TRUST AGREEMENT
THIS TRUST AGREEMENT (hereinafter referred to as "Agreement") made as of
this 19th day of January 1990, by and between Tasty Baking Company, a
Pennsylvania Corporation (hereinafter referred to as "Company"), and Meridian
Trust Company (hereinafter referred to as "Trustee").
W I T N E S S E T H:
WHEREAS, On October 16, 1987, the Company established a Retirement Plan for
Directors (hereinafter referred to as "Plan"), attached hereto as Exhibit "A",
which grants retirement benefits to members of the Board of Directors of the
Company (hereinafter referred to as "Directors"); and
WHEREAS, the Company wishes to establish a trust (hereinafter called
"Trust") and to transfer to the Trust, but only upon a Potential Change of
Control of the Company, a certain sum of money which shall be held therein,
subject to the claims of the Company's creditors in the event of the Company's
insolvency, until paid to the Directors as beneficiaries of the Trust
(hereinafter referred to as "Trust Beneficiaries") as retirement income benefits
(hereinafter referred to as "Benefits") in such amount and manner and at such
times as specified in the Plan; and
WHEREAS, the Trustee is independent of, and is not subject to the direct or
indirect control of, either the Company or the Trust Beneficiaries;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
ARTICLE I: TRUST FUND.
A. Except as provided in Article IV, the Trust hereby established
shall be irrevocable.
B. The Trust is intended to be a grantor trust, within the meaning of
Section 671 of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
C. The principal of the Trust, and any earnings thereon which are not
paid to the Company as provided in Article IV and Article V, shall be held
separate and apart from other funds of the Company and shall be used exclusively
for the uses and purposes herein set forth. Neither the Trust Beneficiaries, nor
the Plan, shall have any preferred claim on, or any beneficial ownership
interest in, any assets of the Trust prior to the time such assets are paid to
the Trust Beneficiaries as Benefits as provided in Article III of this
Agreement. All rights created under the Plan and this Agreement in the Trust
Beneficiaries shall be mere unsecured contractual rights against the Company.
ARTICLE II: CONTRIBUTIONS BY THE COMPANY.
A. Upon a Potential Change in Control (as hereinafter defined) of the
Company, the Company shall transfer to the Trustee that sum of money which is
sufficient to purchase from an insurance company (the "Insurance Company") with
a rating of B or better in Best's annuities which will provide the benefits in
the amounts and at the times due to all Trust Beneficiaries of the Plan. For
purposes of determining the purchase price of such annuity policies, the
retirement date for the Directors who are Trust Beneficiaries shall be presumed
to be the date upon which the Potential Change in Control occurred.
B. A Potential Change in Control occurs when the Company (1) has
entered into an agreement, the consummation of which would result in the
occurrence of a Change in Control of the Company; (2) any person or entity has
publicly announced an intention to take or consider taking actions which if
consummated would constitute a Change in Control of the Company; (3) any person
or entity, excluding persons or entities who on the date hereof have such
"beneficial ownership", has become the "beneficial owner" (as determined
pursuant to Sections 13(d) and 14(d) of the Securities Exchange Act of 1934),
directly or indirectly, of securities of the Company representing 10% or more of
the combined voting power of the Company's then outstanding securities; or (4)
the Board of Directors of the Company has adopted a resolution to the effect
that such a Potential Change in Control of the Company has occurred.
C. A Change in Control is that change in control of the Company which
is of a nature which would be required to be reported to the Securities and
Exchange Commission pursuant to Schedule 14A of Regulation 14A or any successor
provision (whether or not the Company is then subject to such reporting
requirements). A Change in Control will be deemed to have occurred if any person
other than persons or entities who on the date hereof have such "beneficial
ownership", is or becomes the "beneficial owner" (as determined pursuant to
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) of 25% or more
of the combined voting power of the outstanding securities of the Company, or if
during any two consecutive year periods, the directors at the beginning of such
periods cease for any reason during the two-year period to constitute a majority
of the Board of Directors of the Company.
D. If a Change in Control occurs, the Trustee shall purchase an
annuity contract with respect to each Trust Beneficiary providing monthly
payments to the Trustee of amounts due the Trust Beneficiary under the Plan.
Written notice of such event received by the Trustee from the Board of Directors
or the Chief Executive Officer of the Company shall be sufficient evidence of a
Change of Control. Upon a Change in Control, the Company shall contribute to the
Trust such additional sums as shall reflect a recomputation of the Trust
Beneficiaries' Benefits as of the date of the commencement of payment of such
Benefits.
E. The Trustee shall cause each annuity contract to contain a
provision requiring, on notice to the Insurance Company from the Trustee, the
cessation of payments in the event the Company becomes insolvent within the
meaning of Article IV of this Trust Agreement and the payment of such annuities
or the cash surrender value thereof to the person or entity entitled thereto
under Article IV.B.2 of this Trust Agreement.
F. If a Change in Control does not occur within one year of the
Potential Change in Control, then all sums contributed to the Trust by the
Company shall be returned to the Company together with any income earned
thereon.
ARTICLE III: PAYMENT TO TRUST BENEFICIARIES.
A. The Trustee shall make payments of Benefits to the Trust
Beneficiaries from the assets of the Trust in accordance with the terms set
forth in the Plan, if and to the extent (i) assets are available for
distribution; and (ii) at the time of each payment the Trustee does not have
actual knowledge of the insolvency of the Company as provided in Article IV.C.
B. If the assets of the Trust, which are not paid to the Company as
provided in Article IV, are not sufficient to make payments to the Trust
Beneficiaries in accordance with the terms set forth in the Plan, the Trustee
shall xxxxx the payments pro rata and the Company shall pay the balance of any
such payments as they fall due.
ARTICLE IV: TRUSTEE'S RESPONSIBILITY WHEN THE
COMPANY IS INSOLVENT.
A. The Company shall be considered insolvent for the purposes of this
Agreement if (i) the Company is unable to pay its debts as they mature, or (ii)
the Company is subject to a pending proceeding as a debtor under the Bankruptcy
Code.
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 as hereinafter set forth.
1. At such time as the Trustee has actual knowledge, or has
determined, that the Company is insolvent, the Trustee shall deliver the Trust
assets to satisfy such claims in such manner as a court of competent
jurisdiction may direct.
2. The Board of Directors and the Chief Executive Officer of the
Company shall inform the Trustee in the event the Company becomes insolvent. If
the Company or 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
independently determine, within 30 days after receipt of such notice, whether
the Company in insolvent. Pending such determination, the Trustee shall notify
the Insurance Company to discontinue payments to the Trust and the Trustee shall
hold the Trust assets for the benefit of the Company's general creditors. The
Trustee shall notify the Insurance Company to resume payments to the Trust and
the Trustee shall resume payments to the Trust Beneficiaries in accordance with
Article III of this Agreement only after the Trustee has determined that the
Company is not insolvent (or is no longer insolvent, if the Trustee initially
determined the Company to be insolvent).
3. Unless the Trustee has actual knowledge of the Company's
insolvency, the Trustee shall have no duty to inquire whether the Company is
insolvent and shall continue making payments to Trust Beneficiaries until he has
such actual knowledge. The Trustee may in all events rely on such evidence
concerning the Company's solvency as may be furnished to the Trustee which will
give the Trustee a reasonable basis for making a determination concerning the
Company's solvency.
4. Nothing in this Trust Agreement shall in any way diminish any
rights of a Trust Beneficiary to pursue his rights as a general creditor of the
Company with respect to his Benefits.
C. If the Insurance Company discontinues payments to the Trust
pursuant to Article IV.B, of the Agreement, and subsequently resumes such
payments, the first payment to the Trust Beneficiaries following such
discontinuance shall include the aggregate amount of all payments which would
have been made to the Trust Beneficiaries (together with interest on the amount
delayed calculated at the long-term applicable federal rate) in accordance with
the terms set forth in the Plan during the period of such discontinuance, less
the aggregate amount of any payments made to the Trust Beneficiaries by the
Company in lieu of the payments provided for hereunder during any such period of
discontinuance.
ARTICLE V: PAYMENT TO THE COMPANY.
Except as provided in Article II.F and Article IV, the Company may not
direct the Trustee to return to the Company or to divert to others any of the
Trust assets before all payments have been made to the Trust Beneficiaries
pursuant to the terms set forth in the Plan.
ARTICLE IV: 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
done, including such specific records as shall be agreed upon in writing between
the Company and the Trustee. All such accounts, books and records shall be open
to inspection and audit at all reasonable times by the Company and by the Trust
Beneficiaries.
B. Within 90 days following the close of each calendar year and within
90 days after the removal or resignation of the Trustee, the Trustee shall
deliver to the Company and the Trust Beneficiaries 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 the Trustee, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities, and other property held in the Trust at the end of such year
or as of the date of such removal or resignation, as the case may be.
ARTICLE VII: DUTIES AND POWERS OF THE TRUSTEE.
A. The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man 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; provided, however, that the
Trustee shall incur no liability to anyone for any action taken pursuant to a
direction, request, or approval given by the Company or the Trust Beneficiaries
contemplated by and complying with the terms of this Agreement and/or the Plan,
and to that extent shall be relieved of the prudent man rule for investments.
B. The Trustee shall not be required to undertake or to defend any
litigation arising in connection with this Agreement, unless it be first
indemnified by the Company against its prospective costs, expenses and
liability, and the Company hereby agrees to indemnify the Trustee for such
costs, expenses and liability.
C. The Trustee may consult with legal counsel (who may also be counsel
for the Trustee generally) with respect to any of the Trustee's duties or
obligations hereunder, and shall have no liability for any losses occasioned by
the Company or any Trust Beneficiary as a result of acting or refraining from
acting in accordance with the advice of such counsel.
D. The Trustee may hire agents, accountants, actuaries and financial
consultants.
E. The Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law unless expressly provided otherwise herein; provided,
however, that if an insurance policy is held as an asset of the Trust in order
to fund the Supplemental Benefits payable to the Trust Beneficiaries:
1. The Trustee shall have no power, except in accordance with
Article III of this Agreement, to name as a beneficiary of any policy any person
or entity other than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a successor Trustee,
or to loan to any person the proceeds of any borrowing against such policy.
2. The Trust shall own any insurance policies purchased hereunder
outright, subject to any claims of creditors as provided in Article IV.B of this
Agreement.
3. The Insurance Company shall not be responsible to see to the
execution of performance of this Trust.
ARTICLE VIII: COMPENSATION AND EXPENSES OF THE TRUSTEE.
The Trustee shall be entitled to receive from the Company such reasonable
compensation for his services as shall be agreed upon by the Company and the
Trustee. All expenses incurred with respect to the administration of the Trust
shall be paid by the Company, including, without limitation, expenses for items
expressly referred to in Article VII.
ARTICLE IX: REPLACEMENT OF THE TRUSTEE.
A. The Trustee may be removed at any time by the Company, with the
consent of the Trust Beneficiaries, or may resign, in which case a new trustee,
which shall be independent and not subject to direct or indirect control of, or
an agent of, either the Company or the Trust Beneficiaries, shall be appointed
by
the Company with the consent of the Trust Beneficiaries.
B. Any successor Trustee shall have all of the powers of the original
Trustee.
C. No bond shall be required of any Trustee.
D. The Company releases and discharges the Trustee and his successors
of and from all liability for any act of omission or commission as long as they
act in good faith.
ARTICLE X: AMENDMENT OR TERMINATION.
A. This Agreement may be amended any time and to any extent by a
written instrument executed by the Trustee and the Company and consented to by
all of the Trust Beneficiaries.
B. The Trust shall not terminate until the date on which the Trust
Beneficiaries are entitled to no more Benefits pursuant to the Plan, unless
sooner rendered inoperative in accordance with Article IV.B.1 of this Agreement.
C. Upon termination of the Trust as provided in Article X.B of this
Agreement, any assets remaining in the Trust shall be returned to the Company
after all debts and obligations of the Trust then outstanding shall have been
satisfied from such assets.
ARTICLE XI: ALIENATION AND ASSIGNMENT.
Amounts payable to the Trust Beneficiaries under this Agreement may not be
anticipated, assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable process.
ARTICLE XII: MISCELLANEOUS.
A. Notices. Notice to the parties to this Agreement shall be sent to:
Company: Tasty Baking Company
c/o Xxxxxx X. Xxxxxx, President
0000 Xxxxxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
and Trustee: Meridian Trust Company
0 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
and Trust
Beneficiaries: Xx. Xxxxxx X. Xxxx, Xx.
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
with a copy to each Trust Beneficiary
at his address of record with the Company.
B. Waiver of Provisions. Any waiver at any time by either party hereto
of its rights with respect to any matter arising in connection with this
Agreement shall not be deemed to be a waiver with respect to any subsequent
matter. Any waiver at any time by either party hereto as to any right under this
Agreement shall not affect any other right or obligation held by such party
under this Agreement.
C. Alteration of Terms. No alteration or variation of the terms of
this Agreement shall be valid unless in writing and signed by the parties
hereto.
D. Board of Directors. Whenever reference is made in this Agreement to
the Board of Directors of the Company the reference shall be only to such
members who are not entitled to receive benefits under the Plan at the time of
the action referred to and a majority of that number shall constitute action by
the Board of Directors for purposes of this Agreement.
E. Valid and Binding Agreement. The Company and the Trustee intend to
be legally bound by this Agreement in accordance with its terms.
F. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Company and the Trustee have executed or caused its
authorized officers to execute this Agreement as of the date first above
written.
Attest: TASTY BAKING COMPANY
/s/ Xxxxxxxxx X. Xxxxxxx By:/s/ X. X. Xxxx, Xx.
Secretary
The Trustee hereby accepts the Trust:
/s/ Xxxxxx X. XxXxx
Trustee
COMMONWEALTH OF PENNSYLVANIA :
: SS.
COUNTY OF :
On this, the 19th day of January, 1990, before me, the undersigned Notary
Public, personally appeared X. X. Xxxx, Xx. who acknowledged himself to be an
officer of TASTY BAKING COMPANY, a corporation, and that he as such being
authorized to do, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Xxxxxx X. Xxxxxxxxx
Notary Public
My Commission Expires:
Notarial Seal
Xxxxxx Xxxxxxxxx, Notary Public
Philadelphia, Philadelphia County
My Commission Expires July 22, 1992
Member, Pennsylvania Association of Notaries
