Document:

Interstate Bakeries Corp.

 

EXHIBIT 10.7

IBC SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

 

Table of Contents

	 	 	 	 	 	 	 	 	 
	IBC SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
	 	 	1	 
	ARTICLE I ESTABLISHMENT AND PURPOSE
	 	 	1	 
	 	1.1	 	 	Establishment
	 	 	1	 
	 	1.2	 	 	Purpose
	 	 	1	 
	ARTICLE II DEFINITIONS AND CONSTRUCTION
	 	 	1	 
	 	2.1	 	 	Definitions
	 	 	1	 
	 	2.2	 	 	Gender or Number
	 	 	4	 
	 	2.3	 	 	Severability
	 	 	4	 
	 	2.4	 	 	Applicable Law
	 	 	4	 
	 	2.5	 	 	Contractual Obligations
	 	 	4	 
	ARTICLE III PARTICIPATION
	 	 	4	 
	 	3.1	 	 	Participation
	 	 	4	 
	 	3.2	 	 	Ineligible Employees
	 	 	5	 
	ARTICLE IV SERP BENEFIT AND PAYMENT
	 	 	6	 
	 	4.1	 	 	Form of Benefit
	 	 	6	 
	 	4.2	 	 	SERP Benefit at Retirement
	 	 	6	 
	 	4.3	 	 	Death Benefit
	 	 	6	 
	 	4.4	 	 	Disability Benefit
	 	 	7	 
	 	4.5	 	 	Reduction, Suspension or Elimination of Benefits
	 	 	7	 
	 	4.6	 	 	Additional Years of Credited Service or Age and Other Adjustments
	 	 	7	 
	 	4.7	 	 	Contingent Rights
	 	 	8	 
	 	4.8	 	 	Continued Employment and Reemployment of Participant Receiving or
Having Received Benefits
	 	 	8	 
	ARTICLE V ADMINISTRATION AND CLAIMS PROCEDURES
	 	 	9	 

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	 	 	 	5.1	 	 	Administration
	 	 	9	 
	 	 	 	5.2	 	 	Plan Administrator Powers
	 	 	9	 
	 	 	 	5.3	 	 	Claims Procedure and Arbitration
	 	 	10	 
	 	 	 	5.4	 	 	Expenses
	 	 	11	 
	 	ARTICLE VI MERGER, AMENDMENT, AND TERMINATION
	 	 	11	 
	 	 	 	6.1	 	 	Merger, Consolidation or Acquisition
	 	 	11	 
	 	 	 	6.2	 	 	Amendment or Modification
	 	 	11	 
	 	 	 	6.3	 	 	Termination
	 	 	11	 
	 	ARTICLE VII MISCELLANEOUS PROVISIONS
	 	 	12	 
	 	 	 	7.1	 	 	Funding
	 	 	12	 
	 	 	 	7.2	 	 	Tax Withholding
	 	 	12	 
	 	 	 	7.3	 	 	Other Plans
	 	 	12	 
	 	 	 	7.4	 	 	Anti-assignment and Nontransferability
	 	 	12	 

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ARTICLE I

ESTABLISHMENT AND PURPOSE

     1.1 Establishment. Effective as of June 2, 2002, Interstate Bakeries
Corporation, a Delaware corporation, hereby establishes the IBC Supplemental
Executive Retirement Plan (the “IBC SERP”). The IBC SERP is intended to
provide a supplemental executive retirement plan benefit (“SERP Benefit”) in
accordance with the provisions hereof for certain key employees and positions
of the Employer.

     1.2 Purpose. This nonqualified IBC SERP is subject to amendment or
termination at any time. The IBC SERP is an unfunded, non-tax-qualified
mechanism which may be used to enhance the Employer’s ability to retain the
services of certain Employees. The IBC SERP is intended to be an unfunded plan
for a select group of management or highly compensated employees as defined in
Section 201(2) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).

     The IBC SERP is designed to provide SERP Benefits for certain Employees
who, on or after June 2, 2002, terminate employment with the Employer on
account of Retirement, Total and Permanent Disability or death, pursuant to the
terms and conditions herein. The SERP Benefit is a pension annuity payable for
the life of the Participant or, if the Participant is married and so elects,
for the joint lives of the Participant and his Spouse.

ARTICLE II

DEFINITIONS AND CONSTRUCTION

     2.1 Definitions. Whenever the following terms are used in this IBC SERP,
they shall have the meanings set forth below unless the context otherwise
requires, and when the defined meaning is intended herein, the first letter of
each word comprising the term will be capitalized.

		
	 	     (a) Actuarial Equivalent shall mean for purposes of calculating a
joint and survivor annuity hereunder, a monthly amount of equivalent
value to another monthly amount determined using the following actuarial
assumptions (or such other assumptions as may be adopted by the
Administrator from time to time upon the recommendation of the Company’s
outside actuary):

		
	 	     Interest: 7%
	 
	 	     Mortality: the GAM 83 mortality table, blended 50% male/50%
female

		
	 	     (b) Cause shall mean (i) dishonesty by an Employee which results in
direct or indirect enrichment to the Employee at the expense of the
Employer or (ii) a willful violation of the Employee’s obligations to the
Employer which results in a material injury to the Employer or is
intended to result in material

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	 	injury to the Employer. In the event the Employer terminates an
Employee for Cause, the Employer shall so notify the Employee of that
fact in writing at the time of the termination, specifying the acts or
conduct claimed to constitute such Cause.

		
	 	     (c) Chief Executive Officer shall mean the Chief Executive Officer
of Interstate Bakeries Corporation.
	 
	 	     (d) Code means the Internal Revenue Code of 1986, as amended.
	 
	 	     (e) Company means Interstate Bakeries Corporation, a Delaware
corporation, or its successor.
	 
	 	     (f) Compensation Committee means the Compensation Committee of the
Company’s Board of Directors.
	 
	 	     (g) Earnings means base salary for services for the Employer (other
than such items as bonuses, other incentive compensation and pay for
accrued and/or earned but unused vacation) payable by the Employer to the
Employee in cash, but before reduction for amounts voluntarily deferred
by the Employee pursuant to the Interstate Brands Companies Retirement
Income Plan, the IBC Non-Qualified Deferred Compensation Plan and the
Employer’s Code Section 125 cafeteria plan. In the case of Total and
Permanent Disability, “Earnings” shall include payments to the Employee
under the Employer’s Salary Continuation Policy. The Plan Administrator
shall determine whether a particular item of income constitutes Earnings
if a question arises.
	 
	 	     (h) Effective Date shall be June 2, 2002.
	 
	 	     (i) Employee means any corporate officer or senior management
employee of the Employer.
	 
	 	     (j) Employer means the Company and such other employers authorized
by the Compensation Committee, as listed on Schedule B.
	 
	 	     (k) Final Average Earnings means the annual average of the
Employee’s Earnings during the consecutive sixty (60) months (or if the
Employee’s period of employment with the Employer is less than sixty (60)
consecutive months, the annual average of the Employee’s Earnings over
his entire period of employment) immediately preceding (i) in the case of
Retirement or death, the Employee’s Retirement or death or (ii) in the
case of Total and Permanent Disability, the last day the Employee
received pay under the Employer’s Salary Continuation policy.
	 
	 	     (l) Participant means an Employee who (i) is eligible to participate
pursuant to Section 3.1 (Participation) hereof and (ii) is not ineligible
to participate pursuant to Section 3.2 (Ineligible Employees).

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	 	     (m) Pension Benefit Amount means an annual single life pension
annuity benefit, calculated as follows:

		
	 	     1.80% of a Participant’s Final Average Earnings multiplied by his
Years of Credited Service up to twenty (20) years.

		
	 	     (n) Plan Administrator is defined in Section 5.1.
	 
	 	     (o) Retirement shall mean retirement by a Participant who retires on
or after his Retirement Age.
	 
	 	     (p) Retirement Age means age sixty (60).
	 
	 	     (q) Retirement Date shall be a date which is the first day of the
month that falls on or after the date of Retirement.
	 
	 	     (r) Spouse means the spouse of a Participant who is legally married
to the Participant on the date of the earlier to occur of the
Participant’s Retirement, Total and Permanent Disability or death.
	 
	 	     (s) Total and Permanent Disability or Totally and Permanently
Disabled means a physical or mental disability for which the Participant
qualifies for long-term disability benefits under the Employer’s then
existing group long-term disability insurance policy or for which the
Participant would qualify for long-term disability benefits if the
Participant were covered by such policy.
	 
	 	     (t) Years of Credited Service shall mean an Employee’s number of
years (and the fraction thereof) of full-time employment with the
Employer as reflected on the Employer’s records, including (i) years (and
the fraction thereof) of such full-time employment prior to the Effective
Date of the IBC SERP and (ii) years (and the fraction thereof) of an
Employee’s full-time employment with an entity that was acquired by the
Company where immediately following such acquisition the Company is in
control of such acquired entity. For purposes of the immediately
preceding sentence, a “year of full-time employment” means each 12-month
period measured from the Employee’s employment commencement date with the
Employer (or, if earlier, from the Employee’s employment commencement
date with an acquired entity referred to in the immediately preceding
sentence) during which an Employee is continuously reflected as an active
full-time employee on the Employer’s records, and “control” means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of an entity, whether through
the ownership of voting securities, by contract, or otherwise. For
purposes of determining an Employee’s Years of Credited Service under
this Section 2.1(t), the bridging of service policy adopted by the
Employer from time to time shall apply whenever the Employee has a break
in service with the Employer that is bridged under such policy. Further,
in the event that after the Effective Date the Compensation Committee
removes an Employee or a position from Schedule A, or the Employee is
removed

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	 	from any position on Schedule A, then unless otherwise provided on
Schedule A, the Years of Credited Service and Final Average Earnings
shall only be recognized for purposes of this IBC SERP through the date
of removal. If the Employee whose name is removed from Schedule A or who
is removed from a position on Schedule A, or whose position is removed
from Schedule A, is subsequently placed in a position on Schedule A or
whose then current position or name is added to or restored to Schedule
A, that Employee’s Years of Credited Service and Final Average Earnings
shall be recognized for purposes of this IBC SERP as if the Employee or
the Employee’s position had never been removed from Schedule A, or the
Employee had never been removed from a position on Schedule A.

     2.2 Gender or Number. Except when otherwise indicated by the context, any
reference to the masculine gender shall also include the feminine gender, or
vice versa, and the definition of any term in the singular shall also include
the plural, or vice versa.

     2.3 Severability. In the event that any provision of the IBC SERP shall
be held invalid or illegal for any reason, any illegality or invalidity shall
not affect the remaining parts of the IBC SERP, but the IBC SERP shall be
construed and enforced as if the illegal or invalid provision had never been
inserted. The Compensation Committee shall have the right and opportunity to
correct and remedy such questions of illegality or invalidity by amendment as
provided herein.

     2.4 Applicable Law. To the extent not controlled by the laws of the
United States of America, this IBC SERP shall be governed and construed in
accordance with the laws of the State of Missouri.

     2.5 Contractual Obligations. The IBC SERP is not an employment contract.
It does not give to any person any rights to continued employment with the
Employer. The IBC SERP does not give any person any rights to gain or to
maintain eligibility to participate in the IBC SERP at his Retirement Date or
any other date. All Employees remain subject at all times to change of
responsibility level, including, but not limited to, change of job, change of
salary, transfer, discipline, layoff, discharge and any other change of
employment status without regard for the impact that any change in employment
status might have upon an Employee’s eligibility to be a Participant in the IBC
SERP.

ARTICLE III

PARTICIPATION

     3.1 Participation. After the Effective Date, to become a Participant, the
following requirements of this Section 3.1 must be simultaneously satisfied by
any Employee. The Employee must:

		
	 	     (a) be designated as a Participant by the Compensation Committee by
name or by position and listed on the attached Schedule A, as amended
from time to time at the discretion of the Compensation Committee;

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	 	     (b) be in the active employment of the Employer immediately prior to
his Retirement Date or, if the Employee has accrued twenty (20) Years of
Credited Service, be in active employment with the Employer immediately
prior to his death or the date he commences his final disability leave
which immediately precedes the subsequent determination that he is
Totally and Permanently Disabled; and

		
	 	     (c) except in the case of a Death Benefit provided under Section
4.3, have executed any nondisclosure agreement, release or such other
agreements or documents that the Plan Administrator may require as a
condition for eligibility to receive a SERP Benefit.

     Notwithstanding anything herein to the contrary, no SERP Benefit shall,
except as otherwise provided in Section 4.8(b), be payable to any Employee so
long as such Employee continues in active employment. Further, in the event
that an Employee’s name or position is removed from Schedule A or the Employee
is removed from a position on Schedule A, such Employee, if he satisfies the
requirements of (b) and (c) above, shall become a Participant and shall be
credited with Years of Credited Service to the extent provided in the second to
last sentence of Section 2.1(t).

     3.2 Ineligible Employees.

		
	 	     (a) No person who has retired from the Employer prior to the
Effective Date shall be eligible to be a Participant in the IBC SERP or
to receive a SERP Benefit.
	 
	 	     (b) Except as provided in Sections 4.3 and 4.4, no Participant shall
vest in a SERP Benefit until the date provided in Section 4.7. No
Employee, except as otherwise provided in Section 4.8, may grow into
eligibility for a SERP Benefit after his employment with the Employer is
terminated.
	 
	 	     (c) Notwithstanding an Employee’s satisfaction of the requirements
for participation herein, such Employee may nevertheless be deemed to be
ineligible to participate or to continue to participate in the IBC SERP
and such Employee and his Spouse, if any, may be denied benefits
hereunder if, upon consideration of the facts and circumstances and any
advice or recommendation of the Employer, the Compensation Committee
determines that such Employee’s employment has been terminated for Cause
or such Employee during employment or following termination of
employment has:

		
	 	     (i) violated any material written Employer policies or
agreement with the Employer, or
	 
	 	     (ii) committed a felony or other major offense related in any
manner to the Employee’s employment with the Employer.

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ARTICLE IV

SERP BENEFIT AND PAYMENT

     4.1 Form of Benefit. The IBC SERP has been created to provide certain
Employees with a specified level of pension annuity benefits.

     4.2 SERP Benefit at Retirement.

		
	 	     (a) The SERP Benefit payable to a Participant at Retirement (the
“Retirement Benefit”) is a monthly amount equal to one-twelfth of the
Pension Benefit Amount and is payable on the first day of each month,
beginning on the Participant’s Retirement Date, and continuing monthly
thereafter for the remainder of the Participant’s lifetime, provided that
if the Participant dies before receiving 300 monthly payments, monthly
payments in the same amount shall continue to be made to his Spouse, if
any, until the earlier of the Spouse’s death or when a total of 300
monthly payments have been made to the Participant and his Spouse in the
aggregate.
	 
	 	     (b) In lieu of the monthly Retirement Benefit payable under Section
4.2(a), the Participant, if he is legally married on his Retirement Date,
may elect to receive an adjusted Retirement Benefit payable as a monthly
joint and survivor annuity to the Participant for his lifetime and, in
the event he predeceases his Spouse, payable to such Spouse for the
remainder of the Spouse’s lifetime. The monthly amount of such annuity
payments to the Participant will equal the Actuarial Equivalent of
one-twelfth of the Pension Benefit Amount which would have been paid to
the Participant if he had not elected this option. The survivor
percentage elected can be 50% or 100%. Accordingly, the monthly amount
of annuity payments to the Spouse will equal 50% or 100% of the monthly
joint and survivor annuity payments payable to the Participant, depending
on the Participant’s election. The Participant must make an election to
receive this joint and survivor annuity benefit (i) within sixty (60)
days prior to his Retirement Date and (ii) in accordance with procedures
established by the Plan Administrator.
	 
	 	     (c) Notwithstanding anything herein to the contrary, the amount of
the Retirement Benefit calculated under Section 4.2(a) or 4.2(b), as the
case may be, shall not be actuarially increased on the basis of the
Participant’s age where the Participant retires after his Retirement Age.

     4.3 Death Benefit.

		
	 	     (a) If a Participant who has reached his Retirement Age, or who has
accrued twenty (20) Years of Credited Service, dies prior to termination
of employment with the Employer, his Spouse, if any, shall be entitled to
a monthly death benefit (the “Death Benefit”) equal to one-twelfth of the
Pension Benefit Amount. Payment of a Death Benefit will commence on the
first day of the month immediately following the date on which the
Participant would have attained Retirement Age or if the Participant had
attained Retirement Age prior to

6

 

		
	 	his death, payment will commence on the first day of the month
immediately following the Participant’s death. Payment of a Death
Benefit to the Spouse will terminate upon the Spouse’s death or when a
total of 300 monthly payments have been made to the Spouse, whichever
occurs first.
	 
	 	     (b) Notwithstanding any provision herein to the contrary, the Death
Benefit provided under Section 4.3(a) shall not be actuarially increased
on the basis of the Participant’s age where the Participant dies after
his Retirement Age.

     4.4 Disability Benefit.

		
	 	     (a) If a Participant with twenty (20) Years of Credited Service
terminates employment with the Employer prior to attaining his Retirement
Age due to Total and Permanent Disability and remains Totally and
Permanently Disabled until Retirement Age, the Participant shall be
entitled to a monthly disability benefit (the “Disability Benefit”) equal
to one-twelfth of the Pension Benefit Amount. Such Disability Benefit
shall commence on the first day of the month immediately following the
date on which the Participant would have attained Retirement Age and
shall continue monthly thereafter for the remainder of the Participant’s
lifetime, provided that if the Participant dies before receiving 300
monthly payments, monthly payments in the same amount shall continue to
be made to his Spouse, if any, until the earlier of the Spouse’s death or
when a total of 300 monthly payments have been made to the Participant
and his Spouse in the aggregate.
	 
	 	     (b) In lieu of the Disability Benefit set forth in Section 4.4(a)
above, a Participant with a Spouse may elect to receive an adjusted
Disability Benefit calculated and payable in the same manner set forth in
Section 4.2(b) above. The Participant must make an election to receive
this joint and survivor Disability Benefit (i) within sixty (60) days
prior to his attainment of Retirement Age and (ii) in accordance with
procedures established by the Plan Administrator.
	 
	 	     (c) If a Participant who is entitled to a Disability Benefit dies
prior to his Retirement Age, his Spouse (if still married to the
Participant on the date of the Participant’s death) if any, shall receive
the Death Benefit provided under Section 4.3(a).

     4.5 Reduction, Suspension or Elimination of Benefits. The Compensation
Committee, in its sole discretion, may at any time reduce, suspend or eliminate
any SERP Benefit otherwise payable to a Participant or Spouse, if the
Participant has acted or failed to act in one or more of the ways specified in
Section 3.2(c) (Ineligible Employees). Any such reduction, suspension or
elimination of SERP Benefits payable hereunder to a Participant shall
automatically apply to any Death Benefit or survivor annuity that would be
payable hereunder to the Participant’s Spouse.

     4.6 Additional Years of Credited Service or Age and Other Adjustments. In
the sole and absolute discretion of the Compensation Committee, a Participant
may be (i)

7

 

 provided with additional years of age or Years of Credited Service under
this IBC SERP or (ii) provided with benefits supplemental to, or otherwise
calculated in a different manner from (including, but not limited to, the
calculation of Final Average Earnings), his SERP Benefit. Any such additional
benefit or payment provisions shall be as set forth in a separate, written
agreement with such Participant signed by the then current chairman of the
Compensation Committee which shall otherwise be subject to all the terms of
this IBC SERP.

     4.7 Contingent Rights. Except as provided in Sections 4.3, 4.4 and 6.3,
no Employee or Participant shall have a vested or future interest in, or
entitlement to, any benefits from the IBC SERP until the last day of the month
immediately preceding his Retirement Date, at which time such SERP Benefit
shall be fully vested, subject only to forfeiture as provided in Section 3.2(c)
(Ineligible Employees) and Section 4.5 (Reduction, Suspension, or Elimination
of Benefits). As a non-qualified plan, any benefit hereunder is made subject
to the conditions precedent as set forth herein and to the rights reserved
herein by the Compensation Committee to increase, reduce, suspend, or eliminate
benefits hereunder, to terminate or amend the IBC SERP, and the Compensation
Committee’s discretionary authority to deem any Employee ineligible hereunder.

     4.8 Continued Employment and Reemployment of Participant Receiving or
Having Received Benefits.

		
	 	     (a) No benefits accrued under this IBC SERP may be distributed to a
Participant while the Participant remains in active employment with the
Employer.
	 
	 	     (b) Notwithstanding anything herein to the contrary, if a
Participant who is receiving a Retirement Benefit is subsequently
reemployed, payment of such benefit shall continue without interruption.
At the time of the Participant’s subsequent termination of employment, if
he executes any additional nondisclosure agreement, release, or such
other agreements or documents the Plan Administrator may require, his
Retirement Benefit shall be recalculated and payment of such benefit
shall be adjusted to reflect any increase (but not any decrease) in such
benefit attributable to any increase in his Final Average Earnings and
any increase attributable to his additional Years of Credited Service
(but only if his Years of Credited Service upon his previous Retirement
do not equal or exceed twenty (20)). Notwithstanding anything herein to
the contrary, (i) no Death Benefit shall be payable under Section 4.3 to
the Spouse of a Participant who resumes employment under this Section
4.8(b) and (ii) the calculation of Final Average Earnings shall not
include the amount of the Retirement Benefit being paid to such
reemployed Participant.

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ARTICLE V

ADMINISTRATION AND CLAIMS PROCEDURES

     5.1 Administration. The Company, acting through its Chief Executive
Officer, shall be the Plan Administrator. The Plan Administrator shall
have the discretionary authority that is expressly stated in this IBC SERP as
being delegated and empowered to the Plan Administrator and shall have the
discretionary authority to handle the day-to-day administration of the IBC SERP
and to administer and interpret the IBC SERP according to its provisions.
Meanwhile, the Compensation Committee shall have the discretionary authority
that is expressly stated in this IBC SERP as being delegated and empowered to
the Compensation Committee.

     Determinations of the Plan Administrator as to any questions arising under
this IBC SERP, including questions of construction and interpretation shall be
final, binding, and conclusive upon all persons. All determinations reserved
for the Compensation Committee herein shall be final, binding and conclusive
upon all persons.

     5.2 Plan Administrator Powers. In addition to the other powers provided
elsewhere in this IBC SERP, the Plan Administrator shall have the power and
authority in its sole and absolute discretion:

		
	 	     (a) To construe and interpret the IBC SERP, determine the
application of the IBC SERP to situations where such application is
unclear or disputable, to resolve all questions arising under the IBC
SERP (including questions of fact) and make equitable adjustments for any
mistakes or errors made in the administration of the IBC SERP; provided
that individual exceptions to the provisions of the IBC SERP shall not be
permitted;
	 
	 	     (b) To determine all questions arising in the administration of the
IBC SERP, including the power to determine the status of individuals as
Participants, the rights of Participants and their Spouses and the amount
of their respective benefits and such determination, interpretation or
other action shall, subject to the right to appeal and arbitration under
Section 5.3, be final and binding for all purposes and upon all persons;
	 
	 	     (c) To adopt, amend and rescind such rules, regulations and forms as
it may deem necessary for the proper and efficient administration of the
IBC SERP consistent with its purposes;
	 
	 	     (d) To enforce and administer the IBC SERP in accordance with its
terms and the rules, regulations and forms it adopts; to appoint others
and to delegate to them such administrative duties as the Plan
Administrator shall deem appropriate;
	 
	 	     (e) To take such action and establish such procedures as it deems
necessary or appropriate to coordinate benefits under this IBC SERP and
any other plan;
	 
	 	     (f) To direct the appropriate person to make payments from the IBC
SERP;

9

 

		
	 	     (g) To employ such counsel, auditors, actuaries, or other
specialists (who may be counsel, auditors, actuaries or other specialists
for the Company) and to engage such clerical or other services to the
extent such services are not provided by the Company;
	 
	 	     (h) To maintain records concerning the IBC SERP sufficient to
prepare reports, returns and other information required by the IBC SERP
or by law, and to communicate the terms of the IBC SERP and any material
amendments thereto to the Participants;
	 
	 	     (i) To delegate such of its powers and authorities (including the
power and authority to delegate) to such person or persons, who so
consent, as the Plan Administrator may appoint; and
	 
	 	     (j) To do all other things the Plan Administrator deems necessary or
desirable for the advantageous administration of the IBC SERP and to make
the IBC SERP fully effective in accordance with its terms and intent.

     5.3 Claims Procedure and Arbitration. In the event that a dispute arises
under this IBC SERP, then a written claim must be made to the Plan
Administrator within sixty (60) days from the date the payment or benefit is
refused. The Plan Administrator shall review the written claim and, if the
claim is denied in whole or in part, the Plan Administrator shall provide, in
writing and within ninety (90) days of receipt of such claim (or, if the claim
is for a Disability Benefit and the Employer’s then existing long-term
disability insurance carrier is not making the determination of whether the
Participant has incurred a Total and Permanent Disability, within 45 days of
the Plan Administrator’s receipt of such claim, subject to a 30-day extension
if the Plan Administrator notifies the claimant in writing before the end of
the initial 45-day period of the reason for the extension), the Plan
Administrator’s specific reasons for such denial and reference to the
provisions of this IBC SERP upon which the denial is based and any additional
material or information necessary for the claimant to perfect the claim. Such
written notice shall further indicate the steps to be taken by claimant if a
further review of the claim denial is desired. A claim shall be deemed denied
if the Plan Administrator fails to take any action within the aforesaid
periods.

     If claimant desires a second review, the claimant shall notify the Plan
Administrator in writing within sixty (60) days of the date of the first claim
denial. Claimant may review the IBC SERP or any documents relating thereto and
submit any written issues and comments he may feel appropriate. In its sole
discretion, the Compensation Committee may then review the second claim and if
so reviewed provide a written decision within sixty (60) days of receipt of
such claim. If reviewed by the Compensation Committee, its decision shall
likewise state the specific reasons for the decision and shall include
reference to specific provisions of this IBC SERP upon which the decision is
based.

     If claimant continues to dispute the benefit denial, then such dispute
will be resolved only in arbitration before a single arbitrator and not in any
court nor before any

10

 

 jury. The arbitration procedures shall be those provided in the Federal
Arbitration Act or, if for any reason it does not apply, the Missouri
Arbitration Act. The arbitration will be in Kansas City, Missouri, or such
other place as the claimant and Compensation Committee agree in writing. The
arbitrator will determine the amount of the arbitrator’s fees and expenses that
the claimant will pay. All arbitration hearings must commence within 90 days
after the Compensation Committee has sent its written decision to the claimant
pursuant to the immediately preceding paragraph.

     5.4 Expenses. The expenses of administering the IBC SERP shall be borne
by the Company.

ARTICLE VI

MERGER, AMENDMENT, AND TERMINATION

     6.1 Merger, Consolidation or Acquisition. In the event of a merger,
consolidation, or acquisition where the Employer is not the surviving
corporation, this IBC SERP shall continue as an obligation of the surviving
corporation.

     6.2 Amendment or Modification. The Compensation Committee may amend or
modify the IBC SERP at any time; provided, however, that (i) no amendment or
modification of the IBC SERP shall deprive a Participant or Spouse of any SERP
Benefit which has become vested prior to the effective date of such amendment
or modification and (ii) no amendment or modification will reduce any
Employee’s accrued but unvested SERP Benefit below the accrued SERP Benefit
which would have vested as provided in Section 6.3(ii) had the IBC SERP
terminated on the date of such amendment or modification. The Administrator
shall calculate and shall maintain as part of the Company’s records the amount
of the SERP Benefit in (i) or (ii) of the immediately preceding sentence as of
the date of the amendment or modification where any such amendment or
modification would otherwise reduce SERP Benefits.

     6.3 Termination. In the case of a termination of the IBC SERP, (i) the
termination shall not deprive a Participant or Spouse of any SERP Benefit which
has become vested prior to the effective date of termination and (ii) each
Employee with an accrued but unvested SERP Benefit on the termination date
shall become vested in his accrued SERP Benefit as of the termination date. In
the case of an accrued SERP Benefit which becomes vested under (ii) of the
immediately preceding sentence, such accrued SERP shall be calculated as set
forth in Section 4.2 above and based on the Participant’s Years of Credited
Service and Final Average Earnings as of the IBC SERP termination date.
Payment of a Participant’s accrued SERP Benefit shall not be dependent upon his
continuation of employment with the Employer following the IBC SERP termination
date, and such Benefit shall become payable at the date for commencement of
payment of a SERP Benefit pursuant to the terms of Sections 4.2, 4.3 or 4.4
above, subject to the provisions of Section 3.2(c). The Administrator shall
calculate and shall maintain as part of the Company’s records the amount of all
vested SERP Benefits upon termination of the IBC SERP.

11

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

     7.1 Funding. Benefits hereunder shall constitute an unfunded obligation
of the Employer, but the Employer may create reserves, funds, and/or provide
for amounts to be held in trust on the Employer’s behalf. Payment of benefits
may be made by the Employer, or on behalf of the Employer by such a trust or
through a service or benefit provider to the Employer or such trust. No
Participant, Employee, or any other person shall have any right, title, or
interest whatsoever in or to, or any preferred claim in or to, any such trust
assets or to any other investment reserves, accounts, or funds that the
Employer may purchase, establish, or accumulate to aid in providing the
payments described in this IBC SERP. Nothing contained in this IBC SERP, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust or a fiduciary relationship of any kind between the Employer and
a Participant, Employee, or any other person.

     7.2 Tax Withholding. The Employer shall withhold or cause to be withheld
from any benefit payments (and, where necessary, any other amounts payable by
the Employer) any withholding or other taxes required to be withheld with
respect to such payment and such sum as the Employer may reasonably estimate as
necessary to cover any withholding or other taxes which may be due and owing as
a result of any SERP Benefit or the creation or maintenance of this IBC SERP.

     7.3 Other Plans. No benefit payable hereunder shall be deemed
compensation to the Participant for the purposes of computing benefits to which
such Participant may be entitled under any other plan or arrangement of the
Employer for the benefit of its employees.

     7.4 Anti-assignment and Nontransferability. An Employee, Participant,
Spouse or other person shall have no rights, by way of anticipation or
otherwise, to assign or otherwise dispose of any interest under this IBC SERP,
nor shall rights be assigned or transferred by operation of law. No SERP
Benefits hereunder may be assigned.

     IN WITNESS WHEREOF, the Company has caused this IBC SERP to be executed
and adopted by its duly authorized officer effective as of the day and year
first above written.

	 	 
	 	INTERSTATE BAKERIES CORPORATION
	 	 
	 	/s/ CHARLES A. SULLIVAN
	 	

	 	Charles A. Sullivan

12

 

SCHEDULE A

TO THE IBC SERP

PARTICIPANTS

13

 

SCHEDULE B

TO THE IBC SERP

PARTICIPATING EMPLOYERS

Interstate Brands Corporation

Interstate Brands West Corporation

14Interstate Bakeries Corp.

 

EXHIBIT 10.8

IBC RABBI TRUST AGREEMENT

This TRUST AGREEMENT is entered into by and between INTERSTATE BAKERIES
CORPORATION (“the Company”) and UMB Bank, n.a. (“the Trustee”) effective as of
the 2nd day of June, 2002.

WHEREAS, the Company has adopted certain non-qualified deferred compensation
plans as listed in Appendix A (the “Plans”);

WHEREAS, the Company has incurred or expects to incur liability under the terms
of such Plans with respect to the individuals participating in such Plans (the
“Participants”) and their beneficiaries;

WHEREAS, the Company wishes to establish a trust (the “Trust”) and to
contribute to the Trust assets that shall be held therein, subject to the
claims of the Company’s creditors in the event of the Company’s Insolvency, as
herein defined, until paid to Participants and their beneficiaries in such
manner and at such times as specified in the Plans;

WHEREAS, it is the intention of the parties that this Trust shall constitute an
unfunded arrangement and shall not affect the status of the Plans as unfunded
plans 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 (“ERISA”); and

WHEREAS, it is the intention of the Company to make contributions to the Trust
to provide itself with a source of funds to assist it in meeting its
liabilities under the Plans.

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 the Trust

	 	(a)	 	The Company hereby deposits with the Trustee in trust
$1,105,139 which, together with subsequent contributions in cash or
in securities and earnings thereon, shall constitute the corpus of
the Trust to be held, administered and disposed of by the Trustee as
provided in this Trust Agreement.
	 
	 	(b)	 	Company contributions or deposits to the trust may be made in
the form of cash or other property including the common stock, par
value $0.01 per share, of the Company (“Company Stock”)
	 
	 	(c)	 	The Trust hereby established is revocable by the Company. It
shall become irrevocable automatically upon the occurrence of a
Change of Control of the Company. Prior to a Change of Control, the
Company may revoke this Trust by written notice to the Trustee,
whereupon the Trust shall be immediately terminated
and all assets distributed to the Company and applicable
Subsidiaries.

-1-

 

	 	(d)	 	The Trust is intended to be a grantor trust, of which the
Company and any applicable Subsidiaries are the grantors, within the
meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of
the Internal Revenue Code of 1986, as amended (the “Code”), and
shall be construed accordingly.
	 
	 	(e)	 	The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of the Company and the
Subsidiaries and shall be used exclusively for the uses and purposes
of Participants, the payment of the expenses, costs or Company taxes
relating to the administration of the Trust or the payment of
benefits therefrom, and general creditors as herein set forth.
Amounts contributed to the Trust by the Company and any Subsidiary
shall at all times be held and maintained as separate trusts
hereunder and accounted for by the Trustee separately. 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 Plans and this Trust Agreement shall be
unsecured contractual rights of Participants and their beneficiaries
against the Company. Any assets held by the Trust will be subject
to the claims of the general creditors of the Company or any
participating Subsidiary, as the case may be, under Federal and
state law in the event the Company or a Subsidiary is Insolvent, as
defined in Section 3(a) herein.
	 
	 	(f)	 	The Company and its Subsidiaries, in their sole discretion,
may at any time, or from time to time, make additional deposits of
cash or other property acceptable to the Trustee in the Trust to
augment the principal to be held, administered and disposed of by
the Trustee as provided in this Trust Agreement. Prior to a Change
of Control, the Trustee shall not have any right to compel
additional deposits.
	 
	 	(g)	 	Upon a Change of Control, as defined herein, the Company and
any participating Subsidiary shall, as soon as practicable, but in
no event later than the effective date of the Change of Control,
make an irrevocable contribution to the Trust in an amount that is
sufficient to fund the Trust in an amount equal to not less than
100% of the liabilities of the Plans. Such liabilities shall be
determined pursuant to an actuarial funding method which is
actuarially sound and which uses the average of the 30-year Treasury
bond yield rate for the month preceding the month in which such
Change of Control occurred, and the applicable mortality table as
set forth in Code Section 417(e).
	 
	 	(h)	 	Within 30 days following the end of each Plan year ending
after the Trust has become irrevocable pursuant to Section 1(c)
hereof, the Compensation Committee of the Company’s Board of
Directors (or its successor) shall cause the Company and any
participating Subsidiary to irrevocably deposit cash or other
property with the Trustee in an amount, when added to the assets
then held in the Trust, to satisfy all liabilities of the Plans, as
of the close of such Plan years.

	 	 	 

-2-

 

	 	 	 
	Section 2.	 	
Payments to Participants and Their Beneficiaries

	 	(a)	 	Prior to a Change of Control, distributions from the Trust
shall be made by the Trustee to Participants and beneficiaries at
the direction of the Company. The entitlement of a Participant or
his or her beneficiaries to benefits under the Plans shall be
determined by the Company or such party or professional
administrator as it shall designate under the Plans as the Company’s
agent, and any claim for such benefits shall be considered and
reviewed under the procedures set out in the Plans.
	 
	 	(b)	 	The Company and any participating Subsidiary may make payment
of benefits directly to Participants or their beneficiaries as they
become due under the terms of the Plans. The Company shall notify
the Trustee of its decision to make payment of benefits directly
prior to the time amounts are payable to Participants or their
beneficiaries. In addition, if the corpus of the Trust including
the principal, and any earnings thereon, is not sufficient to make
payments of benefits in accordance with the terms of the Plans, the
Company shall make the balance of each such payment as it falls due
in accordance with the Plans. The Trustee shall notify the Company
when the corpus is not sufficient. Nothing in this Agreement shall
relieve the Company of its liabilities to pay benefits due under the
Plans except to the extent such liabilities are actually satisfied
by the Trust.
	 
	 	(c)	 	After a Change of Control, the Company shall deliver to the
Trustee a schedule of liabilities under the Plans, together with a
payment schedule so that the Trustee can resolve whether
contributions are sufficient and whether assets will be sufficient
to make payments when due. Thereafter, the Trustee shall pay such
amount of benefits as shall be in accordance with such schedule.
After a Change of Control, the Company shall continue to make the
determination of benefits due to Participants or their beneficiaries
and shall provide the Trustee with an updated schedule of benefits
due.
	 
	 	(d)	 	The Trustee may at its discretion institute an action to
collect a contribution due the Trust following a Change of Control
or in the event that the Trust should ever experience a shortfall in
the amount of assets necessary to pay all liabilities pursuant to
the terms of the Plans.

	 	 	 
	Section 3.	 	
Trustee Responsibility Regarding Payments To The Trust Beneficiary When The Company Is Insolvent

	 	(a)	 	The Trustee shall cease payment of benefits to applicable
Participants and their beneficiaries if the Company or an adopting
Subsidiary is Insolvent. The Company or an adopting Subsidiary,
respectively, shall be considered “Insolvent” for purposes of this
Trust Agreement if (i) the Company or the adopting Subsidiary is
unable to pay its debts as they become due, or (ii) the Company or
the adopting Subsidiary 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, the
principal and income of the Trust allocable to the Company and its
respective adopting Subsidiaries shall be subject to claims of
general creditors of the Company and the adopting Subsidiary under
Federal and state law as set forth below.

-3-

 

	 	(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 or an adopting Subsidiary
is Insolvent. If a person claiming to be a creditor of the
Company or a Subsidiary alleges in writing to the Trustee that
the Company or the Subsidiary has become Insolvent, the
Trustee shall determine whether the Company or the Subsidiary
is Insolvent and, pending such determination, the Trustee
shall discontinue payment of benefits to Participants who
perform or performed services for any affected entity, and
their beneficiaries.
	 
	 	(2)	 	Unless the Trustee has actual knowledge that the
Company or Subsidiary is Insolvent, or has received notice
from the Company or a person claiming to be a creditor
alleging that the Company or Subsidiary is Insolvent, the
Trustee shall have no duty to inquire whether the Company or
Subsidiary is Insolvent. The Trustee may in all events rely
on such evidence concerning solvency as may be furnished to
the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning whether the entity
is Insolvent.
	 
	 	(3)	 	If at any time the Trustee has determined that
the Company or Subsidiary is Insolvent, the Trustee shall
discontinue payments to Participants who perform or performed
services for any affected entity, and their beneficiaries, and
shall hold the assets of the Trust for the benefit of the
affected entity’s or entities’ general creditors. Nothing in
this Trust Agreement shall in any way diminish any rights of
Participants or their beneficiaries to pursue their rights as
general creditors of the Company with respect to benefits due
under the Plans or otherwise.
	 
	 	(4)	 	If payments from the Trust have been suspended,
then the Trustee shall resume the payment of benefits to
Participants and their beneficiaries in accordance with
Section 2 of this Trust Agreement only after the Trustee has
determined that the Company or the Subsidiary is not Insolvent
(or is no longer Insolvent).
	 
	 	(5)	 	Company Stock (or other assets) contributed by
the Company to the
Trust for the benefit of employees of a Subsidiary
shall be subject to the claims of the creditors of the
Company (in addition to the Subsidiary), and the
Company Stock (or other assets) contributed by the
Company to the Trust, which remain upon termination of
the Trust, and after satisfying all of the Trust’s
obligations, shall revert to the Company.

-4-

 

	 	(6)	 	In the case of bankruptcy of the Company, the
Trustee must discontinue payments to all Participants and
their beneficiaries with respect to Company Stock (or other
assets) contributed to the Trust by the Company for the
benefit of employees of a Subsidiary.

	 	(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 Participants and their beneficiaries under
the terms of the Plans for the period of such discontinuance,
less the aggregate amount of any payments made to
Participants and their beneficiaries by the Company or any
Subsidiary in lieu of the payments provided for hereunder
during any such period of discontinuance.
	 
	 	(d)	 	The Insolvency of a Subsidiary shall not
necessarily cause the Insolvency of the Company or any other
Subsidiary for purposes of this Section 3.

	 	 	 
	Section 4.	 	
Payments When a Shortfall of The Trust Assets Occurs

	 	(a)	 	If there are not sufficient assets for the payment of
benefits pursuant to Section 2 or Section 3(c) hereof and the
Company or a Subsidiary does not otherwise make such payments within
a reasonable time after demand from the Trustee, the Trustee shall
make payment of benefits from the Trust to the Participants and
their beneficiaries in the following order of priority:

	 	(1)	 	retired Participants and their beneficiaries; and
	 
	 	(2)	 	any other vested Participants and their
beneficiaries eligible for payment under the terms of the
Plans.

	 	(b)	 	Within each category set forth under Section 4(a), payments
shall be made on a pro-rata basis.
	 
	 	(c)	 	Upon receipt of a contribution from the Company necessary to
make up for a shortfall in the payments due, the Trustee shall
resume payments to all the Participants and beneficiaries under the
Plans. Following a Change of Control, the Trustee shall have the
right to compel a contribution to the Trust from the Company
or any Subsidiary to make-up for any shortfall, and if necessary,
may at its discretion initiate litigation against the Company
and/or the appropriate Subsidiary to seek to force such
contributions to be made to the Trust.

-5-

 

	 	 	 
	Section 5.	 	
Payments to the Company

Except as provided in Section 3 hereof, after the Trust has become irrevocable,
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 Participants and their beneficiaries pursuant to the
terms of the Plans.

	 	 	 
	Section 6.	 	
Powers and Duties of the Trustee

	 	(a)	 	The Trustee shall not be liable in discharging its duties
hereunder, including without limitation its duty to invest and
reinvest the Trust assets, if it acts for the exclusive benefit of
the Participants and their beneficiaries, in good faith and as a
prudent person would act in accomplishing a similar task and in
accordance with the terms of this Trust Agreement and any applicable
Federal or state laws, rules or regulations.
	 
	 	(b)	 	Subject to investment guidelines agreed to in writing from
time to time by the Company and the Trustee prior to a Change of
Control, which investment guidelines may include the right of the
Company to make specific investment directions (provided however
that in no event shall the Company retain the right to make
investment directions following a Change of Control), the Trustee
shall have the power in investing and reinvesting the Trust assets
in its sole discretion:

	 	(1)	 	To invest and reinvest in any readily marketable
common and preferred stocks, bonds, notes, debentures,
certificates of deposit or demand or time deposits (including
any such deposits with the Trustee) and shares of investment
companies and mutual funds, without being limited to the
classes or property in which the Trustee is authorized to
invest by any law or any rule of court of any state and
without regard to the proportion any such property may bear to
the entire amount of the Trust;
	 
	 	(2)	 	To commingle for investment purposes all or any
portion of the Trust assets with assets of any other similar
trust or trusts established by the Company with the Trustee
for the purpose of safeguarding non-qualified deferred
compensation or retirement income benefits of its employees
and/or directors;
	 
	 	(3)	 	To retain any property at any time received by
the Trustee;
	 
	 	(4)	 	To sell or exchange any property, including
Company Stock, held by
it at public or private sale, for cash or on credit, to
grant and exercise options for the purchase or exchange
thereof, to exercise all conversion or subscription
rights pertaining to any such property and to enter
into any covenant or agreement to purchase any property
in the future. If the sales are to be public sales,
the Company shall prepare and file an 

-6-

 

	 	 	 	appropriate registration statement with respect to such shares
under the Securities Act of 1933 (the “1933 Act”). In
addition, in connection with any public or private
sale, the company shall prepare and file all documents
necessary to register such shares on all stock
exchanges on which the Company Stock is registered for
trading;
	 
	 	(5)	 	To participate in any plan of reorganization,
consolidation, merger, combination, liquidation or other
similar plan relating to property held by it and to consent to
or oppose any such plan or any action thereunder or any
contract, lease, mortgage, purchase, sale or other action by
any person;
	 
	 	(6)	 	To deposit any property held by it with any
protective, reorganization or similar committee, to delegate
discretionary power thereto, and to pay part of the expenses
and compensation thereof any assessments levied with respect
to any such property to deposit;
	 
	 	(7)	 	To extend the time of payment of any obligation
held by it;
	 
	 	(8)	 	To hold uninvested any moneys received by it,
without liability for interest thereon, but only in
anticipation of payments due for investments, reinvestments,
expenses or disbursements;
	 
	 	(9)	 	To the extent to which it is not otherwise
directed by the Company, to exercise all voting or other
rights with respect to any property held by it and to grant
proxies, discretionary or otherwise;
	 
	 	(10)	 	For the purposes of the Trust, to borrow money
from others, to issue its promissory note or notes therefor,
and to secure the repayment thereof by pledging any property
held by it;
	 
	 	(11)	 	To employ suitable contractors and counsel, who
may be counsel to the Company or to the Trustee, and to pay
their reasonable expenses and compensation from the Trust to
the extent not paid by the Company;
	 
	 	(12)	 	To register investments in its own name or in the
name of a nominee; to hold any investment in bearer form; and
to combine certificates representing securities with
certificates of the same issue
held by it in other fiduciary capacities or to deposit
or to arrange for the deposit of such securities with
any depository, even though, when so deposited, such
securities may be held in the name of the nominee of
such depository with other securities deposited
therewith by other persons, or to deposit or to arrange
for the deposit of any securities issued or guaranteed
by the United States government, or any agency or

-7-

 

	 	 	 	instrumentality thereof, including securities evidenced
by book entries rather than by certificates, with the
United States Department of the Treasury or a Federal
Reserve Bank, even though, when so deposited, such
securities may not be held separate from securities
deposited therein by other persons; provided, however,
that no securities held in the Fund shall be deposited
with the United States Department of the Treasury or a
Federal Reserve Bank or other depository in the same
account as any individual property of the Trustee, and
provided, further, that the books and records of the
Trustee shall at all times show that all such
securities are part of the Trust Fund;
	 
	 	(13)	 	To settle, compromise or submit to arbitration
any claims, debts or damages due or owing to or from the
Trust, respectively, to commence or defend suits or legal
proceedings to protect any interest of the Trust, and to
represent the Trust in all suits or legal proceedings in any
court or before any other body or tribunal; provided, however,
that, except as provided in Section 2(d) hereof, the Trustee
shall not be required to take any such action unless it shall
have been indemnified by the Company to its reasonable
satisfaction against liability or expenses it might incur
therefrom;
	 
	 	(14)	 	To hold and retain policies of life insurance,
annuity contracts, and other property of any kind which
policies are contributed to the Trust by the Company or any
Subsidiary or are purchased by the Trustee;
	 
	 	(15)	 	To hold any other class of assets which may be
contributed by the Company and that is deemed reasonable by
the Trustee, unless expressly prohibited herein;
	 
	 	(16)	 	To loan any securities at any time held by it to
brokers or dealers upon such security as may be deemed
advisable, and during the terms of any such loan to permit the
loaned securities to be transferred into the name of and voted
by the borrower or others; and
	 
	 	(17)	 	Generally, to do all acts, whether or not
expressly authorized, that the Trustee may deem necessary or
desirable for the protection of the Fund.

	 	(c)	 	Following a Change of Control, the Trustee shall have the
sole and absolute discretion in the management of the Trust assets
and shall have all the powers set forth under Section 6(b). In
investing the Trust assets, the Trustee shall consider:

	 	(1)	 	the needs of the Plans;
	 
	 	(2)	 	the need for matching of the Trust assets with the
liabilities of the Plans; and

-8-

 

	 	(3)	 	the duty of the Trustee to act solely in the best
interests of the Participants and their beneficiaries.

	 	(d)	 	The Trustee shall have the right, in its sole discretion, to
delegate its investment responsibility to an investment manager who
may be an affiliate of the Trustee. In the event the Trustee shall
exercise this right, the Trustee shall remain, at all times
responsible for the acts of an investment manager. The Trustee
shall have the right to purchase an insurance policy or an annuity
to fund the benefits of the Plans.
	 
	 	(e)	 	The Company shall have the right at any time, and from time
to time in its sole discretion, to substitute assets of equal fair
market value for any asset held by the Trust.

	 	 	 
	Section 7.	 	
Insurance Contracts

	 	(a)	 	To the extent that the Trustee is directed by the Company
prior to a Change of Control to invest part or all of the Trust Fund
in insurance contracts, the type and amount thereof shall be
specified by the Company. The Trustee shall be under no duty to
make inquiry as to the propriety of the type or amount so specified.
	 
	 	(b)	 	Each insurance contract issued shall provide that the Trustee
shall be the owner thereof with the power to exercise all rights,
privileges, options and elections granted by or permitted under such
contract or under the rules of the insurer. The exercise by the
Trustee of any incidents of ownership under any contract shall,
prior to a Change of Control, be subject to the direction of the
Company. After a Change of Control, the Trustee shall have all such
rights.
	 
	 	(c)	 	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 lend to any person the proceeds of any
borrowing against an insurance policy held in the Trust; provided,
however, that the Trustee may assign the policy to the Company
pursuant to Section 14(c) herein.
	 
	 	(d)	 	No insurer shall be deemed to be a party to the Trust
Agreement and an insurer’s obligations shall be measured and
determined solely by the terms of contracts and other agreements
executed by the insurer.

	 	 	 
	Section 8.	 	
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 within the Trust.

-9-

 

	 	 	 
	Section 9.	 	
Accounting by the 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 45 days following the close of each calendar
year and within 45 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. The Company may approve such
account by an instrument in writing delivered to the Trustee. In the absence
of the Company’s filing with the Trustee objections to any such account within
90 days after its receipt, the Company shall be deemed to have so approved such
account. In such case, or upon the written approval by the Company of any such
account, the Trustee shall, to the extent permitted by law, be discharged from
all liability to the Company for its acts or failures to act described by such
account. The foregoing, however, shall not preclude the Trustee from having
its accounting settled by a court of competent jurisdiction. The Trustee shall
be entitled to hold and to commingle the assets of the Trust in one fund for
investment purposes but at the direction of the Company prior to a Change of
Control, the Trustee shall create one or more sub-accounts.

	 	 	 
	Section 10.	 	
Responsibility of the 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 Plans or
this Trust and is given in writing by the Company. In the event of
a dispute between the Company and a party, the Trustee may apply to
a court of competent jurisdiction to resolve the dispute, subject,
however to Section 2(d) hereof.
	 
	 	(b)	 	The Company hereby indemnifies the Trustee against losses,
liabilities, claims, costs and expenses in connection with the
administration of the Trust, unless resulting from the gross
negligence or intentional misconduct of Trustee. To the extent the
Company fails to make any payment on account of an indemnity
provided in this paragraph 10(b), in a reasonably timely manner,
the Trustee may obtain payment from the Trust. If the Trustee
undertakes or defends any litigation arising in connection with
this Trust or to protect a Participant’s or beneficiary’s rights
under the Plans, the Company agrees to indemnify the Trustee
against the Trustee’s costs, reasonable 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.

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	 	(c)	 	Prior to a Change of Control, the Trustee may consult with
legal counsel (who may also be counsel for the Company generally)
with respect to any of its duties or obligations hereunder.
Following a Change of Control the Trustee shall select independent
legal counsel and may consult with counsel or other persons with
respect to its duties and with respect to the rights of Participants
or their beneficiaries under the Plans.
	 
	 	(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
and may rely on any determinations made by such agents and
information provided to it by the Company.
	 
	 	(e)	 	The Trustee shall have, without exclusion, all powers
conferred on the Trustee by applicable law, unless expressly
provided otherwise herein.
	 
	 	(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 Treas. Reg. § 301.7701-2 promulgated pursuant to the Code.
	 
	 	(g)	 	At the direction of the Company, the Trustee shall pay out of
the corpus of the Trust for the employer-related taxes, such as
FICA, owed or incurred by the Company as the result of the payment
of any benefits out of the Trust. If such taxes are paid out of the
Trust by the Trustee at the direction of the Company, then the
Company shall immediately deliver to the Trustee reimbursement for
such amounts paid.
	 
	 	(h)	 	The Company and the Trustee shall arrange for withholding and
remittance of any required federal, state or local taxes.

	 	 	 
	Section 11.	 	
Compensation and Expenses

	 	(a)	 	The Trustee’s compensation shall be as agreed in writing from
time to time by the Company and the Trustee. At the direction of
the Company, the fees, costs and expenses associated with the
administration of the Trust, including the fees of the
Trustee and the reimbursement to the Trustee for any expenses of
its agents, may be paid out of the corpus of the Trust. Unless
paid out of the corpus of the Trust, the Company shall pay all
administrative expenses and the Trustee’s fees and shall promptly
reimburse the Trustee for any fees and expenses of its agents. If
not so paid, the fees, costs and expenses shall be paid from the
Trust. For purposes of this Section 11(a), costs shall include the
reasonable costs of bringing litigation under Sections 2(d), 4(c),
12(c) and 12(d) hereunder.

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	 	(b)	 	At the direction of the Company, the fees, costs and expenses
associated with the administration of the Plans may be paid out of
the corpus of the Trust. Unless paid out of the corpus of the
Trust, the Company shall pay all fees, costs and expenses associated
with the administration of the Plans. If not so paid, such fees,
costs and expenses shall be paid from the Trust.

	 	 	 
	Section 12.	 	
Resignation and Removal of the Trustee

	 	(a)	 	The Trustee may resign at any time by written notice to the
Company, which shall be effective 90 days after receipt of such
notice unless the Company and the Trustee agree otherwise; provided,
however, that any such resignation shall be effective only after the
appointment of a successor Trustee.

	 	(b)	 	The Trustee may be removed by the Company on 90 days’ notice
or upon shorter notice accepted by the Trustee prior to a Change of
Control. Subsequent to a Change of Control, the Trustee may be
removed by the Company only with the consent of a majority of the
Participants.
	 
	 	(c)	 	If the Trustee resigns within two years after a Change of
Control, the Company, or, if the Company fails to act within a
reasonable period of time following such resignation, the Trustee,
shall apply to a court of competent jurisdiction for the appointment
of a successor Trustee or for instructions.
	 
	 	(d)	 	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 90
days after receipt of notice of resignation, removal or transfer,
unless the Company extends the time limit.
	 
	 	 	 	If the Trustee resigns or is removed, a successor shall be
appointed by the Company, in accordance with Section 13 hereof, by
the effective date of resignation or removal under paragraph (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 13.	 	
Appointment of Successor

	 	(a)	 	If the Trustee resigns or is removed in accordance with
Section 12 hereof, the Company may appoint, subject to Section 12,
any third party national banking association with a market
capitalization exceeding $100,000,000 to replace the Trustee upon
resignation or removal. The successor Trustee shall have all of the
rights and powers of the former Trustee, including ownership rights
in the Trust. The former Trustee shall execute any instrument
necessary or reasonably requested by the Company or the successor
Trustee to evidence the transfer.

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	 	(b)	 	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 8 and 9 hereof. The successor Trustee
shall not be responsible for and the Company shall indemnify and
defend the successor Trustee from any claim or liability resulting
from any action or inaction of any prior Trustee or from any other
past event, or any condition existing at the time it becomes
successor Trustee.

	 	 	 
	Section 14.	 	
Amendment or Termination

	 	(a)	 	This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. No such amendment shall
modify in any material way the duties or responsibilities of the
Trustee without its consent. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plans or shall make
the Trust revocable after it has become irrevocable in accordance
with Section 1 hereof.
	 
	 	 	 	This Trust Agreement may not be amended by the Company for two
years following a Change of Control without the written consent of
a majority of the Participants.
	 
	 	(b)	 	After the Trust has become irrevocable pursuant to Section
1(c) herein, the Trust shall not terminate until the date on which
Participants and their beneficiaries have received all benefits due
to them under the terms and conditions of the Plans.
	 
	 	(c)	 	Subject to Section 14(b), the Company may terminate this
Trust prior to the time all benefit payments under the Plans have
been made. All assets in the Trust at termination shall be returned
to the Company.

	 	 	 
	Section 15.	 	
Definitions

For purposes of this Trust, the following terms shall be defined as set forth
below:

	 	(a)	 	Change of Control shall mean a change in control of the
Company 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)
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), whether or not the Company is then subject to such
reporting requirement; provided, however, that, without limiting
the generality of the foregoing, a Change in Control shall be
deemed to have occurred (irrespective of the applicability of the
initial clause of this definition) if at any time (a) any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, but excluding (i) any employee benefit plan of the Company or
any Subsidiary, and (ii) any entity organized, appointed or
established by the Company pursuant to the terms of any such plan)
is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power
of the Company’s then outstanding securities without the prior
approval of at least two-

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	 	 	 	thirds of the members of the Board of
Directors of the Company (the “Board”) in office immediately prior
to such person’s attaining such percentage interest; (b) the
Company is a party to a merger, consolidation, share exchange, sale
of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately
prior to such transaction or event constitute less than a majority
of the whole Board thereafter; or (c) during any period of two
consecutive years, individuals who at the beginning of such period
constituted members of the Board (including for this purpose any
new member whose election or nomination for election by the
Company’s stockholders was approved by at least two-thirds of the
members of the whole Board then still in office who were members of
the Board at the beginning of such period) cease for any reason to
constitute a majority of the whole Board.
	 
	 	(b)	 	Subsidiary shall mean (i) in the case of a corporation, any
corporation of which the Company directly or indirectly owns shares
representing more than 50% of the combined voting power of the
shares of all classes or series of capital stock of such corporation
which have the right to vote generally on matters submitted to a
vote of the stockholders of such corporation and (ii) in the case of
a partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly
or indirectly owns more than 50% of the voting, capital or profits
interests (whether in the form of partnership interests, membership
interests or otherwise).

	 	 	 
	Section 16.	 	
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)	 	Each of the General Counsel and Chief Financial Officer of
the Company shall have the specific authority to determine whether a
Change of Control has transpired and each shall be required to give
the Trustee notice of a Change of Control. The Trustee shall be
entitled to rely upon such notice, but if the Trustee first receives
notice of a Change of Control from another source, the Trustee shall
make its own independent determination.
	 
	 	(c)	 	Benefits payable to 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.
	 
	 	(d)	 	Any action required by the Company under the terms of this
Trust shall be made by the Compensation Committee of the Company’s
Board of Directors, or any officer to whom the Compensation
Committee has delegated its authority to act under the terms of this
Trust.

This Trust Agreement shall be governed by and construed in accordance with the
laws of Missouri.

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IN WITNESS WHEREOF, this Trust Agreement has been executed on behalf of the
parties effective as of the day and year first above written.

	 	 	 
	 	INTERSTATE BAKERIES CORPORATION
	 	 	 
	 	By:   	/s/ PAUL E. YARICK
	 	 	

	 	 	Paul E. Yarick
	 	 	 
	 	UMB BANK, N.A.
	 	 	 
	 	By:   	/s/ JANAE L. SCHAEFFER
	 	 	

	 	 	Janae L. Schaeffer

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APPENDIX A

IBC Supplemental Executive Retirement Plan

-16-

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