EXHIBIT 10.38
AMENDED AND RESTATED
CONSOLIDATED FREIGHTWAYS, INC.
1993 NONQUALIFIED EMPLOYEE BENEFIT PLANS
TRUST AGREEMENT
(a) This Amended and Restated Agreement, effective this 1st
day of January, 1995, by and between CONSOLIDATED FREIGHTWAYS,
INC., a Delaware corporation (Company) and MELLON BANK, N.A.,
(Trustee);
(b) WHEREAS, Company has adopted the nonqualified deferred
compensation Plan(s) as listed in Appendix A;
(c) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the
individuals participating in such Plan(s);
(d) WHEREAS, Company now wishes to establish and contribute
to this trust (the "Trust") assets that shall be held therein,
subject to the claims of Company's creditors in the event of
Company's Insolvency, as herein defined, until paid to Plan
participants and their beneficiaries in such manner and at such
times as specified in the Plan(s);
(e) WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not affect
the status of the Plan(s) as an unfunded plan maintained for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title I
of the Employee Retirement Income Security Act of 1974;
(f) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of funds
to assist it in the meeting of its liabilities under the Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust
(a) Company hereby deposits with Trustee in trust $100.00,
which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust
Agreement.2
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of
1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) Within 90 days following the end of each Plan Year, and
within 30 days following any change in control, as defined in
Section 14(e), below, Company shall irrevocably deposit additional
cash or other property (which shall not be Company stock) to the
Trust in an appropriate amount sufficient to pay each Plan
participant or beneficiary the benefits payable pursuant to the
terms of the Plan(s) as of the close of such Plan Year based on the
distributions elected by Plan participants other than upon
termination of employment, or as of the date of such change in
control (as the case may be).
(f) Trustee accepts the Trust established under this Trust
Agreement on the terms and subject to the provisions set forth
herein, and it agrees to discharge and perform fully and faithfully
all of the duties and obligations imposed upon it under this Trust
Agreement.
Section 2. Payments to Plan Participants and Their
Beneficiaries
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each
Plan participant (and his or her beneficiaries), that provides a
formula or other instructions acceptable to Trustee for determining
the amounts so payable, the form in which such amount is to be paid
(as provided for or available under the Plan(s)), and the time of
commencement for payment of such amounts. Except as otherwise
provided in Section 2(c) below or elsewhere herein, Trustee shall
make payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule and shall make payments
of legal fees and expenses as required by the Plan(s). The Trustee
shall make provisions for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect to
the payment of benefits pursuant to the terms of the Plan(s) and
shall pay amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and paid
by the Company. Company shall provide Trustee with the rates at
which taxes are to be withheld and shall be responsible for
providing payees with all required state and federal notices
regarding withholding. Company shall also be responsible for
depositing all withheld amounts with the appropriate taxing
authorities and for providing each Plan participant (or
beneficiary) with the appropriate information evidencing such
withholding payments.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits or legal fees and expenses under the
Plan(s) shall be determined by Company or such party as it shall
designate under the Plan(s), and any claim for such benefits shall
be considered and reviewed under the procedures set out in the
Plan(s).
(c) Company may make payment of benefits and legal fees and
expenses directly to Plan participants or their beneficiaries as
they become due under the terms of the Plan(s). Company shall
notify Trustee of its decision to make payment of benefits or legal
fees and expenses directly prior to the time amounts are payable to
participants or their beneficiaries. In addition, if the principal
of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Plan(s),
Company shall make the balance of each such payment as it falls
due. Trustee shall notify Company when principal and earnings are
not sufficient.
(d) Trustee shall not be liable for any failure by Company
to provide contributions sufficient to pay all benefits and legal
fees and expenses under the Plan(s) in full.
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary When Company Is Insolvent
(a) Trustee shall cease payment of benefits and legal fees
and expenses to Plan participants and their beneficiaries if the
Company is Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a
pending proceeding as a debtor under the United States Bankruptcy
Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in writing
of Company's Insolvency. If a person claiming to be a creditor of
Company alleges in writing to Trustee that Company has become
Insolvent, Trustee shall determine whether Company is Insolvent
and, pending such determination, Trustee shall discontinue payment
of benefits and legal fees and expenses to Plan participants or
their beneficiaries. In all cases, Trustee shall be entitled to
conclusively rely upon the written certification of the Board of
Directors or the Chief Executive Officer of the Company when
determining whether the Company is solvent.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is Insolvent,
Trustee shall have no duty to inquire whether Company is Insolvent.
Trustee may in all events rely on such evidence concerning
Company's solvency as may be furnished to Trustee and that provides
Trustee with a reasonable basis for making a determination
concerning Company's solvency.
(3) If at any time Trustee has determined that Company
is Insolvent, Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the assets of
the Trust for the benefit of Company's general creditors. Nothing
in this Trust Agreement shall in any way diminish any rights of
Plan participants or their beneficiaries to pursue their rights as
general creditors of Company with respect to benefits due under the
Plan(s) or otherwise.
(4) Trustee shall resume the payment of benefits and
legal fees and expenses to Plan participants or their beneficiaries
in accordance with Section 2 of this Trust Agreement only after
Trustee has determined that Company is not Insolvent (or is no
longer Insolvent).
(5) Provided that there are sufficient assets, if
Trustee discontinues the payment of benefits and legal fees and
expenses from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all
payments due to Plan participants or their beneficiaries under the
terms of the Plan(s) for the period of such discontinuance, less
the aggregate amount of any payments made to Plan participants or
their beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company
(a) Except as provided in Section 3 hereof or in
subsection (b) below, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any of
the Trust assets before all payment of benefits have been made to
Plan participants and their beneficiaries pursuant to the terms of
the Plan(s).
(b) If Company elects to make payment of benefits directly
to Plan participants or their beneficiaries pursuant to the terms
of Section 2(c), above, the Trustee shall distribute to Company
within 30 days of a request for payment an amount equal to each
such payment made by Company, excluding any legal fees or expenses.
Section 5. Investment and Administration of the Trust
(a) Trustee shall have the power:
(i) To invest the assets of the Trust as directed
by the Board of Directors of Company or a
Committee thereof. In no event, shall the
Trustee be instructed to invest in real
estate, options or future contracts. If the
Board wants to invest all or part of the
assets in collective funds, the Company shall
add to this Trust Agreement such collective
fund language as may from time to time be
required by the Trustee. Such Board reserves
the right to delegate this investment
authority to Trustee or an investment manager;
(ii) To collect and receive any and all money and
other property due to the Trust and to give
full discharge therefor;
(iii) To settle, compromise or submit to arbitration
any claims, debts or damages due or owing to
or from the Trust; to commence or defend suits
or legal proceedings to protect any interest
of the Trust; and to represent the Trust in
all suits or legal proceedings in any court or
before any other body or tribunal;
(iv) Generally to do all acts, whether or not
expressly authorized, which Trustee may
deem necessary or desirable for the protection
of the Trust.
(b) Persons dealing with Trustee shall be under no obligation
to see to the proper application of any money paid or property
delivered to Trustee or to inquire into Trustee's authority as to
any transaction.
(c) Company shall have the right at any time, and from time
to time in its sole discretion, to substitute assets of equal fair
market value for any asset held by the Trust. This right is
exercisable by Company in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity.
Section 6. Disposition of Income
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee
(a) Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. All such
accounts, books and records shall be open to inspection and audit
at all reasonable times by Company or Company's representatives or
agents. Within 120 days following the close of each calendar year
and within 120 days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its
administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such
removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued
interest paid or receivable being shown separately), and showing
all cash, securities and other property held in the Trust at the
end of such year or as of the date of such removal or resignation,
as the case may be.
(b) The written approval of any accounting by Company shall
be final as to all matters and transactions stated or shown therein
and shall be binding upon Company and all beneficiaries of the
Trust and other persons who then shall be or thereafter become
interested in the Trust, except for Trustee's gross negligence or
willful misconduct. Failure of Company to notify Trustee within
180 days after receipt of any accounting of its disapproval of such
accounting shall be the equivalent of written approval.
(c) Trustee shall timely provide Company with such
information as Trustee possesses as Company may need for tax or
other reporting purposes. Trustee shall also furnish such
information to any participant so requesting in writing.
Section 8. Responsibility of Trustee
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims, provided, however, that Trustee shall incur no liability
to any person for any action taken pursuant to a direction, request
or approval given by Company, which is contemplated by, and in
conformity with, the terms of the Plan(s) or this Trust and is
given in writing by Company, and to that extent, Trustee shall be
relieved of liability for the prudent person rule for investments.
In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) Trustee shall not be required to undertake or to defend
any litigation arising in connection with this Trust Agreement,
unless it be first indemnified by Company against its prospective
costs, expenses and liability, and Company hereby agrees to
indemnify Trustee for such costs, expenses and liability.
(c) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder. Expenses of such persons shall be deemed to be expenses
of management and administration of the Trust within the meaning of
Section 9(b), below.
(d) Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly provided
otherwise herein, provided, however, that if an insurance policy is
held as an asset of the Trust, Trustee shall have no power to name
a beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(e) However, notwithstanding the provisions of Section 8(d)
above, Trustee may loan to Company the proceeds of any borrowing
against an insurance policy held as an asset of the Trust.
(f) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of carrying
on a business and dividing the gains therefrom, within the meaning
of section 301.7701-2 of the Procedure and Administrative
Regulations promulgated pursuant to the Internal Revenue Code.
Section 9. Taxes, Compensation and Expenses of Trustee
(a) 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 kind whatsoever which at
any time are lawfully levied or assessed upon or become payable in
respect of the Trust, 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 are not
paid by Company or contested by Company pursuant to the last
sentence of this Section 9(a), Trustee shall pay such taxes out of
the Trust, and Company shall, upon notice by Trustee, deposit into
the Trust an amount equal to the amount paid from the Trust to
satisfy such tax liability. If requested by Company, and agreed to
by Trustee, Trustee shall at Company's expense, contest the
validity of such taxes in any manner deemed appropriate by 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, Company may itself contest the validity of
any such taxes, but any such contest shall not affect Company's
obligation to reimburse the Trust for taxes paid from the Trust.
(b) Trustee may be paid compensation by Company in accordance
with any written agreement for this purpose between them. Trustee
shall be reimbursed by Company for its reasonable expenses of
management and administration of the Trust, including reasonable
compensation of any agent engaged by Trustee to assist it in such
management and administration. The fees for Legal Counsel, as
defined in Section 10(c), below, and other reasonable expenses,
will be paid by Company. Trustee shall be able to charge the Trust
for such compensation and for any reasonable expenses including
Legal Counsel, appraisal or accounting fees, and the same may be
deducted from the Trust unless paid by Company within 60 days after
Company receives written billing by Trustee; provided that this
paragraph shall not apply while a dispute over the amount of such
charges exists.
Section 10. For Protection of Trustee
(a) Company shall certify to Trustee the name or names of any
person or persons authorized to act for Company. Such
certification shall be signed by the Chief Executive Officer or other
officer of Company duly authorized by the Board of Directors
of Company. Until Company notifies Trustee, in a similarly signed
notice, that any such person is no longer authorized to act for
Company, Trustee may continue to rely upon the authority of such
person. Trustee may rely upon any certificate, notice or direction
of Company which Trustee reasonably believes to have been signed by
a duly authorized officer or agent of Company.
(b) Notices to Trustee shall be sent in writing to Trustee's
office at One Mellon Bank Center, Room 3346, Pittsburgh,
Pennsylvania 15258 or to such other address as Trustee may specify.
No communication shall be binding upon Trust or Trustee until it
is received by Trustee and unless it is in writing and signed by an
authorized person. Notices to Company shall be sent in writing,
attention General Counsel, to Company's principal office at 3240
Hillview Avenue, Palo Alto, California 94304 or to such other
address as Company may specify. No notice shall be binding upon
Company until it is received by Company.
(c) Trustee may consult with any legal counsel ("Legal
Counsel") for the purpose of obtaining advice on topics including
but not limited to the construction of this Trust Agreement, its
duties hereunder, or any act which it proposes to take or omit, and
shall not be liable for any action taken or omitted in good faith
pursuant to such advice. Expenses of Legal Counsel shall be deemed
to be an expense of management and administration of the Trust
within the meaning of Section 9(b), above.
(d) Trustee shall discharge its duties under this Trust
Agreement in a manner consistent with the objectives of this Trust
Agreement. Trustee shall not be liable for any loss sustained by
the Trust by reason of the purchase, retention, sale or exchange of
any investment in good faith and in accordance with the provisions
of this Trust Agreement. Trustee shall have no responsibility or
liability for any failure of Company to make contributions to the
Trust. Trustee shall not be liable hereunder for any act taken or
omitted, except for its own gross negligence or willful misconduct.
Trustee's duties and obligations shall be limited to those
expressly imposed upon it by this Trust Agreement, and Trustee
shall have no responsibility under the Plan(s), notwithstanding any
reference to the Plan(s).
(e) Company hereby indemnifies and holds Trustee harmless
from and against any and all losses, damages, costs, expenses or
liabilities (herein, "Liabilities"), including reasonable
attorneys' fees and other costs of litigation, to which Trustee may
become subject pursuant to, and arising out of, occasioned by,
incurred in connection with or in any way associated with this
Trust Agreement, except for any act or omission constituting gross
negligence or willful misconduct of Trustee.
(f) If one or more Liabilities shall arise, or if Company
fails to indemnify Trustee as provided herein, then Trustee may
engage Legal Counsel of Trustee's choice, but at Company's expense,
either to conduct the defense against such Liabilities or to
conduct such actions as may be necessary to obtain the indemnity
provided for herein, or to take both such actions. Trustee shall
notify Company within 15 days after Legal Counsel has been engaged
with the name and address of such Legal Counsel.
Section 11. Resignation and Removal of Trustee
(a) Trustee may resign at any time by written notice to
Company, which shall be effective 60 days after receipt of such
notice unless Company and Trustee agree otherwise.
(b) Trustee may be removed by Company on 60 days' notice or
upon shorter notice accepted by Trustee.
(c) If Trustee resigns or is removed within 2 years of a
change in control, as defined in Section 14(e), below, Trustee
shall select a successor Trustee in accordance with the provisions
of Section 12(b) hereof prior to the effective date of Trustee's
resignation or removal.
(d) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within 60 days after receipt of notice of resignation,
removal or transfer, unless Company extends the time limit.
(e) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 12 hereof, by the effective
date of resignation or removal under paragraph(s) (a) or (b) of
this section. If no such appointment has been made, Trustee may
apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 12. Appointment of Successor
(a) If Trustee resigns or is removed in accordance with
Section 11(a) or (b) hereof, Company shall appoint a bank or trust
company in good standing, organized and doing business under the
laws of the United States or a state thereof, with a combined
capital and surplus of not less that $50,000,000 and authorized
under the laws governing its organization to exercise corporate
trustee powers, as a successor to replace Trustee upon resignation
or removal. The appointment shall be effective when accepted in
writing by the new Trustee, who 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
instrument necessary or reasonably requested by Company or the
successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 11(c) hereof and selects a successor Trustee,
Trustee shall appoint a bank or trust company in good standing,
organized and doing business under the laws of the United States or
a state thereof, with a combined capital and surplus of not less
that $50,000,000 and authorized under the laws governing its
organization to exercise corporate trustee powers. The appointment
of a successor Trustee shall be effective when accepted in writing
by the new Trustee. The new Trustee shall have all the rights and
powers of the former Trustee, including ownership rights in Trust
assets. The former Trustee shall execute any instrument necessary
or reasonably requested by the successor Trustee to evidence the
transfer.
(c) 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 Sections 5, 7 and 8 hereof. The successor
Trustee shall not be responsible for and Company shall indemnify
and defend the successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it
becomes successor trustee.
Section 13. Amendment or Termination
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company, provided that no
amendment which would materially affect the likelihood that assets
of the Trust will be available to fund benefits payable under the
Plan(s) shall be made unless the prior written approval of 75% of
the Plan participants (or beneficiaries as the case may be) has
been obtained; and provided further, that no amendment shall
increase the duties or responsibilities of Trustee unless Trustee
consents thereto in writing.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s). The Trust shall
terminate at the discretion of Company if the Internal Revenue
Service or any court rules that Company is not the owner of the
Trust, that Plan participants (or their beneficiaries) are taxable
on payment of Plan benefits prior to their becoming payable or that
Plan participants (or their beneficiaries) have greater rights to
assets of the Trust than other general creditors of Company.
(c) Upon written approval of 75 percent of the Plan
participants or beneficiaries entitled to payment of benefits
pursuant to the terms of the Plan(s), Company may terminate this
Trust prior to the time all benefit payments under the Plan(s) have
been made.
(d) Upon termination of the Trust, after its final
accounting, Trustee shall distribute the net balance of any assets
of the Trust remaining after all benefits, legal fees and expenses,
and management and administration expenses have been paid. Upon
making such a distribution, Trustee shall be relieved from all
further liability.
Section 14. Miscellaneous
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of such prohibition, without
invalidating the remaining provisions hereof.
(b) Any reference to Plan(s) provisions which require
knowledge of the Plan shall impose a duty on the Company to
communicate such knowledge to the Trustee by giving the Trustee
relevant portions of the Plan((s) and the Trustee shall be entitled
to rely upon such provisions until notified by the Company.
(c) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution
or other legal or equitable process.
(d) This Trust Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
(e) For purposes of this Trust, "change in control" shall
have the same meaning as provided in the Plan(s).
(f) The headings of sections of this Trust Agreement and
defined terms are used herein for convenience of reference only and
in case of any conflict the text of this Agreement shall control.
(g) This Agreement shall be binding upon and inure to the
benefit of any successor to Company or its business as the result
of merger, consolidation, reorganization, transfer of assets or
otherwise and any subsequent successor thereto, and any such
successor shall be deemed to be the "Company" under this Agreement.
In the event of any such merger, consolidation, reorganization,
transfer of assets or other similar transaction,
the successor to Company or its business or any subsequent
successor thereto shall promptly notify Trustee in writing of its
successorship and furnish the Trustee with the information
specified in Section 10(a) of this Agreement. In no event shall
any such transaction described herein suspend or delay the rights
of Plan participants (or their beneficiaries) to receive benefits
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
CONSOLIDATED FREIGHTWAYS, INC. MELLON BANK, N.A.
By: /s/Eberhard G.H. Schmoleler By: ___________________
Name: /s/Eberhard G.H. Schmoleler Name: ___________________
Title: Senior Vice President Title: ___________________
and General Counsel