EXHIBIT 4.16
DIRECTED EMPLOYEE BENEFIT TRUST AGREEMENT
This TRUST AGREEMENT ("Trust Agreement" or "Agreement"), entered into this
_____ day of December, 1998, by and between SFX ENTERTAINMENT, INC., a Delaware
corporation (the "Company"), and THE XXXXXXX XXXXXX TRUST COMPANY (the
"Trustee").
PURPOSE
The Company has adopted a plan called the SFX Entertainment Profit Sharing
and 401(k) Plan (the "Plan") for the exclusive purpose of providing benefits to
certain of its employees and their beneficiaries and defraying reasonable
expenses of administering the Plan. The Plan provides that, from time to time,
cash and other assets may be paid to the Trustee by the Company to be held and
administered as a trust (the "Trust Fund" or "Trust") for the uses and purposes
of the Plan. The Company intends that the Plan shall qualify under section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
the Trust shall constitute a part of the Plan, as a tax exempt entity within the
meaning of Code section 501(a).
Subject to specific conditions set forth in this Agreement, the Trustee
agrees that it will hold in the Trust and invest cash and other acceptable
property received pursuant to this Agreement and received as contributions from
the Company or transfers from another plan qualified under section 401(a) of the
Code upon the terms and conditions stated below.
ARTICLE 1
TRUST FUND
1.1 The Company's Vice President and Chief Financial Officer or other duly
authorized official shall certify in writing to the Trustee the names and
specimen signatures of all those persons who are authorized to act as or on
behalf of the Plan's named fiduciary, which term shall include the administrator
of the Plan (the "Administrator") and these names and specimen signatures shall
be updated as necessary by the Vice President and Chief Financial Officer or
other duly authorized official.
1.2 All contributions or transfers shall be received by the Trustee in cash
or in any other property acceptable to the Trustee, including Company stock, as
determined by the Trustee under its Investment Guidelines, which are
incorporated herein and made part of the Agreement as amended from time to time.
The Trust Fund shall consist of the contributions and transfers received by the
Trustee, together with the income and earnings from them and any increments to
them. The Trustee shall manage and administer the Trust Fund without distinction
between principal and income. The Trustee shall have no duty to (i) compute any
amount required to be transferred or paid to it by the Company, (ii) collect any
contributions or transfers to the Trust Fund, or (iii) determine whether any
contribution or transfer complies with the terms of the Plan.
If the Company creates or maintains one or more employee benefit plans
qualified under Code section 401(a) in addition to the Plan, the Company may
request the Trustee to hold the assets of the additional plan or plans in the
Trust Fund. The Administrator shall keep records showing the interest of the
Plan and each additional plan in the Trust Fund unless the Trustee enters into
an agreement with the Company to keep separate accounts for each such plan. The
Company and the Administrator shall not permit or cause the assets of one plan
to be used to pay benefits or the administrative expenses of any other plan with
the assets in the Trust Fund.
1.3 The Trustee shall accept a contribution of cash or other property
otherwise acceptable to the Trustee that has been distributed to a Participant
(or an eligible employee who is about to become a Participant) from another
employee benefit plan qualified under Code section 401(a), or from an individual
retirement account or annuity described in Code section 408, at the direction of
the Administrator. The Administrator shall be solely responsible for determining
that such assets represent an eligible rollover contribution within the meaning
of Code section 402(c)(4) or 408(d)(3). The Trustee shall accept a transfer of
cash or other property acceptable to the Trustee on behalf of a Participant (or
an employee who is about to become a Participant) directly from the trustee of
an employee benefit plan qualified under Code section 401(a) at the direction of
the Administrator.
ARTICLE 2
INVESTMENTS AND DISTRIBUTIONS
2.1 (a) Except as provided below, the Administrator shall have all power
over and responsibility for the management, disposition, and investment of the
Trust assets, and the Trustee shall comply with proper written directions of the
Administrator concerning those assets. The Administrator shall not issue
directions in violation of the terms of the Plan and Trust or prohibited by the
fiduciary responsibility rules of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Except to the extent required by ERISA or otherwise
provided in this Agreement, the Trustee shall have no duty or responsibility to
review, initiate action, or make recommendations regarding Trust assets and
shall retain assets until directed in writing by the Administrator to dispose of
them.
The Administrator may delegate to any other person or persons any of the
Administrator's rights, powers or responsibilities with respect to the operation
and administration of the Trust Fund. Any such delegation shall be made in
writing and communicated to the Trustee. The Administrator shall not be liable
for any breach of fiduciary responsibility of a delegatee that is not
proximately caused by the Administrator's failure to properly select or
supervise such delegatee and in which the Administrator does not participate.
(b) If permissible under the Plan, each Participant and/or Beneficiary
may have investment power over the Account maintained for him or her, and
may direct the investment and reinvestment of assets of the Account among
the options authorized by the Administrator. Such direction shall be
furnished to the Trustee in writing under procedures agreed to by the
Trustee and the Administrator. To the extent provided under ERISA section
404(c), the Trustee shall not be liable for any loss, or by reason of any
breach, which results from such Participant's or Beneficiary's exercise of
control. If a Participant who has investment authority under the terms of
the Plan fails to provide such directions, the Administrator shall direct
the investment of the Participant's Accounts. The Administrator shall
maintain records showing the interest of each Participant and/or
Beneficiary in the Trust Fund unless the Trustee enters into an agreement
with the Company to keep separate Accounts for each such Participant and/or
Beneficiary. The Trustee shall have no duty or responsibility to review or
make recommendations regarding investments made at the direction of the
Administrator or Participant and shall be required to act only upon receipt
of proper written directions. A Participant or Beneficiary shall not have
authority to direct the investment of assets in his or her Account in a
loan to any other Participant, or "collectibles" within the meaning of Code
section 408(m)(2).
(c) The Administrator may appoint an investment manager or managers
within the meaning of section 3(38) of ERISA to direct, control or manage
the investment of all or a portion of the Trust assets, as provided in
sections 3(38) and 403(a)(2) of ERISA. The Administrator shall notify the
Trustee in writing of the appointment of each investment manager, and the
assets over which each manager shall exercise control and cause the
investment manager to acknowledge to the Trustee in writing that the
investment manager is a fiduciary with respect to the Plan. If the
foregoing conditions are met, the investment manager shall have the power
to manage, acquire, or dispose of any Trust assets identified as under such
manager's control, and the Trustee shall not be liable for acts or
omissions of the investment manager, or be under an obligation to invest or
otherwise manage any asset of the Trust that is subject to the management
of such investment manager. The Trustee shall act only upon receipt of
proper written directions from a duly appointed investment manager, and
shall have no liability to review or question any such directions.
(d) If the Plan authorizes loans to Plan Participants, the duties of
the Trustee and Administrator may be covered by a separate agreement to be
incorporated as part of this Agreement.
2.2 (a) Subject to the Investment Guidelines of the Trustee, any general or
specific investment guidelines formulated by the Company or the Administrator
and the provisions of Section 2.1 above, the person with investment
responsibility ("Authorized Person") may cause the Trust Fund to be invested and
reinvested in every kind of investment including, without limitation, publicly
traded equity and debt interests of all kinds issued by domestic or foreign
governments, business organizations, limited partnerships, investment companies
and trusts or other entities, convertible securities of all kinds,
interest-bearing deposits in any depository institution (including the Trustee
or any affiliate of the Trustee), money market securities of all kinds,
collective investments as described in subsection (b) below and insurance
contracts as described in subsection (c) below. Notwithstanding anything in the
Trust Agreement to the contrary, the Trustee may hold uninvested and without
liability for interest such part of the Trust Fund as may be reasonably
necessary for the orderly administration of the Trust Fund.
(b) Subject to the following provisions, the assets of the Trust Fund
may be invested and reinvested, in whole or in part, in any common or
collective investment fund (referred to as the "fund") maintained by the
Trustee or an investment manager in which the Trust Fund is eligible to
participate. Notwithstanding any other provision of this Agreement, to the
extent Trust Fund assets are invested in any such fund, the terms of the
fund's governing instrument shall govern the investment responsibilities
and powers of the entity responsible for management of the fund (referred
to as "fund manager"), and the terms of such governing instrument shall be
incorporated into the Trust Agreement. The value of any interest in a fund
held by the Trust Fund shall be the fair market value of the interest as
determined by the fund manager in accordance with the fund's governing
instrument. For purposes of valuation of the Trust Fund assets, the Trustee
shall be entitled to rely conclusively on the value reported by the fund
manager.
The Trust Fund may be invested in a pooled investment vehicle funded by
contracts issued by an insurance company qualified to do business in a state
(within the meaning of ERISA section 3(10)) including, without limitation, group
annuity and guaranteed investment contracts. Any such contract may provide for
the allocation of amounts received by the insurance company to its general
account, one or more of its separate accounts (including pooled separate
accounts), or both. To the extent Trust Fund assets are allocated to a separate
account of an insurance company, the Administrator shall appoint the insurance
company as an investment manager as provided above. Notwithstanding any other
provision of the Trust Agreement, the terms of the contract(s) governing the
separate account(s) in which the Trust Fund is invested shall govern the
investment responsibilities and powers of the insurance company and, to the
extent required by law, the terms of such contract(s) shall be incorporated into
the Trust Agreement.
(c) To the extent permitted by the Plan, the Authorized Person may
direct the Trustee to apply for and purchase life insurance or annuity
contracts (referred to as "contracts") from an insurance company, subject
to the following provisions:
(i) The Authorized Person shall be responsible for ensuring that
the purchases conform with the requirements of the Plan and any rules
and policies established by the Administrator regarding the form,
value, optional settlement methods and other provisions of the
contracts. The Trustee shall not be responsible for the validity or
proper execution of any contract delivered to it, or any act of any
persons which renders the contract void or voidable. The Trustee shall
not be responsible if the contract held in the Trust Fund fails to
meet the requirements of the Plan, and shall have no duty to inform
Participants of the terms and conditions of any such contract.
(ii) The Administrator shall instruct the insurance company to
notify the Administrator of all premiums becoming due under the
contracts. The Plan Administrator shall deliver all premium notices to
the Trustee, together with a direction to the Trustee to pay the
premiums out of the Trust Fund. The Trustee shall have no
responsibility for paying the premium unless sufficient assets of the
Trust Fund are available for that purpose.
(iii) The Administrator shall cause the Trustee to be designated
as the sole owner of any such contract, with sole power to exercise
all rights, privileges, options and other incidents of ownership at
the Administrator's direction. The Administrator from time to time
shall direct the Trustee regarding the designation of a beneficiary of
the death benefit payable under any such contract in accordance with
the applicable provisions of the Plan.
(d) To the extent permitted by the Plan and ERISA and subject to
the applicable federal and state securities laws, the Authorized
Person may direct the Trustee to invest in qualifying employer
securities within the meaning of ERISA section 407(d)(5) ("Employer
Securities"). The Administrator shall have full responsibility for
determining that any such investment, and the voting rights
attributable to such investment, complies with applicable law.
Notwithstanding any other provision of the Plan or Trust Agreement,
the Administrator shall have responsibility for voting any shares or
directing that such shares shall be sold, exchange, or otherwise
disposed of except to the extent provided in Sections 2.3 (q) and (r)
herein, or to the extent that such duties are made the responsibility
of another person or persons under the terms of the Plan or other
governing document, and such person performs according to such terms.
2.3 In its administration of the Trust Fund, the Trustee shall have and
exercise whatever powers are necessary to discharge its obligations and exercise
its rights under the Trust Agreement. Subject to the direction of the
Administrator, Participants, or an investment manager as provided in Section
2.1, the Trustee shall have full power and authority with respect to property
held in the Trust Fund to do all such acts, take all proceedings, and exercise
all such rights and privileges, whether specifically referred to or not in this
document, as could be done, taken, or exercised by the absolute owner,
including, without limitation, the following:
(a) To collect income generated by the Trust Fund investments and
proceeds realized on the sale or disposition of assets and to hold the
same pending reinvestment or distribution in accordance with this
Agreement;
(b) To register Trust Fund property in the Trustee's own name, in
the name of a nominee or in bearer form, provided the Trustee's
records and accounts show that such property is an asset of the Trust
Fund;
(c) To deposit securities in a security depository and permit the
securities so deposited to be held in the name of the depository's
nominee, and to deposit securities issued or guaranteed by the U.S.
Government or any agency or instrumentality thereof, including
securities evidenced by book entry rather than by certificate, with
the U.S. Department of the Treasury, a Federal Reserve Bank or other
appropriate custodial entity, in the same account as the Trustee's own
property, provided the Trustee's records and accounts show that such
securities are assets of the Trust Fund;
(d) To retain the property in the Trust;
(e) To sell Trust assets, at either public or private sale, at
such time or times and on such terms and conditions as it may deem
appropriate;
(f) To consent to or participate in any plan for the
reorganization, consolidation, or merger of any business unit, any
security of which is held in the Trust Fund, to pay calls and
assessments imposed upon the owners of such securities as condition of
their participating therein, and to consent to any contract, lease,
mortgage, purchase or sale of property, by or between such business
unit and any other party;
(g) To exercise or dispose of any right it may have as the holder
of any security, to convert the same into another security, to acquire
any additional security or securities, to make any payments, to
exchange any security, or to do any other act with reference thereto;
(h) To renew or extend the time of payment of any obligation due
or becoming due;
(i) To grant options to purchase property held in the Trust;
(j) To compromise, arbitrate, or otherwise adjust or settle
claims in favor of or against the Trust and to deliver or accept
consideration in either total or partial satisfaction of any
indebtedness or other obligation, and to continue to hold property so
received for the period of time that the Trustee deems appropriate;
(k) To exchange any property for other property upon such terms
and conditions as the Trustee may deem proper, and to give or receive
money to effect equality in price;
(l) To foreclose any obligation by judicial proceeding or
otherwise;
(m) To xxx or defend in connection with any and all securities or
property at any time received or held in the Trust Fund and to charge
against the Trust Fund all reasonable expenses and attorney's fees in
connection therewith;
(n) To manage any real property in the same manner as if the
Trustee were the absolute owner thereof, including the power to lease
the same for such term or terms, and upon such conditions including,
but without limitation, agreements for the purchase or disposal of
buildings on the property or options to the tenant to renew such lease
from time to time or to purchase such property as the Trustee deems
proper; to make ordinary and extraordinary repairs and alterations to
any property that the Trustee deems proper; to make ordinary and
extraordinary repairs and alterations to any building, to raze old
buildings, to erect new buildings, to insure against loss by fire or
other casualties, and to employ agents and confer upon them authority
with respect to the management of such real property as the Trustee
deems appropriate;
(o) To borrow money from any person other than a party in
interest or a disqualified person with respect to the Plan with or
without giving security;
(p) To deposit any security with any protective or reorganization
committee, and to delegate to that committee such power and authority
as the Trustee may deem proper, and to agree to pay out of the Trust
Fund that portion of the expenses and compensation of that committee
as the Trustee may deem proper;
(q) To deliver to the Administrator, or the person or persons
identified by the Administrator, proxies and powers of attorney and
related informational material, for any shares or other property held
including Employer Securities in the Trust. Subject to the provisions
of Section 2.3 (r), the Administrator shall have responsibility for
instructing the Trustee as to voting such shares and the tendering of
such shares, by proxy or in person, except to the extent such
responsibility is delegated to another person, under the terms of the
Plan or Trust Agreement or under an agreement between the named
fiduciary of the Plan and an investment manager, in which case such
persons shall have such responsibility. The Trustee may use agents to
effect such delivery to the Administrator or the person or persons
identified by the Administrator. In no event shall the Trustee be
responsible for the voting or tendering of shares of securities held
in the Trust or for ascertaining or monitoring whether, or how,
proxies are voted or whether the proper number of proxies is received.
(r) If Company Stock is a permissible investment option under the
Plan, all voting rights with respect to shares of Company Stock held
in the Trust Fund and allocated to Participants' Accounts shall be
exercised by the Trustee in such manner as may be directed by the
respective Participant (which term, for purposes of this subsection
(r), shall include the beneficiary of a deceased Participant and any
alternate payee for whom an account has been established with an
interest in Company Stock). Any shares of Company Stock in the Trust
Fund that are allocated to Participants who fail to give directions to
the Trustee shall be voted by the Trustee in the same proportion as
the Shares for which voting instructions have been received, subject
to the power of the Administrator to direct the Trustee to vote such
shares in a different manner, if the Administrator determines that
such action is consistent with its fiduciary obligations under ERISA.
If there is a tender or exchange offer with respect to Company Stock,
the Trustee shall respond in accordance with instructions received
from Participants, but if the Trustee shall not receive timely
direction from a Participant as to the manner in which to respond to
such a tender or exchange offer, the Trustee shall not tender or
exchange any shares of Company Stock with respect to which such
Participant has the right of direction, and the Trustee shall have no
discretion in such matter, except as may be required by applicable
law. Unallocated shares of Company Stock and shares of Company Stock
held by the Trustee pending allocation to Participants' Accounts shall
be tendered or exchanged (or not tendered or exchanged) by the Trustee
in the same proportion as shares with respect to which Participants
have been given the opportunity to direct the Trustee pursuant to the
preceding sentence above are tendered or exchanged, and the Trustee
shall have no discretion in such matter, except as may be required by
applicable law. The Administrator may establish such rules and
guidelines as it deems necessary to properly effect the provision of
this section;
(s) To appoint agents as necessary or desirable, including legal
counsel who may be counsel for the Company;
(t) To hold that portion of the Trust Fund as the Trustee may
deem necessary for ordinary administration and for the disbursement of
funds in cash, without liability for interest, by depositing the same
in any bank (including deposits which bear a reasonable rate of
interest in a bank or similar financial institution supervised by the
United States or a State, even where a bank or financial institution
is the Trustee, or otherwise is a fiduciary of the Plan, including The
Xxxxxxx Xxxxxx Trust Company), subject to the rules and regulations
governing such deposits, and without regard to the amount of any such
deposit;
(u) To retain group or individual insurance contracts of all
kinds authorized under the Plan;
(v) If directed by the Administrator, Participant or investment
manager, to acquire, hold, and administer limited partnership
interests, or interests in other specialized investment vehicles,
provided that such Authorized Person signs any agreement or other
necessary documents requested by the Trustee prior to entering into
the transaction;
(w) To write covered call options on securities where appropriate
for the Trust; provided that any such transaction is in conformity
with the Plan and all applicable rules, regulations and laws governing
the Trustee, the Plan, and this Trust;
(x) To the extent permitted under applicable laws, to invest in
deposits, long and short term debt instruments, stocks, and other
securities, including those of the Trustee, The Xxxxxxx Xxxxxx
Corporation (the "Public Company"), Xxxxxxx Xxxxxx & Co., Inc. (the
"Broker/Dealer"), their affiliates and subsidiaries.
(y) To lend securities from the Trust on a secured basis in
accordance with a separate written agreement between the Administrator
and the Trustee
2.4 The Trustee is authorized to contract or make other arrangements with
The Public Company, the Broker/Dealer, their affiliates and subsidiaries,
successors and assigns and any other organizations affiliated with or
subsidiaries of the Trustee or related entities, for the provision of services
to the Trust or Plan, except where such arrangements are prohibited by law or
regulation.
2.5 The Trustee is authorized to place securities orders, settle securities
trades, hold securities in custody, and other related activities on behalf of
the Trust through or by the Broker/Dealer whenever possible, unless the
Authorized Person specifically instructs the use of another broker/dealer.
Trades (and related activities) conducted through the Broker/Dealer shall be
subject to fees and commissions established by the Broker/Dealer, which may be
paid from the Trust or netted from the proceeds of trades.
Trades shall not be executed through the Broker/Dealer unless the
Administrator and the Authorized Person have received disclosure concerning the
relationship of the Broker/Dealer to the Trustee, and fees and commissions which
may be paid to the Public Company, Broker/Dealer, the Trustee and/or their
affiliates or subsidiaries as a result of using the Broker/Dealer's execution or
other services.
The Trustee is authorized to disclose such information as is necessary to
the operation and administration of the Trust to the Public Company or any of
its affiliates, and to such other persons or organizations that the Trustee
determines have a legitimate business purpose for obtaining such information.
2.6 At the direction of the Authorized Person, the Trustee may purchase
shares of regulated investment companies (or other investment vehicles) advised
by the Public Company, Broker/Dealer or the Trustee or any affiliate of them
("SchwabFunds(R)") except to the extent prohibited by law or regulation.
(a) Uninvested cash of the Trust will be invested in Schwab Funds
designated by the Authorized Person for that purpose, unless the Authorized
Person specifically instructs the use of another fund or account, except to
the extent prohibited by law or regulation.
Schwab Fund shares may not be purchased or held by the Trust unless
the Authorized Person has received disclosure concerning the Public
Company's, Broker/Dealer's, the Trustee's and/or their affiliate's or
subsidiary's relationship to the Funds, and any fees which may be paid to
the Public Company, Broker/Dealer, Trustee and/or their affiliates or
subsidiaries.
2.7 The Administrator shall have responsibility for establishing and
carrying out a funding policy and method, as specified in section 402(b)(1) of
ERISA, consistent with the objectives of the Plan and the requirements of ERISA,
taking into consideration the Plan's short-term and long-term financial needs.
The Trustee shall not be responsible for proper diversification of the
assets of the Trust Fund. The Administrator or the person to whom such
responsibility has been properly delegated under the requirements of ERISA shall
be responsible for the funding policy, for diversification of assets held in
trust for the Plan, and for compliance of the Trust Fund with statutory
limitations on the amount of investment in securities or other property of the
Company or its affiliated companies.
2.8 No assets of the Trust Fund shall be invested in the securities of the
Company or its affiliates unless the Administrator determines that the
securities are exempt from registration under the federal Securities Act of
1933, as amended, and are exempt from registration or qualification under the
applicable state law, and of any other applicable blue sky law, or in the
alternative, that the securities have been so registered and/or qualified. The
Administrator shall also specify what restrictive legend on transfer, if any, is
required to be set forth on the certificates for the securities and the
procedure to be followed by the Trustee to effectuate a resale of such
securities. The Administrator shall not direct the investment in "employer
securities" or "employer real property", within the meaning of section 407 of
ERISA, if such investment would be prohibited by ERISA. The Administrator shall
only direct the investment of Trust funds into securities of the Company or an
affiliate (i) if those securities are traded on an exchange permitting a readily
ascertainable fair market value, or (ii) if the Administrator shall have
obtained a current valuation by a qualified independent appraiser.
2.9 The Company represents and warrants that it will take all
responsibility (and hereby assumes all liability for the failure) to notify
Participants of any limitations on investment directions necessary or
appropriate to comply with federal securities laws (including the Exchange Act
and the 1933 Act), including but not limited to the frequency of investment
changes by certain officers and shareholder-employees pursuant to Section 16(a)
and the volume of trading in Company Stock pursuant to Rule 10b-6. Consequently
the Trustee shall have no liability to a Participant, and Beneficiary, or the
Company for carrying out instructions relating to the acquisition or disposition
of Company Stock regardless of whether those instructions subject such person or
the Company to any liability.
The Company represents and warrants that either the percentage of the
issued and outstanding class of equity security registered under section 12 of
the Exchange Act which is Company Stock owned by the Plan (the "Plan
Percentage") is less than 4.5% or that the Plan and its prior trust, if any,
have complied with all notice and filing requirements imposed by federal
securities laws with regard to Company Stock. The Company covenants that it will
(a) notify the Trustee in writing within 5 business days following any date as
of which the Plan Percentage equals or exceeds 4.5%, (b) monitor the Plan
Percentage on a daily basis so long as the Plan Percentage is at least 4.5%, (c)
notify the Trustee in writing within 5 business days following any date as of
which the Plan Percentage equals or exceeds 5% and, if applicable, 10%, and (d)
provide monthly written reports to the Trustee disclosing the Plan Percentage.
The foregoing monitoring and notification requirements shall cease during any
month when the Plan Percentage is below 4.5% for each day of the month. The
provisions of this Section 2.9 shall survive the termination of this Trust
Agreement.
2.10 The Trustee shall make distributions or transfers from the Trust as
specified in proper written directions from the Administrator. The Trustee is
authorized, to the extent required under applicable law, to withhold from
distributions to any payee an amount that the Trustee determines is necessary to
cover federal and state taxes, and the Trustee is required to withhold such
amounts if so directed by the Administrator. The Trustee shall have no liability
for making any distribution or transfer pursuant to the direction of the
Administrator (including amounts withheld pursuant to the previous sentence) and
shall be under no duty to make inquiry whether any distribution or transfer
directed by the Administrator is made pursuant to the provisions of the Plan.
The Administrator shall furnish to the Trustee all information necessary to
carry out such withholding, or, if such information is not provided to the
Trustee, the Administrator and the Company shall hold the Trustee harmless from
and indemnify it for any liability and related expenses that arise in connection
with improper withholding.
The Trustee shall not be liable for the proper application of any part of
the Plan or Trust if distributions or transfers are made in accordance with the
written directions of the Administrator including any distribution made pursuant
to a domestic relations order which the Administrator has determined to be
qualified within the meaning of section 414(p) of the Code, nor shall the
Trustee be responsible for the adequacy of the Trust Fund to discharge any and
all payments and liabilities under the Plan.
2.11 The Trustee may make any payment required of it under this Agreement
by mailing its check for the amount specified to the recipient at such address
last furnished to the Trustee by the Administrator, or if the Trustee has never
received an address, to the recipient in care of the Administrator.
2.12 All persons dealing with the Trustee are released from inquiring into
the decision or authority of the Trustee and from seeing to the proper
application of any monies paid or securities or other property delivered to the
Trustee.
2.13 The Trustee shall bear no liability for acting upon any instruction or
document believed by it to be genuine and to be presented or signed by a party
duly authorized to do so, and the Trustee shall be under no duty to make any
investigation or inquiry about the correctness of such instruction or document.
2.14 The Trustee may consult with legal counsel of its choice, including
counsel for the Company, upon any question or matter arising hereunder and the
opinion of such counsel, when relied upon by the Trustee shall be evidence the
Trustee was acting in good faith.
2.15 If as provided in the Plan, other trustees of separate trusts under
the Plan may be appointed, the Trustee under this Agreement shall have no duties
or responsibilities for Plan assets not held in the Trust by the Trustee, except
as required by applicable law.
ARTICLE 3
SETTLEMENT OF ACCOUNTS
3.1 (a) The Trustee shall maintain accurate records and detailed
accounts of all investments, receipts, disbursements, and other
transactions related to the Trust, and those records shall be
available at all reasonable times to the Administrator, the Company,
or their authorized representatives.
(b) The Trustee, at the direction of the Administrator, shall
submit to the Administrator and any other person that the
Administrator designates those valuations, reports, or other
information as the Administrator may request. In any case, the Trust
Fund shall be valued by the Trustee at the frequency agreed to by the
Trustee and the Company, but in any event not less than annually at
the fair market value as of the close of business at the end of the
last business day of the fiscal year of the Plan. Except as specified
below, in the absence of fraud or bad faith, the Trustee's valuation
of the Trust Fund shall be conclusive.
3.2 (a) Within sixty days following the close of each fiscal year of
the Plan or the close of any other period as may be agreed upon by the
Trustee and the Administrator, the Trustee shall file with the
Administrator a written account setting forth a description of all
securities and other property purchased and sold, all receipts,
disbursements, and other transactions effected by it during that
fiscal year or other designated period, and listing the securities and
other property held by the Trustee at the end of such fiscal year or
other designated period, together with their then fair market values.
(b) The Administrator may approve an account by written notice of
approval delivered to the Trustee or by failure to deliver to the
Trustee express objections to the account in writing within sixty days
from the date upon which the account was mailed or otherwise delivered
to the Administrator.
(c) The account shall be deemed approved upon receipt by the
Trustee of the Administrator's written approval of the account or upon
the passage of the sixty day period of time, except for any matters
covered by written objections that have been delivered to the Trustee
by the Administrator and for which the Trustee has not given an
explanation or made an adjustment satisfactory to the Administrator.
(d) If the account is not settled as provided above, the Trustee,
the Company or the Administrator shall have the right to apply to a
court of competent jurisdiction at the expense of the Trust Fund for a
judicial settlement of the accounting. Any judgment or decree entered
in such proceedings shall be conclusive on all persons interested in
the Trust Fund.
3.3 Notwithstanding any other provision of this Article 3, if the Trustee
shall determine that the Trust Fund consists in whole or in part of property not
traded freely on a recognized market, or that information necessary to ascertain
the fair market value is not readily available, the Trustee may request
instructions from the Administrator concerning the value of such property for
all purposes under the Plan and this Trust Agreement, and the Administrator
shall comply with that request. The Trustee shall be entitled to rely upon the
value placed upon such property by the Administrator. At the Trustee's option,
it may request that the Administrator hire an independent appraiser that meets
the requirements of Code section 401(a)(28)(C) to value the property.
Alternatively, if the Trustee chooses, or if the Administrator shall fail or
refuse to instruct the Trustee on the value of such property within a reasonable
time after receipt of the Trustee's request, the Trustee at its sole discretion
may engage an independent appraiser to determine the fair market value of such
property. Any expenses with respect to such appraisal shall be paid by the
Trustee out of the Trust Fund or, at the option of the Company, by the Company.
ARTICLE 4
INDEMNIFICATION
4.1 To the extent permitted under ERISA, the Company shall indemnify and
hold harmless the Trustee, its officers, employees, and agents from and against
all liabilities, losses, expenses, and claims (including reasonable attorney's
fees and costs of defense) arising out of (1) the acts or omissions to act with
respect to the Plan or Trust by persons unrelated to the Trustee ("unrelated
persons"), (2) the Trustee's action or inaction with respect to the Plan or
Trust resulting from reliance on the action or inaction of unrelated persons,
including directions to invest or otherwise deal with Plan assets, or (3) any
violation by any unrelated person of the provisions of ERISA or the regulations
thereunder, unless the Trustee commits a breach of its duties by reason of its
negligence or willful misconduct. Expenses incurred by the Trustee which it
believes to be subject to indemnification under this Agreement shall be paid by
the Company upon the Trustee's request, provided that the Company may delay
payment of any amount in dispute until such dispute is resolved according to the
provisions of Sec. 8.5 of the Agreement. Such resolution may include the award
of interest on unpaid amounts determined to be payable to the Trustee under this
Section.
ARTICLE 5
TAXES, EXPENSES AND COMPENSATION OF TRUSTEE
5.1 The Trustee shall notify the Plan Administrator of any tax levied upon
or assessed against the Trust Fund of which the Trustee has knowledge. If the
Trustee receives no instructions from the Administrator, the Trustee may pay the
tax from the Trust Fund. If the Plan Administrator wishes to contest the tax
assessment, it shall give appropriate written instructions to the Trustee. The
Trustee shall not be required to bring any legal actions or proceedings to
contest the validity of any tax assessments unless the Trustee has been
indemnified to its satisfaction against loss or expense related to such actions
or proceedings, including reasonable attorney's fees.
5.2 The Company shall quarterly pay the Trustee its expenses in
administering the Trust Fund and reasonable compensation for its services as
Trustee at a rate set forth in the Fee Schedule, which may be amended from time
to time. Trustee reserves the right to alter this rate of compensation at any
time by providing the Company with written notice of such change at least sixty
days prior to its effective date. Reasonable compensation shall include
compensation for any extraordinary services or computations required, such as
determination of the value of assets when current market values are not
published, and the covering of overdrafts. The Trustee shall have a lien on the
Trust Fund for compensation and for any reasonable expenses including counsel,
appraisal, or accounting fees, and such amounts may be withdrawn from the Trust
Fund unless paid by the Company within thirty days after mailing of the written
billing by the Trustee.
ARTICLE 6
RESIGNATION OR REMOVAL OF TRUSTEE
6.1 The Trustee may resign as Trustee hereunder or may be removed by the
Company. This resignation or removal may be accomplished at any time upon the
giving of sixty days written notice to the Trustee or Company, as applicable (or
less if the other party agrees to waive notice). Upon resignation or removal,
the Company shall appoint a successor trustee who shall then succeed to all the
powers and duties given to the Trustee by this Agreement. The terminating
Trustee shall transfer all property of the Trust Fund then held by it to such
successor Trustee. The terminating Trustee may require as a condition of making
such transfer that the successor Trustee present evidence that any bonding
requirement under ERISA section 412 has been met and/or may require that the
Company provide a writing indemnifying the Trustee against any losses arising
from the replacement of the Trustee. If either party has given notice of
termination as provided under this Agreement, and upon the expiration of the
advance notice period no other successor Trustee has been appointed and has
accepted such appointment, this provision shall serve as (i) notice of
appointment of the Chief Executive Officer of the Company as Trustee and (ii) as
acceptance by that person of that appointment. The Trustee is authorized to
reserve such sum of money as it may deem advisable for payment of its fees and
expenses in connection with the settlement of its accounts or other proper Trust
expenses, and any balance of such reserve remaining after the payment of such
fees and expenses shall be paid to the successor Trustee.
6.2 Within sixty days of the transfer to the successor Trustee, the
terminating Trustee shall provide the Company with an account in the form and
manner prescribed for the annual account by Article 3. Unless the Company files
with the Trustee written objections within sixty days after such account has
been mailed or otherwise delivered, the account shall be deemed to have been
approved by the Company.
ARTICLE 7
AMENDMENT AND TERMINATION OF TRUST
7.1 It is the intention of the Company that this Trust and the Plan of
which it is a part shall be permanently administered for the benefit of the
Plan's Participants and their Beneficiaries, and defraying reasonable expenses
of administering the Plan. This Trust is, accordingly, irrevocable except with
respect to Section 8.4; however, this Trust may be terminated at any time by the
Company, and upon such termination, the Trust Fund shall be distributed by the
Trustee as and when directed by the Administrator in accordance with the
provisions of Section 2.10 and the Plan document. From the date of termination
of the Plan and until the final distribution of the Trust assets, the Trustee
shall continue to have all the powers provided under this Agreement that are
necessary or desirable for the orderly liquidation and distribution of the Trust
Fund. In no instance upon any termination, or discontinuance, and subsequent
distribution shall the Trust Fund or any part of it be used for, or diverted to,
purposes other than providing benefits to participating employees and their
beneficiaries, and defraying the administrative expenses of the Plan until all
Plan liabilities have been satisfied, except in the instance of the failure of
the Trust initially to qualify for tax-exempt status as set forth in Section
8.4.
7.2 This Trust Agreement, other than Section 7.1, may be amended at any
time by written agreement of the Company and the Trustee, provided, that such
amendment shall not operate:
(i) to cause any part of the Trust Fund to revert to or be recoverable
by the Company or to be used for or diverted to purposes other than the
exclusive benefit of Participants and their Beneficiaries, except to the
extent permitted by law and the Plan; or
(ii) to reduce the then accrued benefits or the amounts then held for
the benefit of any Participant or Beneficiary of the Plan.
7.3 The Trustee may condition the transfer or distribution of any assets of
the Trust Fund upon termination of the Trust on receipt of a favorable
determination letter from the Internal Revenue Service confirming that the
termination of the Plan does not adversely affect the tax-exempt status of the
Trust Fund. Alternatively, the Trustee, in its sole discretion, may accept the
indemnification of the Trustee against any liability arising from such transfer
or distribution that is provided by the Company or may require the Company to
post a bond sufficient to protect the Trustee against such liability until such
time as a favorable determination letter is received.
ARTICLE 8
MISCELLANEOUS
8.1 The Trust will be administered in the State of California, and its
validity, construction, and all rights hereunder shall be governed by ERISA and,
to the extent not preempted, by the laws of California. If any provisions of
this Agreement shall be invalid or unenforceable, the remaining provisions shall
continue to be fully effective.
8.2 The headings in this instrument have been inserted for convenience of
reference only, and are to be ignored in any construction of the provisions of
this Agreement.
8.3 No person entitled to any benefit under this Trust and the Plan shall
have any right to assign, alienate, hypothecate, or encumber his interest in any
benefits under this Agreement (except as to any loans under the Plan) and those
benefits shall not in any way be subject to claim of his creditors or liable to
attachment, execution, or other process of law except to the extent required
under a qualified domestic relations order within the meaning of section 414(p)
of the Code.
8.4 It is intended that this Trust shall be tax exempt under section 501 of
the Code and that the Plan referred to herein shall qualify under section 401(a)
of the Code. However, notwithstanding any other provisions of the Trust, if the
Internal Revenue Service is requested to issue to the Company a favorable
written determination or ruling with respect to the initial qualification of the
Plan and exemption of the Trust from tax and such request is denied, the Trustee
shall, after receiving a written direction from the Administrator, pay to each
Participant that portion of the Trust Fund applicable to said Participant's
voluntary contributions, if any, and provided the Plan so states, pay to the
Company any part of the Trust Fund attributable to Company contributions then
remaining in the Trustee's possession. As a condition to such repayment, the
Company must execute, acknowledge, and deliver to the Trustee its written
undertaking, in form satisfactory to the Trustee, to indemnify, defend, and hold
the Trustee harmless from all claims, actions, demands, or liabilities arising
in connection with such repayment, and provided further that such repayment will
occur within one year after the date the request for qualification is denied.
8.5 Any dispute under this Agreement shall be resolved by submission of
the issue to a member of the American Arbitration Association who is chosen by
the Company and the Trustee. If the Company and the Trustee cannot agree on such
a choice, each shall nominate a member of the American Arbitration Association,
and the two nominees will then select an arbitrator. Expenses of the arbitration
shall be paid as decided by the arbitrator.
8.6 This Trust Agreement is incorporated into and is a part of the Plan.
Anything in any other part of the Plan that is inconsistent with this Trust
Agreement is overridden, and in the case of such conflict, the terms of this
Trust Agreement shall govern.
8.7 The duties and responsibilities of the Trustee shall be solely those
set forth in this document. The Trustee shall not be a named fiduciary under the
Plan and shall not have the authority to interpret the Plan.
8.8 To the extent permitted by statutory or administrative exemption, the
Trustee may engage in actions that otherwise would violate section 406 of ERISA.
8.9 Each fiduciary shall be solely responsible for the fiduciary's own acts
or omissions under the Plan or the Trust. Except to the extent otherwise
provided by ERISA, the parties specifically intend that no fiduciary shall be
liable for any breach of fiduciary responsibility of another fiduciary.
8.10 The Trustee is authorized to tape record conversations between the
Trustee and persons acting on behalf of the Plan or a Participant in the Plan to
verify data on transactions.
IN WITNESS WHEREOF, SFX ENTERTAINMENT, INC. and THE XXXXXXX XXXXXX TRUST
COMPANY, have caused this Agreement to be executed by their respective officers
thereunto duly authorized as of the day and year first above written.
SFX Entertainment, Inc.
Company
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Printed Name: Xxxxxx X. Xxxxxx
Title: Vice President and Chief Financial Officer
THE XXXXXXX XXXXXX TRUST COMPANY,
Trustee
By: /s/ Xxxx Xxxxx
------------------------------
Printed Name: Xxxx Xxxxx
Title:
