EXHIBIT 10.14
TRUST AGREEMENT
Between
PNC INVESTMENT CORP.,
as Settlor
and
HERSHEY TRUST COMPANY,
as Trustee
TRUST AGREEMENT
This Agreement is made as of the 20th day of December, 1999, by and
between PNC INVESTMENT CORP., a corporation duly established and existing under
the laws of the State of Delaware (the "Company") and HERSHEY TRUST COMPANY, a
national bank organized under the laws of the United States, with an office in
Hershey, Pennsylvania (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company, its parent corporation, PNC Bank Corp. (the
"Parent Corporation"), and certain of its subsidiaries and affiliates (the
Parent Corporation and the Company's certain subsidiaries and affiliates
collectively referred to as the "Employers") are or may become obligated under
the employee benefit plans and agreements listed on Attachment A hereto (the
"Plans") to make payments to certain former, present and future employees and
directors (collectively, the "Participants"); and
WHEREAS, for purposes of ensuring that such payments will not be
improperly withheld in the event of a Change in Control of the Parent
Corporation, the Company has been directed to establish a grantor trust (the
"Trust") to provide for the funding of benefit obligations under the Plans;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants contained herein and intending to be legally bound hereby, the Company
and the Trustee hereby covenant and agree as follows:
SECTION I
TRUST FUND
1.1 NAME OF TRUST
The trust fund referred to herein shall be known as the PNC INVESTMENT
CORP. BENEFIT FUNDING TRUST.
1.2 ESTABLISHMENT OF TRUST FUND
A trust fund (the "Trust Fund") is hereby established with the Trustee
consisting of such sums of money and such other property (including insurance
policies) as may be acceptable to the Trustee as from time to time shall be paid
or delivered to the Trustee in accordance with the terms hereof and for the
purposes hereof. All cash or other property so received, together with the
income therefrom, shall be held, managed and administered by the Trustee
pursuant to the terms of this Agreement without distinction between principal
and income.
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The Trust is intended to be a "grantor trust," within the meaning of
Section 671 of the Internal Revenue Code of 1986, as amended (the "Code").
The Trustee will record a separate account within the Trust for the
Company and each Employer, and the Trustee will value not only the assets of the
Trust as a whole, but also the assets of each account attributable to the
Company and each Employer. For federal income tax purposes, the Company and each
Employer will be deemed to be the grantor of its separate account; provided,
however, that because the Company and each Employer are members of the same
consolidated return group, a single Form 1041 may be issued to the Parent
Corporation. Payments are to be made from the account in the Trust of the
Company or the Employer employing the employee to whom payments are made.
The insolvency of the Company and each Employer is considered
separately so that, in the event that one Employer, but not the Company or the
other Employers becomes insolvent, the assets in the account of the insolvent
Employer will be identified and held for the benefit of that Employer's
creditors.
For accounting purposes only, separate accounts may be established for
individual Participants in the Plans. Monies allocated to any such individual
accounts shall be distributable only to the Participants for whom the accounts
are established (or to the beneficiaries of such Participants) pursuant to the
provisions of the applicable Plan.
The Trust Fund shall be held separate and apart from other funds of the
Company and shall be used exclusively for the purpose of assuring payment by the
Company and the Employers of future obligations of the Company and the Employers
arising under the Plans, except to the extent otherwise set forth herein.
1.3 DESCRIPTION OF TRUST
The Company represents and agrees that the Trust established under this
Agreement is intended to fund only the Plans. The Trust is, and is intended to
be, a depository arrangement with the Trustee for the setting aside of cash and
other assets of the Company as and when it so determines in its sole discretion
and as required by the terms of Section 3.1 hereof, for the purpose of
satisfying future obligations under the Plans. The Company represents that each
Plan is an excess benefit plan (within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), a
benefit arrangement for a select group of management or highly compensated
active and/or former employees (within the meaning of Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA) or is not covered by ERISA. The Company further
represents that the Plans are not qualified under Section 401 of the Code and,
therefore, are not subject to the Code's requirements applicable to
tax-qualified plans.
1.4 REVOCABILITY
The Trust shall be revocable by the Company, and Participants shall
have no right to any part of the Trust Fund; provided, however, that the Trust
may not be revoked during a "Change
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in Control Period" (as defined in Section XVII of this Agreement) or after a
"Change in Control" (as defined in Section XVII of this Agreement).
1.5 ACCEPTANCE BY THE TRUSTEE
The Trustee accepts the Trust established under this Trust Agreement on
the terms and subject to the provisions set forth herein, and agrees to
discharge and perform fully and faithfully all of the duties and obligations
imposed upon it under this Trust Agreement.
SECTION II
AUTHORITY
A designated "Representative" appointed by the Company shall have the
authority to act on behalf of the Company, subject to the terms hereof. In its
sole discretion, the Representative may designate one or more individuals to act
on its behalf. The Trustee shall be entitled to deal with the Representative
until notified otherwise by the Company. The Company shall provide the Trustee
with a certified list of the names and specimen signatures of its
Representative, or any individuals designated by the Representative to act on
its behalf, and shall also notify the Trustee in writing, from time to time, of
any changes to the names so provided.
2.1 DISTRIBUTIONS FROM TRUST FUND
The Trustee shall make payments (including the payment of Trust
expenses) and other disbursements from the Trust Fund only upon the express
written instructions of the Representative or as expressly authorized by the
terms of this Agreement. Such payments may be made either directly to the person
or persons specified in such written instructions, or deposited in a checking
account maintained on behalf of the Trust Fund for the purpose of making
payments or disbursements in accordance with the provisions of the Plans.
2.2 INDEMNIFICATION
To the extent permitted by law, the Company shall fully indemnify and
hold the Trustee harmless from any liability and expense incident to any act or
omission by reason of the Trustee's reliance upon, and compliance with, written
instructions issued by the Representative not in contravention of the terms of
the Plans.
2.3 TRUSTEE RESPONSIBILITY FOR PAYMENTS WHEN COMPANY OR EMPLOYER IS (OR IS
DEEMED TO BE) INSOLVENT
(a) If at any time the Trustee has actual knowledge, or has determined
in accordance with Section 2.3(c) below, that the Company or an Employer is
insolvent under the standards set forth in Section 2.3(b) below, the Trustee
shall hold for the benefit of, or deliver upon the order of a court of competent
jurisdiction, any undistributed portion of the Company's or the
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Employer's Trust Fund account to satisfy the claims of the Company's or the
Employer's general creditors.
(b) The Company or an Employer shall be considered insolvent for
purposes of this Agreement if (i) it is unable to pay its debts as they become
due or (ii) it is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
(c) The Company agrees that its Chief Executive Officer or General
Counsel, as from time to time acting, shall have the duty to inform the Trustee
of the Company's or an Employer's insolvency. The Chief Executive Officer or
General Counsel may discharge such obligation through a Representative. If the
Company or a person claiming to be a creditor of the Company or an Employer
alleges in writing to the Trustee that the Company or an Employer has become
insolvent, the Trustee shall independently determine, within 30 days after
receipt of such notice, whether the Company or the Employer is insolvent in
accordance with the standards therefor established in this Agreement, and
pending such determination, shall discontinue all payments from the Trust Fund.
The Company shall cooperate with the Trustee in its investigation. The Trustee
may refuse any request for an analysis of insolvency if such request is received
within 90 days of its concluding a prior analysis. The Trustee shall resume
payments in accordance with the terms of this Agreement only after the Trustee
has determined that the Company or the Employer is not insolvent (or is no
longer insolvent, if the Trustee initially determined the Company or the
Employer to be insolvent). Nothing in this Agreement shall in any way diminish
any rights of any Participant to pursue his or her rights as a general creditor
of the Company or an Employer with respect to benefits under the terms of the
Plans.
(d) Unless the Trustee has received notice or otherwise has actual
knowledge of the Company's or an Employer's insolvency or alleged insolvency,
the Trustee shall have no duty to inquire as to whether the Company or an
Employer is insolvent.
(e) If the Trustee discontinues payments to a person from the Trust
Fund pursuant to Section 2.3(b) above and subsequently resumes such payments,
the first payment to such person following the discontinuance shall include the
aggregate amount of all payments which would have been made to such person in
accordance with the terms of the Plan during such period, less the aggregate
amount of such payments to each person made by or on behalf of the Company or an
Employer during such period, as certified in writing to the Trustee by the
Representative.
SECTION III
EFFECT OF A CIC TRIGGER EVENT OR A CHANGE IN CONTROL
3.1 CONTRIBUTIONS TO THE TRUST
(a) Upon the occurrence of a "CIC Trigger Event" (as defined in Section
XVII of this Agreement) or a Change in Control (if no CIC Trigger Event precedes
the Change in Control), the Parent Corporation shall deliver to the Trustee to
be held in trust hereunder an amount of
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cash, marketable securities (valued at fair market value), insurance policies or
a combination thereof (the "Required Contribution") equal to the amount that,
together with any amounts already held by the Trust Fund, will be sufficient to
provide for the obligations of the Company and the Employers under the Plans.
Such amount shall be determined by the Parent Corporation in its discretion, but
shall not be less than such amount as would be determined (i) using an annual
interest rate assumption of 6%, (ii) using the UP-84 mortality table for
benefits payable under the Plans three or more years after the date of the
Required Contribution and no mortality assumption for benefits payable less than
three years from the date of the Required Contribution, (iii) assuming that, for
purposes of determining the amount to be transferred to the Trust with respect
to those Plans that are agreements (the "CIC Agreements") providing for the
payment of benefits in the event of certain terminations of employment following
a Change in Control, that all Participants who are covered by such agreements
are terminated without "Cause" (as defined in such agreements) by the Company as
of the first day of the applicable "Coverage Period" (as defined in the
agreements) and (iv) assuming that, for purposes of determining the amount to be
transferred to the Trust with respect to each Plan that is not a CIC Agreement,
that each Participant terminates employment with the Company and the Employers
as of the earliest date as of which the Participant is entitled to begin
receiving benefits under each such Plan (assuming the Participant terminated
employment as of such date). If such Required Contribution is made as the result
of a CIC Trigger Event, such Required Contribution, as adjusted for income and
losses, shall be returned to the Parent Corporation upon the written request of
the Parent Corporation; provided, however, that the Required Contribution may
not be returned to the Parent Corporation during the existence of a Change in
Control Period or after a Change in Control.
(b) At twelve-month intervals commencing twelve months after the date a
Required Contribution is made pursuant to Section 3.1(a) hereof, unless a Change
in Control Period has ceased to exist and no Change in Control has occurred, the
Parent Corporation shall recalculate the Required Contribution that would be
required to be delivered pursuant to Section 3.1(a) hereof assuming a CIC
Trigger Event occurred as of the end of the month immediately preceding such
twelve-month interval date. If the amount so calculated exceeds the fair market
value of the Trust Fund's assets, the Parent Corporation shall promptly (and in
no event later than seven days from the date of such twelve-month interval date)
pay to the Trustee an amount in cash (or marketable securities or any
combination thereof) equal to such excess.
(c) The Chief Executive Officer or the General Counsel of the Parent
Corporation (or one of their designated representatives) shall promptly notify
the Trustee in writing of the occurrence of any of the following: a CIC Trigger
Event, a Change in Control, or the cessation of a Change in Control Period.
After a Change in Control and during the existence of a Change in Control
Period: (i) this Trust shall be irrevocable, as provided in Section 3.2; (ii)
all payments due in accordance with the provisions of the Plans, as determined
by the Trustee in its reasonable judgment, shall be made directly by the Trustee
to Participants; and (iii) the Trustee shall not act upon any direction from the
Company, any Employer (including the Parent Corporation) or the Representative
that is contrary to the foregoing provisions.
(d) The Trustee shall be fully protected in making such payments from
time to time in accordance with the provisions of this Section 3.1 and shall be
charged with no responsibility
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whatsoever respecting the application of such monies, except as otherwise
required by law.
(e) The Company shall provide the Trustee with copies of all of the
Plan documents, including any amendments thereto.
3.2 PAYMENTS TO THE COMPANY
(a) Prior to a Change in Control and other than during the existence of
a Change in Control Period, the Company or the Representative may direct the
Trustee to pay all or a portion of the Trust Fund to the Company. After a Change
in Control and during the existence of a Change in Control Period, neither the
Company, any Employer (including the Parent Corporation) nor the Representative
shall have any power to direct the Trustee to return to the Company or to pay to
others (other than Participants, their beneficiaries or the general creditors of
the Company or any Employer) any portion of the Trust Fund prior to the complete
satisfaction of the Company's or the Employers' obligations to Participants and
their beneficiaries under the terms of the Plans.
(b) Notwithstanding the provisions of Section 3.2(a), if after a Change
in Control or during a Change in Control Period, the Parent Corporation
determines that a portion of the Trust Fund will never be required to satisfy
such obligations assuming that the Trust Fund earns a zero rate of return, such
portion may be returned to the Parent Corporation if (i) the Trustee is directed
to make such payment by the Company or the Representative and (ii) the Trustee
has satisfied itself that the amount remaining in the Trust Fund will be
sufficient to pay or provide for all future benefits under the Plans using such
assumptions as it deems appropriate in its sole discretion; provided, however,
that no amounts may be returned to the Parent Corporation pursuant to this
Section 3.2 prior to the third anniversary of the date of a Change in Control.
(c) Notwithstanding the foregoing provisions of Section 3.2, the
Representative may, at any time within 60 days of the date of any payment made
by the Company to Participants in satisfaction of the Company's or the
Employers' obligations under the Plans, direct the Trustee to reimburse the
Company for such payments; provided, however, that such reimbursement shall be
made to the Company only to the extent that (i) all amounts due and payable
under the Plans have been paid in full and (ii) the Trustee determines that the
reimbursement of such amounts will not impair the ability of the Trust to fully
fund future benefit payments under the Plans using such assumptions as it deems
appropriate in its sole discretion.
3.3 DISPUTES BETWEEN PARTICIPANT AND TRUSTEE
It is recognized that a Participant may dispute the amount of benefit
paid by the Trustee under one or more Plans, or may assert a right to receive a
benefit payment when the Trustee determines that no payment is due to the
Participant under one or more Plans. In either such event, the Trustee shall
gather information from all sources it may deem appropriate (including the
Company) and shall permit the Participant to make a written submission. After
consideration of all such materials, the Trustee shall provide the Participant
with its decision as rendered in its reasonable judgment. If such decision is
adverse to the Participant's claim, the decision shall be accompanied by a
written explanation of the basis for the Trustee's decision. The Trustee's
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decision shall be final and binding. During the period that the Trustee is
considering the claim, the Trustee shall make payment of only the amount of
benefits (if any) as to which there is no dispute. If the Trustee then reaches a
decision that the Participant's benefits should have been increased, it shall
make a single sum payment equal to the excess of the revised benefit amount over
the amount actually paid together with simple interest at a rate of 9% per annum
from each benefit payment date to the date of the lump sum payment.
3.4 INSUFFICIENCY OF TRUST FUND
If, as of the date of any payment of Plan benefits from the Trust Fund,
the Trustee determines that the Trust Fund is insufficient to provide for the
payment to Participants of the full amount of their Plan benefits to be paid as
of such date, the amount of Plan benefits paid to each Participant from the
Trust Fund as of such date shall be reduced in proportion to the ratio which the
aggregate fair market value of the Trust Fund bears to the aggregate amount
otherwise payable at that time to each such Participant. At all times the
Company and the Employers shall continue to be fully liable for the payment of
all Plan benefits notwithstanding any insufficiency of the Trust Fund.
SECTION IV
INVESTMENT OF THE TRUST FUND
4.1 GENERAL
Except as otherwise provided herein, the Trustee shall invest and
reinvest the assets of the Trust Fund in accordance with the written directions
of the Representative or its designate.
4.2 APPOINTMENT OF INVESTMENT MANAGERS BY THE COMPANY
Before a Change in Control and other than during a Change in Control
Period, the Company or the Representative, in their sole discretion, may appoint
one or more investment managers (including the Trustee) to manage and control
the assets of the Trust Fund (the "Investment Managers"). Any Investment Manager
so appointed shall be either: (a) an investment adviser registered as such under
the Investment Advisers Act of 1940, as amended; (b) a bank, as defined in that
Act; (c) an insurance company qualified to perform investment management
services under the laws of more than one state; or (d) a subsidiary or affiliate
of the Company authorized to perform investment management services. Any
Investment Manager shall certify in writing that it is qualified to act in such
capacity, and acknowledge that it assumes the fiduciary duties established by
this Agreement.
4.3 ALLOCATION OF ASSETS BY THE COMPANY FOR INVESTMENT
Before a Change in Control and other than during a Change in Control
Period, the Company or the Representative shall direct the manner of allocation
among Investment
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Managers of assets of the Trust Fund, and may direct the transfer of assets
between Investment Managers on reasonable notice to the Trustee and any affected
Investment Manager. An Investment Manager designated to manage assets allocated
to it shall have exclusive authority to manage, acquire and dispose of such
assets subject to any investment policy that may, from time to time, be
established by the Representative or the Company.
Unless the Trustee participates knowingly in, or knowingly undertakes
to conceal, an act or omission of an Investment Manager, where such act or
omission would be a breach of the fiduciary responsibility of such Investment
Manager, the Trustee shall be under no liability for any loss of any kind which
may result by reason of any action taken by it in accordance with any direction
of such Investment Manager or by reason of its failure to exercise any power or
authority with respect to allocated assets because of the failure of the
Investment Manager to issue proper and timely directions to the Trustee.
4.4 INVESTMENT RESPONSIBILITY OF THE TRUSTEE
After a Change in Control and during any Change in Control Period, the
Trustee shall have responsibility for the management and control of the assets
of the Trust Fund, subject to any investment policy (a "Pre-CIC Investment
Policy") established by the Company or the Representative prior to the
commencement of the Change in Control Period or the Change in Control (if no
Change in Control Period precedes the Change in Control). After a Change in
Control and during any Change in Control Period, the Trustee may continue to
retain or terminate the services of any Investment Manager previously appointed
by the Company or the Representative, and in its sole discretion, exercise the
powers described in Sections 4.2 and 4.3 hereof (without regard to the
limitation on the exercise all of such powers by the Company or the
Representative to periods prior to a Change in Control and other than during a
Change in Control Period) subject to the terms of any Pre-CIC Investment Policy.
4.5 INVESTMENT POWERS OF TRUSTEE
In addition to any power granted under any statute or laws pertaining
to the investment of trust assets, the Trustee's investment powers shall
include, but shall not be limited to, the investment of trust assets in the
following:
(a) bonds or other obligations of the United States of America, and any
agencies thereof, or any bonds or other obligations which are directly or
indirectly guaranteed by the United States, or any agency thereof;
(b) open-end or closed-end investment companies that offer investment
funds, the assets of which correspond to those described under (a) above with at
least $10 billion under management;
(c) savings accounts, certificates of deposit and other types of time
deposits with any financial institution or quasi-financial institution whose
combined capital and surplus is not less than $1 billion, including the
Trustee's banking department; and
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(d) to the extent permitted by applicable law, any collective, common
or pooled trust
fund operated by the Trustee, the assets of which primarily correspond to those
described under (a) above, but which also may include bonds or obligations of
non-governmental issuers which are rated among the top three ratings categories
of any nationally recognized rating agency. The provisions of any such
collective, common or pooled investment trust shall be incorporated herein by
reference during, but only during the period that any portion of this Trust Fund
is a part of such trust.
Prior to a Change in Control and other than during any Change in
Control Period, the Trustee shall exercise the powers set forth in this Section
4.5 only in accordance with the directions of the Representative or its
designee. After a Change in Control and during any Change in Control Period the
Trustee shall have full discretion to exercise the powers set forth in this
Section 5, subject to the terms of any Pre-CIC Investment Policy.
4.6 ADMINISTRATIVE POWERS OF THE TRUSTEE
The Trustee is authorized and empowered to:
(a) sell, exchange, convey, transfer or otherwise dispose of, any
property, real or personal, held in the Trust Fund and to make any sale by
private contract or public auction, and for cash or credit, or partly for cash
and partly for credit, and no person dealing therewith shall be bound to see the
application of the purchase money or to inquire into the validity, expediency or
propriety of any such sale or disposition;
(b) vote in person or by proxy any stocks, bonds or other securities
held in the Trust Fund, without any obligation to inquire as to or follow the
wishes of the Company or the Representative with respect to such voting;
(c) exercise any rights appurtenant to any such stocks, bonds or other
securities for the conversion thereof into other stocks, bonds or securities, or
to exercise rights or options to subscribe for or purchase additional stocks,
bonds or other securities, and to make any and all necessary payments with
respect to such conversion or exercise;
(d) join in, dissent from or oppose the reorganization,
recapitalization, consolidation, sale or merger of corporations or properties of
which the Trust Fund may hold stocks, bonds or other securities or in which it
may be interested, upon such terms and conditions as may be deemed advisable, to
pay any expenses, assessments or subscriptions in connection therewith, and to
accept any securities or property, whether or not trustees would be authorized
to invest in such securities or property, which may be issued upon any such
reorganization, recapitalization, consolidation, sale or merger and thereafter
to hold the same without any duty to sell;
(e) borrow or raise monies from any lender, excluding the Trustee in
its corporate capacity, if permitted by law, for the benefit of the Trust Fund
and in conjunction with its duties under this Agreement, in such amount and upon
such terms and conditions as may be deemed advisable; and for any sums so
borrowed to issue promissory notes and to secure the repayments thereof by
mortgaging or pledging all or any part of the Trust Fund except any common,
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collective or pooled trust units which may be held in the Trust Fund; and no
person lending money to the Trust Fund shall be bound to see to the application
of the money loaned or to inquire into the validity, expediency or propriety of
any such borrowing;
(f) cause any investment of the Trust Fund to be registered in, or
transferred into, the Trustee's name or the names of a nominee or nominees, or
to retain such investment unregistered or in a form permitting transfer by
delivery, provided that the books and records of the Trustee shall at all times
show that all such investments are part of the Trust Fund;
(g) purchase or otherwise acquire and make payment therefor from the
Trust Fund any bond or other form of guarantee or surety required by any
authority having jurisdiction over this Trust Fund and its operation, or
believed to be in the best interests of the Trust Fund, except the Trustee or
Investment Manager may not obtain any insurance whose premium obligation extends
to the Trust Fund which would protect the Trustee or Investment Manager against
their liability for breach of fiduciary duty;
(h) defend against or participate in any legal actions involving the
Trust Fund in the manner and to the extent it deems advisable, the costs of any
such defense or participation to be borne by the Trust Fund unless paid by the
Company; provided, however, that the Trustee or Investment Manager shall not be
entitled to costs if either shall have committed a breach of fiduciary duty;
(i) compromise, compound and settle any debt or obligation due to the
Trust Fund and to reduce the rate of interest on, to extend or otherwise modify,
or to foreclose upon default or otherwise enforce any such obligation; or
(j) enforce any right, obligation or claim in its absolute discretion
and in general to protect in any way the interest of the Trust Fund, either
before or after default with respect to any such right, obligation or claim, and
in case it shall consider such action in the best interest of the Trust Fund, in
its absolute discretion 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 it.
The Trustee shall at all times be authorized and empowered to exercise
all of the powers listed in this Section 4.6; provided that, prior to a Change
in Control and other than during the existence of a Change in Control Period the
Trustee shall exercise the powers described in clauses (b), (d), (e), (h), (i)
and (j) of this Section 4.6 only if it has not received direction from the
Representative, otherwise it shall be obligated to follow the direction of the
Representative.
SECTION V
DIVERSIFICATION
Prior to a Change in Control and other than during the existence of a
Change in Control
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Period, the Company or its Representative shall be solely responsible for the
manner in which investments of the Trust Fund are prudently diversified. After a
Change in Control and during the existence of a Change in Control Period, the
Trustee shall be responsible for the manner in which Trust Fund investments are
prudently diversified, subject to any Pre-CIC Investment Policy.
The Trustee shall have no liability or responsibility for the
diversification of the investments of the Trust Fund: (a) held in any account
under the direction of an Investment Manager or (b) when the Trust Fund is
managed in accordance with the written directions of the Representative or its
designee.
SECTION VI
FIDUCIARY RESPONSIBILITY
The Representative, the Trustee, and any designated Investment Manager
shall, under those circumstances where each or any of them are charged with the
responsibility for the investment management of assets of the Trust Fund,
discharge their duties as provided in this Agreement with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character with the like aims and by
diversifying the investments held hereunder so as to minimize the risk of large
losses, unless under the circumstances, it would clearly not be prudent to do
so; provided, however, that the Representative, the Trustee, or any designated
Investment Manager does not guarantee (a) the Trust Fund in any manner against
investment loss or depreciation in asset value or (b) the adequacy of the Trust
Fund to meet and discharge all or any liabilities of the Plans.
The Representative, the Trustee, or any designated Investment Manager
may, in its discretion, keep such portion of the Trust Fund in cash or cash
balances as it may deem reasonably necessary from time to time, and shall keep
such portion of the Trust Fund in cash or cash balances as may be required to
meet contemplated payments from the Trust Fund. No liability shall accrue for
any interest on any cash balances so maintained.
The Representative, or the Trustee is specifically authorized to
appoint ministerial agents as to part or all of the Trust Fund and functions
incident thereto where, in its sole discretion, such delegation is necessary,
appropriate or desirable to facilitate the operations of the Trust Fund and
consistent with the purposes of the Trust Fund.
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SECTION VII
TAXES AND TRUSTEE'S COMPENSATION
7.1 TRUSTEE'S COMPENSATION
The Trustee shall be entitled to such reasonable compensation for
services rendered as mutually agreed upon in writing with the Company, and shall
be reimbursed for all reasonable expenses (except those arising from a breach of
fiduciary duty) incurred by the Trustee as a result of the performance of its
duties hereunder, including, but not limited to, legal and accounting expenses
incurred as a result of disbursements and payments made by the Trustee, and
reasonable compensation for agents, counsel or other services rendered to the
Trustee by third parties, and expenses incident thereto. Any such compensation,
and reimbursement for any such expenses shall be paid by the Trust Fund to the
Trustee, unless paid by the Company.
7.2 TAXES
The Trustee shall notify the Representative of any tax assessments that
it receives on any property held in the Trust Fund, and, unless notified to the
contrary by the Representative within 90 days, shall either pay or pay over to
the Company funds sufficient to cover such assessments if so directed by the
Representative. If the Representative notifies the Trustee within said period
that such assessments are invalid or that they should be contested, the Trustee
shall take whatever action is indicated in the notice received from the
Representative, including contesting the assessment or litigating any claims.
Notwithstanding anything herein to the contrary, the Company shall at
all times be responsible for the payment and reporting of taxes due on the
income and gains of the Trust Fund, and for the withholding, payment, and
reporting of any and all taxes withheld from payments from the Trust Fund to
Participants under the Plans (or to their designated beneficiaries). The Trustee
shall notify the Company or its Representative of the income and gains of the
Trust Fund in order to facilitate the Company's responsibilities in regard to
such payment and reporting of taxable income of the Trust Fund. The Trustee
shall pay over to the Company such sums as may be required for payment of
withholding tax obligations with respect to benefit payments under the Plans
made by the Trustee from the Trust Fund; provided, however, that no amounts
shall be paid from the Trust Fund with respect to withholding tax obligations
other than those that arise as of the date of actual payment of benefits from
the Trust Fund to a Participant. The Company shall notify the Trustee of any and
all amounts to be withheld from any payments to be made to individual
Participants (or to their designated beneficiaries) and issue directions to the
Trustee regarding payment over to the Company of such sums so withheld. The
Trustee shall have no duty or obligation to determine the actual taxable income
to be paid by the Company on the income and gains of the Trust Fund, or of any
amount of federal, state, or local income taxes to be withheld, reported, or
paid by, or on behalf, of any Participant or their designated beneficiaries.
However, it shall be the duty of the Trustee to file, or cause to be filed, any
fiduciary tax return that may be required under Section 671 of the Code.
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SECTION VIII
BOOKS, RECORDS AND ACCOUNTS
The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder
(including those transactions related to accounts under the management of a
designated Investment Manager) and all such accounts, books and records relating
thereto shall be open at all reasonable times to inspection and audit by any
person designated by the Representative within a reasonable time period
following the close of each fiscal year of the Trust Fund, and within 120 days,
or such other agreed upon time, following the removal or resignation of the
Trustee or the termination of the Trust, the Trustee shall file with the
Representative a certified written report setting forth all investments,
receipts and disbursements, and other transactions effected during the fiscal
year, or other period from the close of the preceding report to the date of such
removal, resignation or termination, including a description of all securities
and investments then held in the Trust Fund, and such other information
customarily provided by the Trustee.
Upon the expiration of 180 days following the close of a fiscal year of
the Trust Fund for which an annual accounting is filed, or 90 days from the date
of filing of any interim accounting, the Trustee shall, to the extent permitted
by law, be forever released and discharged from any liability or accountability
to anyone for clerical errors apparent on the face of such accounting.
No Participant or beneficiary under the Plans, shall have the right to
demand or be entitled to any accounting by the Trustee, other than those to
which they may be entitled under the law.
Notwithstanding any other provision hereof or of the Plans, the Trustee
shall not be subject to any liability for any act or omission, regardless of its
nature, after three years following the date on which a plaintiff had actual
knowledge of such act or omission; provided, however, that in the case of fraud
or concealment the Trustee may be held liable at any time within six years after
the date of discovery of such error or omission.
The Trustee shall determine the fair market value of the Trust Fund in
its customary manner at such times as may be required by the Representative, or
in order to carry out the provisions of the Plans.
All records and accounts maintained by the Trustee with respect to the
Trust Fund shall be preserved for such period as may be required under any
applicable law. Upon the expiration of any such retention period, the Trustee
shall have the right to destroy such records and accounts after first notifying
the Company or the Representative in writing of its intention, and transferring
to the Company or to the Representative any such books, records, and accounts as
requested. The Trustee shall have the right to preserve all books, records, or
accounts in original form, or on microfilm, magnetic tape, or any other similar
process.
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SECTION IX
RESIGNATION AND REMOVAL OF TRUSTEE
The Trustee may be removed by the Company at any time upon written
notice to the Trustee to that effect; provided, however, that after a Change in
Control or during the existence of a Change in Control Period the Trustee may
not be removed by the Company without the written consent of at least 75% of the
Participants as of the date of removal who were Participants as of the day
preceding the Change in Control or the commencement of the Change in Control
Period (if removal or the Trustee is to occur during a Change in Control
Period). The Trustee may resign as Trustee of the Trust Fund upon written notice
to that effect delivered to the Company.
Such removal or resignation shall become effective as of the last day
of the month which coincides with or next follows the expiration of 90 days from
the date of the delivery of such written notice, unless an earlier or later date
is agreed upon by the Company and the Trustee.
In the event of removal or resignation, a successor trustee shall be
appointed by the Company to become Trustee as of the time such removal or
resignation becomes effective; provided, however, that after a Change in Control
and during the existence of a Change in Control Period any appointment of a
successor trustee must be approved in writing by at least 75% of the
Participants as of the date of appointment who were Participants as of the day
preceding the Change in Control or the commencement of the Change in Control
Period (if the appointment is to occur during the Change in Control Period). No
successor trustee appointed hereunder shall be held responsible or liable for
the acts or omissions of its predecessor trustee.
Upon the appointment of a successor trustee, the retiring Trustee shall
endorse, transfer, assign, convey and deliver to the successor trustee all of
the funds, securities and other property then held by it in the Trust Fund,
except such amounts as it may consider necessary to cover its compensation and
its expenses in connection with the settlement of its accounts and the delivery
of the Trust Fund to the successor trustee. The balance remaining of any amount
so reserved shall be transferred and paid over to the successor trustee promptly
upon settlement of its accounts, subject to the right of the retiring Trustee to
retain any property deemed unsuitable by it for transfer until such time as
transfer can be made.
Nothing herein shall be construed to deny the Trustee the right to a
settlement of its accounts either by: (a) a receipt and release executed by the
Company or (b) settlement by order of a court of competent jurisdiction.
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SECTION X
AMENDMENT AND TERMINATION
10.1 PRIOR TO A CHANGE IN CONTROL AND OTHER THAN DURING A CHANGE IN CONTROL
PERIOD
Prior to a Change in Control and other than during a Change in Control
Period, the Company may from time to time amend, in whole or in part, any or all
of the provisions of this Trust Agreement without the consent of any
Participant; provided, however, that (a) no amendment shall be made to this
Trust Agreement or the Plans that will cause this Trust Agreement, the Plans or
the assets of the Trust Fund to be governed by or subject to Part 2, 3 or 4 of
Title I of ERISA, (b) no amendment will be made that will cause the assets of
the Trust Fund to be taxable to Participants prior to the distribution of
benefits therefrom and (c) no amendment shall increase the duties or
responsibilities of the Trustee, unless the Trustee consents thereto in writing.
10.2 FOLLOWING A CHANGE IN CONTROL OR DURING A CHANGE IN CONTROL PERIOD
Following a Change in Control and during the existence of a Change in
Control Period, this Trust Agreement may be amended (subject to the restrictions
set forth in Section 10.1) only with the prior written consent of 75% of the
Participants as of the date of the amendment who were Participants immediately
preceding the Change in Control or the Change in Control Period (if the
amendment occurs during a Change in Control Period). Upon receipt of a request
from the Company for an amendment, the Trustee shall be responsible for
attempting to secure such consents in a timely fashion, and unless ordered by a
court of competent jurisdiction, shall not reveal to the Company or to any other
person any information concerning such consents, except whether the required
majority has been achieved.
10.3 COMPLIANCE WITH ERISA AND THE CODE
Notwithstanding anything in this Section X to the contrary, this Trust
Agreement and the Plans shall be amended from time to time (without the consent
of any Participant) to (a) maintain the "unfunded" status of the Plans for
purposes of ERISA and the Code, (b) maintain the Trust as a "grantor trust" for
purposes of the Code, (c) ensure that contributions to the Trust by the Company
will not result in the recognition of income by Participants and that income and
gains of the Trust Fund will not constitute taxable income to the Trust or
Participants and (d) ensure that benefits paid to Participants from the Trust
Fund will be deductible by the Company in the year of payment (but only to the
extent that any such amendment does not result in a material detriment to
Participants).
10.4 EXECUTION OF AMENDMENTS
The Company and the Trustee shall execute such amendments to this Trust
Agreement as shall be necessary to give effect to any amendment made pursuant to
this Article X.
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10.5 WINDING UP
To the extent not revoked in accordance with the provisions of this
Trust Agreement, the Trust Fund shall remain in existence until the Plans are
terminated and all benefits payable thereunder are paid to Participants or their
designated beneficiaries. Upon payment of or provision for all such benefits
pursuant to the terms of the Plans, this Trust Fund shall be terminated and any
assets remaining in the Trust Fund shall be distributed to the Company, pursuant
to the directions of the Representative.
In making such distribution, the Trustee shall presume that such
distribution is in full compliance with, and is not in violation of, any
applicable law regulating the termination of the Plans, and the Trustee may
require the Company or the Representative to furnish it with evidence that such
distribution does not violate any applicable law. The Company shall assume all
liability of any kind whatsoever arising from any such distribution made by the
Trustee to the Company or at the direction of the Representative as a result of
the termination of the Plans, and shall indemnify and save harmless from any
attempt to impose any liability on the Trustee with respect to such
distributions.
In no event shall this Trust continue for a period longer than 21 years
following the date of death of the last surviving individual who is a
Participant in any of the Plans on the date of execution of this Trust
Agreement.
SECTION XI
CONSOLIDATION OR MERGER
Any corporation into which the Trustee may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Trustee is a party, or any corporation succeeding to
the trust business of the Trustee, shall become the successor of the Trustee
hereunder, without the execution or filing of any instrument or the performance
of any further act on the part of the parties thereto.
SECTION XII
SPENDTHRIFT TRUST
The rights, benefits, and payments of any Participant or designated
beneficiary payable under the Plans and the assets of the Trust Fund shall not
be subject in any manner to anticipation, sale, assignment, alienation,
transfer, pledge, encumbrance, or charge, voluntary or involuntary, by any
Participant or beneficiary. Any attempt by a Participant or beneficiary to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the
same shall be void. The assets of the Trust Fund shall not in any manner be
liable for or subject to the debts,
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contracts, liabilities, engagements, or torts of any Participant or beneficiary
entitled to benefits under the Plans and such benefits shall not be considered
an asset of a Participant or a beneficiary in the event of his or her insolvency
or bankruptcy.
SECTION XIII
PARTICIPATING EMPLOYERS
13.1 ADOPTION OF TRUST BY AFFILIATED EMPLOYERS
The Company may from time to time consent to the participation in this
Trust by any of its subsidiaries or affiliates (referred to above as the
"Employers"). The Company may require, as a condition of the joining of the
Trust by any such entity, that such entity take such action as is necessary to
establish that any plan arrangement or agreement which such entity maintains (or
is a party to) meets the criteria described in Section 1.3, and may adopt a
supplement or supplements to this Trust setting forth the identity of the plan,
arrangement or agreement involved and special rules, if any, as to the interests
of persons covered by such other plan.
13.2 ACTIONS BY AFFILIATES
Any subsidiary or affiliate participating hereunder shall become a
party to the Trust and become an "Employer" hereunder when its Board of
Directors delivers a resolution to the Company approving such action along with
an adoption agreement, in the form prescribed by the Representative, executed by
its officers. A copy thereof shall be filed with the Trustee. Any such Employer
shall contribute its allocable share to the cost of maintaining and
administering the Trust so long as it remains a party to the Trust.
13.3 COMPANY AMENDS ON BEHALF OF ALL EMPLOYERS
The Company shall have the right to amend the Trust Agreement on behalf
of all Employers. However, all of the other provisions of this Trust Agreement
(specifically including, but not limited to, Sections 1.3, 2.3 and 3.3) shall
apply to the separate share of the Trust Fund attributable to an Employer,
mutatis mutandis.
13.4 ANY EMPLOYER MAY TERMINATE
The right is reserved by each Employer to terminate the Trust with
respect to its separate account within the Trust; provided, however, that after
a Change in Control and during the existence of a Change in Control Period, an
Employer may not terminate the Trust with respect to Participants who were
Participants immediately prior to the CIC Trigger Event or the Change in Control
(if no CIC Trigger Event precedes the Change in Control). In the event that any
Employer shall withdraw or shall be deemed to have withdrawn from participation
in all of the Plans, the Representative shall instruct the Trustee in writing as
to the disposition to be made pursuant to the Plans of that portion of the Trust
Fund held for employees of such Employer.
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Any corporation into which an Employer may merge, or with which it may be
consolidated, or any corporation resulting from such merger or consolidation or
which otherwise succeeds to substantially all of the assets of such entity shall
be and shall continue as that entity for all purposes of this Trust Agreement
without the execution or filing of any additional instrument or the performance
of any further act; provided, that it continues to meet the definition of
"Employer" as set forth in this Trust Agreement.
SECTION XIV
CHOICE OF LAW
This Trust Agreement shall be construed and enforced, to the extent
possible, according to the laws of the Commonwealth of Pennsylvania, and all
provisions hereof shall be administered according to the laws of said state and
any federal laws, regulations or rules which may from time to time be
applicable.
SECTION XV
NECESSARY PARTIES; THIRD-PARTY BENEFICIARIES
(a) To the extent permitted by law, prior to a Change in Control and
other than during the existence of a Change in Control Period, only the Trustee
and the Company shall be necessary parties in any application to the courts for
an interpretation of this Trust Agreement or for an accounting by the Trustee,
and no Participant or designated beneficiary under the Plans, or other person
having an interest in the Trust Fund, shall be entitled to any notice or service
of process. Any final judgment entered in such an action or proceedings shall,
to the extent permitted by law, be conclusive upon all persons claiming under
this Trust Agreement or the Plans.
(b) To the extent permitted by law, upon the occurrence of a Change in
Control and during the existence of a Change in Control Period, only the
Trustee, the Company and the Parent Corporation shall be necessary parties in
any application to the courts for an interpretation of this Trust Agreement or
for an accounting by the Trustee, and no Participant or designated beneficiary
under the Plans, or other person having an interest in the Trust Fund, shall be
entitled to any notice or service of process. Any final judgment entered in such
an action or proceedings shall, to the extent permitted by law, be conclusive
upon all persons claiming under this Trust Agreement or the Plans.
(b) Participants in the Plans are intended to be third-party
beneficiaries of this Agreement and shall be entitled to enforce the terms of
this Agreement to the same extent as a party hereto.
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SECTION XVI
SUCCESSORS TO THE COMPANY AND THE EMPLOYERS
In addition to any obligations imposed by law upon any successor(s) to
the Company and the Employers, the Company and the Employers shall be obligated
to require any successor(s) (whether direct or indirect, by purchase, merger,
consolidation, operation of law, or otherwise) to all or substantially all of
the business and/or assets of the Company and the Employers to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company and the Employers would be required to perform it if no such
succession had taken place; in the event of such a succession, references to
"Company" and "Employers" herein shall thereafter be deemed to include such
successor(s).
SECTION XVII
DEFINITIONS
17.1 A "CHANGE IN CONTROL" means a change of control of the Parent Corporation
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), whether or not the Parent Corporation is then
subject to such reporting requirement; provided, however, that without
limitation, a Change in Control shall be deemed to have occurred if:
(a) any Person, excluding employee benefit plans of the Parent
Corporation, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act or any successor provisions thereto), directly or
indirectly, of securities of the Parent Corporation representing 20% or more of
the combined voting power of the Parent Corporation's then outstanding
securities; provided, however, that such an acquisition of beneficial ownership
representing between 20% and 40%, inclusive, of such voting power shall not be
considered a Change in Control if the Board of Directors of the Parent
Corporation (the "Board") approves such acquisition either prior to or
immediately after its occurrence;
(b) the Parent Corporation consummates a merger, consolidation, share
exchange, division or other reorganization or transaction of the Parent
Corporation (a "Fundamental Transaction") with any other corporation, other than
a Fundamental Transaction that results in the voting securities of the Parent
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 60% of the combined voting power immediately
after such Fundamental Transaction of (i) the Parent Corporation's outstanding
securities, (ii) the surviving entity's outstanding securities or (iii) in the
case of a division, the outstanding securities of each entity resulting from the
division;
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(c) the shareholders of the Parent Corporation approve a plan of
complete liquidation or winding-up of the Parent Corporation or an agreement for
the sale or disposition (in one transaction or a series of transactions) of all
or substantially all of the Parent Corporation's assets;
(d) as a result of a proxy contest, individuals who prior to the
conclusion thereof constituted the Board (including for this purpose any new
director whose election or nomination for election by the Parent Corporation's
shareholders in connection with such proxy contest was approved by a vote of at
least two-thirds of the directors then still in office who were directors prior
to such proxy contest) cease to constitute at least a majority of the Board
(excluding any Board seat that is vacant or otherwise unoccupied);
(e) during any period of 24 consecutive months, individuals who at the
beginning of such period constituted the Board (including for this purpose any
new director whose election or nomination for election by the Parent
Corporation's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board
(excluding any Board seat that is vacant or otherwise unoccupied); or
(f) the Board determines that a Change in Control has occurred.
Notwithstanding anything to the contrary herein, a divestiture or
spin-off of a subsidiary or division of the Parent Corporation shall not by
itself constitute a "Change in Control."
17.2 "CIC FAILURE" means the following:
(a) with respect to a CIC Trigger Event described in Section 17.4(a),
the Parent Corporation's shareholders vote against the transaction approved by
the Board or the agreement to consummate the transaction is terminated; or
(b) with respect to a CIC Trigger Event described in Section 17.4(b),
the proxy contest fails to replace or remove a majority of the members of the
Board.
17.3 "CHANGE IN CONTROL PERIOD" means the period beginning on the date of a CIC
Trigger Event and ending on the earlier of the date of a CIC Failure or the
occurrence of a Change in Control; provided, however, that a Change in Control
Period shall not terminate if subsequent to the commencement of the Change in
Control Period another CIC Trigger Event occurs and a CIC Failure has not
occurred with respect to that CIC Trigger Event.
17.4 "CIC TRIGGER EVENT" means the occurrence of either of the following:
(a) the Board or the Parent Corporation's shareholders approve a
transaction described in Section 17,1(b) hereof; or
(b) the commencement of a proxy contest in which any Person seeks to
replace or
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remove a majority of the members of the Board.
17.5 "PERSON" shall have the meaning given in Section 3(a)(9) of the Exchange
Act and shall also include any syndicate or group deemed to be a "person" under
Section 13(d)(3) of the Exchange Act.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused their duly authorized officers to execute and deliver
this Trust Agreement as of the day and year first above noted.
PNC INVESTMENT CORP.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chair, President & Treasurer
HERSHEY TRUST COMPANY
By: /s/ ▇▇▇▇ ▇. Shelren
--------------------------
Accepted and agreed to, intending to be legally bound, by PNC Bank Corp. with
respect to its obligations hereunder.
PNC BANK CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
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ATTACHMENT "A"
PLANS
PNC Bank Corp. Supplemental Incentive Savings Plan
PNC Bank Corp. Supplemental Retirement Savings Plan
PNC Bank Corp. Supplemental Executive Retirement Plan
PNC Bank Corp. ERISA Excess Pension Plan
PNC Bank Corp. Key Executive Equity Program
PNC Bank Corp. and Affiliates Deferred Compensation Plan
PNC Bank Corp. Director's Deferred Compensation Plan
PNC Bank Corp. Directors Retirement Plan
PNC Bank Corp. Outside Directors Deferred Stock Unit Plan
Pittsburgh National Bank Deferred Director's Fees
All Change in Control Severance Agreements entered into between PNC Bank Corp.
and executives of PNC Bank. Corp. and its subsidiaries and affiliates