EXHIBIT 10.3
COASTCAST CORPORATION
GRANTOR TRUST
This Trust Agreement made this 1st day of September, 1996 by and between
Coastcast Corporation, a California corporation ("Company") and Imperial
Trust Company, a California corporation ("Trustee");
WHEREAS, Company has entered into the Coastcast Corporation Supplemental
Executive Retirement Plan (the "Plan") effective September 1, 1996 pursuant
to which Company has agreed to provide participants in the Plan with certain
supplemental retirement benefits;
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such Plan;
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 Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Plan as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of
1974;
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
ARTICLE 1
ESTABLISHMENT OF TRUST
1.1 NORMAL CONTRIBUTIONS. Company shall make contributions to the
Trust at the times and in the amounts listed in Exhibit A to this Agreement,
which shall become the principal of the Trust to be held, administered and
disposed of by Trustee as provided in this Trust Agreement. In the event
that the Company fails to make the contributions specified in Exhibit A, the
Trustee shall promptly notify the Company of such default. If the Company
fails to correct such default within ninety (90) days after receipt of such
notice, such default Shall be treated as a Change in Control for all purposes
under this Trust Agreement. 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 deposited by Trustee as provided in this Agreement. Neither
Trustee nor any Plan participant
1 of 13
23
or beneficiary shall have any right to compel such additional contributions
prior to a Change in Control.
1.2 CONTRIBUTIONS UPON A CHANGE IN CONTROL. Upon a Change in
Control, Company shall make an irrevocable contribution to the Trust equal to
the following:
(a) the present value of all vested and unvested accrued
benefits payable to participants or beneficiaries under the Plan on a
pre-tax basis; plus
(b) the present value of all reasonably anticipated fees and
expenses (including reasonably anticipated legal expenses) of the Trust for
the duration of the Trust, which shall be presumed to be at least one
percent (1%) of the amount in paragraph (a); less
(c) the current fair market value of all the assets held in the
Trust immediately before such contribution.
1.3 IRREVOCABILITY. The Trust hereby established shall be
irrevocable.
1.4 GRANTOR TRUST. 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. 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 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 3.1 herein.
1.5 ESTABLISHMENT OF SUBTRUSTS. Upon a Change of Control, or at any
other time upon written direction of Company, Trustee shall establish a separate
subtrust for each participant in the Plan who is covered by the Trust. The
subtrusts shall reflect an undivided interest in the assets of the Trust and
shall not require any segregation of particular assets. Whenever separate
subtrusts are established, the then-existing assets of the Trust or affected
portion thereof shall be allocated in proportion to the vested accrued benefits,
and then, if any assets remain, the unvested (if any) accrued benefits of the
participants affected thereby, in both instances as of the end of the month
immediately preceding such allocation. With respect to any new contributions to
the Trust by Company after separate subtrusts have been established, Company
shall designate the subtrust for which such contributions are made. After
separate subtrusts are established, assets allocated to one subtrust may not be
utilized to provide benefits under any other subtrust until all benefits payable
under such subtrust have been paid in full. Trustee shall allocate investment
earnings and losses of the Trust among the subtrusts in proportion to their
account balances, except that changes in the value of an insurance contract
shall be allocated to the subtrust for which it is held. Payments to general
creditors in the event of Company becoming Insolvent shall be charged against
the subtrusts in
2 of 13
24
proportion to their account balances, except that payment of benefits to a
participant as a general creditor shall be charged against the subtrust for that
participant.
ARTICLE 2
PAYMENTS TO PLAN PARTICIPANTS
AND THEIR BENEFICIARIES
2.1 PAYMENT SCHEDULE PROVIDED BY COMPANY. Company shall deliver to
Trustee a schedule (the "Payment Schedule") that indicates the amounts payable
in respect of each Plan participant (and his or her beneficiaries), that
provides a formula of other instructions acceptable to Trustee for determining
the amounts so payable, the form in which such amount is to be paid (as provided
for or available under the 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. Trustee shall make provisions 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.
2.2 BENEFITS DETERMINED BY PLAN. 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 prior
to a Change in Control and by the Participant Committee after a Change in
Control. Any claim for such benefits shall be considered and reviewed under the
procedures set out in the Plan. Any dispute remaining after such review
procedures shall be resolved as provided in Article 8.
2.3 DIRECT PAYMENT BY COMPANY. 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.
ARTICLE 3
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS
TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT
3.1 INSOLVENCY DEFINED. Trustee shall cease payment of benefits to
Plan participants and their beneficiaries if Company is Insolvent. Company
shall be considered "Insolvent" for purposes of this Trust Agreement if
(a) Company is unable to pay its debts as they become due, or (b) Company is
subject to a pending proceeding as a debtor under the United States Bankruptcy
Code.
3 of 13
25
3.2 ASSETS SUBJECT TO CLAIMS OF CREDITORS ON INSOLVENCY. At all
times during the continuance of this Trust, 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.
(a) 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.
(b) 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.
(c) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their beneficiaries to
pursue their rights as general creditors of Company with respect to
benefits due under the Plan or otherwise.
(d) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Article 2 of this
Trust Agreement only after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
3.3 MAKE UP OF SUSPENDED BENEFITS AFTER INSOLVENCY. Provided that
there are sufficient assets, if Trustee discontinues the payment of benefits
from the Trust pursuant to Section 3.2 hereof and subsequently resumes such
payments, the first payment following such discontinuance shall include the
aggregate amount of all payments due to Plan participants or their beneficiaries
under the terms of the Plan for the period of such discontinuance, less the
aggregate amount of any payments made to Plan participants or their
beneficiaries by Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
ARTICLE 4
PAYMENTS TO COMPANY
4.1 NO RETURN OF ASSETS TO COMPANY PRIOR TO PAYMENT OF BENEFITS.
Except as provided in Article 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 payments of benefits have
been made to Plan participants and their beneficiaries pursuant to the terms of
the Plan.
4 of 13
26
4.2 COMPANY MAY SUBSTITUTE OTHER PROPERTY FOR TRUST ASSETS. Company
shall have the power to reacquire part or all of the assets or collateral held
in the Trust at any time, by simultaneously substituting for it other readily
marketable property of equivalent value, net of any costs of disposition. The
property which is substituted may not be less liquid or marketable or less well
secured than the property for which it is substituted, as determined by Trustee.
Such power is exercisable in a nonfiduciary capacity and may be exercised
without the approval or consent of participants or any other person. The value
of any insurance contract for purposes of substitution shall be the present
value of future projected cash flow or benefits payable under the contract, but
not less than the cash surrender value. The projection shall include death
benefits based on reasonable mortality assumptions, including facts specifically
related to the health of the insured and the terms of the contract to be
reacquired. Values shall be reasonably determined by Trustee and may be based
on the determination of qualified independent parties or experts. Trustee shall
have the right to secure confirmation of value by a qualified independent party
or expert for all property to be substituted for other property hereunder.
ARTICLE 5
POWERS OF TRUSTEE
5.1 INVESTMENT POLICY. Company shall establish and provide to
Trustee an "Investment Policy" setting forth permitted investments for the
Trust. Prior to a Change in Control, Company may revise this Investment Policy
from time to time and Trustee shall invest the Trust assets in investments
authorized under the Investment Policy, in accordance with written directions of
Company. After a Change in Control, the Participant Committee shall approve or
revise the Investment Policy and shall direct Trustee with regard to investment
of Trust assets. Trustee shall be fully protected in acting upon or complying
with any investment objectives, guidelines, restrictions or directions provided
by Company or the Participant Committee in accordance with this paragraph.
If Trustee does not receive instructions from Company prior to a
Change in Control, or from a Participant Committee after a Change in Control,
for the investment of part or all of the Trust assets for a period of at least
sixty (60) days, Trustee shall invest and reinvest the liquid assets of the
Trust as Trustee may deem appropriate, in its sole discretion, in investments
permitted under the Investment Policy as previously furnished to Trustee.
Trustee is hereby specifically authorized to invest in any common or pooled
investment fund or mutual fund (within the types of investments permitted under
the Investment Policy), now or hereafter maintained by Trustee, or an affiliate
of Trustee, and any interest-bearing savings or deposit accounts with the
banking department of Trustee, or an affiliate of Trustee.
5.2 ADMINISTRATIVE POWERS. Subject in all respects to applicable
provisions of this Trust Agreement and the Plan, Trustee shall have the rights,
powers and privileges of an absolute owner when dealing with property of the
Trust, including, without limiting the generality of the foregoing, the powers
listed below:
5 of 13
27
(a) To sell, convey, transfer, exchange, partition, lease, and
otherwise dispose of any of the assets of the Trust at any time held by
Trustee under this Trust Agreement.
(b) To exercise any option, conversion privilege or subscription
right given the trustee as the owner of any security held in the Trust; to
vote any corporate stock either in person or by proxy, with or without
power of substitution; to consent to or oppose any reorganization,
consolidation, merger, readjustment of financial structure, sale, lease or
other disposition of the assets of any corporation or other organization,
the securities of which may be an asset of the Trust; to take any action in
connection therewith and receive and retain any securities resulting
therefrom.
(c) To cause any property of the Trust to be issued, held or
registered in the name of Trustee as trustee, or in the name of one or more
of its nominees, or one or more nominees of any system for the central
handling of securities, or in such form that title will pass by delivery,
provided that the records of Trustee shall in all events indicate the true
ownership of such property.
(d) To renew or extend the time of payment of any obligation due
or to become due.
(e) To commence or defend lawsuits or legal or administrative
proceedings; to compromise, arbitrate or settle claims, debts or damages in
favor of or against the Trust; to deliver or accept, in either total or
partial satisfaction of any indebtedness or other obligation, any property;
to continue to hold for such period of time as Trustee may deem appropriate
any property so received; and to pay all costs and reasonable attorneys'
fees in connection therewith out of the assets of the Trust.
(f) To manage any real property in the Trust in the same manner
as if Trustee were the absolute owner thereof.
(g) To borrow money from any person in such amounts upon such
terms and conditions and for such purposes as Trustee, in its discretion,
may deem appropriate; in connection therewith to pledge or mortgage any
Trust asset as security; to lend money on a secured or unsecured basis to
any person other than a party in interest.
(h) To hold such part of the assets of the Trust uninvested for
such limited periods of time as may be necessary for purposes of orderly
account administration or pending required directions, without liability
for payment of interest.
(i) To determine how all receipts and disbursements shall be
credited, charged or apportioned as between income and principal.
(j) To dispose of any property in the Trust and to enforce any
note or obligations of Company to the Trust (and foreclose on any
collateral securing such notes, subject to the terms of any pledge
agreement to Trustee) in the event Company fails to
6 of 13
28
make required contributions to the Trust after sixty (60) days' written
notice to Company of its failure to make such required contributions.
(k) Generally to do all acts, whether or not expressly
authorized, which Trustee may deem necessary or desirable for the orderly
administration or protection of the Trust.
5.3 NO INVESTMENT IN COMPANY SECURITIES. In no event may Trustee
invest in securities (including stock or rights to acquire stock) or obligations
issued by Company, other than a de minimis amount held in common investment
vehicles in which Trustee invests. All rights associated with assets of the
Trust shall be designated by Trustee, and shall in no event be exercisable by or
rest with Plan participants.
5.4 LIMITATION WITH RESPECT TO INSURANCE POLICIES. Trustee shall
have, without exclusion, all powers conferred on Trustees by applicable law,
unless expressly provided otherwise herein; provided, however, that if an
insurance policy is held as an asset of the Trust, Trustee shall have no power
to name a beneficiary of the policy other than the Trust, to assign the policy
(as distinct from conversion of the policy to a different form) other than to a
successor Trustee, or to loan to any person the proceeds of any borrowing
against such policy.
5.5 LIMITATION WITH RESPECT TO COMPANY AS A BUSINESS.
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.
ARTICLE 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.
ARTICLE 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. Such records shall be open to inspection by Company at all
reasonable times. Within sixty (60) days following the close of each calendar
year and within sixty (60) days after the removal or resignation of Trustee,
Trustee shall deliver to 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
7 of 13
29
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. After a Change in Control the Participant
Committee shall have the same rights of inspection of Company and Trustee
shall deliver a copy of its written account to the Participant Committee as
well as to Company.
ARTICLE 8
RESPONSIBILITY OF TRUSTEE
8.1 FIDUCIARY RESPONSIBILITY. 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 or
the Participant Committee which is contemplated by, and in conformity with, the
terms of the Plan or this Trust and is given in writing by Company.
8.2 DISPUTED CLAIMS. In the event of a dispute between Company and
any participant or beneficiary, Trustee may decide such claim and give notice to
Company and the participant or beneficiary of its decision on the claim. Either
party shall then have sixty (60) days from the receipt of such Trustee notice to
make a demand for arbitration, in writing, to Trustee, the opposing party, and
the American Arbitration Association. If no such demand is made after such
sixty (60) day period, the decision of Trustee shall become final and binding on
all parties. Trustee may decline to decide a claim and may submit such claim
directly to arbitration by providing notice of demand for arbitration in writing
to Company, the relevant participant or beneficiary and the American Arbitration
Association.
8.3 ARBITRATION. Any claim, dispute or other matter in question
arising out of or related to this Trust Agreement shall be resolved by binding
arbitration in accordance with the California Employment Dispute and Resolution
Rules of the American Arbitration Association. The decision of the arbitrators
shall be final and may be enforced in any court of competent jurisdiction. The
fees and expenses (including reasonable attorneys' fees) incurred in the
arbitration shall be paid as directed by the arbitrator. However, all of
Trustee's fees and expenses incurred in any arbitration or enforcement
proceeding to resolve a dispute between Company and a participant or
beneficiary shall be allowed as an administrative expense of the Trust.
8.4 LEGAL COUNSEL. Trustee may consult with legal counsel (who may
also be counsel for Company generally) with respect to any of its duties or
obligations hereunder.
8.5 EXPERTS. Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder.
8 of 13
30
ARTICLE 9
COMPENSATION AND EXPENSES OF TRUSTEE
Trustee shall be reimbursed for all reasonable expenses and shall be
paid a reasonable fee fixed by agreement with Company from time to time. No
increase in the fee shall be effective before sixty (60) days after Trustee
gives notice to Company of the increase. Trustee shall notify Company
periodically of expenses and fees. Company shall pay trustee and other
administrative and valuation fees and expenses.
ARTICLE 10
RESIGNATION AND REMOVAL OF TRUSTEE
10.1 RESIGNATION. Trustee may resign at any time by written notice to
Company, which shall be effective sixty (60) days after receipt of such notice
unless Company and Trustee agree otherwise. If Trustee resigns, Company shall
select a successor Trustee in accordance with the provisions of Section 11.1
hereof, subject to the approval of the Participant Committee in the event of a
Change in Control prior to the effective date of Trustee's resignation or
removal.
10.2 REMOVAL. Trustee may be removed by Company at any time prior to
a Change in Control on sixty (60) days' notice or upon shorter notice accepted
by Trustee. On or after a Change in Control, Trustee may be removed by the
Participant Committee on sixty (60) days' notice or upon shorter notice accepted
by Trustee. If Trustee is removed, a successor shall be appointed, in
accordance with Section 11.2 hereof, by the effective date of removal. If no
such appointment has been made, Trustee may apply to a court of competent
jurisdiction for instructions. All expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of the Trust.
10.3 TRANSFER OF ASSETS. 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
ninety (90) days after receipt of notice of resignation, removal or transfer,
unless Company extends the time limit.
ARTICLE 11
APPOINTMENT OF SUCCESSOR
11.1 ON RESIGNATION OF TRUSTEE. If Trustee resigns pursuant to the
provisions of Section 10.1 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. 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
9 of 13
31
Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to evidence the transfer.
11.2 ON REMOVAL OF TRUSTEE. If Trustee is removed in accordance with
Section 10.2 hereof, Company or the Participant Committee having the authority
to make such removal 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 requested by Company, the Participant
Committee or the successor Trustee to evidence the transfer.
11.3 RESPONSIBILITY OF SUCCESSOR TRUSTEE. 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 the terms of this Trust Agreement. The
successor Trustee shall not be responsible for and Company shall indemnify and
defend the successor Trustee from any claim or liability resulting from any
action or inaction of any prior Trustee or from any other past event, or any
condition existing at the time it becomes successor Trustee.
ARTICLE 12
AMENDMENT OR TERMINATION
12.1 AMENDMENT. Prior to a Change in Control, this Trust Agreement
may be amended by a written instrument executed by Trustee and Company. After a
Change in Control this Trust Agreement may only be amended by a written
instrument executed by Trustee, Company and the Participant Committee.
Notwithstanding the foregoing, no such amendment shall conflict with the terms
of the Plan or shall make the Trust revocable.
12.2 TERMINATION. The Trust shall not terminate until the date on
which Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan. Upon termination of the Trust any
assets remaining in the Trust shall be returned to Company. Notwithstanding
the foregoing, upon written approval of all 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.
ARTICLE 13
MISCELLANEOUS
13.1 SEVERABILITY. 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.
10 of 13
32
13.2 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.
13.3 This Trust Agreement shall be governed by and construed in
accordance with the laws of California.
ARTICLE 14
DEFINITIONS
14.1 CHANGE IN CONTROL shall mean either: (a) the dissolution or
liquidation of Company; (b) a reorganization, merger or consolidation of Company
with one or more corporations as a result of which Company is not the surviving
corporation; (c) approval by the stockholders of Company of any sale, lease,
exchange or other transfer (in one or a series of transactions) of all or
substantially all of the assets of Company; or (d) approval by the stockholders
of Company of any merger or consolidation of Company in which the holders of the
voting stock of Company immediately before the merger or consolidation will not
own fifty percent (50%) or more of the voting shares of the continuing or
surviving corporation immediately after such merger or consolidation. For
purposes of this Trust Agreement, a Change in Control shall be deemed to have
occurred when Trustee makes a determination to that effect on its own
initiative, or upon receipt by Trustee of written notice to that effect from
Company. As provided in Section 1.1 of this Trust Agreement, the uncured
failure of the Company to make required contributions to the Trust shall be
considered a Change in Control for purposes of this Trust Agreement.
14.2 EFFECTIVE DATE. The effective date of this Trust Agreement
shall be September 1, 1996.
14.3 INSOLVENT/INSOLVENCY shall have the meaning given to such term
in Section 3.1 of this Agreement.
14.4 INVESTMENT POLICY shall mean the investment policy provided by
Company or the Participant Committee to Trustee pursuant to Section 5.1 of this
Trust Agreement.
14.5 PAYMENT SCHEDULE shall have the meaning given to such term in
Section 2.1 of this Trust Agreement.
14.6 PARTICIPANT COMMITTEE shall mean the committee of three (3)
participants established after a Change in Control to establish the Investment
Policy and direct Trustee pursuant to the terms of this Trust Agreement. Such
committee shall consist of participants who shall be nominated and elected upon
a Change in Control and annually thereafter by the individual participants
having an interest in the Trust assets as of the date of such election.
11 of 13
33
14.7 PAYMENT SCHEDULE shall have the meaning given to such term in
Section 2.1 of this Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and entered
into this Agreement as of the effective date in Section 14.2 hereof.
COMPANY: COASTCAST CORPORATION
By /s/ Xxxxxxx X. Xxxx
-------------------
Its President & COO
-----------------
TRUSTEE: IMPERIAL TRUST COMPANY
By /s/ Xxxxx X. Xxxxx
-------------------
Its Vice President
-----------------
12 of 13
34
EXHIBIT A
ANNUAL CONTRIBUTIONS TO BE MADE BY COMPANY TO TRUST
9/1/96 $2,026,000
------
1997 $2,026,000
----
1998 $2,026,000
----
1999 $2,026,000
----
2000 $2,026,000
----
2001 $2,026,000
----
2002 $2,026,000
----
13 of 13
35
