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EXHIBIT 10(k)
DALLAS SEMICONDUCTOR CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN TRUST
This Agreement made this 11th day of June, 1998 by and between Dallas
Semiconductor Corporation ("Company") and ▇▇▇▇▇ Fargo Bank, N.A. ("Trustee").
WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Dallas
Semiconductor Corporation Executive Deferred Compensation Plan ("Plan");
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement for tax purposes 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 Company to make contributions to the
Trust to provide itself with a source of funds to assist in the meeting of its
liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) Company hereby deposits with Trustee in trust Two Million Two
Hundred Forty Thousand Dollars ($2,240,000) (the "Contribution") which shall
become the principal of the Trust to be held, administered and disposed of by
Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, Subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively
for the uses and purposes of Plan participants and general creditors as herein
set forth. Plan participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against
Company. Any
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assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) 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 Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither 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.
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), 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,
Trustee shall make payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and
paid by Company. The Company shall provide the Trustee with such other
information as may be reasonably requested by the Trustee in order to allow the
Trustee to comply with all of its distribution, reporting and withholding
responsibilities hereunder.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by Company or such party as it
shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan. Company
shall notify 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, Company shall make the balance of each such payment as it falls due.
Trustee shall notify Company where principal and earnings are not sufficient.
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Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary When Company Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges
in writing to Trustee that Company has become Insolvent, Trustee shall
determine whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits to Plan
participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming
to be a creditor alleging that Company is Insolvent, Trustee shall
have no duty to inquire whether Company is Insolvent. Trustee may in
all events rely on such evidence concerning Company's solvency as may
be furnished to Trustee and that provides Trustee with a reasonable
basis for making a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the
benefit of Company's general creditors. Nothing in this Trust
Agreement shall in any way diminish any rights of Plan participants of
their beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there were sufficient assets, if 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 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 Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
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Section 4. Payments to Company.
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return
to Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Plan participants and their beneficiaries pursuant
to the terms of the Plan.
Section 5. Investment Authority.
(a) Subject to Company's rights under Section 5(d), and subject
further to Section 5(e), Trustee shall invest all contributions solely in
Company's authorized common stock, $.02 par value ("Company Stock"), within ten
(10) trading days after receipt or, if necessary to prevent unusual
fluctuations in the Company Stock's price, as soon as reasonably possible after
receipt. Subject to Sections 5(d) and 5(e), Trustee shall hold the shares of
Company Stock so acquired until January 1, 2005. Company Stock shall be sold to
fund benefit payments under the Plan as needed and shall be sold only as needed
to fund benefit payments under the Plan or to return forfeitures to the Company
under the Plan. All purchases of Company Stock shall be made on the open market
at fair market value. Until invested in Company Stock, all contributions and
income that are not needed for current expenditures shall be held in
interest-bearing investments under Section 5(b)(4) pending the investment of
such funds in Company Stock.
(b) Subject to the provisions of Section 5(a), 5(d) and 5(e), Trustee
shall have the following investment powers:
(1) To invest in any properties, real or personal or mixed,
including but not limited to, common or preferred stocks (including
Company Stock or rights to acquire Company Stock), securities, or any
other interest in any corporation, interests in investment trusts and
mutual funds, bonds, notes or other evidences of indebtedness or
ownership, first mortgages, real property, leases on real property,
contracts to sell real property, contracts of sale of real property,
short-term cash equivalents having ready marketability, including but
not limited to U.S. Treasury bills, commercial paper, certificates of
deposit, savings shares or savings share accounts of savings and loan
associations, and similar type securities, and any other property of
any kind or nature whatsoever;
(2) To purchase or subscribe for property and to retain it as
a Trust asset; to sell any Trust asset at any time held by it at
either public or private sale for cash or other consideration or on
credit at such time or times and on such terms and conditions as may
be deemed appropriate; to exchange such Trust assets and to grant
options for the purchase or exchange thereof; and to convey,
partition, or otherwise dispose of,
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with or without covenants, including covenants of warranty of title,
any property free of all trusts;
(3) To register any property held by it hereunder in the name
of Trustee or in the names of nominees with or without the addition of
words indicating that such property is held in a fiduciary capacity,
to take and hold the same unregistered or in form permitting
transferability by delivery, to deposit or arrange for the deposit of
securities in a qualified central depository even though, when so
deposited, such property may be held in the name of the nominee of
such depository with other securities deposited therein by other
persons, or to deposit or to arrange for the deposit of any property
issued by the United States government, or any agency or
instrumentality thereof, with a Federal Reserve bank, provided that
the books and records of Trustee shall at all times disclose that all
such property is a Trust asset;
(4) To invest cash balances held by Trustee, from time to
time, in short-term cash equivalents having ready marketability,
including but not limited to money market mutual funds (including
those for which Trustee or its affiliate act as investment advisor),
U.S. Treasury bills, commercial paper, certificates of deposit,
savings shares or savings share accounts of savings and loan
associations, and similar type securities;
(5) Generally to do all such acts, to make, execute,
acknowledge, and deliver any and all deeds, leases, assignments, oil
and gas leases, documents of transfer, and conveyances, receipts,
releases, agreements, and without limitation by the foregoing, to
execute any and all other instruments, take all such proceedings and
exercise all such rights and powers with relation to any Trust asset
to the same extent as an individual might do with respect to his own
property; and
(6) To deposit all or any Trust assets with a custodian,
subject to the direction and control of the Trustee.
(c) Subject to Section 5(a) and Section 5(e), Trustee may invest in
securities (including stock or rights to acquire stock) or obligations issued
by Company. All rights associated with assets of the Trust shall be exercised
by Trustee or the person designated by Trustee, and shall in no event be
exercisable by or rest with Plan participants.
(d) 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 Company in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
(e) Company shall have full investment responsibility for the
purchase, sale, retention, tender and voting of Company Stock and for any
insurance contracts, and Trustee shall act with respect to Company Stock and
any insurance contracts only as provided in this Section or as otherwise
directed by Company.
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Section 6. Disposition of Income.
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested as provided in
Section 5.
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within thirty (30) days following the close of each
calendar quarter and within thirty (30) days after the removal or resignation
of Trustee, Trustee shall deliver to Company a written account of its
administration of the Trust during such quarter or during the period from the
close of the last preceding quarter 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
quarter or as of the date of such removal or resignation, as the case may be.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of this Trust and is given in writing by Company.
In the event of a dispute between Company and a party, Trustee may apply to a
court of competent jurisdiction to resolve the dispute. In the event of a
conflict between the terms of the Trust and the terms of the Plan solely with
respect to the Trustee's obligations, the terms of the Trust shall take
precedence to the extent consistent with applicable law.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in
a reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein;
provided, however, that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a
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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.
(d) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
Section 9. Compensation and Expenses of Trustee.
Company shall pay all administrative and 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 Trustee.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective thirty (30) days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Trustee may be removed by Company on thirty (30) days notice or
upon shorter notice accepted by Trustee.
(c) If Trustee resigns or is removed within four (4) years of a Change
of Control, as defined herein, Company shall apply to a court of competent
jurisdiction for the appointment of a successor Trustee or for instructions.
(d) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within fifteen (15) days
after receipt of notice of resignation, removal or transfer, unless Company
extends the time limit, which extension Company will not unreasonably withhold.
(e) If 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 paragraph (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
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Section 11. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, 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 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 required by Company or the successor Trustee
to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the provisions of
Section 10(c) hereof, the appointment of a successor Trustee shall be effective
when accepted in writing by the new Trustee. The new Trustee shall have all the
rights and powers of the former Trustee, including ownership rights in Trust
assets. The former Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.
(c) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 5, 7, and 8 hereof. The successor Trustee shall not be responsible for
and Company shall indemnity and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it becomes
successor Trustee.
Section 12. Amendment or Termination.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan, unless sooner revoked in accordance with
Section 12(c) hereof. Upon termination of the Trust any assets remaining in the
Trust shall be returned to Company.
(c) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, 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 Company.
(d) Sections 1(b), 1(e), 4, 10(c), 12(a), 12(c), 12(d), and 13(d) of
this Trust Agreement may not be amended by Company for four (4) years following
a Change of Control, as defined herein.
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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 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.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
(d) For purposes of this Trust, Change of Control shall mean: (i) any
time at which any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended on the date of adoption of the
Plan), other than the Company, a subsidiary of the Company or any savings,
pension, or other benefit plan for the benefit of employees of the Company or
its subsidiaries, acquires or otherwise becomes the beneficial owner of shares
of Company Stock (or any other voting securities of the Company, or options,
warrants or other securities or rights convertible into, exchangeable for or
exercisable for Company Stock or any other voting securities of the Company) in
a transaction or series of transactions that results in such person, directly
or indirectly, owning more than twenty percent (20%) of the outstanding shares
of Company Stock (including, for this purpose, all other securities having the
right to vote generally in the election of directors); (ii) in connection with
or as a result of any cash tender offer, merger or other business combination,
sale of assets or contested election (by proxy or otherwise), resignation of
director(s), or any combination of the foregoing transactions (a
"Transaction"), such time as the persons who were non-employee directors before
the Transaction shall cease to constitute at least a majority of the
non-employee directors on the Board of Directors of the Company or any
successor to the Company; or (iii) the election of any person other than ▇. ▇.
▇▇▇▇▇▇▇ as chairman and chief executive officer of the Company. Company shall
immediately notify Trustee of any Change of Control. Trustee may conclusively
rely upon such notice and shall have no duty to determine whether a Change of
Control has occurred.
Section 14. Effective Date.
The effective date of this Trust Agreement shall be December 31, 1997.
DALLAS SEMICONDUCTOR CORPORATION
BY: ▇. ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ FARGO BANK, N.A.
BY: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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