Exhibit 10 (n)
TRUST AGREEMENT
THIS TRUST
AGREEMENT (hereinafter referred to as "Agreement") made as of this
19th day of January 1990, by and between Tasty Baking Company, a
Pennsylvania Corporation (hereinafter referred to as "Company"),
and Meridian Trust Company (hereinafter referred to as
"Trustee").
W I T N E S S E T H:
WHEREAS, On
October 16, 1987, the Company established a Retirement Plan for
Directors (hereinafter referred to as "Plan"), attached hereto as
Exhibit "A", which grants retirement benefits to members of the
Board of Directors of the Company (hereinafter referred to as
"Directors"); and
WHEREAS, the
Company wishes to establish a trust (hereinafter called "Trust")
and to transfer to the Trust, but only upon a Potential Change of
Control of the Company, a certain sum of money which shall be held
therein, subject to the claims of the Company's creditors in the
event of the Company's insolvency, until paid to the Directors as
beneficiaries of the Trust (hereinafter referred to as "Trust
Beneficiaries") as retirement income benefits (hereinafter referred
to as "Benefits") in such amount and manner and at such times as
specified in the Plan; and
WHEREAS, the
Trustee is independent of, and is not subject to the direct or
indirect control of, either the Company or the Trust
Beneficiaries;
NOW, THEREFORE,
the parties do hereby establish the Trust and agree that the Trust
shall be comprised, held and disposed of as follows:
ARTICLE I: TRUST FUND.
A. Except as
provided in Article IV, the Trust hereby established shall be
irrevocable.
B. The Trust is
intended to be a grantor trust, within the meaning of Section 671
of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
C. The principal
of the Trust, and any earnings thereon which are not paid to the
Company as provided in Article IV and Article V, shall be held
separate and apart from other funds of the Company and shall be
used exclusively for the uses and purposes herein set forth.
Neither the Trust Beneficiaries, nor the Plan, shall have any
preferred claim on, or any beneficial ownership interest in, any
assets of the Trust prior to the time such assets are paid to the
Trust Beneficiaries as Benefits as provided in Article III of this
Agreement. All rights created under the Plan and this Agreement in
the Trust Beneficiaries shall be mere unsecured contractual rights
against the Company.
ARTICLE II: CONTRIBUTIONS BY THE
COMPANY.
A. Upon a
Potential Change in Control (as hereinafter defined) of the
Company, the Company shall transfer to the Trustee that sum of
money which is sufficient to purchase from an insurance company
(the "Insurance Company") with a rating of B or better in Best's
annuities which will provide the benefits in the amounts and at the
times due to all Trust Beneficiaries of the Plan. For purposes of
determining the purchase price of such annuity policies, the
retirement date for the Directors who are Trust Beneficiaries shall
be presumed to be the date upon which the Potential Change in
Control occurred.
B. A Potential
Change in Control occurs when the Company (1) has entered into an
agreement, the consummation of which would result in the occurrence
of a Change in Control of the Company; (2) any person or entity has
publicly announced an intention to take or consider taking actions
which if consummated would constitute a Change in Control of the
Company; (3) any person or entity, excluding persons or entities
who on the date hereof have such "beneficial ownership", has become
the "beneficial owner" (as determined pursuant to Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Company representing 10% or more
of the combined voting power of the Company's then outstanding
securities; or (4) the Board of Directors of the Company has
adopted a resolution to the effect that such a Potential Change in
Control of the Company has occurred.
C. A Change in
Control is that change in control of the Company which is of a
nature which would be required to be reported to the Securities and
Exchange Commission pursuant to Schedule 14A of Regulation 14A or
any successor provision (whether or not the Company is then subject
to such reporting requirements). A Change in Control will be deemed
to have occurred if any person other than persons or entities who
on the date hereof have such "beneficial ownership", is or becomes
the "beneficial owner" (as determined pursuant to Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934) of 25% or more of
the combined voting power of the outstanding securities of the
Company, or if during any two consecutive year periods, the
directors at the beginning of such periods cease for any reason
during the two-year period to constitute a majority of the Board of
Directors of the Company.
D. If a Change
in Control occurs, the Trustee shall purchase an annuity contract
with respect to each Trust Beneficiary providing monthly payments
to the Trustee of amounts due the Trust Beneficiary under the Plan.
Written notice of such event received by the Trustee from the Board
of Directors or the Chief Executive Officer of the Company shall be
sufficient evidence of a Change of Control. Upon a Change in
Control, the Company shall contribute to the Trust such additional
sums as shall reflect a recomputation of the Trust Beneficiaries'
Benefits as of the date of the commencement of payment of such
Benefits.
E. The Trustee
shall cause each annuity contract to contain a provision requiring,
on notice to the Insurance Company from the Trustee, the cessation
of payments in the event the Company becomes insolvent within the
meaning of Article IV of this Trust Agreement and the payment of
such annuities or the cash surrender value thereof to the person or
entity entitled thereto under Article IV.B.2 of this Trust
Agreement.
F. If a Change
in Control does not occur within one year of the Potential Change
in Control, then all sums contributed to the Trust by the Company
shall be returned to the Company together with any income earned
thereon.
ARTICLE III: PAYMENT TO TRUST
BENEFICIARIES.
A. The Trustee
shall make payments of Benefits to the Trust Beneficiaries from the
assets of the Trust in accordance with the terms set forth in the
Plan, if and to the extent (i) assets are available for
distribution; and (ii) at the time of each payment the Trustee does
not have actual knowledge of the insolvency of the Company as
provided in Article IV.C.
B. If the assets
of the Trust, which are not paid to the Company as provided in
Article IV, are not sufficient to make payments to the Trust
Beneficiaries in accordance with the terms set forth in the Plan,
the Trustee shall 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 in
insolvent. Pending such determination, the Trustee shall notify the
Insurance Company to discontinue payments to the Trust and the
Trustee shall hold the Trust assets for the benefit of the
Company's general creditors. The Trustee shall notify the Insurance
Company to resume payments to the Trust and the Trustee shall
resume payments to the Trust Beneficiaries in accordance with
Article III of this Agreement only after the Trustee has determined
that the Company is not insolvent (or is no longer insolvent, if
the Trustee initially determined the Company to be
insolvent).
3. Unless the
Trustee has actual knowledge of the Company's insolvency, the
Trustee shall have no duty to inquire whether the Company is
insolvent and shall continue making payments to Trust Beneficiaries
until he has such actual knowledge. The Trustee may in all events
rely on such evidence concerning the Company's solvency as may be
furnished to the Trustee which will give the Trustee a reasonable
basis for making a determination concerning the Company's
solvency.
4. Nothing in
this Trust Agreement shall in any way diminish any rights of a
Trust Beneficiary to pursue his rights as a general creditor of the
Company with respect to his Benefits.
C. If the
Insurance Company discontinues payments to the Trust pursuant to
Article IV.B, of the Agreement, and subsequently resumes such
payments, the first payment to the Trust Beneficiaries following
such discontinuance shall include the aggregate amount of all
payments which would have been made to the Trust Beneficiaries
(together with interest on the amount delayed calculated at the
long-term applicable federal rate) in accordance with the terms set
forth in the Plan during the period of such discontinuance, less
the aggregate amount of any payments made to the Trust
Beneficiaries by the Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
ARTICLE V: PAYMENT TO THE
COMPANY.
Except as
provided in Article II.F and Article IV, the Company may not direct
the Trustee to return to the Company or to divert to others any of
the Trust assets before all payments have been made to the Trust
Beneficiaries pursuant to the terms set forth in the
Plan.
ARTICLE IV: ACCOUNTING BY THE
TRUSTEE.
A. The Trustee
shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be
done, including such specific records as shall be agreed upon in
writing between t
