MICROAGE, INC. COMPENSATION TRUST
DATED: February 1, 1998
MICROAGE, INC. COMPENSATION TRUST
THIS TRUST AGREEMENT is made and entered into by and between
MICROAGE, INC., a Delaware corporation (the "Company") and NORTHERN TRUST BANK
OF ARIZONA, N.A. (the "Trustee").
WHEREAS, the Company has adopted certain plans or agreements
for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (hereinafter collectively referred to as the "Plan")
attached as Appendix A and incorporated herein by this reference;
WHEREAS, the Company has incurred or expects to incur
liability under the terms of the Plan with respect to individuals participating
in the Plan;
WHEREAS, the Company wishes to establish a trust (hereinafter
called the "Trust") and to contribute to the Trust assets that shall be held
therein, subject to the claims of the Company's creditors in the event of the
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;
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 select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
and
WHEREAS, it is the intention of the Company to make
contributions to the Trust to provide itself with a source of funds to assist it
in meeting 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
ESTABLISHMENT OF TRUST
----------------------
1.1 The Company hereby deposits with the Trustee in trust Ten Dollars
($10.00), which shall become the principal of the Trust to be held, administered
and disposed of by the Trustee as provided in this Trust Agreement.
1.2 The Trust hereby established shall be irrevocable.
1.3 The Trust is intended to be a grantor trust, of which the Company
is the grantor, within the meaning of subpart E, part 1, subchapter J, chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
1.4 The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of the 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 and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against the
Company. Any assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3.1 herein.
1.5 The Company, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust with the
Trustee to augment the principal to be held, administered and disposed of by the
Trustee as provided in this Trust Agreement. Neither the Trustee nor any Plan
participant or beneficiary shall have any right to compel such additional
deposits.
SECTION 2
PAYMENTS TO PLAN PARTICIPANTS
-----------------------------
AND THEIR BENEFICIARIES
-----------------------
2.1 The Company shall deliver to the 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 the 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), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, the Trustee shall make payments to
3
the Plan participants and their beneficiaries in accordance with such Payment
Schedule. The Company shall have the sole responsibility for all tax withholding
filings and reports. The Trustee shall withhold such amounts from distributions
as the Company directs and shall follow the instructions of the Company with
respect to remission of such withheld amounts to appropriate governmental
authorities.
2.2 The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by the Company or such party as
it shall designate under the Plan, and any claim for such benefit shall be
considered and reviewed under the procedures set out in the Plan.
2.3 The Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. The Company shall notify the Trustee of its decision to make payment of
benefits 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, the Company shall make the balance of each such payment as it
falls due. The Trustee shall notify the Company where principal and earnings are
not sufficient.
SECTION 3
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS
-----------------------------------------
TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT
----------------------------------------------
3.1 The Trustee shall cease payment of benefits to Plan participants
and their beneficiaries if the Company is Insolvent. The Company shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) the Company
is unable to pay its debts as they become due, or (ii) the Company is subject to
a pending proceeding as a debtor under the United States Bankruptcy Code.
3.2 At all times during the continuance of this Trust, as provided in
Section 1.4 hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Company under federal and state law as set
forth below.
(a) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in writing of the
Company's Insolvency. If 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 determine whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment of benefits to Plan
participants or their beneficiaries.
4
(b) Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, the Trustee shall have no duty
to inquire whether the Company is Insolvent. The Trustee may in all events rely
on such evidence concerning the Company's solvency as may be furnished to the
Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(c) If at any time the Trustee has determined that the Company
is Insolvent, the Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the benefit of
the 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 the Company with respect to benefits due
under the Plan or otherwise.
(d) The Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after the Trustee has determined that the Company is not
Insolvent (or is no longer Insolvent).
3.3 Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3.2
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 for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.
SECTION 4
PAYMENTS TO THE COMPANY
-----------------------
4.1 Except as provided in Section 3 hereof, the Company shall have no
right or power to direct the Trustee to return to the 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.
SECTION 5
INVESTMENT AUTHORITY
--------------------
5.1 In no event may the Trustee invest in securities (including stock
or rights to acquire stock) or obligations issued by the Company, other than a
de minimus amount held
5
in common investment vehicles in which the Trustee invests. All rights
associated with assets of the Trust shall be exercised by the Trustee or the
person designated by the Trustee, and shall in no event be exercisable by or
rest with Plan participants.
5.2 The Company shall have the right at anytime, 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 the Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
SECTION 6
DISPOSITION OF INCOME
---------------------
6.1 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 THE TRUSTEE
-------------------------
7.1 The 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
the Company and the Trustee. Within 60 days following the close of each calendar
year and within 60 days after the removal or resignation of the Trustee, the
Trustee shall deliver to the 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.
SECTION 8
RESPONSIBILITY OF THE TRUSTEE
-----------------------------
8.1 The 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 the
Trustee shall incur no liability to any person for any
6
action taken pursuant to a direction, request or approval given by the Company
which is contemplated by, and in conformity with, the terms of the Plan or this
Trust and is given in writing by the Company. In the event of a dispute between
the Company and a party, the Trustee may apply to a court of competent
jurisdiction to resolve the dispute. The Trustee shall not be liable, to the
extent permitted by law, for compliance with the investment directions as
communicated to the Trustee by the Company.
8.2 The Trustee may consult with legal counsel (who may also be counsel
for the Company generally) with respect to any of its duties or obligations
hereunder.
8.3 The 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.
8.4 The 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 or collateral assignment interest
therein is held as an asset of the Trust, the Trustee shall have no power to
name a beneficiary of the policy other than the Trust, to assign the policy or
collateral assignment interest therein (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 or collateral
assignment interest therein.
8.5 However, notwithstanding the provisions of Section 8.4 above, the
Trustee may loan to the Company the proceeds of any borrowing against an
insurance policy or collateral assignment interest therein held as an asset of
the Trust, provided the Plan participant or policy owner authorizes such loan in
writing.
8.6 Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, the 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.
8.7 Any cost or expense incurred in connection with the performance of
the Trustee's responsibilities under this Section 8 (including the hiring of
agents, attorneys, accountants, etc.) shall be a proper expense of this Trust
and the Trustee shall not be liable for the payment of such costs or expenses.
The Company shall reimburse the Trustee for any such cost or expense incurred by
the Trustee in connection with the performance of its duties and
responsibilities under this Section 8.
7
8.8 The Company (which has the authority to do so under the laws of its
state of incorporation) shall indemnify the Trustee, and defend it and hold it
harmless from and against any and all liabilities, losses, claims, suits or
expenses (including attorneys' fees) of whatsoever kind and nature which may be
imposed upon, asserted against or incurred by the Trustee at any time by reason
of its provision of services under this Trust Agreement, its status as Trustee,
or by reason of any act or failure to act under the Trust Agreement, except to
the extent that any such liability, loss claim, suit or expense arises directly
from the Trustee's negligence or willful misconduct in the performance of
responsibilities specifically allocated to it under the Trust Agreement. This
paragraph shall survive the termination of this Trust Agreement.
SECTION 9
COMPENSATION AND EXPENSES OF THE TRUSTEE
----------------------------------------
9.1 The Company shall pay all expenses associated with the
administration of the Trust including the Trustee's fees and expenses. If not so
paid, the fees and expenses shall be paid from the Trust.
SECTION 10
RESIGNATION AND REMOVAL OF THE TRUSTEE
--------------------------------------
10.1 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
the Company and the Trustee agree otherwise.
10.2 The Trustee may be removed by the Company on 30 days notice or
upon shorter notice accepted by the Trustee.
10.3 Upon resignation or removal of the 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 the Company extends the time limit.
10.4 If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under Section 10.1 or 10.2. If no such appointment has
been made, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
8
SECTION 11
APPOINTMENT OF SUCCESSOR
------------------------
11.1 If the Trustee resigns or is removed in accordance with Section
10.1 or 10.2 hereof, the Company may appoint only a corporate trustee as a
successor to replace the 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 the Company or the successor Trustee to evidence the
transfer.
11.2 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 7 and 8 hereof. The successor Trustee shall not be responsible for and
the 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 the successor
Trustee.
SECTION 12
AMENDMENT OR TERMINATION
------------------------
12.1 This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of a Plan or shall make the Trust
revocable.
12.2 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. Upon termination of the Trust any assets remaining in
the Trust shall be returned to the Company.
12.3 Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, the Company may terminate
this Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to the Company.
9
SECTION 13
MISCELLANEOUS
-------------
13.1 Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
13.2 Benefits payable to the 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.
13.3 This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona.
SECTION 14
EFFECTIVE DATE
--------------
14.1 The effective date of this Trust Agreement shall be as of February
1, 1998.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Agreement to be executed by their duly authorized representatives on the 1st day
of February 1, 1998.
MICROAGE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Its:
-----------------------------
NORTHERN TRUST BANK OF ARIZONA, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Its:
-----------------------------
10
APPENDIX A
----------
1. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Supplemental Executive Retirement Plan, dated
October 1, 1992, as amended from time to time.
2. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Amended & Restated Split Dollar Insurance
Agreement, dated December 14, 1994.
* * *
11