Exhibit 10 (k)
1/19/90
TRUST
AGREEMENT
THIS TRUST AGREEMENT (hereinafter referred to as
“Agreement”) made as of this 17th day of November 1989,
by and between Tasty Baking Company, a Pennsylvania corporation
(hereinafter referred to as “Company”), and Meridian
Trust Company (hereinafter referred to as
“Trustee”).
W I T N E S S E T H
:
WHEREAS, the Company has established a
Supplemental Executive Retirement Plan (hereinafter referred to as
“Plan”), attached hereto as Exhibit “A”,
which grants supplemental retirement benefits to certain executives
of the Company (hereinafter referred to as “Employees”)
and their spouses under certain conditions; and
WHEREAS, the Company wishes to establish a trust
(hereinafter called “Trust”) and to transfer to the
Trust, but only upon a Potential Change of Control of the Company,
a certain sum of money which shall be held therein., subject to the
claims of the Company’s creditors in the event of the
Company’s insolvency, until paid to the Employees or their
spouses as beneficiaries of the Trust (hereinafter referred to as
“Trust Beneficiaries”) as supplemental retirement
income benefits (hereinafter referred to as “Supplemental
Benefits”) in such amount and manner and at such times as
specified in the Plan; and
WHEREAS, the Trustee is independent of, and is
not subject to the direct or indirect control of, either the
Company or the Trust Beneficiaries;
NOW, THEREFORE, the parties do hereby establish
the Trust and agree that the Trust shall be comprised, held and
disposed of as follows:
ARTICLE I: TRUST
FUND .
A. Except as
provided in Article IV, the Trust hereby established shall be
irrevocable.
B. The Trust is
intended to be a grantor trust, within the meaning of Section 671
of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
C. The
principal of the Trust, and any earnings thereon which are not paid
to the Company as provided in Article IV and Article V, shall be
held separate and apart from other funds of the Company and shall
be used exclusively for the uses and purposes herein set
forth.
Neither the
Trust Beneficiaries, nor the Plan, shall have any preferred claim
on, or any beneficial ownership interest in, any assets of the
Trust prior to the time such assets are paid to the Trust
Beneficiaries as Supplemental Benefits as provided in Article III
of this Agreement. All rights created under the Plan and
this Agreement in the Trust Beneficiaries shall be mere unsecured
contractual rights against the Company.
ARTICLE II:
CONTRIBUTIONS BY THE COMPANY .
A. Upon a
Potential-Change in Control (as hereinafter defined) of the
Company, the Company shall transfer to the Trustee that sum of
money which is sufficient to purchase from an insurance company
(the “Insurance Company”) with a rating of B or better
in Best’s annuities which will provide the benefits in the
amounts and at the times due to all Trust Beneficiaries of the
Plan. For purposes of determining the purchase price of
such annuity policies, the retirement date for Employees who are
Trust Beneficiaries shall be presumed to be the date upon which the
Potential Change in Control occurred.
B. A Potential
Change in Control occurs when the Company (1) has entered into an
agreement, the consummation of which would result in the occurrence
of a Change in Control of the Company; (2) any person or entity has
publicly announced an intention to take or consider taking actions
which if consummated would constitute a Change in Control of the
Company; (3) any person or entity, excluding persons or entities
who on the date hereof have such “beneficial
ownership”, has become the “beneficial owner” (as
determined pursuant to Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934), directly or indirectly, of securities of the
Company representing 10% or more of the combined voting power of
the Company’s then outstanding securities; or (4) the Board
of Directors of the Company has adopted a resolution to the effect
that such a Potential Change in Control of the Company has
occurred.
C. A Change in
Control is that change in control of the Company which is of a
nature which would be required to be reported to the Securities and
Exchange Commission pursuant to Schedule 14A of Regulation 14A or
any successor provision (whether or not the Company is then subject
to such reporting requirements). A Change in Control
will be deemed to have occurred if any person other than persons or
entities who on the date hereof have such “beneficial
ownership”, is or becomes the “beneficial owner”
(as determined pursuant to Sections 13{d) and 14(d) of the
Securities Exchange Act of 1934) of 25% or more of the combined
voting power of the outstanding securities of the Company, or if
during any two consecutive year periods, the directors at the
beginning of such periods cease for any reason during the two-year
period to constitute a majority of the Board of Directors of the
Company.
D. If a Change
in Control occurs, the Trustee shall purchase an annuity contract
with respect to each Trust Beneficiary who is an Employee providing
monthly payments to the Trustee of amounts due the Trust
Beneficiary under the Plan. Written notice of such event received
by the Trustee from the Board of Directors or the Chief Executive
Officer of the Company shall be sufficient evidence of a Change of
Control. In the event a Trust Beneficiary is the spouse
of a deceased Employee, the commencement date of the annuity shall
be the date of the Change in Control. Upon a Change of
Control, the Company shall contribute to the Trust such additional
sums as shall reflect a recomputation of the Trust Beneficiaries
Supplemental Benefits as of the date of the commencement of payment
of such Benefits.
E. The Trustee
shall cause each annuity contract to contain a provision requiring,
on notice to the Insurance Company from the Trustee, the cessation
of payments in the event the Company becomes insolvent within the
meaning of Article IV of this Trust Agreement and the payment of
such annuities or the cash surrender value thereof to the person or
entity entitled thereto under Article IV.B.2 of this Trust
Agreement.
F. If a Change
in Control does not occur within one year of the Potential Change
in Control, then all sums contributed to the Trust by the Company
shall be returned to the Company together with any income earned
thereon.
ARTICLE III: PAYMENT
TO TRUST BENEFICIARIES .
A. The Trustee
shall make payments of Supplemental Benefits to the Trust
Beneficiaries from the assets of the Trust in accordance with the
terms set forth in the Plan, if and to the extent (i) assets are
available for distribution; and (ii) at the time of each payment
the Trustee does not have actual knowledge of the insolvency of the
Company as provided in Article IV.C.
B. If the
assets of the Trust, which are not paid to the Company as provided
in Article IV, are not sufficient to make payments to the Trust
Beneficiaries in accordance with the terms set forth in the Plan,
the Trustee shall abate the payments pro rata and the Company shall
pay the balance of any such payments as they fall due.
ARTICLE IV:
TRUSTEE’S RESPONSIBILITY WHEN THE COMPANY IS INSOLVENT
.
A. The Company
shall be considered insolvent for the purposes of this Agreement if
(i) the Company is unable to pay its debts as they mature, or (ii)
the Company is subject to a pending proceeding as a debtor under
the Bankruptcy Code.
B. At all times
during the continuance of this Trust, the principal and income of
the Trust shall be subject to claims of general creditors of the
Company as hereinafter set forth.
1. At such time
as the Trustee has actual knowledge, or has determined, that the
Company is insolvent, the Trustee shall deliver the Trust assets to
satisfy such claims in such manner as a court of competent
jurisdiction may direct.
2. The Board of
Directors and the Chief Executive Officer of the Company shall
inform the Trustee in the event the Company becomes
insolvent. If the Company or a person claiming to be a
creditor of the Company alleges in writing to the Trustee that the
Company has become insolvent, the Trustee shall independently
determine, within 30 days after receipt of such notice, whether the
Company is insolvent. Pending such determination, the
Trustee shall notify the Insurance Company to discontinue payments
to the Trust and the Trustee shall hold the Trust assets for the
benefit of the Company’s general creditors. The
Trustee shall notify the Insurance Company to resume payments to
the Trust and the Trustee shall resume payments to the Trust
Beneficiaries in accordance with Article III of this Agreement only
after the Trustee has determined that the Company is not insolvent
(or is no longer insolvent, if the Trustee initially determined the
Company to be insolvent).
3. Unless the
Trustee has actual knowledge of the Company’s insolvency, the
Trustee shall have no duty to inquire whether the Company is
insolvent and shall continue making payments to Trust Beneficiaries
until he has such actual knowledge. The Trustee may in
all events rely on such evidence concerning the Company’s
solvency as may be furnished to the Trustee which will give the
Trustee a reasonable basis for making a determination concerning
the Company’s solvency.
4. Nothing in
this Trust Agreement shall in any way diminish any rights of a
Trust Beneficiary to pursue his rights as a general creditor of the
Company with respect to his Supplemental Benefits.
C. If the
Insurance Company discontinues payments to the Trust pursuant to
Article IV.B, of this Agreement, and subsequently resumes such
payments, the first payment to the Trust Beneficiaries following
such discontinuance shall include the aggregate amount of all
payments which would have been made to the Trust Beneficiaries
(together with interest on the amount delayed calculated at the
long-term applicable federal rate) in accordance with the terms set
forth in the Plan during the period of such discontinuance, less
the aggregate amount of any payments made to the Trust
Beneficiaries by the Company i
