1 Exhibit 10.12
TRUST UNDER
SUN COMPANY, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
This TRUST AGREEMENT (the "Trust"), is made this 1st day of February,
1996 by and between Sun Company, Inc., a Pennsylvania corporation (the
"Company"), Mellon Bank, N.A. (the "Trustee") and Towers Perrin (the
"Recordkeeper").
WHEREAS, Company has adopted a nonqualified deferred compensation Plan
known as Sun Company, Inc. Directors' Deferred Compensation Plan, ("the
Plan").
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan with respect to the Directors participating in such Plan
("Plan Participants").
WHEREAS, the Company desires to assure that the future payment of such
amounts will not be improperly withheld in the event that a Change in
Control of the Company should occur; and
WHEREAS, for purposes of assuring that such payments will not be improperly
withheld, the Company desires to deposit with the Trustee, subject only to the
claims of the Company's creditors as provided herein, amounts sufficient to make
such payments as they may become due and payable; and
WHEREAS, Company wishes to establish a trust (hereinafter called "Trust")
and to contribute to 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 in section 5 (a)) until paid to Plan Participants and their
beneficiaries in such manner and at such times as specified in the Plans;
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
as an unfunded plan maintained for the purpose of providing deferred
compensation for a group of Directors for purposes of Title I of the Employee
Retirement Income Security Act of 1974;
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;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
2
Section 1. The Plan
(a) Prior to a Change in Control of the Company, the Compensation Committee of
the Board of Directors of the Company (the "Compensation Committee") may
from time to time designate additional plans and/or agreements that are
subject to this Trust (collectively referred to as the "Plans") or delete
any Plan from this Trust. Any additional plans which are subject to this
Trust will be listed on Appendix A hereto.
(b) The Company (or certain of its subsidiaries) shall continue to be liable to
the Plan Participants to make all payments required under the terms of the
Plans to the extent such payments have not been made pursuant to this
Trust. Distributions made from the Trust to or for Plan Participants in
respect of the Plan pursuant to Section 4 hereof, shall, to the extent of
such distributions, satisfy the Company's (or certain of its subsidiaries')
obligation to pay benefits to such Plan Participants under the Plans.
Section 2. Establishment of Trust
(a) Company hereby deposits with Trustee in trust the sum of $100 in cash which
shall become the principal of the Trust to be held, administered and
disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established is revocable by Company; it shall become
irrevocable upon a Change of Control, as defined herein.
(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 Plans 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 5(a) herein.
3
(e) In the event of a Potential Change in Control of the Company, an additional
amount of cash (or property acceptable to the Trustee having a fair market
value equal to such amount, or some combination thereof), representing the
sum of the amounts, determined as provided below, plus an amount equal to
5% of that amount to provide for expenses and other costs of maintaining
the Trust (collectively, the "Required Funding Amount"), shall be delivered
not later than 30 days after the occurrence of a Potential Change in
Control of the Company (as defined in Section 13(e) hereof).
(f) In the event the Compensation Committee designates additional Plans that
are subject to this Trust and/or Plans subject to this Trust are amended
after a Potential Change in Control of the Company, the Treasurer shall,
unless the Trust Corpus shall theretofore have been released pursuant to
Section 6(a) hereof, recalculate the Required Funding Amount. If the amount
so calculated exceeds the fair market value of the assets then held in
trust, the Company shall promptly (and in no event later than 30 days from
the date of such recalculation) pay to the Trustee an amount of cash (or
property acceptable to the Trustee have a fair market value equal to such
amount or some combination thereof) equal to such excess. If the Required
Funding Amount so calculated is less than the fair market value of the
assets held in trust, the Trustee shall retain such difference.
(g) If, subsequent to a Control Transaction which has not been expressly
approved by at least a majority vote of the Continuing Directors, there is
a Change in Control, Company shall, as soon as possible, but in no event
longer than one (1) day following the Change in Control, as defined herein,
make an irrevocable contribution to the Trust in an amount that is
sufficient to pay each Plan Participant or beneficiary the benefits to
which Plan Participants or their beneficiaries would be entitled pursuant
to the terms of the Plan as of the date on which the Change in Control
occurred. This Required Funding Amount shall be determined in a way that
will provide the Trust with sufficient assets, taking into consideration
Section 3(e), to pay all benefits accrued by the Plan Participants through
the date of the Change in Control of the Company under the terms of the
Plans in effect on such date. The Company agrees not to challenge the
Treasurer's calculation of the required Funding Amount upon and after a
Change in Control of the Company.
4
(h) The Company agrees to pay interest on any delinquent payment of the
Required Funding Amount from the date of a Change in Control of the
Company, based upon the daily average of the prime rate charged by the
Trustee.
(i) In determining the Required Funding Amount with respect to any payment or
series of payments expected to be due more than one year after the date as
of which the required Funding Amount is to be determined, the present value
of such payment or series of payments shall be calculated by using a
discount rate equal to one percentage point less than the then lowest
annual yield to maturity on United States Treasury obligations having then
remaining maturities approximately equal to the maturity of the payment or
payments being valued.
(j) Payment by the Company pursuant to Section 2(a) and 2(e) hereof shall be
accompanied by a schedule delivered to the Recordkeeper (as described in
Section 4(d) of the individual Plan for whose account such payment is being
made, which schedule sets forth the amounts delivered in respect of the
Plan. The Recordkeeper shall maintain separate account for the Plan (the
"Account"). Each Account shall consist of contributions to and payments
from the Trust Corpus which are allocable to the Plan, and earnings
thereon, less disbursements therefrom attributable to the interest of the
Plan in the Trust Corpus.
Section 3. Investment Authority
(a) As used herein, the term "Trust Corpus" shall mean the amounts delivered to
the Trustee pursuant to the terms hereof, less amounts distributed from the
Trust pursuant to the terms hereof, plus all income earned by the Trust, in
whatever form held or invested as provided herein.
(b) Trustee may invest in securities (including stock or rights to acquire
stock) or obligations issued by Company. All rights associated with assets
of the Trust shall be exercised by Trustee or the person designated by
Trustee, and shall in no event be exercisable by or rest with Plan
Participants. Subject to investments guidelines agreed to in writing from
time to time by the Trustee and the Benefit Plans Investment Committee
until a Change in Control occurs, the Trustee shall have the following
powers and discretion in addition to those conferred by law:
5
(1) To invest and reinvest the Trust Corpus in such stocks (of any
classification, including common and preferred stocks), bonds, or
other property (real, personal or mixed) and interests in
investment companies and investment trusts;
(2) To sell, exchange, convey, transfer or dispose of, and also to grant
options with respect to, any property, whether real or personal, at
any time held by it by private contract or by public auction, for cash
or upon credit, or partly for cash and partly upon credit, as the
Trustee may deem best, and no person dealing with the Trustee shall be
bound to see to the application of the purchase money or to inquire
into the validity, expediency or propriety of any such sale or other
disposition;
(3) To acquire, hold and dispose of any real estate, at such time, in such
manner and upon such terms as the Trustee may deem advisable; to
retain, manage, operate, repair, improve, partition, mortgage or lease
for any term or terms of years any such real estate, or to exchange
all or any part thereof for other real estate, upon such terms and
conditions as the Trustee deems proper, using other trust assets for
any of such purposes if deemed advisable;
(4) To compromise, compound and settle any debt or obligation due to or
from the Trust and to reduce the rate of interest thereon, to extend
or otherwise modify, or to foreclose upon default or otherwise enforce
or act with respect to any such obligation as the Trustee may deem
advisable;
(5) With respect to stocks, bonds or securities excluding stocks, bonds or
securities of the Company, to vote, in person or by general or limited
proxy, any stocks or other securities at any time held in the Trust
Corpus, at any meeting of stockholders or security holders, in respect
to any business which may come before the meeting; to exercise any
options appurtenant to any stocks, bonds or other securities for the
conversion thereof into other stocks, bonds or securities; to exercise
or sell any conversion or subscription rights appurtenant to any
stocks, bonds or other securities at any time held in the Trust
Corpus, and to make any and
6
all necessary payments therefor; to join in, and to approve, or to
dissent from and to oppose, any corporate act or proceeding, including
any reorganization, recapitalization, consolidation, merger,
dissolution, liquidation, sale of assets or other action by or plan in
respect of corporations or properties, the stocks or securities of
which may at any time be held in the Trust Corpus; to deposit with any
committee or depository, pursuant to any plan or agreement of
protection, reorganization, consolidation, sale, merger, or other
readjustment, any property held in the Trust Corpus; and to make
payment from the Trust Corpus of any charges or assessments imposed by
the terms of any such plan or agreement;
(6) With respect to stocks, bonds or securities of the Company, the
Trustee shall exercise the powers under Section 3(b)(5) at its
discretion.
(7) To accept and hold any securities or other property received by
it under the provisions of any of the subdivisions of this
Article whether or not the Trustee would be authorized hereunder
then to invest therein;
(8) To borrow money upon such terms and conditions at the Trustee
shall deem advisable to carry out the purposes of the Trust and
to pledge securities or other property of the Trust Corpus in
repayment of any such loan;
(9) To enforce any right, obligation or claim and in general to
protect in any way the interest of the Trust Corpus, either
before or after default, and in case the Trustee shall, in its
discretion, consider such action for the best interest of the
Trust Corpus, to abstain from the enforcement of any right,
obligation or claim and to abandon any property, whether real or
personal which at any time may be held by the Trustee;
(10) To make, execute, acknowledge and deliver any and all deeds,
leases, assignments transfers, conveyances and any and all other
instruments necessary or appropriate to carry out any powers
herein granted;
7
(11) To cause any investments from time to time held by it hereunder
to be registered in, or transferred into, its name as Trustee or
the name of its nominee or nominees, and with or without
designation of fiduciary capacity, or to retain any investments
unregistered or in form permitting transfer by delivery, but the
books and records of the Trustee shall at all times show that all
such investments are part of the Trust Corpus;
(12) To hold any part or all of the Trust Corpus uninvested; and
(13) To do all acts which may be necessary or proper and to exercise any
and all of the powers of the Trustee under this Agreement upon such
terms and conditions as to the Trustee may seem in the best interests
of the Trust Corpus.
(c) Upon and after a Change in Control, the Trustee shall use its good
faith efforts to invest or reinvest all or such part of the Trust
Corpus as it believes prudent under the circumstances (taking into
account, among other things, anticipated cash requirements for the
payment of benefits under the Plans communicated to the Trustee by the
Recordkeeper) solely in direct obligations of the United States of
America or agencies thereof or obligations unconditionally and fully
guaranteed as to principal and interest by the United States of
America, and with respect to such investments the Trustee shall have
the powers and discretion set forth in Section 3(b) in addition to
those conferred by law; provided, however, that the Trustee shall not
be liable for any failure to maximize the income earned on that
portion of the Trust Corpus as is from time to time invested or
reinvested as set forth under Section 3(c), nor for any loss of income
due to liquidation of any investment which liquidation is necessary to
make payments or to reimburse expenses under the terms of this Trust.
(d) All losses of income or principal in respect of, and expenses
(including taxes and, as provided in Section 9 hereof, any expenses
of the Trustee) charged against, the Trust Corpus shall be for the
account of the Company and the Company shall be obligated to reimburse
the Trust Corpus for any loss in principal amount of, or expense
charged against, the Trust Corpus except to the extent that such
amounts have been applied to reduce amounts payable by the Company (or
certain of its subsidiaries) pursuant to Section 4 hereof.
8
The Trustee shall promptly notify the Company in writing of the amount
of such reimbursement. The Company agrees that, upon receipt of such
notice, it will deliver to the Trustee to be held in the Trust an
amount in cash equal to any reimbursement amount specified by the
Trustee, together with interest from the date of receipt of such
notice based upon the daily average of the prime rate charged by the
Trustee.
(e) 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 4. Payments to Plan Participants and Their Beneficiaries
(a) By its acceptance of this Trust the Trustee hereby agrees to the
designation by the Company of Towers Perrin as its recordkeeper
("Recordkeeper") under this Trust. It is recognized that the Trustee
shall have no responsibility hereunder for the continued retention of
the Recordkeeper and/or any responsibility assigned to said
Recordkeeper or its performance thereof. Upon and after a Change in
Control of the Company, the Trustee shall have the sole authority to
retain, dismiss or appoint the Recordkeeper for the Trust on such
terms and conditions as the Trustee deems appropriate. The Company
shall pay or reimburse the Trustee for all fees and expenses of the
Recordkeeper.
(b) Except for the records dealing solely with the Trust Corpus and its
investment, which shall be maintained by the Trustee, the Recordkeeper
shall maintain all the records contemplated by this Agreement,
including the maintenance of the separate Accounts of each Plan under
this Trust and the maintenance of Plan Participant's interests. The
Recordkeeper shall also be responsible for information with respect to
payments to Plan Participants and shall perform such other duties and
responsibilities as the Trustee determines are necessary or advisable
to achieve the objectives of this Trust.
9
(c) Upon the establishment of this Trust or as soon thereafter as practicable,
the Company shall furnish to the Recordkeeper all the information necessary
to determine the benefits payable to or with respect to each Plan
Participant in each Plan, including any benefits payable after the Plan
Participant's death and the recipient of same. The Company shall regularly,
at least annually, furnish revised up-dated information to the
Recordkeeper. In the event the Company refuses or neglects to provide
updated Plan Participant information, as contemplated herein, the
Recordkeeper shall be entitled to rely upon the most recent information
furnished to it by the Company.
(d) The Recordkeeper, on behalf of the 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 Plans), and the
time of commencement for payment of such amounts. Except as otherwise
provided herein, Trustee shall make payments to the Plan Participants
and their beneficiaries in accordance with such Payment Schedule. The
Trustee shall make provision 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 Plans
and shall pay amounts withheld to the appropriate taxing authorities
or determine that such amounts have been reported, withheld and paid
by Company.
(e) The entitlement of a Plan Participant or his or her beneficiaries to
benefits under the Plan shall be determined by the Recordkeeper, on
behalf of the Company, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan and
this Trust Agreement.
(f) Company may make payment of benefits directly to Plan Participants or
their beneficiaries as they become due under the terms of the Plans.
Company shall notify Trustee and Recordkeeper of its decision to make
payment of benefits directly prior to the time amounts are payable to
Plan 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
Plans, Company shall make the balance of each such payment as it falls
due. Trustee shall notify Company where principal and earnings are
not sufficient.
10
(g) The Recordkeeper shall notify the Plan Participant or the beneficiary
of a deceased Plan Participant that Plan Participant's benefits under
a Plan have become payable. Such notice shall include the amount of
such benefits, the manner of payment and the name, address and social
security number of the Plan Participant.
(h) All benefits payable from the Trust Corpus to a Plan Participant or
his beneficiary under a Plan shall be paid solely from the Account of
such Plan. Upon the satisfaction of all liabilities under a Plan in
respect of Plan Participant under a Plan, the Recordkeeper shall
prepare a certification to the Trustee showing the balance, if any,
remaining in the Account for such Plan. Upon the satisfaction of all
liabilities of the Company under the Plan, the Recordkeeper shall
prepare a certification to the Trustee and the Trustee shall thereupon
distribute the Trust Corpus to the Company. The Trustee and the
Recordkeeper shall have no responsibility for determining whether any
Plan Participant or beneficiary has died and shall be entitled to rely
upon information furnished by the Company.
(i) Except as otherwise provided herein, in the event of any final
determination by the Internal Revenue Service or a court of competent
jurisdiction, which determination is not appealable or with respect to
which the time for appeal has expired, or the receipt by the Trustee
of a substantially unqualified opinion of tax counsel selected by the
Trustee, which determination determines, or which opinion opines, that
the Plan Participants or any particular Plan Participant, is subject
to federal income taxation on amounts held in Trust hereunder prior to
the distribution to the Plan Participants of such amounts, the
Trustee, on receipt by the Trustee, of such opinion or notice of such
determination, shall pay to each Plan Participant the portion of the
Trust Corpus includable in such Plan Participant's federal gross
income.
(j) The Company agrees to indemnify and hold harmless the Recordkeeper
from and against any and all damages, losses, claims, fees or expenses
as incurred (including expenses of investigation and fees or expenses
as incurred (including expenses of investigation and fees and
disbursements of counsel to the Recordkeeper) arising out of or in
connection with the performance by the Recordkeeper of its duties
hereunder. Any amount payable to the Recordkeeper under paragraph (a)
of this Section 4 or this paragraph (j) and not previously paid by the
Company shall be paid by the
11
Company promptly upon demand therefore by the Trustee or, if not paid
by the Company within 30 days of the Trustee's demand, from the Trust
Corpus. In the event that payment is made hereunder to the
Recordkeeper from the Trust Corpus, the Trustee shall promptly notify
the Company in writing of the amount of such payment. The Company
agrees that, upon receipt of such notice, it will deliver to the
Trustee to be held in the Trust an amount in cash equal to any
payments made from the Trust Corpus to the Trustee pursuant to
paragraph (a) of this Section 4 or this paragraph (j), together with
interest from the date of receipt of such notice based upon the daily
average of the prime rate charged by the Trustee. The failure of the
Company to transfer any such amount shall not in any way impair the
Recordkeeper's right to indemnification, reimbursement and payment
pursuant to paragraph (a) of this Section 4 or this paragraph (j).
(k) The Recordkeeper may resign and be discharged from its duties
hereunder at any time by giving notice in writing of such resignation
to the Company, or if a Change in Control shall previously have
occurred, the Trustee, specifying a date (not less than 30 days after
the giving of such notice) when such resignation shall take effect.
Promptly after such notice, the Company, or if a Change in Control
shall previously have occurred, the Trustee, shall appoint a successor
recordkeeper, such recordkeeper to become Recordkeeper hereunder upon
the resignation date specified in such notice. If the Company or the
Trustee is unable to appoint a successor recordkeeper within 60 days
after such notice, the Recordkeeper shall be entitled, at the expense
of the Company, to petition a United States District Court or any
court of competent jurisdiction in the state in which the Recordkeeper
maintains its principal place of business to appoint its successor.
The Recordkeeper shall continue to serve until its successor accepts
the responsibility of recordkeeper. The Company, or if a Change in
Control shall previously have occurred, the Trustee, may at any time
substitute a new recordkeeper by giving 15 days notice thereof of the
Recordkeeper then acting. In the event of such removal or
resignation, the Recordkeeper shall provide its successor with the
records and information in its possession relating to the performance
of its duties under this Trust.
12
Section 5. Trustee Responsibility Regarding Payments to Trust Beneficiary
When Company Is Insolvent.
(a) Trustee shall cease payment of benefits 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
to Plan participants or their beneficiaries.
(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 Plans or otherwise.
(4) Trustee shall resume the payments of benefits to Plan Participants or
their beneficiaries in accordance with Section 4 of this Trust
Agreement only after Trustee has determined that Company is not
insolvent (or is no longer Insolvent).
13
(c) Provided that there are sufficient assets, if Trustee discontinues the
payment of benefits from the Trust pursuant to Section 5(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
Plans 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 6. Payments to Company
(a) In the event the Company delivers the Required Funding Amount to the
Trustee because of a Potential Change in Control, the Trust Corpus
shall be returned to the Company one year after delivery of the
Required Funding Amount to the Trustee unless a Change in Control
shall have occurred during such one-year period. Such one-year period
shall recommence in the event of and upon the date of any subsequent
Potential Change in Control. If another Potential Change in Control
should occur after the Trust Corpus has been returned to the Company
as provided in this Section 6(a), the Company shall deliver a new
Required Funding Amount to the Trustee pursuant to Section 2. The
Company shall notify the Trustee of the occurrence of a Potential
Change in Control and Change in Control and the Trustee may rely on
such notice.
(b) Except as provided in Section 5 hereof, after the trust has become
irrevocable, 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 Plans.
Section 7. 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 8. Claims Procedures
(a) The Company agrees that by establishment of this Trust it hereby
forgoes any review (judicial or otherwise) of certifications by the
Recordkeeper as to the benefit payable to any persons hereunder.
14
(b) If a dispute arises as to the amounts or timing of any benefits or the
persons entitled thereto under this Trust, such dispute shall be
resolved under a claims review procedure established and maintained by
the Recordkeeper that includes the following:
(1) The manner in which a claim is made.
(2) Provisions to the effect that, in the event of a denial of a
claim as to the amount of any distribution and/or the method of
payment under any Plan by the Recordkeeper, a claimant will be
given notice in writing of such detail within 90 days, which
notice will set forth the reason for the denial, the pertinent
Plan provision on which the denial is based, a description of the
information necessary to perfect the claim and an explanation of
why such information is necessary, and appropriate steps to be
taken by the claimant to submit the claim for review.
(3) Provisions to the effect that the claimant may request a review
of such denial by filing notice in writing with the Recordkeeper,
within 60 days after receipt of such denial, may review pertinent
documents and may submit issues and comments in writing.
(4) Provisions for the Recordkeeper, in its discretion, to request a
meeting to clarify an immediate matters it deems appropriate.
(5) Provisions to the effect that all interpretations,
determinations, and decisions of the Recordkeeper in respect to
any matter will be final, conclusive, and binding upon the
claimant.
(c) By making a Plan subject to the Trust, the claims review procedures of
paragraph (b) of this Section 8 supersede any claims review procedures
in the Plan to the extent of any benefits payable from the Trust.
Section 9. Trustee
(a) The duties and responsibilities of the Trustee shall be limited to
those expressly set forth in this Trust, and no implied covenants or
obligations shall be read into this trust against the Trustee.
15
(b) The Trustee shall maintain such books, records and accounts as may be
necessary for the proper administration of the Trust Corpus and shall
render to the Company (and the Plan Participants after a Change in
Control of the Company has occurred), on or prior to each April 1
following the date this Trust was created until the termination of
this Trust (and on the date of such termination), an accounting with
respect to the Trust Corpus as of the end of the then most recent
calendar year (and as of the date of such termination). Unless the
Company (or any Plan Participant after a Change in Control of the
Company has occurred) shall have filed with the Trustee written
exceptions or objections to any such statement and account within 180
days after receipt thereof, the Company or any Plan Participant, as
the case may be, shall be deemed to have approved such statement and
account, and in such case the Trustee shall be forever released and
discharged with respect to all matters and things reported in such
statement and account as though it had been settled by a decree of a
court of competent jurisdiction in an action or proceeding to which
the Company and any Plan Participate were parties.
(c) The Trustee shall not be liable for any act taken or omitted to be
taken hereunder if taken or omitted to be taken by it in good faith.
The Trustee shall also be fully protected in relying upon any notice
given hereunder which it in good faith believes to be genuine and
executed and delivered in accordance with this Trust.
(d) The Trustee may consult with legal counsel to be selected by it, and
the Trustee shall not be liable for any action taken or suffered by it
in good faith in accordance with the advice of such counsel.
(e) The Trustee shall be reimbursed by the Company for its reasonable
expenses, including without limitation any expenses incurred under
paragraph (g) of this Section 9,
incurred in connection with the performance of its duties hereunder
and shall be paid such fees for the performance of such duties as may
be agreed upon in writing from time to time between the Company and
the Trustee. After a Change in Control of the Company has occurred,
the fees of the Trustee shall be determined by the application of the
current rates then charged by the Trustee for the provision of the
types of investment and trustee services contemplated in this Trust to
trusts of a similar character. The Trustee's reasonable expenses and
fees shall be paid in the manner provided by paragraph (f) of this
Section 9.
16
(f) The Company agrees to indemnify and hold harmless the Trustee from and
against any and all damages, losses, claims or expenses as incurred
(including expenses of investigation and fees and disbursements of
counsel to the Trustee and any taxes imposed on the Trust Corpus or
income of the Trust) arising out of or in connection with the
performance by the Trustee of its duties hereunder. Any amount
payable to the Trustee under paragraph (e) of this Section 9 or this
paragraph (f) and not previously paid by the Company shall be paid by
the Company promptly upon demand therefore by the trustee or, if the
Trustee so chooses in its sole discretion, from the Trust Corpus. In
the event that payment is made hereunder to the Trustee from the Trust
Corpus, the Trustee shall promptly notify the Company in writing of
the amount of such payment. The Company agrees that, upon receipt of
such notice, it will deliver to the Trustee to be held in the Trust an
amount in cash equal to any payments made from the Trust Corpus to the
Trustee pursuant to paragraph (e) of this Section 9 or this paragraph
(f), together with interest from the date of receipt of such notice
based upon the daily average of the prime rate charged by the Trustee.
The failure of the Company to transfer any such amount shall not in
any way impair the Trustee's right to indemnification, reimbursement
and payment pursuant to paragraph (e) of this Section 5.01 or this
paragraph (f).
(g) The Trustee is specifically authorized and required to take such
action as may be necessary or appropriate, including the institution
of litigation or other legal process, to enforce the Company's
obligations hereunder, and any expenses thus incurred by the Trustee
shall be paid or reimbursed by the Company pursuant to paragraphs (e)
and (f) of this Section 9.
(h) 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.
17
(i) 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 10. Resignation and Removal of Trustee.
(a) The Trustee may resign at any time by written notice to the Company,
which shall be effective 30 days after receipt of such notice unless
Company and Trustee agree otherwise. If a Change of Control shall
previously have occurred, the Trustee shall give such resignation
notice, in writing, to the Company and the Plan Participants,
specifying a date (not less than 30 days after the giving of such
notice) when such resignation shall take effect. Promptly after such
notice, the Company, or if a Change in Control shall previously have
occurred, the Company and at least 80% of the Plan Participants then
entitled to receive payments hereunder, shall appoint a successor
trustee, such trustee to become Trustee hereunder upon the resignation
date specified in such notice. If the Company and such Plan
Participants are unable to appoint a successor trustee within 60 days
after such notice, the Trustee shall be entitled, at the expense of
the Company, to petition a United States District Court or any court
of competent jurisdiction in the state in which the Trustee maintains
its principal place of business to appoint its successor, in
accordance with section 10(c). The Trustee shall continue to serve
until its successor accepts the Trust and receives delivery of the
Trust Corpus. The Company, or if a Change in Control shall previously
have occurred, the Company and at least 80% of the Plan Participants
then entitled to receive payments hereunder, may at any time
substitute a new trustee by giving 15 days notice thereof to the
Trustee then acting. In the event of such removal or resignation, the
Trustee shall duly file with the Company and, on and after a Change in
Control, the Plan Participants, a written statement or statements of
accounts and proceedings as provided in Section 9(b) hereof for the
period since the last previous annual accounting of the Trust, and if
written objections to such account are not filed as provided in
Section 9(b) hereof, the Trustee shall to the maximum extent permitted
by applicable law be forever released and discharged from all
liability and accountability with
18
respect to the propriety of its acts and transactions shown in such
account. The Trustee and any successor thereto appointed hereunder
shall be a corporate professional trustee which is not an affiliate of
the Company but which has equity in excess of $100,000,000.00.
(b) 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 30 days after receipt
of notice of resignation, removal or transfer, unless Company extends
the time limit.
(c) If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 10 hereof, by the effective date of
resignation or removal under paragraph (a) 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 11. Termination
Except as provided herein, this Trust shall be irrevocable. At any time
prior to a Change in Control of the Company, this Trust may be terminated
by the Compensation Committee. Upon or after a Change in Control of the
Company, this 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 Plans unless sooner revoked in accordance with
Section 2(b) hereof. Upon termination of the Trust any assets remaining in
the Trust shall be returned to Company.
Section 12. Amendment or Waiver
(a) This Trust may be amended by a written instrument executed by Trustee
and Company. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plans or shall make the Trust revocable
after it has become irrevocable in accordance with Section 2(b)
hereof.
(b) Upon and after a Change in Control of the Company, the following rules
will govern amendments and waivers: (1) this Trust may not be amended
except by an instrument in writing signed on behalf of the parties
hereto together with the written consent of at least 80% of the Plan
Participants then entitled to receive payments hereunder; (2) the
parties hereto, together with the consent of not less than 80% of
19
the Plan Participants then entitled to receive payments hereunder, may
at any time waive compliance with any of the agreements or conditions
contained herein; (3) any agreement on the part of a party hereto or
an Plan Participant to any such waiver shall be valid if set forth in
an instrument in writing signed on behalf of such party or Plan
Participant; and (4) no such amendment or waiver relating to this
Trust may be made with respect to a particular Plan Participant unless
such Plan Participant has agreed in writing to such amendment or
waiver.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan Participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law
or in equity), alienated pledge, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable
process.
(c) For purposes of this Trust, the phrase "subsequent to a Control
Transaction which has not been expressly approved by at least a
majority vote of the Continuing Directors, there is a change in
Control" shall be determined by applying the following definitions:
(1) "Control Transaction" shall mean any of the following
transactions or any combination thereof: (A) any tender offer
for or acquisition of capital stock of the Company, (B) any
merger, consolidation, or sale of all or substantially all of the
assets of the Company, or (C) the submission of a nominee or
nominees for the position of director of the Company by
shareholder or a Group of shareholders in a proxy solicitation or
otherwise.
(2) "Continuing Director" shall mean a Director who was a member of
the Board of Directors immediately prior to a Control Transaction
which results in a Change in Control.
20
(3) "Change in Control" shall be deemed to have occurred for purposes
of this Plan, if (A) Continuing Directors cease, within one year
of a Control Transaction, to constitute a majority of the Board
(or of the Board of Directors of any successor to the Company or
to all or substantially all of its assets) or (B) any entity,
person or Group acquires shares of the Company in a transaction
or series of transactions that result in such entity, person or
Group directly or indirectly owning beneficially more than fifty
percent (50%) of the outstanding voting shares.
(4) "Group" shall mean persons who act in concert as described in
Sections 13(d)(3) and/or 14(d)(2) of the Securities Exchange Act
of 1934, as amended.
(d) For purposes of this Trust, a "potential Change in Control" of the
Company shall be deemed to have occurred if subsequent to the
effective date of the Trust any of the following events or
transactions has occurred: (1) any Person (other than the Company)
makes a tender offer for capital stock of the Company; (2) and Person
becomes the beneficial owner, directly or indirectly, of capital stock
of the Company in an amount which requires the filing of Schedule 13D
or its equivalent form pursuant to the Rules and Regulations under the
Securities Exchange Act of 1934 as may from time to time be amended;
(3) the submission of a nominee or nominees for the position of
director of the Company by a shareholder or shareholders in a proxy
solicitation or otherwise which, in its judgment the Board of
Directors determines by adoption of a resolution within 30 days of
such submission, might result in a Change in Control of the Company;
(4) any Person files a pre-merger notification for the acquisition of
capital stock of the Company pursuant to the Hart-Scott-Rodino Act; or
(5) the Board of Directors of the Company in its judgment determines
by adoption of a resolution that a Potential Change in Control of the
Company for purposes of this trust has occurred.
Section 14. Further Assurances
The Company shall, at any time and from time to time, upon the reasonable
request of the Trustee and/or Recordkeeper, execute and deliver such
further instruments and do such further acts as may be necessary or proper
to effectuate the purposes of this Trust.
21
Section 15. Certain Provisions Relating to This Trust
(a) This Trust sets forth the entire understanding of the parties with
respect to the subject matter hereof and supersedes any an all prior
agreements, arrangements and understandings relating thereto. This
Trust shall be binding upon and inure to the benefit of the parties
and their respective successors and legal representatives.
(b) This Trust shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania, other than and without
reference to any provisions of such laws regarding choice of laws of
conflict of laws. The situs of this Trust shall be Philadelphia
County, Pennsylvania.
(c) The interests of the Plan Participants hereunder are not subject to
assignment or alienation.
(d) Nothing in this Trust shall in any way diminish any rights of a Plan
Participant to pursue his rights as a general creditor of the company
(or certain of its subsidiaries) under the Plans.
(e) The Trustee by joining in the execution of this Trust hereby signifies
its acceptance of the trust hereby created.
(f) In the event that any provision of this Trust or the application
thereof to any person or circumstances shall be determined by a court
of proper jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Trust, or the application of such provision to
persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each
provision of this Trust shall be valid and enforced to the fullest
extent permitted by law.
Section 16. Authorization
(a) Any action of the Board of Directors or by the Compensation Committee
pursuant to this Trust shall be evidenced by a resolution adopted by
the Board of Directors (or a duly authorized committee thereof) or the
Compensation Committee that is certified to the Trustee and
Recordkeeper by the Secretary or an Assistant Secretary of the Company
under its corporate seal, and the Trustee and Recordkeeper shall be
fully protected in acting in accordance with such resolution.
22
(b) Any action of the Benefit Plans Investment Committee pursuant to this
Trust shall be evidence by a written notice or direction to such
effect over the signature of any member (or duly authorized
representative) of the Benefit Plans Investment Committee, and the
Trustee and the Recordkeeper shall be fully protected in acting in
accordance with such resolution. The Company shall provide to the
Trustee and the Recordkeeper in writing from time to time the names
and specimen signatures of all persons designated as members of the
Benefit Plans Investment Committee. The Benefit Plans Investment
Committee shall provide to the Trustee and the Recordkeeper in writing
from time to time the names and specimen signatures of the person or
persons authorized to act on its behalf. The Trustee and the
Recordkeeper shall be fully protected in acting in accordance with
such notices or directions.
(c) Any action of the Chief Executive Officer or Treasurer pursuant to
this Trust shall be evidence by a written notice or direction to such
effect over the signature of such officer, and the Trustee and the
Recordkeeper shall be fully protected in acting in accordance with
such notices or directions.
(d) Any action of the Company pursuant to this Trust shall be evidenced by
a written notice or direction to such effect over the signature of any
officer or other representative of the Company who shall have been
certified to the Trustee and the Recordkeeper by the President,
Treasurer or Secretary of the Company as having such authority. The
President, Treasurer or Secretary of the Company shall provide to the
Trustee and the Recordkeeper in writing from time to time the names
and specimen signatures of the officers and other representatives
authorized to act on behalf of the Company. The Trustee and the
Recordkeeper shall be fully protected in acting in accordance with
such notices or directions.
Section 17. Notices
Any notice, report, demand or waiver required or permitted hereunder shall
be in writing and shall be given personally or by prepaid registered or
certified mail, return receipt requested, addressed as follows:
If to the Board of Directors: Sun Company, Inc.
Philadelphia, PA 19103
Attention: Corporate Secretary
23
If to the Compensation
Committee: Sun Company, Inc.
Philadelphia, PA 19103
Attention: Secretary
Compensation Committee
If to the Benefit
Plans Investment Committee: Sun Company, Inc.
Philadelphia, PA 19103
Attention: Secretary,
Benefit Plans Investment
Committee
If to the Chief Executive
Officer: Sun Company, Inc.
Philadelphia, PA 19103
Attention: Chief Executive
Officer
If to the Treasurer: Sun Company, Inc.
Philadelphia, PA 19103
Attention: Treasurer
If to the Company: Sun Company, Inc.
Philadelphia, PA 19103
Attention: General Counsel
If to the Trustee: Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Attention: Anne Ayoob
If to the Recordkeeper: Towers Perrin
Centre Square West
1500 Market Street
Philadelphia, PA 19102
Attention:
Vice President and Director
If to an Plan Participant, to the address of such Plan Participant provided
by the Recordkeeper.
A Notice shall be deemed received upon the date of delivery if given
personally or, if given by mail, upon the receipt thereof.
24
Section 18. Trust Beneficiaries
Upon and after a Change in Control of the Company, each Plan Participant is
an intended beneficiary under this Trust, and shall be entitled to enforce
all terms and provisions hereof with the same force and effect as if such
person had been a party hereto.
Section 19. Counterparts
This Trust may be executed in any number of counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Trust as of the
date first written above.
SUN COMPANY, INC.
(the "Company")
By: /s/ MALCOLM I. RUDDOCK, JR.
----------------------------
Malcolm I. Ruddock, Jr.
Treasurer
TOWERS PERRIN
(the "Recordkeeper")
By: /s/ CLYDE BEERS
---------------------------
Vice President and Director
MELLON BANK, N.A.
(the "Trustee")
By: /s/ ROBERT T. BORZA
---------------------------
Vice President
25
APPENDIX A
----------
Additional plans (other than Directors' Deferred Compensation Plan)
and/or agreements, subject to Trust:
(1) Indemnification Agreements with each member of the Sun Company, Inc.
Board of Directors