UNIVERSAL FOODS CORPORATION
RABBI TRUST "A" AGREEMENT
This Trust Agreement is made as of the 10th day of September, 1998 by
and between UNIVERSAL FOODS CORPORATION, a Wisconsin corporation (the
"Company"), and FIRSTAR BANK, MILWAUKEE, N.A. (the "Trustee").
(i) WHEREAS, the Company previously entered into a trust agreement
dated January 18, 1988 ("Prior Trust Agreement") with Marshall & Ilsley Trust
Company as trustee (the "Prior Trustee") for the purpose of funding the payment
of benefits in the event of a change of control of the Company under various
executive employment contracts for selected Company executives (the
(ii) WHEREAS, the Trustee succeeded the Prior Trustee under the Prior
Trust Agreement on February 1, 1998; and
(iii) WHEREAS, the Prior Trust Agreement is revocable by the Company
because the trust thereunder has not been funded due to a change of control as
provided therein, there is only one Executive employment agreement covered by
the Prior Trust Agreement, and the Company, the remaining covered Executive and
the Trustee desire to amend the Prior Trust Agreement to make various changes in
the trust agreement, including the terms and conditions defined as a "Change of
Control" of the Company; and
(vi) WHEREAS, the Company, the remaining covered Executive and the
Trustee now desire to amend and restate the trust agreement substantially in the
form of the model rabbi trust issued by the Internal Revenue Service in Revenue
Procedure 92-64 (hereinafter the "Trust") and administer all of the assets held
by the Prior Trustee in the Trust as so amended and restated, which shall be
held therein, subject to the claims of the Company's creditors in the event the
Company becomes Insolvent, as herein defined, until paid in accordance with the
terms of the remaining Executive employment agreement listed on Appendix A and
any other Executive employment agreement designated by the Company to be covered
by this Trust Agreement (the "Contracts") for the benefit of the Executives
covered by the Contracts; and
(v) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of any
Contract 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,
as amended; and
(vi) 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 the
meeting of its liabilities under the Contracts;
NOW, THEREFORE, the parties do hereby amend and restate the Trust
Agreement, as follows:
SECTION 1. SUCCESSOR TRUST
(a) The Company and Trustee hereby acknowledge the deposit with the
Trustee of assets previously held under the Prior Trust Agreement, which shall
continue as the principal of the Trust to be held, administered and disposed of
by the Trustee as provided in this Trust Agreement.
(b) The Trust shall become irrevocable upon a Change of Control, as
(c) 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
(d) 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 paying benefits to Executives as required by the
Contracts and claims of general creditors, as herein set forth. Executives shall
have no preferred claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Contracts and this Trust Agreement
shall be mere unsecured contractual rights of Executives 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 the Company is
Insolvent, as defined in Section 3(a) herein.
(e) 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
Executive shall have any right to compel such additional deposits.
(f) Upon a Change of Control as defined herein, the Company shall,
within five (5) business days following the Change of Control, make an
irrevocable contribution to the Trust in an amount that is sufficient to pay the
Executives the benefits to which Executives would be entitled pursuant to the
terms of the Contract(s) as of the date on which the Change of Control occurred;
provided, however, payment of benefits through this Rabbi Trust A shall not
duplicate any benefits payable to Executives through Rabbi Trust B (which
provides for payment of benefits for several non-qualified benefit plans of the
Company) or any other irrevocable trust arrangement providing for secured
payment of benefits to Executives, notwithstanding that the benefits shall be
payable upon a Change of Control pursuant to the terms of the Contracts.
SECTION 2. PAYMENTS TO EXECUTIVES.
(a) Upon a Change of Control, within five (5) business days following
such Change of Control, the Company shall deliver to the Trustee a schedule (the
"Payment Schedule") that
indicates the amounts payable in respect of each Executive, 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 under
the Contracts), and the time of commencement for payment of such amounts. Except
as otherwise provided herein, the Trustee shall make payments to the Executives
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 Contracts and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by the Company.
(b) The entitlement of an Executive to benefits under a Contract shall
be determined by the Company or such party as it shall designate, and any claim
for such benefits shall be considered and reviewed under procedures determined
by the Company and uniformly applied.
(c) The Company may make payment of benefits directly to Executives as
they become due under the terms of the Contracts. The Company shall notify the
Trustee of its decision to make payment of benefits directly prior to the time
amounts are payable to Executives. 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 Contracts, 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 THE COMPANY IS INSOLVENT.
(a) The Trustee shall cease payment of benefits to Executives if the
Company is Insolvent. 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.
(b) At all times during the continuance of this Trust, as provided in
Section l(d) 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
(1) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in writing that the
Company is Insolvent. 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 Executives.
(2) Unless the Trustee has actual knowledge that the Company
is Insolvent, 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 whether the
Company is Insolvent as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination whether the Company
(3) If at any time the Trustee has determined that the Company
is Insolvent, the Trustee shall discontinue payments to Executives 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
Executives to pursue their rights as general creditors of the Company with
respect to benefits due under the Contracts or otherwise.
(4) The Trustee shall resume the payment of benefits to
Executives 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
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Executives under the terms of the Contracts for the period of such
discontinuance, less the aggregate amount of any payments made to Executives by
the Company in lieu of the payments provided for hereunder during any such
period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after a Change of Control, 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 Executives pursuant to the terms of the Contracts,
except in the case of a termination of the Trust pursuant to Section 12.
SECTION 5. INVESTMENT AUTHORITY.
(a) The Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by the Company. 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 Executives,
except that voting rights with respect to Trust assets will be exercised by the
(b) 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
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, to the extent not necessary for the
payment of benefits after a Change of Control, all or part of the income
received by the Trust, net of expenses and taxes,
shall be returned to the Company, as determined by the Company.
SECTION 7. ACCOUNTING BY TRUSTEE.
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 thirty (30) 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 TRUSTEE.
(a) 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 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 Contracts 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
(b) If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the Trustee against
the Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If the Company does not pay such costs, expenses and liabilities
in a reasonably timely manner, the Trustee may obtain payment from the Trust.
(c) 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
(d) 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.
(e) 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 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 (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.
(f) Notwithstanding any powers granted to the 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.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
The Company shall pay all administrative costs and the Trustee's fees
and expenses. If not so paid, the costs, fees and expenses shall be paid from
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 no less than thirty (30) days after receipt of
such notice unless the Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on fifteen (15) days
notice or upon shorter notice accepted by the Trustee.
(c) 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 thirty (30) days after receipt
of notice of resignation, removal or transfer, unless the Company extends such
(d) 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 paragraphs (a) or (b) of this section. 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.
SECTION 11. APPOINTMENT OF SUCCESSOR.
If the Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, the Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, 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.
SECTION 12. AMENDMENT OR TERMINATION.
(a) Prior to a Change of Control, 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 the Contracts
or shall make the Trust revocable after it has become irrevocable in accordance
with Section l(b) hereof.
(b) The Trust shall not terminate until the date on which Executives
are no longer entitled to benefits pursuant to the terms of the Contracts,
unless approved as provided in Section 12(c) hereof.
(c) After a Change of Control, upon written approval of Executives
entitled to payment of not less than sixty-five percent (65%) of benefits
payable under the Payment Schedule, the Company may terminate this Trust prior
to the time all benefits payable under the Payment Schedule have been made. All
assets in the Trust at termination shall be returned to the Company.
SECTION 13. MISCELLANEOUS.
(a) 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.
(b) Benefits payable to Executives 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.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Wisconsin.
(d) For purposes of this Trust, Change of Control shall mean:
(1) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of
20% or more of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (1), the
following acquisitions shall not constitute a Change of Control: (I) any
acquisition directly from the Company, (II) any acquisition by the Company,
(III) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company or
(IV) any acquisition pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (3) of this paragraph (d); or
(2) individuals who, as of September 10, 1998, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors; provided, however, that any
individual becoming a director subsequent to September 10, 1998 whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors; or
(3) consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another entity (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
business combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any employee benefit plan (or related trust) of the Company or
of such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or the action of the Board, providing for such Business
(4) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
SECTION 14. EFFECTIVE DATE.
The effective date of this amended and restated Trust Agreement shall
be September 10, 1998.
UNIVERSAL FOODS CORPORATION
By: /s/ Kenneth P. Manning
Name: Kenneth P. Manning
Title: Chairman, President and
Chief Executive Officer
FIRSTAR BANK, MILWAUKEE, N.A.
By: /s/ Richard A. Whittow
Name: Richard A. Whittow
Title: Vice President