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EXHIBIT 10.14
XXXXX INSTRUMENTS CORP.
EMPLOYEE STOCK OWNERSHIP TRUST AGREEMENT
THIS AGREEMENT, by and between XXXXX INSTRUMENTS CORP. (a California
corporation), hereinafter referred to as the "Company," and XXXXX FARGO BANK,
N.A., hereinafter referred to as the "Trustee," to be effective as of March 1,
1996.
WITNESSETH:
WHEREAS, it is the policy of the Company to so finance and conduct its
operations as to enable its Employees to acquire stock ownership interests in
the Company; and
WHEREAS, the Company has adopted the XXXXX INSTRUMENTS CORP. EMPLOYEE
STOCK OWNERSHIP PLAN, hereinafter referred to as the "Plan," as a qualified
employee plan under Sections 401(a) and 4975(e)(7) of the Internal Revenue Code
of 1986, effective as of March 1, 1996; and
WHEREAS, the Trustee has been designated by the Company to serve as
trustee under the Plan and has agreed to so serve;
NOW, THEREFORE, the parties hereto do hereby establish the XXXXX
INSTRUMENTS CORP. EMPLOYEE STOCK OWNERSHIP TRUST and agree that the following
shall constitute the Trust Agreement:
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A. The Trust Assets. Employer Contributions shall be paid to the
Trustee from time to time in accordance with the provisions of the Plan. All
Employer Contributions and all investments thereof, together with all
accumulations, accruals, earnings and income with respect thereto, shall be held
by the Trustee in trust hereunder as the Trust Assets. Except as otherwise
provided in Paragraph B(6) of this Agreement, the Trust Assets shall be invested
by the Trustee as directed by the Committee (appointed by the Company to
administer the Plan) pursuant to the terms of the Plan and this Trust Agreement.
The Trustee shall not be responsible for the maintaining of the records of
Participants' Accounts under the Plan, for the administration of the Plan or for
the computation of, or collection of, Employer Contributions. The Trustee shall
hold, invest, reinvest, manage, administer and distribute the Trust Assets, as
directed by the Committee and as provided herein and under the Plan, for the
exclusive benefit of Participants (and their Beneficiaries).
B. Investment of Trust Assets.
(1) As directed by the Committee (except as otherwise provided
in Paragraph B(6) of this Agreement), the Trustee shall invest and reinvest the
Trust Assets primarily (or exclusively) in Company Stock, in accordance with the
terms of the Plan and this Agreement. The Trustee may invest and hold up to 100%
of the Trust Assets in Company Stock, if so directed by the Committee.
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(2) As directed by the Committee, the Trustee may also place Trust
Assets in various deposit accounts offered by any bank (including the Trustee)
or savings and loan association, invest in other securities or investments
desirable for the Trust, or in any kind of investment fund (including any common
trust fund maintained by the Trustee), or Trust Assets may be held temporarily
in cash.
(3) The Committee shall have the responsibility and liability for
the prudence of investments directed by it under this Paragraph B. The Committee
may delegate to the Trustee the responsibility for investing Trust Assets other
than Company Stock.
(4) The Trustee may invest and reinvest the Trust Assets, or any
part thereof, in any one or more investment trust funds regularly maintained by
the Trustee for common investment of trust funds, the Declaration of Trust
therefore being made hereby a part of this Trust Agreement, and notwithstanding
any other provisions hereof, the Trustee may commingle said investment with
assets similarly invested by trusts similar hereto, by investing the same as a
part of one or more of such investment trust funds, all according to said
Declarations of Trust as now constituted and as amended from time to time.
(5) In the event that the Committee directs the Trustee to dispose
of any Company Stock held as Trust Assets, under circumstances which require
registration and/or qualification of the securities under applicable Federal or
state securities laws, then the Company, at its own expense, will take, or cause
to be
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taken, any and all such actions as may be necessary or appropriate to effect
such registration and/or qualification.
(6) Notwithstanding the foregoing provisions of this Paragraph B
and the provisions of Paragraph C, the initial acquisition of Company Stock by
the Trust (using the proceeds of an Acquisition Loan from the Company) and the
incurring of the initial Acquisition Loan shall be effected by the Trustee
(without directions from the Committee) based upon the Trustee's determination
(in the exercise of its reasonable judgment) that such transaction is in the
best interests of Participants and is in compliance with all applicable
provisions of the Code and ERISA.
C. Trustee's Powers. As directed by the Committee, the Trustee shall
have the authority and power to:
(1) contract or otherwise enter into transactions for the purpose
of acquiring or selling Company Stock, including transactions with the Company
or any Company shareholder, subject to the provisions of Section 5(a) and (e) of
the Plan;
(2) borrow from any lender (including the Company and affiliates
of the Trustee) to finance the acquisition of Company Stock, giving its note as
Trustee with such reasonable interest and security for the loan as may be
appropriate or necessary; provided that any such borrowing shall comply with the
provisions of Section 5(b) of the Plan;
(3) vote any stocks (including Company Stock as provided in
Section 8 of the Plan), bonds or other securities held
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in the Trust, or otherwise consent to or request any action on the part of the
issuer in person or by proxy;
(4) sell, transfer, mortgage, pledge, lease or otherwise dispose
of, or grant options with respect to, any Trust Assets at public or private
sale;
(5) give general or specific proxies or powers of attorney with or
without powers of substitution;
(6) participate in reorganizations, recapitalizations,
consolidations, mergers and similar transactions with respect to Company Stock
or any other securities;
(7) exercise any options, subscription rights and conversion
privileges with respect to any Trust Assets;
(8) xxx, defend, compromise, arbitrate or settle any suit or legal
proceeding or any claim due it or on which it may be liable;
(9) exercise any of the powers of an owner with respect to the
Trust Assets;
(10) perform all acts which the Trustee shall deem necessary or
appropriate and exercise any and all powers and authority of the Trustee under
this Agreement.
The Committee may authorize the Trustee in writing to act on any matter
(or class of matters) with respect to which directions or instructions from the
Committee are called for hereunder without specific directions or other
instructions from the Committee.
D. Nominees. The Trustee may register any Company Stock or other
property held by it as Trust Assets hereunder in its own
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name or in the name of its nominees, with or without the addition of words
indicating that such securities are held in a fiduciary capacity, and may hold
any securities in bearer form; but the books and records of the Trustee shall at
all times reflect that all such investments are part of the Trust.
E. Records. The Trustee shall keep accurate and detailed accounts of
all investments, receipts and disbursements and other transactions of the Trust,
and all accounts, books and records relating thereto shall be open to inspection
by any person designated by the Committee or the Company at all reasonable
times. The Trustee shall maintain such records, make such computations and
perform such ministerial acts as the Committee may from time to time reasonably
request.
F. Reports. Within a reasonable period of time after the last day of
February of each Plan Year, or following the removal or resignation of the
Trustee, and as of any other date specified by the Committee, the Trustee shall
file a report with the Committee. This report shall show all purchases, sales,
receipts, disbursements and other transactions effected by the Trustee during
the year or period for which the report is filed, and shall contain an exact
description, the cost as shown on the Trustee's books, and the fair market value
as of the end of such period, of every asset held in the Trust and the amount
and nature of each liability of the Trust. The Trustee may rely without
liability upon the Fair Market Value of Company Stock determined by the
Committee based upon a valuation by an independent appraiser.
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G. Distributions. The Trustee shall make distributions from the Trust,
at such times and in such amounts of Company Stock and/or cash, to the person
entitled thereto under the Plan, as the Committee directs in writing. Any
undistributed portion of a Participant's Capital Accumulation under the Plan
shall be retained in the Trust until the Committee directs its distribution. If
distribution is directed in Company Stock, the Trustee or the Committee shall
cause the Company to issue an appropriate stock certificate to the person
entitled thereto, to be delivered to such person by the Committee; provided that
the Trustee and the Company shall comply with the provisions of the Plan
relating to the repurchase of Company Stock by the Trust or by the Company. Any
cash distribution shall be made by the Trustee's furnishing its check to the
Committee for delivery to the Participant (or Beneficiary).
H. Signatures. All communications required hereunder from the Company
or the Committee to the Trustee shall be in writing signed by an officer of the
Company or a member of the Committee authorized to sign on its behalf. The
Committee shall authorize one or more of its members to sign on its behalf all
communications required hereunder between the Committee and the Trustee. The
Company shall at all times keep the Trustee advised of the names and specimen
signatures of all members of the Committee and the individuals authorized to
sign communications on behalf of the Committee. The Trustee shall be fully
protected in relying on any such communication and shall not be required to
verify the accuracy or validity thereof unless it has reasonable grounds to
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doubt the authenticity of any signature. If, after request, the Trustee does not
receive instructions from the Committee on any matter in which instructions are
required hereunder, the Trustee shall act or refrain from acting as it may
determine. Except as otherwise specifically required by applicable law, the
Committee may sign any and all documents on behalf of the Plan and the Trust.
I. Expenses. The reasonable expenses incurred by the Trustee in the
performance of its duties, and all other proper administrative costs of the Plan
and Trust (including Trustee's fees), shall be charged to and paid out of the
Trust Assets. However, the Company may pay all or any portion of such expenses.
The Trustee shall be entitled to such reasonable compensation for its services
as may be agreed upon in writing from time to time between the Company and the
Trustee.
J. Liability of Trustee. The Trustee shall not be liable for any action
it takes or refrains from taking in accordance with proper directions of the
Committee. The Trustee shall not be required to pay interest on any portion of
the Trust Assets which is held uninvested at the direction of the Committee. The
Company shall fully indemnify the Trustee and hold it harmless from loss or
liability, including reasonable legal fees, which the Trustee sustains in
discharging its duties and responsibilities under this Agreement, unless such
loss or liability results from the Trustee's breach of fiduciary responsibility
under ERISA. This would include any nonrecoverable consideration paid to acquire
Company Stock from, or not received in selling Company
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Stock to, a "party in interest" or "disqualified person," which amount was later
determined part of "adequate consideration" or in excess thereof by the Internal
Revenue Service or other governmental authority.
K. Amendment and Termination. The Company (through its Board of
Directors) shall have the right at any time, by an instrument in writing, duly
executed and delivered to the Trustee, to modify, alter or amend this Agreement,
in whole or in part, and to terminate the Plan and Trust, in accordance with the
express provisions of Section 19 of the Plan. In no event, however, shall any
such amendment increase the duties, powers or liabilities of the Trustee
hereunder without its prior written consent.
L. Non-Reversion. Subject to the provisions of Paragraph K above and
Sections 4(d) and 19 of the Plan, this Trust is declared to be irrevocable, and
at no time shall any part of the Trust Assets revert to the Company or be used
for, or be diverted to, purposes other than for the exclusive benefit of
Participants (and their Beneficiaries). However, the Company may, by notice in
writing to the Trustee, direct that all or part of the Trust Assets be
transferred to a successor trustee under a trust which is for the exclusive
benefit of such Participants (and their Beneficiaries) and which satisfies the
requirements of Section 401(a) of the Code; and thereupon the Trust Assets, or
any part thereof, shall be paid over, transferred or assigned to said successor
trustee, free from the Trust created hereunder; provided, however, that no part
of the Trust Assets may be used to
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pay contributions of the Company under any other plan maintained
for the benefit of its Employees.
M. Resignation or Removal of Trustee. The Trustee may resign at any
time upon 60 days' written notice to the Company. The Trustee may be removed at
any time by the Company upon 30 days' written notice to the Trustee. The person
to whom notice is to be given may agree to waive the requirement of written
notice or to a shorter period of notice. Upon receipt of instructions or
directions from the Company or the Committee with which the Trustee is unable or
unwilling to comply, the Trustee may resign, upon notice in writing to the
Company given within a reasonable time under the circumstances then prevailing
after the receipt of such instructions or directions; and notwithstanding any
other provisions hereof, in that event the Trustee shall have no liability to
the Company, or to any Participant (or Beneficiary), for failure to comply with
such instructions or directions.
Upon resignation or removal of the Trustee, the Company's Board of
Directors shall appoint a successor trustee or trustees. The successor trustee
shall have the same powers and duties as are conferred upon the Trustee
hereunder, and the Trustee shall assign, transfer and pay over to the successor
trustee all the Trust Assets, together with such records or copies thereof as
may be necessary to the successor trustee.
N. Definition. The definition of certain terms in the Plan shall apply
to this Agreement wherever applicable. Each gender includes the other, and the
singular includes the plural.
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O. Acceptance. The Trustee hereby accepts this Trust and agrees to hold
the initial Trust Assets, and all additions and accretions thereto, subject to
all the terms and conditions of the Plan and this Agreement. In the event that
any provision of this Agreement shall be held illegal or invalid for any reason,
the illegality or invalidity thereof shall not affect the remaining provisions
of this Agreement, but shall be fully severable, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had never been
inserted herein.
P. Conflict Between Plan and Trust Agreement. If there is a conflict
between the terms of the Plan and this Agreement, the terms of this Agreement
shall be controlling with respect to the Trustee's powers, rights, duties and
liabilities.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Agreement to be executed on this 23rd day of April, 1996.
XXXXX INSTRUMENTS CORP. XXXXX FARGO BANK, N.A.
By /s/ XXXX X. XXXXXX By /s/
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Chairman & CEO
By /s/ XXXXX XXXXXXX By /s/
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President
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