1
EXHIBIT 10.4
FIRST AMENDED AND RESTATED
ITC LEARNING CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
TRUST AGREEMENT
DATED AS OF DECEMBER 2, 1997
2
TABLE OF CONTENTS
A. Definitions.......................................................... 2
B. The Trust Assets..................................................... 2
C. Investment........................................................... 3
D. Trustee's Powers..................................................... 4
E. Voting Company Stock................................................. 6
F. Nominees............................................................. 6
G. Records.............................................................. 7
H. Reports.............................................................. 7
I. Distributions........................................................ 7
J. Signatures........................................................... 8
K. Expenses............................................................. 8
L. Liability............................................................ 9
M. Amendment and Termination............................................ 9
N. Irrevocability....................................................... 9
O. Resignation or Removal of Trustee.................................... 10
P. Acceptance........................................................... 11
3
FIRST AMENDED AND RESTATED
ITC LEARNING CORPORATION
EMPLOYED STOCK OWNERSHIP PLAN TRUST AGREEMENT
THIS TRUST AGREEMENT (this "Agreement") is originally dated as of March
11, 1992, and is hereby amended and restated as of December 2, 1997, by and
between ITC Learning Corporation, a Maryland corporation (formerly known as
Industrial Training Corporation) (the "Company"), and Xxxxxx X. XxxXxxx and
Xxxxxxx Xxxxxx, comprising the Board of Trustees of the Trust defined below
(collectively the "Trustee" and each individually an "individual Trustee").
WITNESSETH
WHEREAS, the Company has adopted the ITC Learning Corporation Employee
Stock Ownership Plan (the "Plan"), which consists of a leveraged employee stock
ownership plan and a stock bonus plan, effective as of January 1, 1992; and
WHEREAS, the Company has adopted the Plan in order to facilitate the
acquisition of equity ownership in the Company by the employees of the Company
and to carry out the general and specific provisions set forth in Article I of
the Plan, all in compliance with the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Code
of 1986, as amended (the "Code");
WHEREAS, the Company has appointed the individual Trustees to serve as
the Board of Trustees under the Plan, and the individual Trustees have agreed to
so serve;
4
WHEREAS, Xxxxxx Xxxxxxxxx and Xxxxxx X. Xxxxxxxx have resigned their
positions as Trustees on the Board of Trustees under the Plan and the Company
has accepted their respective resignations;
WHEREAS, the Company has appointed Xxxxxxx Xxxxxx to serve as a Trustee
on the Board of Trustees under the Plan and Xxxxxxx Xxxxxx has agreed to so
serve;
WHEREAS, the Company has designated the Plan and this Trust as
constituting a plan and trust intended to qualify under sections 401(a) and
4975(e)(7) of the Code and to be exempt from income taxation under section
501(a) of the Code; and
WHEREAS, the Company desires to amend and restate this Agreement to
reflect the current composition of the Board of Trustees under the Plan.
NOW THEREFORE, the parties do hereby agree that the following shall
constitute the Trust Agreement:
A. DEFINITIONS. The definitions of certain words in the Plan shall
apply to this Agreement wherever applicable. Each gender includes the others,
and the singular includes the plural.
B. THE TRUST ASSETS. Employer Contributions shall be paid to the
Trustee from time to time in accordance with the Plan. All contributions to the
Trust and all investments thereof, together with all accumulations, accruals,
earnings and income with respect thereto, shall be held by the Trustee in trust
hereunder as the Trust Assets. The Trust Assets shall be used to repay a Loan
and shall be invested by the Trustee in Company Stock, as provided in the Plan.
-2-
5
The Trustee shall not be responsible for the administration of the Plan,
maintaining any records of Participants' Accounts under the Plan, or the
computation of or collection of contributions, but shall hold, invest, reinvest,
manage, administer, and distribute the Trust Assets, as directed by the
Committee and as provided herein, for the exclusive benefit of Participants (and
their Beneficiaries).
C. INVESTMENT.
(1) The Trustee shall invest and reinvest the Trust Assets primarily
in Company Stock by applying Employer Contributions paid to the Trust in cash to
make payments or prepayments of principal and interest on a Loan or by otherwise
applying Employer Contributions to purchase Company Stock, in accordance with
the terms of the Plan and this Agreement. Except as provided in Paragraph I
below, the Trustee may dispose of Company Stock only if the Committee so
approves in writing. The Trustee may also, as directed by the Committee, place
Trust Assets in savings accounts and certificates of deposit, short-term
securities, stocks and bonds of corporations, annuity contracts, any kind of
investment company or fund (open-end or otherwise), a common trust fund
(including a common trust fund maintained by the Trustee, the terms of which are
hereby incorporated by reference) for the investment of qualified employee
benefit trusts or in any other kind of realty or personalty desirable for the
Trust, without regard to whether or not such investment is an authorized or
appropriate investment for trustees under any state laws applicable thereto.
(2) Any purchase of Company Stock using the proceeds of a Loan to the
Trust shall be effected by the Trustee without direction from the Board of
Directors or the Committee pursuant to the Trustee's determination, in the
exercise of its reasonable judgment after
-3-
6
consultation with such advisors as it reasonably deems necessary, that such
purchase transaction is in the best interests of the Participants and
Beneficiaries and that the purchase transaction and the terms and conditions of
such Loan are in compliance with all applicable provisions of the Code and
ERISA. As directed by the Committee, the Trustee shall refinance any Loan used
to acquire Company Stock and, in connection with any such refinancing, shall
repay any such Loan.
(3) The Trustee shall hold Company Stock for the benefit of
Participants until otherwise directed by the Committee pursuant to the
provisions of the Plan. Notwithstanding the foregoing, the Trustee shall, as
directed by the Committee, apply, use or distribute dividends declared and paid
in cash with respect to Company Stock then held in the Trust, separately with
respect to (i) dividends on then allocated shares of Company Stock and (ii)
dividends on then unallocated shares of Company Stock, each at the time such
cash dividends are paid, to: (w) make payments and prepayments of principal and
interest on a Loan; or (x) acquire additional shares of Company Stock; or (y)
distribute such dividends in cash to Participants pro rata based on the
respective number of shares of Company Stock then allocated to each
Participant's Account; or (z) hold and invest such amounts under the terms of
the Plan and this Agreement. In the event that cash dividends are used to
acquire additional shares of Company Stock, such acquisition shall be made by
the Trustee to the extent and in the manner permitted under the Code and ERISA.
(4) The Trustee may in good faith rely without liability upon the
valuation of Company Stock as determined by the Company or by an Independent
Appraiser.
D. TRUSTEE'S POWERS. As directed by the Board of Directors or the
Committee, the Trustee shall have the authority and power to:
-4-
7
(1) Sell, transfer, mortgage, pledge, lease, or otherwise dispose of,
or grant options with respect to any Trust Assets at public or private sale;
(2) Borrow funds (including from the Company or any stockholder of the
Company) to finance the acquisition of Company Stock, giving a note as Trustee
with such reasonable interest and security for the Loan as may be appropriate or
necessary; provided that (i) any such borrowing shall comply with the provisions
of Section 5.04 of the Plan, (ii) any collateral pledged by the Trustee shall be
limited to Company Stock acquired with the proceeds of such Loan and recourse
thereunder shall be limited to such Company Stock, and (iii) if permitted by
Treasury Regulation section 54.4975-7, all dividends, distributions, rights,
proceeds and other property at any time and from time to time received,
receivable or otherwise distributable in respect of, in exchange for, upon the
conversion of, or in substitution of such Company Stock and such collateral
shall be released from pledge as Loan principal is repaid;
(3) Vote any stocks (including Company Stock, as provided in Paragraph
E and in Article VIII of the Plan), bonds or other securities held in the Trust,
or otherwise consent to or request any action on the part of the issuer in
person or by proxy;
(4) Give general or specific proxies or powers of attorney with or
without powers of substitution;
(5) Participate in reorganizations, recapitalizations, consolidations,
mergers, and similar transactions with respect to Company Stock or any other
securities;
(6) Deposit such Company Stock or other securities in any voting
trust, or with any protective or like committee, or with a trustee or with
depositories designated thereby;
-5-
8
(7) Exercise any option, subscription rights, put rights, and
conversion privileges;
(8) Xxx, defend, compromise, arbitrate, or settle any suit or legal
proceeding to which the Trustee or the Plan is or is threatened to be made a
party or any claim due to the Trust Fund or on which the Trust Fund is liable;
(9) Contract or otherwise enter into transactions as Trustee with the
Company or any stockholder of the Company, for the purpose of acquiring or
selling Company Stock; and
(10) Perform all acts which the Trustee shall deem necessary or
appropriate and exercise any and all powers and authority of the Trustee under
this Agreement.
E. VOTING COMPANY STOCK. The Trustee shall vote and/or respond to a
tender or exchange offer with respect to shares of Company Stock held by the
Trustee as part of the Trust Assets in accordance with instructions received
from the Committee and with applicable provisions of the Plan. Without limiting
the generality of the foregoing, with respect to any matter submitted to the
stockholders of the Company, (i) the Trustee shall vote and/or tender shares
allocated to the Accounts of Participants in the manner instructed by such
Participants, and (ii) the Trustee shall vote and/or tender unallocated shares,
and allocated shares for which no instructions are received, in the same
proportion as it votes and/or tenders shares of Company Stock in respect of
which instructions had been received from Participants.
F. NOMINEES. The Trustee may register any securities or other
property held by it as Trust Assets hereunder in its own name or in the name of
its nominees with or without the addition of words indicating that such
securities are held in a fiduciary capacity, and may hold any
-6-
9
securities in bearer form, but the books and records of the Trustee shall at all
times show that all such investments are part of the Trust.
G. RECORDS. The Trustee shall keep accurate and detailed accounts of
all investments, receipts and disbursements, and other transactions hereunder,
and all accounts, books, and records relating thereto shall be open to
inspection by any person designated by the Committee at all reasonable times.
The Trustee shall maintain such records, make such computations, and perform
such ministerial acts as the Committee may from time to time request.
H. REPORTS. Within a reasonable time after December 31, or following
the removal or resignation of any individual Trustee, and as of any other date
specified by the Committee, the Trustee shall file a report with the Committee.
This report shall show all purchases, sales, receipts, disbursements, and other
transactions effected by the Trustee during the year or period for which the
report is filed, and shall contain an exact description, the costs as shown on
the Trustee's books, and the fair market value as of the end of such period, of
every asset held in the Trust and the amount and nature of any debt obligation
owed by the Trust.
I. DISTRIBUTIONS. The Trustee shall make distributions from the Trust
as directed by the Committee, at such times and in such number of shares of
Company Stock, and such amounts of cash, if applicable, to the person entitled
thereto under the Plan. Any undistributed part of a Participant's Capital
Accumulation shall be retained in the Trust until the Committee directs its
distribution. Where distribution is directed in Company Stock, the Committee or
the Trustee shall cause the Company to issue an appropriate stock certificate or
certificates to the person entitled thereto, to be delivered to such person by
the Committee; provided that the Committee and the Trustee shall comply with any
applicable provisions of the
-7-
10
Plan relating to the repurchase of such Company Stock by the Trust or by the
Company. In the event that all or a portion of a Participant's Capital
Accumulation is to be distributed in cash, it shall be paid by the Trustee
furnishing its check to the Committee for delivery to the Participant (or
Beneficiary). Shares of Company Stock distributed by the Trustee may include
such legend restrictions as the Company may reasonably require in order to
insure compliance with applicable federal or state securities laws.
J. SIGNATURES. All communications required hereunder from the Company
or the Committee to the Trustee shall be in writing signed by an officer of the
Company or a member of the Committee authorized to sign on its behalf. The
Committee shall authorize one or more individuals to sign on its respective
behalf all communications required hereunder. The Company shall at all times
keep the Trustee advised of the names and specimen signatures of all individuals
authorized to sign on behalf of the Company. The Trustee shall be fully
protected in relying on any such communication and shall not be required to
verify the accuracy or validity thereof unless it has reasonable grounds to
doubt the authenticity of any signature. If, after request, the Trustee does not
receive instructions from the Committee on any matter in which instructions are
required hereunder, the Trustee shall act or refrain from acting as it may
determine.
K. EXPENSES. The Trustee may employ suitable agents and counsel who
may be counsel for the Company. The reasonable expenses incurred by the Trustee
in the performance of its duties hereunder, and all other proper charges and
administrative expenses of the Plan and Trust shall be paid out of Trust Assets;
however, the Company may pay all or any portion of such expenses. An individual
Trustee shall not be entitled to compensation for services as Trustee hereunder.
-8-
11
L. LIABILITY. The Trustee shall assume the responsibility and
liability for the prudence of investments under subparagraph C(3). Except as
provided in subparagraph C(3), the Trustee shall not be liable for the making,
retention, or sale of any investment or reinvestment made by it as herein
provided, nor for any loss to or diminution of the Trust Assets, nor for any
action it takes or refrains from taking in accordance with proper direction of
the Committee. The Company shall fully indemnify the Trustee and hold it
harmless from loss or liability, including reasonable legal fees, which the
Trustee sustains in discharging its duties and responsibilities under this
Agreement, unless such loss or liability results from the Trustee's willful
misconduct or gross negligence. Notwithstanding the foregoing, the
indemnification provided in this Paragraph shall be in addition to any rights of
indemnification which the Trustee may be entitled to under the provisions of the
Plan or otherwise. The Trustee shall not be required to pay interest on any part
of the Trust Assets which are held uninvested pursuant to the Committee's
direction.
M. AMENDMENT AND TERMINATION. The Company's Board of Directors shall
have the right at any time, by an instrument in writing, duly executed and
delivered to the Trustee, to modify, alter, or amend this Agreement, in whole or
in part, and/or to terminate the Plan and Trust, in accordance with the express
provisions of the Plan. In no event, however, shall the duties, powers, or
liabilities of the Trustee hereunder be changed without its prior written
consent.
N. IRREVOCABILITY. Subject to the provisions of Paragraph M above,
and Article XII of the Plan, this Trust is declared to be irrevocable and,
except as expressly permitted under the Plan, at no time shall any part of the
Trust Assets revert to any Employer or be used for or be diverted to purposes
other than for the exclusive benefit of Participants (and their
-9-
12
Beneficiaries). However, the Company may, by notice in writing to the Trustee,
direct that all or part of the Trust Assets be transferred to a successor
trustee under a trust which is for the exclusive benefit of such Participants
(and their Beneficiaries) and which satisfies the requirements of section 401(a)
of the Code; and thereupon the Trust Assets, or any part thereof, subject to any
outstanding Loans and accrued interest attributable thereto, shall be paid over,
transferred, or assigned to said successor trustee, free from the Trust created
hereunder; provided, however, that no part of the Trust Assets may be used to
pay contributions of an Employer under any other plan maintained by it for the
benefit of its Employees.
O. RESIGNATION OR REMOVAL OF TRUSTEE.
(1) Any individual Trustee may resign at any time upon thirty (30)
days' written notice to the Company. Any individual Trustee may be removed at
any time by the Company upon thirty (30) days' written notice to that Trustee.
Upon the receipt of instructions or directions from the Committee with which an
individual Trustee is unable or unwilling to comply, an individual Trustee may
resign, upon notice in writing to the Company or the Committee given within a
reasonable time under the circumstances then prevailing, after the receipt of
such instructions or directions. Notwithstanding any other provisions hereof, in
the event that an individual Trustee resigns, that individual Trustee shall have
no liability to the Company, or any Participant (or Beneficiary), for failure to
comply with such instructions or directions.
(2) Upon resignation or removal of any individual Trustee, the Company
shall appoint a successor trustee or trustees. The successor trustee shall have
the same powers and duties as are conferred upon the Trustee hereunder. In the
event that the Trustee is replaced by an institutional Trustee, the Trustee
shall assign, transfer, and pay over to such successor trustee
-10-
13
all the Trust Assets, together with such records or copies thereof as may be
necessary to the successor trustee.
P. ACCEPTANCE. The Trustee hereby accepts this Trust and agrees to
hold the existing Trust Assets, and all additions and accretions thereto,
subject to all the terms and conditions of this Agreement, which shall be
interpreted and construed under the laws of the Commonwealth of Virginia to the
extent that such laws are not superseded by the laws of the United States. In
the event any provision of this Agreement shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining
provisions of this Agreement, but shall be fully severable, and the Agreement
shall be construed and enforced as if the illegal or invalid provision had never
been inserted herein.
-11-
14
IN WITNESS WHEREOF, the Company and the Board of Trustees have hereby agreed to
the terms of this Trust Agreement, executed the day and year first above
written.
ITC LEARNING CORPORATION
By:
----------------------------------------
Title:
----------------------------------------
BOARD OF TRUSTEES:
By: /s/ Xxxxxx X. XxxXxxx
----------------------------------------
Xxxxxx X. XxxXxxx, not in his individual
capacity but as Trustee
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx, not in her individual
capacity but as Trustee
-12-
