NORTH VALLEY BANCORP
UMBRELLA TRUST(TM) FOR EXECUTIVES
By and Between
NORTH VALLEY BANCORP
And
XXXXXX TRUST & SAVINGS BANK
North Valley Bancorp Company
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Xxxxxx Trust & Savings Bank Trustee
Personal Trust and Asset Management
Group
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Effective April 1, 1995
Exhibit 10(gg)
TABLE OF CONTENTS
PAGE
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PREAMBLE ......................................................................1
ARTICLE I--EFFECTIVE DATE; DURATION ...........................................2
1.01 Effective Date and Trust Year ..........................................2
1.02 Duration ...............................................................3
1.03 Irrevocability .........................................................4
1.04 Special Circumstance ...................................................4
ARTICLE II--TRUST FUND AND FUNDING POLICY .....................................5
2.01 Contributions ...........................................................5
2.02 Investments and Valuation ...............................................8
2.03 Subtrusts ..............................................................11
2.04 Recapture of Excess Assets .............................................12
2.05 Substitution of Other Property .........................................13
2.06 Administrative Powers of Trustee .......................................13
ARTICLE III--ADMINISTRATION ..................................................16
3.01 Committee; Company Representatives .....................................16
3.02 Payment of Benefits ....................................................16
3.03 Disputed Claims ........................................................17
3.04 Records ................................................................18
3.05 Accountings ............................................................18
3.06 Expenses and Fees ......................................................19
ARTICLE IV--LIABILITY ........................................................19
4.01 Indemnity ..............................................................19
4.02 Bonding ................................................................19
ARTICLE V--INSOLVENCY ........................................................19
5.01 Determination of Insolvency ...........................................19
5.02 Insolvency Administration .............................................20
5.03 Termination of Insolvency Administration ..............................20
5.04 Creditors' Claims During Solvency .....................................21
ARTICLE VI---SUCCESSOR TRUSTEES ..............................................21
6.01 Resignation and Removal ...............................................21
6.02 Appointment of Successor ..............................................21
6.03 Accountings; Continuity ...............................................22
(i)
TABLE OF CONTENTS
PAGE
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ARTICLE VII--GENERAL PROVISIONS ..............................................22
7.01 Interests Not Assignable ..............................................22
7.02 Amendment .............................................................22
7.03 Applicable Law ........................................................22
7.04 Agreement Binding on All Parties ......................................22
7.05 Notices and Directions ................................................23
7.06 No Implied Duties .....................................................23
7.07 Gender, Singular and Plural ...........................................23
ARTICLE VIII--INSURER ........................................................23
8.01 Insurer Not a Party ...................................................23
8.02 Authority of Trustee ..................................................23
8.03 Contract Ownership ....................................................24
8.04 Limitation of Liability ...............................................24
8.05 Change of Trustee .....................................................24
APPENDIX A
Assumptions and Methodology for Calculations Required Under 2.01 and 2.04
(ii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
------------------------- ----
A
Act: 1.04-3 ...................................................................4
B
Board: 1.02-3 .................................................................3
C
Change in Control: 1.04-3 .....................................................4
Code: Preamble ................................................................2
Committee: Preamble ...........................................................1
Company: Preamble .............................................................1
Contracts: 2.02-1 .............................................................8
D
Default: 1.04-6 ...............................................................5
E
ERISA: Preamble ...............................................................2
Excess Assets: 2.04-2 ........................................................12
Expert: 2.06-2 ...............................................................15
I
Insolvency Administration: 5.02 ..............................................20
Insolvent: 5.01-1 ............................................................19
Insurer: 2.02-1 ...............................................................8
Investment Manager: 2.02-4 ...................................................10
P
Participants: Preamble ........................................................1
Payment Schedule: 2.01-5 ......................................................7
Plans: Preamble ...............................................................1
Potential Change in Control: 2.01-7 ...........................................7
S
Segregated Fund: 2.02-4 ......................................................10
Special Circumstance: 1.04-2 ..................................................4
Subtrust: 2.03-1 .............................................................11
T
Tax Funding: 1.02-4 ...........................................................4
Trustee: Preamble .............................................................1
(iii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
------------------------- ----
V
Voting Securities: 1.04-5 .................................................... 5
W
Written Consent of Participants: 1.02-5 ...................................... 4
(iv)
NORTH VALLEY BANCORP
UMBRELLA TRUST(TM) FOR EXECUTIVES
EFFECTIVE APRIL 1, 1995
This Trust Agreement is made and entered into by and between North
Valley Bancorp, a California corporation (the "Company"), and Xxxxxx Trust and
Savings Bank, an Illinois banking corporation (the "Trustee").
The Company hereby establishes with the Trustee a trust to hold all
monies and other property, together with the income thereon, as shall be paid or
transferred to it hereunder in accordance with the terms and conditions of this
Trust Agreement. The Trustee hereby accepts the trust established under this
Trust Agreement and agrees to hold, IN TRUST, all monies and other property
transferred to it hereunder for the uses and purposes and upon the terms and
conditions set forth herein, and the Trustee further agrees to discharge and
perform fully and faithfully all of the duties and obligations imposed upon it
under this Trust Agreement.
PREAMBLE
The Company has adopted the following plans (the "Plans") which shall be
subject to this trust:
Supplemental Executive Retirement Plan
Executive Deferred Compensation Plan
If only one (1) Plan is subject to this trust at any time, references in
this Trust Agreement to the Plans shall refer to such Plan.
The Plans are administered by an administrative committee (the
"Committee") appointed by the Company. If the Plans are administered by more
than one (1) Committee at any time, references in this Trust Agreement to the
Committee which relate to a particular Plan shall refer to the Committee which
administers that Plan and, if the reference does not relate to a particular
Plan, shall refer to all of such Committees. All references in this Trust
Agreement to the Committee shall refer to the administrative committee(s) which
administers the Plan(s), unless the Company appoints a separate administrative
committee to administer this Trust Agreement. If the Company appoints a separate
administrative committee to administer this Trust Agreement, references in this
Trust Agreement to the Committee shall refer to such administrative committee
which is appointed to administer this Trust Agreement, unless the context
clearly indicates otherwise.
The Plan participants who are covered by this Trust Agreement
("Participants") shall be all persons who are Plan participants prior to a
Special Circumstance, unless the Company specifically designates only specified
individuals or groups of Plan participants as Participants covered by this Trust
Agreement. After a person becomes a Participant covered by this Trust Agreement,
such person will continue to be a Participant at all times thereafter (including
after retirement or other termination of service) until all Plan benefits
payable to such Participant have been paid, the Participant
PAGE 1 - UMBRELLA TRUST(TM) FOR EXECUTIVES
ceases to be entitled to any Plan benefits, or the Participant's death,
whichever occurs first. The term "Participants" shall not include any
beneficiaries of Participants.
At any time prior to a Special Circumstance, the Company may, by
written notice to the Trustee, cause additional plans to become Plans subject to
this Trust Agreement or cause additional Plan participants to become
Participants covered by this Trust Agreement. Upon and after a Special
Circumstance, the Company may not add any additional plans or Plan participants
to this Trust Agreement.
The Company shall provide the Trustee with certified copies of the
following items: (i) the Plan documents; (ii) all Plan amendments promptly upon
their adoption; and (iii) lists and specimen signatures of the members of the
Committee(s) which administer the Plan(s) and this Trust Agreement and any other
Company representatives authorized to take action in regard to the
administration of the Plan(s) and this trust, including any changes in the
members of such Committee(s) and of such other representatives promptly
following any such change. The Company shall also provide the Trustee at least
annually with a list of all Participants in each Plan who are covered by this
Trust Agreement.
The purpose of this trust is to give Participants greater security by
placing assets in trust for use only to pay Plan benefits to Participants or, if
the Company becomes insolvent, to pay creditors. The Company shall continue to
be liable to Participants to make all payments required under the terms of the
Plans to the extent such payments are not made from this trust. Distributions
made from this trust to Participants or their beneficiaries shall, to the extent
of such distributions, satisfy the Company's obligations to pay benefits to
Participants and their beneficiaries under the Plans.
The Company and the Trustee agree that the trust hereby created has been
established to pay obligations of the Company pursuant to the Plans and is
subject to the rights of general creditors of the Company, and accordingly is a
grantor trust under the provisions of Sections 671 through 677 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Company hereby agrees to
report all items of income, deductions and credits of the trust on its own
income tax returns; and the Company shall have no right to any distributions
from the trust or any claim against the trust for funds necessary to pay any
income taxes which the Company is required to pay on account of reporting the
income of the trust on its income tax returns. No contribution to or income of
the trust is intended to be taxable to Participants until benefits are
distributed to them.
The Plans are intended to be "unfunded" and maintained "primarily for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees" for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and as such are intended not to be
covered by Parts 2 through 4 of Subtitle B of Title I of ERISA (relating to
participation and vesting, funding and fiduciary responsibility). The existence
of this trust is not intended to alter this characterization of the Plans.
ARTICLE I--EFFECTIVE DATE; DURATION
1.01 Effective Date and Trust Year
This trust shall become effective when the Trust Agreement has been
executed by the Company and the Trustee and the Company has made a contribution
to the trust. For tax purposes the trust year shall be the calendar year. For
financial reporting purposes the trust year shall coincide
PAGE 2 - UMBRELLA TRUST(TM) FOR EXECUTIVES
with the Company's fiscal year. The Company shall report any change in its
fiscal year to the Trustee.
1.02 Duration
1.02-1 This trust shall continue in effect until all assets of the
trust fund are exhausted through distribution of benefits to Participants,
payment to creditors in the event of insolvency, payment of fees and expenses of
the Trustee, and return of remaining funds to the Company pursuant to 1.02-2.
Notwithstanding the foregoing, this trust shall terminate on the day before
twenty-one (21) years after the death of the last survivor of all present or
future Participants who are now living and those persons now living who are
designated as beneficiaries of any such Participants in accordance with the
terms of any of the Plans.
1.02-2 Except as otherwise provided in 1.02 and 1.03, the trust shall be
irrevocable until all benefits payable under the Plans to Participants who are
covered by this Trust Agreement are paid. The Trustee shall then return to the
Company any assets remaining in the trust.
1.02-3 If the existence of this trust or any Subtrust is held to be
ERISA Funding or Tax Funding by a federal court and appeals from that holding
are no longer timely or have been exhausted, this trust or such Subtrust shall
terminate. The Board of Directors of the Company (the "Board") may also
terminate this trust or any Subtrust if it determines, based on an opinion of
legal counsel which is satisfactory to the Trustee, that either (i) judicial
authority or the opinion of the U.S. Department of Labor, Treasury Department or
Internal Revenue Service (as expressed in proposed or final regulations,
advisory opinions or rulings, or similar administrative announcements) creates a
significant risk that the trust or any Subtrust will be held to be ERISA Funding
or Tax Funding or (ii) ERISA or the Code requires the trust or any Subtrust to
be amended in a way that creates a significant risk that the trust or such
Subtrust will be held to be ERISA Funding or Tax Funding, and failure to so
amend the trust or such Subtrust could subject the Company to material
penalties. Upon any such termination, the assets of each terminated Subtrust
remaining after payment of the Trustee's fees and expenses shall be distributed
as follows:
(a) Such assets shall be transferred to a new trust established by
the Company which is not deemed to be ERISA Funding or Tax Funding, but
which is similar in all other respects to this trust, if the Company
determines that it is possible to establish such a trust.
(b) If the Company determines that it is not possible to establish
the trust in (a) above, then the assets shall be distributed to the
Company if the Written Consent of Participants, as defined in 1.02-5, is
obtained for such distribution.
(c) If the Company determines that it is not possible to establish
the trust in (a) above and the Written Consent of Participants is not
obtained to distribute the assets to the Company, then the assets of
the terminated Subtrust shall be allocated in proportion to (i) the
vested accrued benefits and (ii) then, if any assets remain, the
unvested (if any) accrued benefits of Participants under the applicable
Plan and shall be distributed to such Participants in lump sums. Any
assets remaining shall be distributed to other Subtrusts or the Company
in accordance with 2.04.
Notwithstanding the foregoing, the Trustee shall distribute Plan
benefits to a Participant to the extent that a federal court has held that the
interest of the Participant in this trust causes such Plan benefits to be
includible for federal income tax purposes in the gross income of the
Participant
PAGE 3 - UMBRELLA TRUST(TM) FOR EXECUTIVES
prior to actual payment of such Plan benefits to the Participant and appeals
from that holding are no longer timely or have been exhausted. The Trustee may
also distribute Plan benefits to a Participant, upon direction of the Committee
or on its own initiative, if the Trustee reasonably believes, based on an
opinion of legal counsel which is satisfactory to the Trustee, that there is a
significant risk that the Participant's interest in the trust fund will be held
to be ERISA Funding or Tax Funding with respect to such Participant or that such
Participant will be determined not to be a "management or highly compensated
employee" for purposes of ERISA. The provisions of this paragraph shall also
apply to any beneficiary of a Participant.
1.02-4 This trust is "Tax Funding" if it causes the interest of a
Participant in this trust to be includible for federal income tax purposes in
the gross income of the Participant prior to actual payment of Plan benefits to
the Participant.
This trust is "ERISA Funding" if it prevents any of the Plans from
meeting the "unfunded" criterion of the exceptions to application of the
provisions of Parts 2 through 4 of Subtitle B of Title I of ERISA for plans that
are unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
1.02-5 "Written Consent of Participants" means, for the purposes of
this Trust Agreement, consent in writing by Participants who (i) are a majority
in number and (ii) have more than fifty percent (50%) in value of the accrued
benefits, of the Participants in each Subtrust under this Trust Agreement on the
date of such consent.
1.03 Irrevocability
1.03-1 This trust shall be irrevocable, subject to 1.02.
1.04 Special Circumstance
1.04-1 Upon the occurrence of a Special Circumstance described in
1.04-2, the trust assets shall be held for Participants who had accrued benefits
under the Plans before the Special Circumstance occurred, including benefits
accrued for such Participants after the Special Circumstance.
1.04-2 A "Special Circumstance" shall mean a Change in Control (as
defined in 1.04-3) or a Default (as defined in 1.04-6).
1.04-3 A "Change in Control" shall mean: With respect to the Company, a
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 "Act") or any successor thereto; provided
that, without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Act), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of Voting
Securities of the Company representing forty percent (40%) or more of the
combined voting power of the Company's then outstanding Voting Securities; (ii)
during any period of two (2) consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company together with
any new directors whose election or nomination for election was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who were
either directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute at
least a majority of the Board of Directors of the Com-
PAGE 4 - UMBRELLA TRUST(TM) FOR EXECUTIVES
pany; or (iii) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least fifty percent (50%) of the total voting power represented by
the Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company (in one (1) transaction or a series
of transactions) of all or substantially all of the Company's assets.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur as a result of any event described in (i) or (iii) above, if directors
who were a majority of the members of the Board prior to such event determine
that the event shall not constitute a Change in Control within one (1) year
after the transaction and furnish written notice to the Trustee of such
determination.
1.04-4 For purposes of this Trust Agreement, a Change in Control shall
be deemed to have occurred when the Trustee makes a determination to that effect
on its own initiative or upon receipt by the Trustee of written notice to that
effect from the Company. The Chief Executive Officer of the Company or the Board
shall furnish written notice to the Trustee when a Change in Control occurs
under 1.04-3.
1.04-5 "Voting Securities" shall mean any securities of the Company
which vote generally in the election of directors.
1.04-6 A "Default" shall mean a failure by the Company to contribute,
within thirty (30) days of receipt of written notice from the Trustee, any of
the following amounts:
(a) The full amount of any insufficiency in assets of any Subtrust
that is required to pay any premiums or loan interest payments on
insurance contracts which are held in the Subtrust;
(b) The full amount of any insufficiency in assets of any Subtrust
that is required to pay any Plan benefit that is payable upon a
direction from the Committee pursuant to 3.02-3 or upon resolution of a
disputed claim pursuant to 3.03-2; or
(c) Any contribution which is then required under 2.01. If, after
the occurrence of a Default, the Company at any time cures such Default
by contributing to the trust all amounts which are then required under
subparagraphs (a), (b) and (c) above, it shall then cease to be deemed
that a Default has occurred or that a Special Circumstance has occurred
by reason of such Default.
ARTICLE II--TRUST FUND AND FUNDING POLICY
2.01 Contributions
2.01-1 The Company shall contribute to the trust such amounts as are
required to purchase or hold insurance contracts in the trust and to pay
premiums and loan interest payments thereon, all as described in 2.02-1. The
Company shall also contribute to the trust such amounts as are necessary to
enable the Trustee to make all Plan benefit payments to Participants when due,
un-
PAGE 5 - UMBRELLA TRUST(TM) FOR EXECUTIVES
less the Company makes such payments directly, whenever the Trustee advises the
Company that the assets of the trust or Subtrust, other than insurance contracts
or amounts needed to pay future premiums or loan interest payments on insurance
contracts, are insufficient to make such payments. In its discretion, the
Company may contribute to the trust such additional amounts or assets as the
Committee may reasonably decide are necessary to provide security for all Plan
benefits payable to Participants covered by this trust.
2.01-2 Whenever the Company makes a contribution to the trust, the
Company shall designate the Plan(s) and Subtrust(s) to which such contribution
(or designated portions thereof) shall be allocated. The Company may also make
contributions to a special reserve for payment of future fees and expenses of
the Trustee and future trust fees and expenses for legal and administrative
proceedings. The Company shall designate a separate Subtrust to receive such
contributions, which shall be distinct from the other Subtrust(s) established
for the Plan(s).
2.01-3 The Company shall, immediately upon the occurrence of a Special
Circumstance (as defined in 1.04-2) or a Potential Change in Control (as defined
in 2.01-7), and at least annually following a Special Circumstance, contribute
to the trust the sum of the following:
(a) The present value of the remaining premiums and the interest on
any policy loans on insurance contracts held in the trust.
(b) The amount by which the present value of all benefits (vested
and unvested) payable under the Plans on a pretax basis to Participants
covered by this trust exceeds the value of all trust assets. Each
Participant's benefit under any Plan for purposes of calculating present
value shall be the highest benefit the Participant would have accrued
under the Plan within the twenty-four (24) months following such event,
assuming that the Participant's service continues for twenty-four (24)
months at the same rate of compensation, that the Participant continues
to make future deferrals under deferred compensation plans in accordance
with his prior elections, and that the Participant is terminated at a
time when he is entitled to receive any benefit enhancement provided by
the Plan upon a Change in Control. Any benefit enhancement or right with
respect to the Plans which is provided under employment or severance
agreements of Participants shall be taken into account in making the
foregoing calculation.
(c) The present value of a reasonable estimate provided by the
Trustee of its fees and expenses due over the remaining duration of the
trust. Unless the Trustee estimates a greater amount, such amount shall
be presumed to be equal to one percent (1%) of the present value of all
accrued benefits (vested and unvested) payable under the Plans on a
pretax basis to Participants covered by this trust.
(d) The present value of a reasonable estimate provided by the
Trustee of the anticipated fees and expenses for the purpose of
commencing or defending lawsuits or legal or administrative proceedings
over the remaining duration of the trust. Unless the Trustee estimates a
greater amount, such amount shall be presumed to be equal to one percent
(1%) of the present value of all accrued benefits (vested and unvested)
payable under the Plans on a pretax basis to Participants covered by
this trust.
2.01-4 The calculations required under 2.01-3 shall be based on the
terms of the Plans and the actuarial assumptions and methodology set forth in
Appendix A attached hereto. Before a Special
PAGE 6 - UMBRELLA TRUST(TM) FOR EXECUTIVES
Circumstance, Appendix A may be revised by the Committee from time to time.
After a Special Circumstance, Appendix A may be revised only with the Written
Consent of Participants.
2.01-5 Whenever the Company makes a contribution to the trust pursuant
to 2.01-3, it shall furnish the Trustee with a written statement setting forth
the computation of all required amounts contributed under subparagraphs (a),
(b), (c) and (d) of 2.01-3.
Whenever a Special Circumstance occurs or the Company makes a
contribution pursuant to 2.01-3, the Company shall deliver to the Trustee,
contemporaneously with or immediately prior to such event, a schedule (the
"Payment Schedule") indicating the amounts payable under each Plan in respect of
each Participant, or providing a formula or instructions acceptable to the
Trustee for determining the amounts so payable, the form in which such amounts
are to be paid (as provided for or available under the Plans) and the time of
commencement for payment of such amounts. The Payment Schedule shall include any
other necessary instructions with respect to Plan benefits (including legal
expenses) payable under the Plans and any conditions with respect to any
Participant's entitlement to, and the Company's obligation to provide, such
benefits, and such instructions may be revised from time to time to the extent
so provided under the Plans or this Trust Agreement.
A modified Payment Schedule shall be delivered by the Company to the
Trustee at each time that (i) additional amounts are required to be paid by the
Company to the Trustee pursuant to 2.01-3, (ii) Excess Assets are returned to
the Company pursuant to 2.04, and (iii) upon the occurrence of any event
requiring a modification of the Payment Schedule. The Company shall also furnish
a Payment Schedule or modified Payment Schedule for any or all Plan(s) upon
request by the Trustee at any other time. Whenever the Company is required to
deliver to the Trustee a Payment Schedule or a modified Payment Schedule, the
Company shall also deliver at the same time to each Participant the respective
portion of the Payment Schedule or modified Payment Schedule that sets forth the
amount payable to that Participant.
2.01-6 Any contribution to the trust which is made by the Company under
2.01-3 on account of a Potential Change in Control shall be returned to the
Company following one (1) year after delivery of such contribution to the
Trustee unless a Change in Control shall have occurred during such one (1) year
period, if the Company requests such return within sixty (60) days after such
one (1) year period. If no such request is made within this sixty (60) day
period, the contribution shall become a permanent part of the trust fund. The
one (1) year period shall recommence in the event of and upon the date of any
subsequent Potential Change in Control.
2.01-7 A "Potential Change in Control" shall be deemed to occur if:
(a) Any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company as defined in
Section 13(d)(3) of the Act, delivers to the Company a statement
containing the information required by Schedule 13-D under the Act, or
any amendment to any such statement, that shows that such person has
acquired, directly or indirectly, the beneficial ownership of (i) more
than twenty-five percent (25%) of any class of equity security of the
Company entitled to vote as a single class in the election or removal
from office of directors, or (ii ) more than twenty-five percent (25%)
of the voting power of any group of classes of equity securities of the
Company entitled to vote as a single class in the election or removal
from office of directors;
(b) The Company becomes aware that preliminary or definitive copies
of a proxy statement and information statement or other information have
been filed with the Securities
PAGE 7 - UMBRELLA TRUST(TM) FOR EXECUTIVES
and Exchange Commission pursuant to Rule 14a-6, Rule 14c-5, or Rule 14f-1 under
the Act relating to a Potential Change in Control of the Company;
(c) Any person delivers to the Company pursuant to Rule 14d-3 under
the Act a Tender Offer Statement relating to Voting Securities of the
Company;
(d) Any person (other than the Company) publicly announces an
intention to take actions which if consummated would constitute a Change
in Control;
(e) The Company enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a Change in
Control;
(f) The Board approves a proposal, or the Company enters into an
agreement, which if consummated would constitute a Change in Control; or
(g) The Board adopts a resolution to the effect that, for purposes
of this Trust Agreement, a Potential Change in Control has occurred.
Notwithstanding the foregoing, a Potential Change in Control shall not
be deemed to occur as a result of any event described in (a) through (f) above,
if directors who were a majority of the members of the Board prior to such event
determine that the event shall not constitute a Potential Change in Control and
furnish written notice to the Trustee of such determination.
2.01-8 For purposes of this trust, a Potential Change in Control shall
be deemed to have occurred when the Trustee makes a determination to that effect
on its own initiative or upon receipt by the Trustee of written notice to that
effect from the Company. The Chief Executive Officer of the Company or the Board
shall furnish written notice to the Trustee when a Potential Change in Control
occurs under 2.01-7.
2.01-9 The Trustee shall accept the contributions made by the Company
and hold them as a trust fund for the payment of benefits under the Plans. The
Trustee shall not be responsible for determining the required amount of
contributions or for collecting any contribution not voluntarily paid, nor shall
the Trustee be responsible for the adequacy of the trust fund to meet and
discharge all liabilities under the Plans. Contributions may be in cash or in
other assets specified in 2.02.
2.02 Investments and Valuation
2.02-1 The trust fund shall be invested primarily in insurance contracts
("Contracts"). Such Contracts may be purchased by the Company and transferred to
the Trustee as in-kind contributions or may be purchased by the Trustee with the
proceeds of cash contributions (or may be purchased upon direction by the
Committee pursuant to 2.02-2 or an Investment Manager pursuant to 2.02-4). The
Company's contributions to the trust shall include sufficient cash to make
projected premium payments on such Contracts and payments of interest due on
loans secured by the cash value of such Contracts, unless the Company makes
these payments directly. The Trustee shall have the power to exercise all
rights, privileges, options and elections granted by or permitted under any
Contract or under the rules of the insurance company issuing the Contract
("Insurer"), including the right to obtain policy loans against the cash value
of the Contract. Prior to a Special Circumstance, the exercise by the Trustee of
any incidents of ownership under any Contract shall be subject to the direction
of the Committee. The Committee may from time to time direct the Trustee in
writing as to
PAGE 8 - UMBRELLA TRUST(TM) FOR EXECUTIVES
the designation of the beneficiary of a Participant under a Contract for any
part of the death benefits payable to such beneficiary thereunder, and the
Trustee shall file such designation with the Insurer.
Notwithstanding anything contained herein to the contrary, neither the
Company nor the Trustee shall be liable for the refusal of any Insurer to issue
or change any Contract or Contracts or to take any other action requested by the
Trustee; nor for the form, genuineness, validity, sufficiency or effect of any
Contract or Contracts held in the trust; nor for the act of any person or
persons that may render any such Contract or Contracts null and void; nor for
failure of any Insurer to pay the proceeds of any such Contract or Contracts as
and when the same shall become due and payable; nor for any delay in payment
resulting from any provision contained in any such Contract or Contracts; nor
for the fact that for any reason whatsoever (other than its own negligence or
willful misconduct) any Contracts shall lapse or otherwise become uncollectible.
2.02-2 Prior to a Special Circumstance, the Trustee shall invest the
trust fund in accordance with written directions by the Committee, including
directions for exercising rights, privileges, options and elections pertaining
to Contracts and for borrowing from Contracts or other borrowing by the Trustee.
The Trustee shall act only as an administrative agent in carrying out directed
investment transactions and shall not be responsible for the investment
decision. If a directed investment transaction violates any duty to diversify,
to maintain liquidity or to meet any other investment standard under this trust
or applicable law, the entire responsibility shall rest upon the Company. The
Trustee shall be fully protected in acting upon or complying with any investment
objectives, guidelines, restrictions or directions provided in accordance with
this paragraph.
After a Special Circumstance the Committee shall no longer be entitled
to direct the Trustee with respect to the investment of the trust fund, unless
the Written Consent of Participants is obtained for the Committee to continue to
have this right pursuant to 2.02-2. If such Written Consent of Participants is
not obtained, the trust fund shall be invested by the Trustee pursuant to 2.02-3
or by an Investment Manager pursuant to 2.02-4. The Trustee or Investment
Manager shall have the right to invest the Trust Fund primarily in insurance
contracts pursuant to 2.02-1.
Notwithstanding the foregoing, no investments shall be made at any time
in any securities, instruments, accounts or real property of the Company, and
the Trustee may not loan trust fund assets to the Company, or permit the Company
to pledge trust fund assets as collateral for loans to the Company.
The Committee may not direct the Trustee to make any investments, and
the Company may not make any contributions to the trust fund, which are not
permissible investments under 2.02-2 and 2.02-3.
2.02-3 If the Trustee does not receive instructions from the Committee
for the investment of part or all of the trust fund for a period of at least
sixty (60) days, the Trustee shall invest and reinvest the assets of the trust
fund as the Trustee, in its sole discretion, may deem appropriate, in accordance
with applicable law. Permissible investments shall be limited to the following:
(a) Insurance or annuity contracts;
(b) Preferred or common stocks, bonds, notes, debentures, commercial
paper, certificates of deposit, money market funds, obligations of
governmental bodies, or other securities;
PAGE 9 - UMBRELLA TRUST(TM) FOR EXECUTIVES
(c) Interest-bearing savings or deposit accounts with any
federally-insured bank or savings and loan association (including the
Trustee or an affiliate of the Trustee); or
(d) Shares or certificates of participation issued by investment
companies, investment trusts, mutual funds, or common or pooled
investment funds (including any common or pooled investment fund now or
hereafter maintained by the Trustee or an affiliate of the Trustee).
2.02-4 The Company may appoint one (1) or more investment managers
("Investment Manager") subject to the following provisions:
(a) The Company may appoint one (1) or more Investment Managers to
manage (including the power to acquire and dispose of) a specified
portion of the assets of the trust (hereinafter referred to as that
Investment Manager's "Segregated Fund"). Any Investment Manager so
appointed must be either (A) an investment adviser registered as such
under the Investment Advisers Act of 1940, (B) a bank, as defined in
that Act, or (C) an insurance company qualified to perform services in
the management, acquisition or disposition of the assets of trusts under
the laws of more than one (1) state; and any Investment Manager so
appointed must acknowledge in writing to the Company and to the Trustee
that it is a fiduciary with respect to the Plans. The Trustee, until
notified in writing to the contrary, shall be fully protected in relying
upon any written notice of the appointment of an Investment Manager
furnished to it by the Company. In the event of any vacancy in the
office of Investment Manager, the Trustee shall be deemed to be the
Investment Manager of that Investment Manager's Segregated Fund until an
Investment Manager thereof shall have been duly appointed; and in such
event, until an Investment Manager shall have been so appointed and
qualified, references herein to the Trustee's acting in respect of that
Segregated Fund pursuant to direction from the Investment Manager shall
be deemed to authorize the Trustee to act in its own discretion in
managing and controlling the assets of that Segregated Fund, and
subparagraphs (c) and (d) below shall have no effect with respect
thereto and shall be disregarded.
(b) Each Investment Manager appointed pursuant to subparagraph (a)
above shall have exclusive authority and discretion to manage and
control the assets of its Segregated Fund and may invest and reinvest
the assets of the Segregated Fund in any investments in which the
Trustee is authorized to invest under 2.02-3, subject to the terms and
limitations of any written instruments pertaining to its appointment as
Investment Manager. Copies of any such written instruments shall be
furnished to the Trustee. In addition, each Investment Manager from time
to time and at any time may delegate to the Trustee (or in the event of
any vacancy in the office of Investment Manager, the Trustee may
exercise in respect of that Investment Manager's Segregated Fund)
discretionary authority to invest and reinvest otherwise uninvested cash
held in its Segregated Fund temporarily in bonds, notes or other
evidences of indebtedness issued or fully guaranteed by the United
States of America or any agency or instrumentality thereof, or in other
obligations of a short-term nature, including prime commercial
obligations or part interests therein.
(c) Unless the Trustee knowingly participates in, or knowingly
undertakes to conceal, an act or omission of an Investment Manager,
knowing such act or omission to be a breach of the fiduciary
responsibility of the Investment Manager with respect to the Plans, the
Trustee shall not be liable for any act or omission of any Investment
Manager and shall not be under any obligation to invest or otherwise
manage the assets of the Plans that are subject to the management of any
Investment Manager. Without limiting the generality of the forego-
PAGE 10 - UMBRELLA TRUST(TM) FOR EXECUTIVES
ing, the Trustee shall not be liable by reason of its taking or
refraining from taking at the direction of an Investment Manager any
action in respect of that Investment Manager's Segregated Fund. The
Trustee shall be under no duty to question or to make inquiries as to
any direction or order or failure to give direction or order by any
Investment Manager; and the Trustee shall be under no duty to make any
review of investments acquired for the trust at the direction or order
of any Investment Manager and shall be under no duty at any time to make
any recommendation with respect to disposing of or continuing to retain
any such investment.
2.02-5 The values of all assets in the trust fund shall be reasonably
determined by the Trustee and may be based on the determination of qualified
independent parties or Experts (as described in 2.06-2). At any time before or
after a Special Circumstance, the Trustee shall have the right to secure
confirmation of value by a qualified independent party or Expert for all
property of the trust fund, as well as any property to be substituted for other
property of the trust fund pursuant to 2.05. Before a Special Circumstance the
Company may designate one (1) or more independent parties, who are acceptable to
the Trustee, to determine the fair market value of any notes, securities, real
property or other assets.
Any insurance or annuity contracts held in the trust fund shall be
valued at their cash surrender value, except for purposes of substituting other
property for such Contracts pursuant to 2.05-2. All securities shall be valued
net of costs to sell, or register for sale, such securities. All real property
shall be valued net of costs to sell such real property. All other assets of the
trust fund shall be valued at their fair market value.
The Company shall pay all costs incurred in valuing the assets of the
trust fund, including any assets to be substituted for other assets of the trust
fund pursuant to 2.05. If not so paid, these costs shall be paid from the trust
fund. The Company shall reimburse the trust fund within thirty (30) days after
receipt of a xxxx from the Trustee for any such costs paid out of the trust
fund.
2.03 Subtrusts
2.03-1 The Trustee shall establish a separate subtrust ("Subtrust") for
each Plan to which it shall credit contributions it receives which are earmarked
for that Plan and Subtrust. The Trustee shall also establish a separate Subtrust
to which it shall credit contributions it receives which are earmarked to the
special reserve for payment of future fees and expenses of the Trustee and
future trust fees and expenses for legal and administrative proceedings. Each
Subtrust shall reflect an undivided interest in assets of the trust fund and
shall not require any segregation of particular assets, except that an insurance
contract covering benefits of a particular Plan shall be held in the Subtrust
for the Plan. All contributions shall be designated by the Company for a
particular Subtrust. However, any contribution received by the Trustee which is
not earmarked for a particular Subtrust shall be allocated among the Subtrusts
as the Trustee may determine in its sole discretion.
The Committee may direct the Trustee, or the Trustee may determine on
its own initiative, to maintain a separate sub-account within each Subtrust for
a Plan for each Participant who is covered by the Subtrust. Each sub-account in
a Subtrust shall reflect an individual interest in assets of the Subtrust and,
as much as possible, shall operate in the same manner as if it were a separate
Subtrust.
2.03-2 The Trustee shall allocate investment earnings and losses and
expenses of the trust fund among the Subtrusts in proportion to their balances,
except that changes in the value of an insurance contract (including premiums
and interest on loans on an insurance contract) shall be allo-
PAGE 11 - UMBRELLA TRUST(TM) FOR EXECUTIVES
cated to the Subtrust for which it is held. Payments to creditors during
Insolvency Administration under 5.02 shall be charged against the Subtrusts in
proportion to their balances, except that payment of Plan benefits to a
Participant as a general creditor shall be charged against the Subtrust for that
Plan.
2.03-3 Assets allocated to a Subtrust for one (1) Plan may not be
utilized to provide benefits under any other Plans until all benefits under such
Plan have been paid in full, except that Excess Assets of a Subtrust may be
transferred to other Subtrusts pursuant to 2.04-5.
2.04 Recapture of Excess Assets
2.04-1 In the event the trust shall hold Excess Assets, the Committee,
at its option, may direct the Trustee to return part or all of such Excess
Assets to the Company.
2.04-2 "Excess Assets" are assets of the trust exceeding one hundred
twenty-five percent (125%) of the amounts described in subparagraphs (a), (b),
(c) and (d) of 2.01-3.
2.04-3 The calculation required by 2.04-2 shall be based on the terms of
the Plans and the actuarial assumptions and methodology set forth in Appendix A.
Before a Special Circumstance, the calculation shall be made by the Company or a
qualified actuary or consultant selected by the Committee. After a Special
Circumstance, the calculation shall be made by a qualified actuary or consultant
selected by the Trustee, provided the Committee may select a qualified actuary
or consultant with the Written Consent of Participants.
2.04-4 Excess Assets shall be returned to the Company in the following
order of priority, unless the Trustee determines otherwise to protect the
participants:
(a) Cash and cash equivalents;
(b) All taxable investments of the trust (other than cash and cash
equivalents and Contracts with Insurers), in such order as the Committee
may request;
(c) All nontaxable investments of the trust (other than cash and
cash equivalents and Contracts with Insurers), in such order as the
Committee may request; and
(d) Contracts with Insurers, proceeding in order of Contracts on
insureds from the youngest to the oldest ages based on the insured's
attained age on the date of return of Excess Assets.
Notwithstanding the foregoing, Excess Assets may be returned in any
other order of priority directed by the Committee with the Written Consent of
Participants.
2.04-5 If any Subtrust holds Excess Assets, the Committee may direct the
Trustee to transfer such Excess Assets to other Subtrusts, either ratably in
proportion to the unfunded liabilities to Participants for Plan benefits of all
other Subtrusts or first to the other Subtrust(s) with the largest percentage of
such unfunded liabilities. After a Special Circumstance the Trustee may also
transfer Excess Assets of a Subtrust to other Subtrusts upon its own initiative
in such amounts as it may determine in its sole discretion.
PAGE 12 - UMBRELLA TRUST(TM) FOR EXECUTIVES
Excess Assets of a Subtrust for a Plan shall be determined in the same
manner as Excess Assets of the trust are determined pursuant to 2.04-2 and
2.04-3. In making this determination each Subtrust for a Plan shall bear its
allocable share of the amounts described in subparagraphs (a) and (b) of 2.01-3
which relate to that Plan. The Trustee, in its sole discretion, shall determine
whether there are Excess Assets in the separate Subtrust which constitutes the
reserve for payment of future fees and expenses of the Trustee and future trust
fees and expenses for legal and administrative proceedings. Excess Assets for
this Subtrust shall be any amounts which the Trustee reasonably determines will
not be needed in the future for payment of such fees and expenses.
2.05 Substitution of Other Property
2.05-1 The Company shall have the power to reacquire part or all of the
assets or collateral held in the trust fund at any time, by simultaneously
substituting for it other readily marketable property of equivalent value, net
of any costs of disposition; provided that, if the trust holds Excess Assets,
the property which is substituted shall not be required to be of equivalent
value, but only of sufficient value so that the trust will retain Excess Assets
of not less than ten thousand dollars ($10,000) after such substitution. The
property which is substituted must be among the types of investments authorized
under 2.02 and may not be less liquid or marketable or less well secured than
the property for which it is substituted, as determined by the Trustee. Such
power is exercisable in a nonfiduciary capacity and may be exercised without the
approval or consent of Participants or any other person.
2.05-2 Except for insurance contracts, the value of any assets
reacquired under 2.05-1 shall be determined as provided in 2.02-5. The value of
any insurance contract reacquired under 2.05-1 shall be the present value of
future projected cash flow or benefits payable under the Contract, but not less
than the cash surrender value. The projection shall include death benefits based
on reasonable mortality assumptions, including known facts specifically relating
to the health of the insured and the terms of the Contract to be reacquired.
Values shall be reasonably determined by the Trustee and may be based on the
determination of qualified independent parties and Experts, as described in
2.02-5 and 2.06-2. The Trustee shall have the right to secure confirmation of
value by a qualified independent party or Expert for all property to be
substituted for other property.
2.05-3 The Company shall pay all costs incurred in valuing the assets of
the trust fund, including any assets to be substituted for other assets of the
trust fund pursuant to 2.05. If not so paid, these costs shall be paid from the
trust fund. The Company shall reimburse the trust fund with in thirty (30) days
after receipt of a xxxx from the Trustee for any such costs paid out of the
trust fund.
2.06 Administrative Powers of Trustee
2.06-1 Subject in all respects to applicable provisions of this Trust
Agreement and the Plans, including limitations on investment of the trust fund,
the Trustee shall have the rights, powers and privileges of an absolute owner
when dealing with property of the trust, including (without limiting the
generality of the foregoing) the powers listed below:
(a) To sell, convey, transfer, exchange, partition, lease, and
otherwise dispose of any of the assets of the trust at any time held by
the Trustee under this Trust Agreement;
(b) To exercise any option, conversion privilege or subscription
right given the Trustee as the owner of any security held in the trust;
to vote any corporate stock either in person or by proxy, with or
without power of substitution; to consent to or oppose any reor-
PAGE 13 - UMBRELLA TRUST(TM) FOR EXECUTIVES
ganization, consolidation, merger, readjustment of financial structure, sale,
lease or other disposition of the assets of any corporation or other
organization, the securities of which may be an asset of the trust; and to take
any action in connection therewith and receive and retain any securities
resulting therefrom;
(c) To deposit any security with any protective or reorganization
committee, and to delegate to such committee such power and authority
with respect thereto as the Trustee may deem proper, and to agree to pay
out of the trust such portion of the expenses and compensation of such
committee as the Trustee, in its discretion, shall deem appropriate;
(d) To cause any property of the trust to be issued, held or
registered in the name of the Trustee as trustee, or in the name of one
(1) or more of its nominees, or one (1) or more nominees of any system
for the central handling of securities, or in such form that title will
pass by delivery, provided that the records of the Trustee shall in all
events indicate the true ownership of such property, or to deposit any
securities held in the trust with a securities depository;
(e) To renew or extend the time of payment of any obligation due or
to become due;
(f) To commence or defend lawsuits or legal or administrative
proceedings; to compromise, arbitrate or settle claims, debts or damages
in favor of or against the trust; to deliver or accept, in either total
or partial satisfaction of any indebtedness or other obligation, any
property; to continue to hold for such period of time as the Trustee may
deem appropriate any property so received; and to pay all costs and
reasonable attorneys' fees in connection therewith out of the assets of
the trust;
(g) To foreclose any obligation by judicial proceeding or otherwise;
(h) Subject to 2.02, to borrow money from any person in such
amounts, upon such terms and for such purposes as the Trustee, in its
discretion, may deem appropriate; and in connection therewith, to
execute promissory notes, mortgages or other obligations and to pledge
or mortgage any trust assets as security; and to lend money on a secured
or unsecured basis to any person other than a party in interest;
(i) To manage any real property in the trust in the same manner as
if the Trustee were the absolute owner thereof, including the power to
lease the same for such term or terms within or beyond the existence of
the trust and upon such conditions as the Trustee may deem proper; and
to grant options to purchase or acquire options to purchase any real
property;
(j) To appoint one (1) or more persons or entities as ancillary
trustee or subtrustee for the purpose of investing in and holding title
to real or personal property or any interest therein located outside the
State of Illinois; provided that any such ancillary trustee or
sub-trustee shall act with such power, authority, discretion, duties,
and functions of the Trustee as shall be specified in the instrument
establishing such ancillary trust or sub-trust, including (without
limitation) the power to receive, hold and manage property, real or
personal, or undivided interests therein; and the Trustee may pay the
reasonable expenses and compensation of such ancillary trustees or
sub-trustees out of the trust;
PAGE 14 - UMBRELLA TRUST(TM) FOR EXECUTIVES
(k) To hold such part of the assets of the trust uninvested for such
limited periods of time as may be necessary for purposes of orderly
trust administration or pending required directions, without liability
for payment of interest;
(l) To determine how all receipts and disbursements shall be
credited, charged or apportioned as between income and principal, and
the decision of the Trustee shall be final and not subject to question
by any Participant or beneficiary of the trust; and
(m) Generally to do all acts, whether or not expressly authorized,
which the Trustee may deem necessary or desirable for the orderly
administration or protection of the trust fund.
2.06-2 The Trustee may engage one (1) or more qualified independent
attorneys, accountants, actuaries, appraisers, consultants or other experts (an
"Expert") for any purpose, including the determination of Excess Assets pursuant
to 2.04 or disputed claims pursuant to 3.03. The determination of an Expert
shall be final and binding on the Company, the Trustee, and all of the
Participants unless, within thirty (30) days after receiving a determination
deemed by any Participant to be adverse, any Participant initiates suit in a
court of competent jurisdiction seeking appropriate relief. The Trustee shall
have no duty to oversee or independently evaluate the determination of the
Expert. The Trustee shall be authorized to pay the fees and expenses of any
Expert out of the assets of the trust fund.
2.06-3 The Company shall from time to time pay taxes (references in this
Trust Agreement to the payment of taxes shall include interest and applicable
penalties) of any and all kinds whatsoever which at any time are lawfully levied
or assessed upon or become payable in respect of the trust fund, the income or
any property forming a part thereof, or any security transaction pertaining
thereto. To the extent that any taxes levied or assessed upon the trust fund are
not paid by the Company or contested by the Company pursuant to the last
sentence of this paragraph, the Trustee shall pay such taxes out of the trust
fund, and the Company shall upon demand by the Trustee deposit into the trust
fund an amount equal to the amount paid from the trust fund to satisfy such tax
liability. If requested by the Company, the Trustee shall, at the Company's
expense, contest the validity of such taxes in any manner deemed appropriate by
the Company or its counsel, but only if it has received an indemnity bond or
other security satisfactory to it to pay any expenses of such contest.
Alternatively, the Company may itself contest the validity of any such taxes,
but any such contest shall not affect the Company's obligation to reimburse the
trust fund for taxes paid from the trust fund.
2.06-4 Notwithstanding any provisions in the Plans or this Trust
Agreement to the contrary, the Company and Trustee may withhold any benefits
payable to a beneficiary as a result of the death of the Participant or any
other beneficiary until such time as (a) the Company or Trustee is able to
determine whether a generation-skipping transfer tax, as defined in Chapter 13
of the Code, or any substitute provision therefor, is or may become payable by
the Company or Trustee as a result of benefit payments to the beneficiary; and
(b) the Company or Trustee has determined the amount of generation-skipping
transfer tax that is or may become due, including interest thereon. If any such
tax is or may become payable, the Company or Trustee shall reduce the benefits
otherwise payable hereunder to such beneficiary by such amounts as the Company
or Trustee feels are reasonably necessary to pay any generation-skipping
transfer tax and interest thereon which is or may become due.
Any excess amounts so withheld from a beneficiary, which are not used to
pay generation-skipping transfer tax and interest thereon, shall be payable to
the beneficiary as soon as there is a final determination of the applicable
generation-skipping transfer tax and interest thereon. Whenever
PAGE 15 - UMBRELLA TRUST(TM) FOR EXECUTIVES
any amounts which were withheld are paid to any beneficiary, interest shall be
payable by the Company or Trustee to such beneficiary for the period of time
between the date when such amounts would otherwise have been paid to the
beneficiary and the date when such amounts are actually paid to the beneficiary
after the aforementioned generation-skipping transfer tax determinations are
made and the amount of benefits payable to the beneficiary is finally
determined. Interest shall be payable at the same rate as provided under 5.03-2.
ARTICLE III--ADMINISTRATION
3.01 Committee; Company Representatives
3.01-1 The Committee is the plan administrator for the Plans and has
general responsibility to interpret the Plans and determine the fights of
Participants and beneficiaries.
3.01-2 The Trustee shall be given the names and specimen signatures of
the members of the Committee and any other Company representatives authorized to
take action in regard to the administration of the Plans and this trust. The
Trustee shall accept and rely upon the names and signatures until notified of
any change. Instructions to the Trustee shall be signed for the Committee by the
Chairman or such other person as the Committee may designate and for the Company
by any officer or such other representative as the Company may designate.
3.02 Payment of Benefits
3.02-1 Benefit payments shall normally be made directly by the Company.
If such payments are not made when due, after sixty (60) days' written notice to
the Company to permit the Company to cure any such Default, unless such notice
is waived by the Company, the Trustee shall pay benefits to Participants and
beneficiaries on behalf of the Company in satisfaction of its obligations under
the Plans. Benefit payments from a Subtrust shall be made in full until the
assets of the Subtrust are exhausted. Payments due on the date the Subtrust is
exhausted shall be covered pro rata. The Company's obligation shall not be
limited to the trust fund, and a Participant or beneficiary shall have a claim
against the Company for any payment not made by the Trustee.
3.02-2 A Participant's entitlement to benefits under the Plans shall be
determined by the Committee. Any benefit enhancement or right with respect to
the Plans which is provided under employment or severance agreements of
Participants shall be taken into account in making the foregoing determination.
Any claim for such benefits shall be considered and reviewed under the claims
procedures established for the Plans.
3.02-3 The Trustee shall make payments in accordance with written
directions from the Committee or consultant designated by the Committee, except
as provided in 3.03. The Trustee may request such directions from the Committee
or consultant designated by the Committee. If the Committee or consultant
designated by the Committee fails to furnish written directions to the Trustee,
within sixty (60) days after receiving a written request for directions from the
Trustee, the Trustee may make payments in accordance with written directions
from Participants or may determine the amounts due under the terms of the Plans
in reliance upon the most recent Payment Schedule furnished to it by the
Company.
PAGE 16 - UMBRELLA TRUST(TM) FOR EXECUTIVES
The Trustee shall make any required income tax withholding and shall pay
amounts withheld to taxing authorities on the Company's behalf or determine that
such amounts have been paid by the Company.
3.02-4 The Trustee shall use the assets of the trust or any Subtrust to
make benefit payments or other payments in the following order of priority,
unless the Trustee determines otherwise to protect the Participants:
(a) Cash contributions from the Company which are specifically
designated to enable the Trustee to make such benefit payments or other
payments when due;
(b) Cash and cash equivalents of the trust or Subtrust;
(c) All taxable investments of the trust or Subtrust (other than
cash and cash equivalents and Contracts with Insurers), in such order as
the Trustee may determine;
(d) All nontaxable investments of the trust or Subtrust (other than
cash and cash equivalents and Contracts with Insurers), in such order as
the Trustee may determine; and
(e) Contracts with Insurers held in the trust or Subtrust, in such
order and manner (for example, making tax-free withdrawals prior to any
taxable withdrawals from Contracts) as the Trustee may determine. Unless
the Trustee determines otherwise to protect the Participants, the
Trustee shall make tax-free withdrawals prior to any taxable withdrawals
from Contracts; shall make withdrawals from Contracts to the premium
vanish point before surrendering any Contracts; and shall surrender
Contracts, only if necessary, proceeding in order of Contracts on
insureds from the youngest to the oldest ages based on the insured's age
on the date of surrender of the Contract.
Notwithstanding the foregoing, the Trustee may use the assets of the
trust or any Subtrust in any other order of priority directed by the Committee
with the Written Consent of Participants affected thereby.
3.03 Disputed Claims
3.03-1 A Participant covered by this Trust whose claim has been denied
by the Committee, or who has received no response to the claim within sixty (60)
days after submission, may submit the claim to the Trustee. The Trustee shall
give written notice of the claim to the Committee. If the Trustee receives no
written response from the Committee within sixty (60) days after the date the
Committee is given written notice of the claim, the Trustee shall pay the
Participant the amount claimed, unless it determines that a lesser amount is due
under the terms of the Plans. If a written response is received within such
sixty (60) days, the Trustee shall consider the claim, including the Committee's
response. If the merits of the claim depend on compensation, service or other
data in the possession of the Company and it is not provided, the Trustee may
rely upon information provided by the Participant. Any benefit enhancement or
right with respect to the Plans which is provided under employment or severance
agreements of Participants shall be taken into account in making the foregoing
determination.
3.03-2 The Trustee shall give written notice to the Participant and the
Committee of its decision on the claim. If the decision is to grant the claim,
the Trustee shall make payment to the Participant. The Trustee may decline to
decide a claim and may file suit to have the matter resolved
PAGE 17 - UMBRELLA TRUST(TM) FOR EXECUTIVES
by a court of competent jurisdiction. All of the Trustee's expenses in the court
proceeding, including attorneys fees, shall be allowed as administrative
expenses of the trust.
Either the Participant or the Company may challenge the Trustee's
decision by filing suit in a court of competent jurisdiction. If no such suit is
filed within sixty (60) days after delivery of written notice of the Trustee's
decision, the decision shall become final and binding on all parties.
Notwithstanding the two (2) preceding paragraphs, after the Trustee
decides a claim or declines to decide a claim, any dispute between a Participant
and the Company or the Trustee as to the interpretation or application of the
provisions of this Trust Agreement and amounts payable hereunder may, at the
election of any party to such dispute (or, if more than one (1) Participant is
such a party, at the election of two-thirds (2/3) of such Participants) be
determined by binding arbitration in Redding, California, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court of competent jurisdiction. All
fees and expenses of such arbitration shall be paid by the Trustee and
considered an expense of the trust under 3.06.
3.04 Records
3.04-1 The Trustee shall keep complete records on the trust fund open to
inspection by the Company, Committee and Participants at all reasonable times.
In addition to accountings required below, the Trustee shall furnish to the
Company, Committee and Participants any information reasonably requested about
the trust fund.
3.05 Accountings
3.05-1 The Trustee shall furnish the Company with a complete statement
of accounts annually within sixty (60) days after the end of the trust year
showing assets and liabilities and income and expense for the year of the trust
and each Subtrust. The Trustee shall also furnish the Company with accounting
statements at such other times as the Company may reasonably request. The form
and content of the statement of accounts shall be sufficient for the Company to
include in computing its taxable income and credits the income, deductions and
credits against tax that are attributable to the trust fund.
3.05-2 The Company may object to an accounting within one hundred eighty
(180) days after it is furnished and require that it be settled by audit by a
qualified, independent certified public accountant. The auditor shall be chosen
by the Trustee from a list of at least five (5) such accountants furnished by
the Company at the time the audit is requested. Either the Company or the
Trustee may require that the account be settled by a court of competent
jurisdiction, in lieu of or in conjunction with the audit. All expenses of any
audit or court proceedings, including reasonable attorneys' fees, shall be
allowed as administrative expenses of the trust.
3.05-3 If the Company does not object to an accounting within the time
provided, the account shall be settled for the period covered by it.
3.05-4 When an account is settled, it shall be final and binding on all
parties, including all Participants and persons claiming through them.
PAGE 18 - UMBRELLA TRUST(TM) FOR EXECUTIVES
3.06 Expenses and Fees
3.06-1 The Trustee shall be reimbursed for all reasonable expenses and
shall be paid a reasonable fee fixed by agreement with the Company from time to
time. No increase in the fee shall be effective before sixty (60) days after the
Trustee gives written notice to the Company of the increase. The Trustee shall
notify the Company periodically of expenses and fees.
3.06-2 The Company shall pay trustee and other administrative and
valuation fees and expenses. If not so paid, these fees and expenses shall be
paid from the trust fund. The Company shall reimburse the trust fund within
thirty (30) days after receipt of a xxxx from the Trustee for any fees and
expenses paid out of the trust fund.
ARTICLE IV--LIABILITY
4.01 Indemnity
4.01-1 Subject to such limitations as may be imposed by applicable law,
the Company shall indemnify and hold harmless the Trustee from any claim, loss,
liability or expense arising from any action or inaction in administration of
this trust based on direction or information from either the Company, Committee,
any Investment Manager or any Expert, absent willful misconduct or bad faith.
4.02 Bonding
4.02-1 The Trustee need not give any bond or other security for
performance of its duties under this trust.
ARTICLE V--INSOLVENCY
5.01 Determination of Insolvency
5.01-1 The Company is Insolvent for purposes of this trust if:
(a) The Company is unable to pay its debts as they come due; or
(b) The Company is the subject of a pending proceeding as a debtor
under the federal Bankruptcy Code (or any successor federal statute).
5.01-2 The Company shall promptly give notice to the Trustee upon
becoming Insolvent. The Chief Executive Officer of the Company or the Board
shall be obligated to give such notice. If the Trustee receives such notice or
receives from any other person claiming to be a creditor of the Company a
written allegation that the Company is Insolvent, the Trustee shall
independently determine whether such insolvency exists. The expenses of such
determination shall be allowed as administrative expenses of the trust.
5.01-3 The Trustee shall continue making payments from the trust fund to
Participants and beneficiaries under the Plans while it is determining the
existence of insolvency. Such payments shall cease and the Trustee shall
commence Insolvency Administration under 5.02 upon the earlier of:
PAGE 19 - UMBRELLA TRUST(TM) FOR EXECUTIVES
(a) A determination by the Trustee or a court of competent
jurisdiction that the Company is Insolvent; or
(b) Thirty (30) days after the notice or allegation of insolvency is
received under 5.01-2, unless the Trustee or a court of competent
jurisdiction has determined that the Company is not Insolvent since
receipt of such notice or allegation.
5.01-4 The Trustee shall have no obligation to investigate the financial
condition of the Company prior to receiving a notice or allegation of insolvency
under 5.01-2.
5.02 Insolvency Administration
5.02-1 During Insolvency Administration, the Trustee shall hold the
trust fund for the benefit of the creditors of the Company and make payments
only in accordance with 5.02-2. The Participants and beneficiaries shall have no
greater rights than general creditors of the Company. The Trustee shall continue
the investment of the trust fund in accordance with 2.02.
5.02-2 The Trustee shall make payments out of the trust fund in one (1)
or more of the following ways:
(a) To creditors in accordance with instructions from a court, or a
person appointed by a court, having jurisdiction over the Company's
condition of insolvency;
(b) To Participants and beneficiaries in accordance with such
instructions; or
(c) In payment of its own fees or expenses.
5.02-3 The Trustee shall have a priority claim against the trust fund
with respect to its own fees and expenses.
5.03 Termination of Insolvency Administration
5.03-1 Insolvency Administration shall terminate when the Trustee
determines that the Company:
(a) Is not Insolvent, in response to a notice or allegation of
insolvency under 5.01-2;
(b) Has ceased to be Insolvent; or
(c) Has been determined by a court of competent jurisdiction not to
be Insolvent or to have ceased to be Insolvent.
5.03-2 Upon termination of Insolvency Administration under 5.03-1, the
trust fund shall continue to be held for the benefit of the Participants and
beneficiaries under the Plans. Benefit payments due during the period of
Insolvency Administration shall be made as soon as practicable, together with
interest from the due dates at the following rates:
(a) For the Deferred Compensation Plan, the rate credited on the
Participant's account under the Plan.
PAGE 20 - UMBRELLA TRUST(TM) FOR EXECUTIVES
(b) For the Supplemental Executive Retirement Plan, a rate equal to
the interest rate fixed by the Pension Benefit Guaranty Corporation for
valuing immediate annuities in the preceding month.
5.04 Creditors' Claims During Solvency
5.04-1 During periods of Solvency the Trustee shall hold the trust fund
exclusively to pay Plan benefits and fees and expenses of the trust until all
Plan benefits have been paid. Creditors of the Company shall not be paid during
Solvency from the trust fund, which may not be seized by or subjected to the
claims of such creditors in any way.
5.04-2 A period of Solvency is any period not covered by 5.02.
ARTICLE VI--SUCCESSOR TRUSTEES
6.01 Resignation and Removal
6.01-1 The Trustee may resign at any time by notice to the Company,
which shall be effective in sixty (60) days unless the Company and the Trustee
agree otherwise.
6.01-2 The Trustee may be removed by the Company on sixty (60) days'
written notice or shorter notice accepted by the Trustee. After a Special
Circumstance the Trustee may be removed only with the Written Consent of
Participants.
6.01-3 When resignation or removal is effective, the Trustee shall begin
transfer of assets to the successor Trustee immediately. The transfer shall be
completed within sixty (60) days, unless the Company extends the time limit.
6.01-4 If the Trustee resigns or is removed, the Company shall appoint a
successor by the effective date of resignation or removal under 6.01-1 or
6.01-2. After a Special Circumstance a successor Trustee may be appointed only
with the Written Consent of Participants. If no such appointment has been made,
the Trustee may apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of the Trustee in connection with
the proceeding shall be allowed as administrative expenses of the trust.
6.02 Appointment of Successor
6.02-1 The Company may appoint any national or state bank or trust
company that is unrelated to the Company as a successor to replace the Trustee
upon resignation or removal. The appointment shall be effective when accepted in
writing by the new Trustee, which shall have all of the rights and powers of the
former Trustee, including ownership rights in the trust assets. The former
Trustee shall execute any instruments necessary or reasonably requested by the
Company or the successor Trustee to evidence the transfer. After a Special
Circumstance a successor Trustee may be appointed only with the Written Consent
of Participants.
6.02-2 The successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing trust assets, subject to
Article II. The successor Trustee shall not be responsible for, and the Company
shall indemnify and hold harmless the successor Trustee
PAGE 21 - UMBRELLA TRUST(TM) FOR EXECUTIVES
from any claim or liability because of, any action or inaction of any prior
Trustee or any other past event, any existing condition or any existing assets.
6.03 Accountings; Continuity
6.03-1 A Trustee who resigns or is removed shall submit a final
accounting to the Company as soon as practicable. The accounting shall be
received and settled as provided in 3.05 for regular accountings.
6.03-2 No resignation or removal of the Trustee or change in identity of
the Trustee for any reason shall cause a termination of the Plans or this trust.
ARTICLE VII--GENERAL PROVISIONS
7.01 Interests Not Assignable
7.01-1 The interest of a Participant in the trust fund may not be
assigned, pledged or otherwise encumbered, seizer by legal process, transferred
or subjected to the claims of the Participant's creditors in any way.
7.01-2 The Company may not create a security interest in the trust fund
in favor of any of its creditors. The Trustee shall not make payments from the
trust fund of any amounts to creditors of the Company other than Participants,
except as provided in 5.02.
7.01-3 The Participants shall have no interest in the assets of the
trust fund beyond the right to receive payment of Plan benefits and
reimbursement of expenses from such assets subject to the instructions during
Insolvency referred to in 5.02. During Insolvency Administration the
Participants' rights to trust assets shall not be superior to those of any other
general creditors of the Company.
7.02 Amendment
7.02-1 The Company and the Trustee may amend this Trust Agreement at any
time by a written instrument executed by both parties. Except as provided below,
any such amendment may be made only with the Written Consent of Participants.
Notwithstanding the foregoing, any such amendment may be made by written
agreement of the Company and the Trustee without the Written Consent of
Participants if such amendment will not have a material adverse effect on the
rights of any Participant hereunder or, prior to a Special Circumstance, is
necessary to comply with any laws, regulations or other legal requirements.
7.03 Applicable Law
7.03-1 This trust shall be governed, construed and administered
according to the laws of Illinois, except as preempted by ERISA.
7.04 Agreement Binding on All Parties
7.04-1 This Trust Agreement shall be binding upon the heirs, personal
representatives, successors and assigns of any and all present and future
parties.
PAGE 22 - UMBRELLA TRUST(TM) FOR EXECUTIVES
7.05 Notices and Directions
7.05-1 Any notice or direction under this Trust Agreement shall be in
writing and shall be effective when actually delivered or, if mailed, when
deposited postpaid as first-class mail. Mail to a party shall be directed to the
address stated below or to such other address as either party may specify by
notice to the other party. Notices to the Committee shall be sent to the address
of the Company. Notices to Participants who have submitted claims under 3.03
shall be mailed to the address shown in the claim submission. Until notice is
given to the contrary, notices to the Company and the Trustee shall be addressed
as follows:
Company: North Valley Bancorp
Administrative Offices
000 Xxxx Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Trustee: Xxxxxx Trust and Savings Bank
Personal Trust and Asset Management Group
000 Xxxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
7.06 No Implied Duties
7.06-1 The duties of the Trustee shall be those stated in this trust,
and no other duties shall be implied.
7.07 Gender, Singular and Plural
7.07-1 All pronouns and any variations thereof shall be deemed to refer
to the masculine or feminine, as the identity of the person or persons may
require. As the context may require, the singular may be read as the plural and
the plural as the singular.
ARTICLE VIII--INSURER
8.01 Insurer Not a Party
8.01-1 The Insurer shall not be deemed to be a party to this Trust
Agreement, and its obligations shall be measured and determined solely by the
terms of its Contracts and other agreements executed by it.
8.02 Authority of Trustee
8.02-1 The Insurer shall accept the signature of the Trustee on any
documents or papers executed in connection with such Contracts. The signature of
the Trustee shall be conclusive proof
PAGE 23 - UMBRELLA TRUST(TM) FOR EXECUTIVES
to the Insurer that the person on whose life an application is being made is
eligible to have such Contract issued on his life and is eligible for a Contract
of the type and amount requested.
8.03 Contract Ownership
8.03-1 The Insurer shall deal with the Trustee as the sole and absolute
owner of the trust's interests in such Contracts and shall have no obligation to
inquire whether any action or failure to act on the part of the Trustee is in
accordance with or authorized by the terms of the Plans or this Trust Agreement.
8.04 Limitation of Liability
8.04-1 The Insurer shall be fully discharged from any and all liability
for any action taken or any amount paid in accordance with the direction of the
Trustee and shall have no obligation to see to the proper application of the
amounts so paid. The Insurer shall have no liability for the operation of this
Trust Agreement or the Plans, whether or not in accordance with their terms and
provisions.
8.05 Change of Trustee
8.05-1 The Insurer shall be fully discharged from any and all liability
for dealing with a party or parties indicated on its records to be the Trustee
until such time as it shall receive at its home office written notice of the
appointment and qualification of a successor Trustee.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Agreement to be executed by their respective duly authorized officers on the
dates set forth below.
NORTH VALLEY BANCORP
By: X.X. Xxxxxx
----------------------------------
Its: /s/ President and CEO
----------------------------------
Executed: May 10 , 1995
------------------------ -------
XXXXXX TRUST & SAVINGS BANK
By: Xxxx X. Xxxxxxx
----------------------------------
Its: /s/ Vice President
----------------------------------
Executed: May 5 , 1995
------------------------ -------
PAGE 24 - UMBRELLA TRUST(TM) FOR EXECUTIVES
APPENDIX A
Assumptions and Methodology for
Calculations Required Under 2.01 and 2.04
1. The liability for benefits under each Plan will be calculated using two (2)
different assumptions as to when Participants terminate service:
(a) As of the applicable date under 2.01-3 or 2.04, and
(b) Twenty-four (24) months after the applicable date, assuming future
compensation continues at current levels, and future deferrals under deferred
compensation plans continue pursuant to prior elections.
The liability for accrued benefits under each Plan will be the greater of the
liabilities calculated in accordance with (a) and (b) above.
2. Calculations will be based upon the most valuable optional form of payment
available to the Participant.
3. The liability for benefits under deferred compensation or other defined
contribution Plans shall be equal to the deferral or other account balances
(vested and unvested) of Participants as of the applicable date, plus
projected deferrals expected to be made within twenty-four (24) months after
the applicable date pursuant to prior elections. Account balances of
Participants under a Plan shall be calculated based on crediting the highest
rate of interest which may become payable to Participants under the Plan.
4. The liability for benefits under other Plans shall be equal to the present
value of accrued benefits (vested and unvested) of Participants as of the
relevant dates under l(a) or (b) above, discounted to the applicable date at
a rate equal to the immediate annuity rate set forth in Table I of Appendix B
to 29 CFR 269 plus fifty (50) basis points per annum.
5. The liability for benefits under all Plans shall also include the present
value (discounted to the applicable date at a rate equal to the immediate
annuity rate set forth in Table I of Appendix B to 29 CFR 269 plus fifty (50)
basis points per annum) of any survivor benefits which exceed the account
balances or other accrued benefits of Participants and are not covered by
death benefits payable under insurance contracts held in the Trust.
6. No mortality is assumed prior to the commencement of benefits, except for
purposes of calculating any additional accrued liability under paragraph 5
above. Future mortality is assumed to occur in accordance with the 1983 Group
Annuity Mortality Table Male Rates after the commencement of benefits.
EXHIBIT A.1
APPENDIX A
Assumptions and Methodology for
Calculations Required Under 2.01 and 2.04
(Continued)
7. The present value of amounts under subparagraphs (a) (with respect to defined
benefit plans), (b), (c) and (d) of 2.01-3 shall be determined using a discount
rate equal to the immediate annuity rate set forth in Table I of Appendix B to
29 CFR 269 plus fifty (50) basis points per annum.
8. Where left undefined above, calculations will be performed in accordance with
generally accepted actuarial principles.
EXHIBIT A.2
