receipts, disbursements and
other transactions effected by the Trustee during the most recently
completed Fiscal Year;
(b) An exact description of any asset transferred to the
Trustee or transferred by the Trustee to any other person during such
Fiscal Year;
(c) An exact description of assets sold or purchased by the
Trustee during such Fiscal Year, the cost of each item purchased and the
net proceeds of each item sold;
(d) An exact description of all assets held by the Trustee as
of the close of business on the last day of such Fiscal Year, and the
cost and fair market value of each item (other than insurance contracts)
determined as of the same date; and
(e) Any other information required by law to be filed on
behalf of the Trust.
The information described in subsections (a), (b) and (c),
above, may be given in the form of monthly or quarterly reports, if those
reports, taken together, contain the required information.
7.3 Additional Reports. In addition to the report required under
Section 7.2 above, the Trustee shall make any interim reports reasonably
requested by the Company.
12
ARTICLE VIII
ADMINISTRATION OF THE TRUST FUND
8.1 Ownership and Investment of the Trust Fund. The Trustee is
the legal owner of all Trust Fund assets and, subject to this Article, shall
invest and reinvest the Trust Fund. Any amounts reasonably necessary to meet
contemplated payments or to be transferred from the Trust Fund may be deposited
temporarily in the commercial department of any bank or trust company. The
Trustee will not be liable for any interest on those deposits except for
interest actually paid by the bank or trust company or, if the deposit is with
the Trustee's own commercial department, interest at the legally permitted rate
agreed to by the Trustee and the Company. Alternatively, the Trustee may make
temporary deposits in governmental obligations, certificates of deposit,
commercial paper, commercial paper master notes, cash management funds, or a
common trust fund or a cash management fund maintained by the Trustee for
temporary cash investments.
8.2 Powers of the Trustee. Subject to this Article, Article V
and Sections 9.1 and 9.2 and in addition to the powers generally given to
trustees by law, the Trustee may:
(a) Invest and reinvest the Trust Fund in securities or other
property, real or personal, wherever located, and whether or not
productive of income, which the Trustee believes advisable, including
capital, common and preferred shares of stock (including, if directed by
the Company, investment of up to 10% of the Trust Funds in shares of
stock and other securities issued by the Company, the Trustee or any
entity related through common ownership to the Trustee), personal,
corporation and governmental obligations, whether or not secured;
mortgages, leaseholds, fees and other interests in realty; oil, gas or
mineral properties, rights, royalties, payments or other interests in
that property; contracts, conditional sale agreements, choses in action;
trust and participation certificates, or other evidences of ownership,
part ownership, interest or part interest. Except as provided in Section
8.2, the Trustee will not be limited or restricted by any statute or
rule of law, now or hereafter in effect, governing trust investments,
and may invest and reinvest through the medium of any combined, common,
collective or commingled trust fund or funds maintained by the Trustee
or any entity related through common ownership with the Trustee, the
terms of which are incorporated into this Trust, or commingle and invest
the Trust Fund with other trust funds created by the Company under other
trusts. An investment will not be improper or imprudent merely because
the Trustee participated in the issuance,
13
underwriting or original sale of the acquired property or because the
proceeds were to be used to satisfy obligations of the issuer or seller
to the Trustee.
(b) Form or acquire an interest in a corporation or make use
of a corporation for the purpose of investing in and holding title to
any property.
(c) Except as limited by Section 8.2, hold property in the
form received (including shares of stock and other securities issued by
the Company, the Trustee or any entity related through common ownership
to the Trustee) for as long as the Trustee believes advisable,
regardless of the character of that property, and regardless of whether
its acquisition by a trustee is authorized by law.
(d) Sell or contract to sell, exchange or otherwise dispose
of or grant options on any asset of the Trust Funds, at public auction,
by private contract, pursuant to option, or otherwise, upon terms and
conditions which at the time the Trustee believes appropriate, and make,
execute and deliver instruments necessary or proper to complete the
transaction.
(e) Hold in its own or in nominee name any asset of the Trust
Funds.
(f) Exercise or sell, for adequate consideration, conversion
or subscription rights under any Trust Fund asset, and use that portion
of the Trust Funds necessary to exercise those rights.
(g) Vote or refrain from voting all shares of stock or
securities (including, at the direction of the investment committee
established under the Company's Retirement Plan, shares of stock and
other securities issued by the Company, the Trustee or any entity
related through common ownership to the Trustee) in person or by proxy
(including special, limited or general proxies, with or without power of
substitution) and, as stock or security holder, execute and deliver
proxies to one or more nominees. The Trustee may dissent from or consent
to, approve, authorize, and become a party to any reorganization,
consolidation, merger, sale or lease of corporate property or other
corporate readjustment, including dissolution or liquidation, and
execute appropriate instruments. In participating in any corporate
action, the Trustee may act as if it is the absolute owner of the shares
of stock or securities and may deposit those certificates of ownership
with any committee or depository designated in the plan or
14
agreement governing that corporate action, and pay from the Trust Fund
any charges or assessments imposed by that plan or agreement and may
accept and continue to hold any property received by reason of
participation in that corporate action.
(h) Borrow money for Trust purposes in amounts, from any
person (except itself) and on the terms and conditions which the Trustee
deems advisable. The Trustee will issue its promissory note as Trustee
and secure repayment by mortgaging, pledging or otherwise hypothecating
all or any part of the Trust Funds (including, if directed by the
Company, shares of stock and other securities issued by the Company or
any entity related through common ownership to the Trustee).
(i) Establish whether any trust asset is to be treated as
principal or income and charge or apportion expenses, taxes and losses
to principal or income, as the Trustee believes appropriate. However,
gains or profits arising from the sale or other disposition of assets
will become a part of principal, and the Trustee will not be required to
set aside any part of income to absorb or make good any losses arising
from the disposition of any asset. Moreover, all liquidating payments or
liquidating dividends will become part of principal and stock dividends
will be allocated to principal or income depending on the type of
distribution represented by the dividend; regular or ordinary cash
dividends always will be treated as income. Also, the Trustee need not
amortize any premium paid to acquire property or to set aside any part
of the income to absorb a premium; if the Trustee acquires any
investment at a discount or at a price less than par value, it need not
treat or accrue that discount as income.
(j) Modify the terms of any obligation forming part of the
Trust Funds, and release any security for or guaranty of any obligation;
foreclose any mortgage securing any obligation, and purchase the
mortgaged property at the foreclosure sale, or acquire the property by
deed, conveyance or assignment from the mortgagor without foreclosure,
and retain property bought in under foreclosure or acquired without
foreclosure and dispose of it on the terms and conditions which the
Trustee believes appropriate.
(k) Abandon, adjust, arbitrate, compromise, or otherwise
settle any obligation or liability due to or from it as Trustee,
including any tax claim, and/or enforce or contest any claim in legal or
administrative
15
proceedings. The Trustee will not be required to contest any claim
unless it has been indemnified against the costs and expenses of that
action or unless available Trust Fund assets are sufficient to pay those
expenses.
(l) Hire and compensate, from the Trust Funds, agents,
accountants, brokers and counsel (who may be counsel for the Company)
and other assistants and advisors which it believes are necessary or
desirable for the proper administration of the Trust Fund.
(m) Temporarily deposit uninvested funds in a commingled
temporary deposit medium which is composed of certificates of deposit or
other obligations issued by the Trustee, or a cash management fund
maintained by the Trustee.
(n) Do all other acts, not specifically mentioned above which
are necessary to administer the Trust Fund and to carry out the purposes
of the Trust.
8.3 Situs of Assets. Except as permitted by law, the Trustee may
not maintain in the Trust Fund any assets located outside the jurisdiction of
the district courts of the United States.
8.4 Entire Agreement. The Trustee will have only those powers,
duties, or responsibilities set forth in this Agreement.
ARTICLE IX
RELATING TO THE TRUSTEE
9.1 Liability of the Trustee. The Trustee will exercise its
powers and perform its duties with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with those matters would use in the conduct of an
enterprise of a like character and with like aim. The Trustee also will
diversify Trust Fund investments to minimize the risk of large loss unless under
the circumstances the Trustee believes it clearly would be prudent not to
diversify. Wherever this Trust Agreement provides that the Trustee must follow
directions of the Company or that the Trustee has no duty or power concerning a
matter, the Trustee will not be liable for any harm caused by a direction or
lack of a direction or by any exercise or non-exercise of power by another
unless:
16
(a) the Trustee knowingly participates in or knowingly
undertakes to conceal an act or omission of another fiduciary with
respect to the Trust; or
(b) by the Trustee's failure to act in accordance with this
Section, the Trustee has enabled another fiduciary to breach a
fiduciary duty; or
(c) the Trustee has knowledge of a breach of fiduciary duty
which resulted in harm or injury and does not make reasonable efforts
under the circumstances to remedy the breach.
9.2 Obligations under Law. Regardless of any general or specific
power or authority granted to it, the Trustee may not engage in any transaction,
exercise any power or perform any duty under this Trust in violation of the
Code, the Employee Retirement Income Security Act, as amended, or any
regulations or rulings issued under those laws.
9.3 Bond. Unless required by law, the Trustee is not required to
furnish bond for the faithful performance of its duties.
9.4 Compensation. The Trustee will be compensated reasonably as
agreed to by the Company and the Trustee. Such compensation and all reasonable
expenses of administration will be paid by the Company either directly or by
otherwise providing the needed funds to the Trustee. Failing such payment, the
Trustee's compensation and all reasonable expenses of administration will be
paid by the Trustee out of the Trust Funds.
9.5 Indemnification. The Company agrees to indemnify and hold
harmless the Trustee from and against any and all damages, losses, claims or
expenses as incurred, including expenses of investigation and fees and
disbursements of counsel to the Trustee and any taxes imposed on the Trust Fund
or income of the Trust (the "Indemnified Amounts"), arising out of or in
connection with the performance by the Trustee of its duties hereunder provided
the Indemnified Amounts do not arise out of, or are connected with, any of the
foregoing as to which the Trustee may be liable under subparagraphs (a), (b) or
(c) of Section 9.1. Any amount payable to the Trustee under this Section 9.5 and
not previously paid by the Company shall be paid by the Company promptly upon
demand therefor by the Trustee or, if the Trustee so chooses in its sole
discretion, from the Trust Fund. In the event that payment is made hereunder to
the Trustee from the Trust Fund, the Trustee shall promptly notify the Company
in writing of the amount of such payment. The Company agrees that, upon receipt
of such notice, it will deliver to the Trustee to be held in the Trust an amount
in cash or other
17
property equal to any payments made from the Trust Fund to the Trustee pursuant
to this Section 9.5. The failure of the Company to transfer any such amount
shall not in any way impair the Trustee's right to indemnification pursuant to
this Section 9.5.
ARTICLE X
MISSING PERSONS, INCAPACITATED EXECUTIVES,
DEATH, DIRECTIONS, AND NOTICES
10.1 Missing Persons. If any payment to be made by the Trustee
to the Executive is not claimed or accepted by the Executive, the Trustee shall
notify the Company. The Trustee shall not have any obligation to search for or
ascertain the whereabouts of the Executive.
10.2 Incapacity; Death. While the Executive is under a legal
disability or, in the Trustee's opinion, in any way is incapacitated so as to be
unable to manage his financial affairs, the Trustee may make any required
distribution to the Executive by making it (i) directly to the Executive, (ii)
to a legal guardian of the Executive, or (iii) in such other manner as the
Trustee deems in the best interest of the Executive. Upon the death of the
Executive, the Trustee shall make any required distribution to the person or
entity entitled to receive such amounts pursuant to the terms of the Employment
Agreement.
10.3 Form. All directions, notices, certifications and
amendments to the Trust to be given by the Company will be in writing signed on
behalf of the Company.
10.4 Proof of any Matter. If required by the Trustee, any matter
may be proved conclusively by certification by the Company. The Trustee also may
accept or require any other or further evidence it believes to be sufficient or
necessary.
10.5 Absence of Directions. If the Trustee believes that it must
take action under this Trust, it may act in its sole discretion unless direction
is provided in this Trust.
ARTICLE XI
RESIGNATION OR REMOVAL OF TRUSTEE
11.1 Successor Trustee. The Trustee may resign and be discharged
from its duties hereunder at any time by giving notice in writing of such
resignation to the Company and the Executive specifying a date (not less than
thirty (30) days after the giving of such notice) when such resignation shall
take effect. Promptly after such notice, the Company shall appoint a successor
trustee to which the Executive has no reasonable objection, such trustee to
become Trustee hereunder upon the resignation date
18
specified in such notice. The Trustee shall continue to serve until its
successor accepts the trust and receives delivery of the Trust Fund. The Company
may at any time substitute a new trustee by giving thirty (30) days notice
thereof to the Trustee then acting. The Trustee and any successor thereto
appointed hereunder shall be a commercial bank which is not an affiliate of the
Company, but which is a national banking association or established under the
laws of one of the states of the United States, and which has equity in excess
of $50,000,000.
11.2 Final Account. If the Trustee resigns or is removed, and
unless the Company accepts without exception the Trustee's final account, the
Trustee (or its representative) may settle its account either (a) by beginning
an action to procure a judicial settlement or (b) by agreeing on a settlement
with the Company.
11.3 Transfer and Discharge. If a successor trustee is
appointed, the Trustee will transfer the Trust Fund to the successor along with
true copies of all relevant records reasonably requested by the successor. The
Trustee also will execute all documents necessary to the transfer of the Trust
Fund. When it has completed those actions, the Trustee will not be further
accountable for any matters covered in its accounting.
11.4 Effective Date of Appointment of Successor Trustee.
Appointment of a successor trustee will be effective when it delivers to the
Company and to the former trustee written acceptance of the appointment. When
delivered, this Trust will be interpreted as if the successor trustee had been
originally named Trustee. However, the successor trustee will not be liable or
responsible for anything done or omitted in the administration of the Trust
before its appointment.
11.5 Merger or Consolidation. If the Trustee engages in a
corporate reorganization, the resulting corporation automatically will be the
Trustee's successor.
ARTICLE XII
PROTECTION FOR THIRD PERSONS
Protection for Third Persons. In dealing with the Trustee, no
one other than the Company is required to inquire into the Trustee's authority
to take any action authorized by this Trust. All persons may assume that the
Trustee is authorized to take any action which it undertakes and will not be
liable for any act done under written direction of the Trustee. Also, all
persons may assume that the Trustee is authorized to receive any money or
property paid to the Trustee, or paid under the Trustee's written direction.
Written certification by the Company of the Trustee's name will be conclusive
evidence that
19
the Trustee is qualified to act as Trustee at the date of that certification.
ARTICLE XIII
TERMINATION; AMENDMENT; AND WAIVER
13.1 Termination. This Trust shall be terminated upon the
earlier of (i) the exhaustion of the Trust Fund; or (ii) the final payment of
all amounts payable to the Executive pursuant to Sections 8 and 9 of the
Agreement; (iii) the date the Executive ceases to be employed by the Company for
any reason, provided that no Trust Funds unrelated to the $100 initial deposit
made by the Company are then held by the Trust and that no event has occurred
prior to such date or is then occurring which would, pursuant to Section 5.2
hereof, require the Company to fund the Trust beyond the Company's $100 initial
deposit; or (iv) upon the mutual consent of the Company and the Executive.
Promptly upon termination of this Trust, any remaining portion of the Trust
Funds shall be paid to the Company.
13.2 Amendment and Waiver. This Trust is irrevocable and may not
be amended except by an instrument in writing signed on behalf of the parties
hereto together with the written consent of the Executive. The parties hereto,
together with the consent of the Executive, may at any time waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto and the Executive to any such waiver shall be valid if
set forth in an instrument in writing signed by or on behalf of such party and
the Executive. Notwithstanding the foregoing, any such amendment or waiver may
be made by written agreement of the parties hereto without obtaining the consent
of the Executive if such amendment or waiver does not adversely affect the
rights of the Executive hereunder. No amendment or waiver relating to this Trust
may be made which affects the Executive unless the Executive has agreed in
writing to such amendment or waiver.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Tennessee Trust. The Trust will be construed and enforced
according to the laws of the State of Tennessee and the United States.
14.2 Severability. In the event that any provision of this
Agreement or the application thereof to any person or circumstances shall be
determined by a court of proper jurisdiction to be invalid or unenforceable to
any extent, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is
20
held invalid or unenforceable, shall not be affected thereby, and each provision
of this Agreement shall be valid and enforced to the fullest extent permitted by
law.
14.3 Arbitration. Any dispute between the Executive and the
Company or the Trustee as to the interpretation or application of the provisions
of this Trust and amounts payable hereunder shall be determined exclusively by
binding arbitration in Memphis, Tennessee, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitration award in any court of competent jurisdiction.
14.4 Notices. Any notice, report, demand or waiver required or
permitted hereunder shall be in writing and shall be given personally or by
prepaid registered or certified mail, return receipt requested (except that
reports may be sent by ordinary mail), addressed as follows:
If to the Company: TBC Corporation
0000 Xxxxxxx Xxxx Xxxxx
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxxx 00000-0000
Attn: Secretary
If to the Trustee: First Tennessee Bank National
Association
Personal Trust Division
X.X. Xxx 00
Xxxxxxx, Xxxxxxxxx 00000
If to the Executive: ___________________
At his then current home address as
set forth in the books and records
of the party giving such notice.
A notice shall be deemed received upon the date of delivery if
given personally or, if given by mail, upon the receipt thereof.
14.5 Trust Beneficiaries. The Executive is the intended
beneficiary under this Trust, and shall be entitled to enforce all terms and
provisions hereof with the same force and effect as if such person had been a
party hereto. Following the death of the Executive, his rights as the intended
beneficiary under this Trust may be exercised by the person or entity which,
pursuant to the terms of the Employment Agreement, would be entitled to receive
the amounts that would otherwise have been distributed to the Executive
hereunder.
21
14.6 Headings. The headings and subheadings in this Agreement
are inserted for convenience of reference only and are not to be considered in
the construction of its provisions.
14.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which is an original; all counterparts constitute the
same instrument, sufficiently evidenced by any one counterpart.
14.8 Nonalienation of Benefits. The Executive's interest under
the Trust or right to receive any payment or distribution under the Trust is not
subject in any manner to sale, transfer, assignment, pledge, attachment,
garnishment or other alienation or encumbrance of any kind, nor may such
interest or right to receive a payment or distribution be taken, voluntarily or
involuntarily, for the satisfaction of the obligations or debts of, or other
claims against, the Executive or his beneficiary, including claims for alimony,
support, separate maintenance and claims in bankruptcy proceedings.
IN WITNESS WHEREOF, the Company and the Trustee have caused this
instrument to be executed as of the 1st day of ______, _______.
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION TBC CORPORATION
By___________________________ By_____________________________
Title: President and Chief Executive Officer
22
