EXHIBIT 10.7(b)
QUESTECH, INC.
AMENDED AND RESTATED STOCK EMPLOYEE COMPENSATION TRUST
THIS AMENDED AND RESTATED TRUST AGREEMENT (the "Agreement") is made
effective as of March 25, 1998, by and among QuesTech, Inc., a Virginia
corporation, and XXXXXX X. XXXXXXXXXX, XXXXXX X. XXXXXXXXX, XXXXXXXXX X.
XXXXX, XXXXXXX XXXXX and XXXXXXX X. XXXXXXXXX, as individual trustees, and
their successors (each, individually, a "Trustee," and collectively, the
"Trustees");
W I T N E S S E T H:
WHEREAS, the Company established a Stock Employee Compensation Trust (the
"Trust") pursuant to an Amended Stock Employee Compensation Trust Agreement
effective as of December 31, 1993 (the "Trust Agreement");
WHEREAS, the Trustees desire to act as trustees of the Trust, and to hold
legal title to the assets of the Trust, in trust, for the purpose hereinafter
stated and in accordance with the terms hereof;
WHEREAS, the Company has previously adopted the Plans (as defined below);
WHEREAS, the Company desires to provide assurance of the availability of
the shares of its common stock necessary to satisfy certain of its obligations
under the Plans (as defined below);
WHEREAS, the Company desires that the assets to be held in the Trust Fund
(as defined below) should be principally or exclusively securities of the
Company and, therefore, expressly waives any diversification of investments that
might otherwise be necessary, appropriate, or required pursuant to applicable
provisions of law;
WHEREAS, the members of the Board of Directors of the Company have been
appointed as Trustees and have accepted such appointment as of the date set
forth first above; and
WHEREAS, the Company and the Trustees desire to amend and restate the Trust
Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto hereby establish the Trust and agree
that the Trust will be comprised, held and disposed of as follows:
1. TRUST, TRUSTEE AND TRUST FUND
1.1. Trust. This Agreement and the Trust shall be known as the QuesTech,
Inc. Stock Employee Compensation Trust. The parties intend that the
Trust will be an independent legal entity with title to and power to
convey all of its assets. The parties hereto further intend that the
Trust not be subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA'). However, all decisions and interpretations
by the Trustee shall be governed by the arbitrary and capricious
standard, as interpreted under
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applicable ERISA law. The assets of the Trust will be held, invested
and disposed of by the Trustee, in accordance with the terms of the
Trust.
1.2. Trustee. The Trustees named above are hereby designated as the
trustees hereunder, to receive, hold, invest, administer and
distribute the Trust Fund in accordance with this Agreement, the
provisions of which shall govern the power, duties and
responsibilities of the Trustees.
1.3. Trust Fund. The assets held at any time and from time to time under
the Trust collectively are herein referred to as the "Trust Fund" and
shall consist of the Common Stock of the Company, contributions
received by the Trustee, proceeds of any loans, investments and
reinvestment thereof, the earnings and income thereon, less
disbursements therefrom. Except as herein otherwise provided, title to
the assets of the Trust Fund shall at all times be vested in the
Trustees and securities that are part of the Trust Fund shall be held
in such manner that the Trustees' name and the fiduciary capacity in
which the securities are held are fully disclosed, subject to the
right of the Trustees to hold title in bearer form or in the name of a
nominee, and the interests of others in the Trust Fund shall be only
the right to have such assets received, held, invested administered
and distributed in accordance with theprovisions of the Trust.
1.4. Trust Fund Subject to Claims. Notwithstanding any provision of this
Agreement to the contrary, the Trust Fund shall at all times remain
subject to the claims of the Company's general creditors under federal
and state law.
In addition, the Chief Executive Officer of the Company shall have the
duty to inform the Trustees in writing of the Company's insolvency. If
a person claiming to be a creditor of the Company alleges in writing
to any Trustee that the Company has become insolvent, the Chief
Executive Officer shall determine the validity of such claims and if
found to be valid, shall notify the Trustees to discontinue
allocations pursuant to Article 3.
Unless the Trustees have actual knowledge of the Company's insolvency,
or have received notice from the Company or a person claiming to be a
creditor alleging that the Company is insolvent, the Trustees shall
have no duty to inquire whether the Company is insolvent. The Trustees
may in all events rely on such evidence concerning the Company's
solvency as may be furnished to the Trustees that provides the
Trustees with a reasonable basis for making a determination concerning
the Company's insolvency.
If at any time the Trustees have determined that the Company is
insolvent, the Trustees shall discontinue allocations pursuant to
Article 3 and shall hold the Trust Fund for the benefit of the
Company's general creditors. Nothing in this Trust Agreement shall
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in any way diminish rights of employees as general creditors of the
Company with respect to benefits due under the Plan(s) or otherwise.
The Trustees shall resume allocations pursuant to Article 3 only after
the Trustees have determined that the Company is not insolvent (or is
no longer insolvent).
1.5. Definitions. In additional to the terms defined in the preceding
portions of this Agreement, certain capitalized terms have the
meanings set forth below:
"Board of Directors" means the board of directors of the Company.
"Calculation Period" means a period consisting of a calendar year.
"Change of Control" means any of the following events:
(a) an acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of fifty-one
percent (51%) or more of the combined voting power of the
then outstanding voting securities of the Company;
provided, however,that the following acquisitions shall
not constitute a Change in Control: (i) an acquisition by
or directly from the Company, (ii) an acquisition by any
employee benefit plan or trust sponsored or maintained by
the Company; and (iii) any acquisition described in
subclauses (A) or (B) of subsection (b) below; or
(b) approval by the stockholders of the Company of (i) a
complete dissolution or liquidation of the Company, (ii)
a sale or other disposition of all or substantially all of
the Company's assets or (iii) areorganization, merger, or
consolidation ("Business Combination") unless either (A)
all or substantially all of the stockholders of the
Company immediately prior to the Business Combination own
more than fifty percent (50%) of the voting securities of
the entity surviving the Business Combination, or the
entity which directly or indirectly controls such
surviving entity, in substantially the same proportion as
they owned the voting securities of the Company
immediately prior thereto, or (B) the consideration
(other than cash paid in lieu of fractional shares or
payment upon perfection of appraisal rights) issued to
stockholders of the Company in the Business Combination is
solely common stock which is publicly traded on an
established securities exchange in the United States or
on the National Association of Securities Dealers'
Automated Quotation System ("NASDAQ").
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means QuesTech, Inc., a Virginia corporation, or any
successor thereto. References to the Company shall include its
subsidiaries where appropriate.
"Company Stock" means shares of common stock, par value $0.05 per
share, issued by the Company or any successor securities.
"Excess Shares" has the meaning set forth in Section 3.3.
"Extraordinary Dividend" means any dividend or other distribution of
each or other property (other than Company Stock) made with
respect to Company Stock, which the Board of Directors declares
generally to be other than an ordinary dividend.
"Fair Market Value" means as of any date the average of the highest
and lowest report sales price, determined in the regular way on
such date (or if such date is not a trade day, then on the most
recent prior date which is a trading day) of a share of Company
Stock as reported on the composite tape, or similar reporting
system, for issues listed on NASDAQ (or, if the Company Stock is
no longer traded on the NASDAQ Exchange, on such other national
securities exchange on which the Company Stock is listed or
national securities or central market system upon which
transactions in Company Stock are reported, as either shall be
designated by the Board of Directors for the purposes hereof) or
if sales of Common Stock are not reported in any manner specified
above, the average of the high bid and low asked quotations on
such date (or if such date is not a trading day, then on the most
recent prior date which is a trading day) in the over-the-counter
market as reported by NASDAQ or, if not so reported, by National
Quotation Bureau, Incorporated or similar organization selected
by the Board of Directors.
"Loans" means (a) the loan and extension of credit to the Trust
evidenced by the promissory note made and authorized by the Trust
dated December 31, 1993, executed by the Chairman of the Company
as agent for the Trustees, with which the Trust purchased a
portion of the Company Stock; (b) the loan and extension of
credit to the Trust evidenced by the promissory note made and
authorized by the Trust dated March 25, 1998, executed by the
Chairman of the Company as agent for the Trustee, with which the
Trust purchased a portion of the Company Stock; and (c) any other
loan by the Company to the Trust for the purpose of purchasing
Company Stock.
"Plans" or "QTI Plans" means the employee benefit plans and
non-employee directors stock option plan listed on Schedule A
hereto as the same may be amended from time to time by the
Board of Directors, including any successors thereto, and any
other employee benefit plan or non-employee directors stock
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option plans of the Company or its subsidiaries designated as
such by the Board of Directors.
"Participant" means as of any date any individual who is employed by
the Company or any subsidiary of the Company or is a non-employee
director of the Company or any subsidiary of the Company as of
such date and is a participant in a Plan.
"QTI Plan Participant Certification" means a certification to be
delivered by the Participant in a QTI Plan to the Trustee
pursuant to Section 5.4, which sets forth the directions made by
each Participant as to voting or tendering of the Company Stock
allocated to his account in the respective QTI Plan with respect
to the voting or tendering decision at issue.
"Suspense Account" means a separate account to be maintained by the
Trustees to hold Excess Shares pursuant to the terms of Article 3
hereof.
"Trustee" means those persons and corporate entities or any successor
trustee as appointed by the Board of Directors.
"Trust Year" means the period beginning on the date hereof and ending
on December 31, 1994, and each twelve (12) month period beginning
on January 1 and ending on December 31 thereafter.
2. CONTRIBUTIONS AND DIVIDENDS
2.1. Initial Contribution. For the initial Trust Year the Company has been
credited with a contribution to the Trust in cash of Four Hundred
Thirty-Two Thousand Five Hundred and 00/100 Dollars ($432,500.00),
which enabled the Trustees to acquire 221,792 shares of Company Stock
which have been and are being utilized for purposes of funding Common
Stock issuances upon the exercise of stock options issued by the
Company under the QTI Plans, as more specifically set forth in Section
3.1 below. The Trust returned to the Company a promissory note in the
principal sum of Four Hundred Thirty-Two Thousand Five Hundred and
00/100 Dollars ($432,500.00), which note is the obligation of the
Trust.
2.2. Additional Contribution. For the Trust Year 1998 the Company shall be
credited with a contribution to the Trust in cash of Two Million Three
Hundred Twenty Four Thousand Two Hundred Ninety Three and 75/100
Dollars ($2,324,293.75), which amount represents the fair market value
of 296,847 shares of Company Stock on date of purchase thereof and
which amount shall be used by the Trustees to acquire said 296, 847
shares of Company Stock for purpose of funding Common Stock issuances
upon the exercise of stock options issued by the Company under the QTI
Plans, as more specifically set forth in Section 3.1 below. In
recognition thereof, the Trust shall return to the Company a
promissory note having a principal sum equal to the cash contribution
made by the Company, which note shall be the obligation of the Trust.
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2.3. Repayment and Forgiveness of Loans. For each Trust Year in which Plan
Participants exercise stock options under the QTI Plans, the Company
may attribute to repayment of the Loans (in the form of a reduction of
the principal amount outstanding thereunder) the cash exercise price
received from such Plan Participants (a "Principal Reduction"). Unless
otherwise expressly provided herein, the Trustees shall apply all cash
contributions, dividends and earnings of the Trust to the payment of
the Loans. Such payments shall be applied on a pro rata basis to each
Loan outstanding based on the principal amount outstanding on such
Loan in proportion to the aggregate principal amount outstanding on
all Loans.
2.4. Dividends. Except as otherwise provided herein, dividends paid in cash
on Company Stock held by the Trust, including Company Stock held in
the Suspense Account, shall be applied to repay principal due under
the Loans. Dividends which are not in cash or in Company Stock
(including Extraordinary Dividends, or portions thereof shall be
reduced to cash by the Trustees and shall be applied to repay
principal due under the Loans.
3. RELEASE AND ALLOCATION OF COMPANY STOCK
3.1 Release of Shares. In exchange for each Principal Reduction (as
provided in Section 2.2 above), the Trust shall release to the Company
the number of shares of Common Stock for which stock options were
exercised in connection with such Principal Reduction, which shares
then may be registered in the name of the Plan Participant(s)
exercising such options.
3.2 Allocations. For the purposes of this Trust, shares of Company Stock
shall be allocated as directed by the Trustees to the Plans and the
Plan Participants as the Trustees may determine in accordance with
the requirements of the QTI Plans. The Trustees' discretion shall be
limited to the amounts allocated among the QTI Plans, with the
allocation itself being mandatory. Subject to this Article 3, the
shares have been allocated in the manner set forth on Schedule A
hereto.
3.3 Excess Shares. Shares which are not allocated pursuant to the
preceding paragraph ("Excess Shares") shall be held by the Trustee in
the Suspense Account and shall be allocated in accordance with the
provisions of this Article 3.
4. COMPENSATION, EXPENSES AND TAX WITHHOLDING
The Trustees shall not be entitled to compensation for their services
as such. In the event a Trustee is substituted for the members of the
Board of Directors of the Company, the Company may reimburse the
reasonable legal, accounting and appraisal fees, expenses and other
charges reasonably incurred in connection with the administration,
management and distribution of the Trust Fund by such Successor
Trustee.
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5. ADMINISTRATION OF TRUST FUND
5.1. Management and Control of Trust Fund. Subject to the terms of
thisAgreement, the Trustees shall have exclusive authority, discretion
and responsibility to manage and control the assets of the Trust Fund.
5.2. Investment of Funds. Except as otherwise provided in Section 2.2 and
in this Section 5.2, the Trustees shall invest and reinvest the Trust
Fund exclusively in Company Stock, including any increases thereto
resulting from the proceeds of a tender offer, recapitalization or
similar transaction which, if not in Company Stock, shall be reduced
to cash as soon as practicable. The Trustees may invest any portion of
the Trust Fund temporarily pending investment in Company Stock,
distribution or payment of expenses in (i) investments in United
States Government Obligations with maturities of less than one (1)
year, (ii) interest-bearing accounts including but not limited to
certificates of deposit, time deposits, saving accounts and money
market accounts with maturities of less than one (1 ) year in any
bank, with aggregate capital in excess of One Billion Dollars
($1,000,000,000) and a Xxxxx'x Investor Services rating of at least
P1, or an equivalent rating from a nationally recognized ratings
agency, which accounts are insured by the Federal Deposit Insurance
Corporation or other similar federal agency, (iii) obligations issued
or guaranteed by any agency or instrumentality of the United States of
America with maturities of less than one (1) year or (iv) short-term
discount obligations of the Federal National Mortgage Association.
5.3. Trustees' Administrative Powers. Except as otherwise provided herein,
and subject to the Trustees' duties hereunder, the Trustees shall have
the following powers and rights, in addition to those provided
elsewhere in this Agreement or by law:
(a) to retain any asset of the Trust Fund;
(b) subject to Section 5.4 and Article 3, to sell, transfer,
mortgage, pledge, lease or otherwise dispose of, or grant options
with respect to any Trust Fund assets at public or private sale;
(c) with the concurrence of the Company, to borrow from any lender
(including the Company pursuant to the Loans), to acquire
Company Stock as authorized by this Agreement, to enter into
lending agreements upon such terms (including reasonable
interest and security for the loan and rights to renegotiate
and prepay such loan) as may be determined by the Board of
Directors; provided, however, that any collateral given by the
Trustees for the Loans shall be limited to cash and property
contributed by the Company to the Trust and dividends paid on
Company Stock held in the Trust Fund and shall not include
Company Stock acquired with the proceeds of Loans;
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(d) to settle, submit to arbitration, compromise, contest, prosecute
or abandon claims and demands in favor of or against the Trust
Fund;
(e) to vote or to give any consent with respect to any such
securities, including any Company Stock, held by the Trust either
in person or by proxy for any purpose provided that the Trustee
shall vote, tender or exchange all shares of Company Stock as
provided in Section 5.4;
(f) to exercise any of the powers and rights of any individual owner
with respect to any asset of the Trust Fund and to perform any
and all other acts that in their judgment are necessary or
appropriate for the proper administration of the Trust Fund, even
though such powers, rights and acts are not specifically
enumerated in this Agreement;
(g) to employ such accountants, actuaries, investment bankers,
appraisers, other advisors and agents as may be reasonably
necessary in collecting, managing, administering, investing,
valuing, distributing and protecting the Trust Fund or the
assets thereof or any borrowings of the Trustee made in
accordance with Section 5.3(c); and to pay their reasonable
fees and expenses, which shall be deemed to be expenses of the
Trust and forwhich the Trustees shall be reimbursed in
accordance with Section 4.1;
(h) to cause any asset of the Trust Fund to be issued, held or
registered in the Trustees' name or in the name of their nominee,
or in such form that title will pass by delivery, provided that
the records of the Trustees shallindicate the true ownership of
such assets;
(i) to utilize another entity as custodian to hold, but not invest or
otherwise manage or control, some or all of the assets of the
Trust Funds; and
(j) to consult with legal counsel (who may also be counsel for the
Company generally) with respect to any of their duties or
obligations hereunder; and to pay the reasonable fees and
expenses of such counsel, which shall be deemed to be expenses of
the Trust and for which the Trustees shall be reimbursed in
accordance with Section 4.1.
Notwithstanding the foregoing, neither the Trust nor the Trustees
shall have any power to, and shall not, engage in any trade or
business regarding the Trust Fund. All decisions by the Trustees shall
be governed by a majority vote of the Trustees.
5.4. Voting And Tendering Of Company Stock.
(a) Voting of Allocated Company Stock. The Trustee shall exercise
reasonable diligence to follow the directions of the Participants as
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to the manner in which shares of Company Stock held by the Trust are
to be voted on each matter brought before an annual or special
stockholders' meeting of the Company or the manner in which any
consent is to be executed, in each case as provided below. Before each
such meeting of stockholders, the Trustees shall cause to be
furnished to each Participant of each QTI Plan, including
non-qualified optionees, a copy of the proxy solicitation material
received by the Trustees, together with a form requesting confidential
instructions as to how to vote the shares of Company Stock held by the
Trustees. Upon timely receipt of the Participant's Certification, the
Trustees shall on each such matter vote thenumber of shares of Company
Stock held by the Trust as follows:
The Trustee shall, with respect to each QTI Plan, assign to each
Participant, the number of shares (the "QTI Participant Directed
Account") equal to the total number of shares of Common Stock covered
by all of the Participant's option grants. Each share assigned to each
Participant in accordance with the previous sentence shall be subject
to such Participant's direction to the Trustees with respect to shares
of Company Stock allocated to his account in such QTI Plan, as
reflected in the Participant Certification. Any shares of Company
Stock which remain undirected pursuant to the foregoing provisions
shall be voted in proportion to the voting of the shares for which
directions were received. Similar provisions shall apply in the case
of any action by shareholder consent without a meeting.
(b) Voting of Unallocated Company Stock. The Trustees shall vote the
unallocated Company stock on each matter brought before an Annual or
Special Stockholders Meeting of the Company in the same proportion as
they vote the allocated shares.
(c) Tender or Exchange of Company Stock. The Trustees shall use their
best efforts timely to distribute or cause to be distributed to the
Participants of a QTI Plan any written materials distributed to
stockholders of the Company generally in connection with any tender
offer or exchange offer, together with a form requesting
confidential instructions on whether or not to tender or exchange
shares of Company Stock held in the Trust. Upon timely receipt of
the Participants' Certifications, the Trustees shall tender or not
tender the Participant Directed Amount for each Participant in
accordancewith such Participant's direction in which he participates
with respect to shares of Company Stock allocated to his account in
such QTI Plan, as set forth in the Participant Certification. The
Participant of any QTI Plan shall not be limited in the number of
instructions to tender or withdraw from tender which it may give but
shall not have the right to give instructions to tender or withdraw
from tender after a reasonable time established by the Trustees. If
the Trustees shall not receive timely instruction by means of the
Participant's Certification as to the manner in which to respond to
such a tender or exchange offer, the Trustee shall tender or
exchange or not tender or exchange any shares of Company Stock with
respect to which the Participant of any QTI Plan has the right of
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direction in the same proportion as the shares of Company Stock for
which the Trustees are directed.
(d) The Company shall maintain appropriate procedures to ensure that all
instructions by Participants are collected, tabulated, and
transmitted by the Participants to the Trustees without being
divulged or released to any other person affiliated the Company or
its affiliates. All actions taken by Participants and the contents
of the Participant's Certification shall be held confidential by the
Trustees and shall not be divulged or released to any person, other
than (i) agents of the Trustees who are not affiliated with the
Company or its affiliates or (ii) by virtue of the execution by the
Trustees of any proxy, consent or letter of transmittal for the
shares of Company Stock held in the Trust.
5.5. Indemnification.
(a) To the extent lawfully allowable, the Company shall and hereby
does indemnify and hold harmless each Trustee from and against
any claims, demands, actions, administrative or other
proceedings, causes of action, liability, loss, cost, damage or
expense (including reasonable attorney's fees), which may be
asserted against it, in any way arising out of or incurred as
a result of its action or failure to act in connection with the
operation and administration of the Trust; provided that such
indemnification shall not apply to the extent that the Trustee
has acted in willful or negligent violation of applicable law
or its duties under this Trust or in bad faith. No Trustee
shall be under He liability to any person for any loss of any
kind which may result (i) by reason of any action taken by the
Trustee in accordance with or contrary to the direction of any
Participant acting pursuant to Section 5.4(b) (hereinafter
collectively referred to as the "Directing Participants"), (ii)
by reason of the Trustee's failure to exercise any power or
authority or to take any action hereunder because of the
failure of any such Directing Participant to give directions to
the Trustee, as provided for in this Agreement, or (iii) by
reason of any act or omission of any of the Directing
Participants with respect to its duties under this Trust. Each
Trustee shall be fully protected in acting upon any instrument,
certificate, or paper delivered by any Participant or
beneficiary and believed in good faith by the Trustee to be
genuine and to be signed or presented by the proper persons or
persons, and the Trustee shall be under no duty to make any
investigation or inquiry as to any statement contained in any
such writing, but may accept the same as conclusive evidence of
the truth and accuracy of the statements therein contained.
(b) The Company may, but shall not be required to, maintain liability
insurance to insure its obligations hereunder. If any payments
made by the Company, or the Trust pursuant to this indemnity are
covered by insurance, the Company or the Trust
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(as applicable) shall be subrogated to the rights of the
indemnified party against the insurance company.
(c) Without limiting the generality of the foregoing, the Company
may, at the request of any Trustee, advance to the Trustee
reasonable amounts of expenses, including reasonable attorneys'
fees and expenses, which the Trustee advises have been incurred
in connection with its investigation or defense of any claim,
demand, action, cause of action, administrative or other
proceeding arising out of or in connection with the Trustee's
performance of its duties under this Agreement.
5.6. General Duty to Communicate to the Board of Directors. The Trustees
shall promptly notify the Board of Directors of all communications
with or from any government agency or with respect to any legal
proceeding with regard to the Trust and with or from any Plan
Participants concerning their entitlements under the Plans or the
Trust.
6. ACCOUNTS AND REPORTS OF TRUSTEES
6.1. Records and Accounts of Trustees. The Trustees shall maintain accurate
and detailed records and accounts of all transactions of the Trust,
which shall be available at ail reasonable times for inspection or
audit by any person designated by the Company and which shall be
retained as required by applicable law.
6.2. Fiscal Year. The fiscal year of the Trust shall be the twelve (12)
month period beginning on January 1 and ending on December 31.
6.3. Reports of Trustees. The Trustees shall prepare and present to the
Board of Directors a report for the period ending on the last day of
each fiscal year, and for such shorter periods as the Board of
Directors may reasonably request, listing all securities and other
property acquired and disposed of and all receipts, disbursements and
other transactions effected by the Trust after the date of the
Trustees' last account, and further listing all cash, securities, and
other property held by the Trust, together with the fair market value
thereof, as of the end of such period. In addition to the foregoing
the report shall contain such information regarding the Trust Fund's
assets and transactions as the Board of Directors in its discretion
may reasonably request.
6.4. Final Report. In the event of the resignation or removal of a Trustee
hereunder, the Board of Directors may request and the Trustee shall
then with reasonable promptness submit, for the period ending on the
effective date of such resignation or removal, a report similar in
form and purpose to that described in Section 6.3.
7. SUCCESSION OF TRUSTEE
7.1. Resignation of Trustee. Any of the Trustees or any successor thereto
may resign as Trustee hereunder at any time upon delivering a
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written notice of such resignation, to take effect sixty (60)
days after the delivery thereof to the Secretary of the Company,
unless the Board of Directors accepts shorter notice; provided,
however, that no such resignation shall be effective until a
Successor Trustee has assumed the office of Trustee hereunder.
7.2. Removal of Trustee. Any of the Trustees or any successor thereto may
be removed by the Company by delivering to the Trustee so removed an
instrument executed by the Board of Directors. Such removal shall take
effect at the date specified in such instrument.
7.3. Appointment of Successor Trustee. Whenever any one of the Trustees or
any successor thereto shall resign or be removed or a vacancy in the
position shall otherwise occur, the Board of Directors shall use its
best efforts to appoint a Successor Trustee as soon as practicable
after receipt of a notice described in Section 7.1, or the delivery to
the Trustee of a notice described in Section 7.2, as the case may be,
but in no event more than one hundred eighty (180) days after receipt
or delivery, as the case may be, of such notice. A Successor Trustee's
appointment shall not become effective until such successor shall
accept such appointment by delivering its acceptance in writing to the
Company. If a successor is not appointed within such one hundred
eighty (180) day period, the Trustee, at the Company's expense, may
petition a court of competent jurisdiction for appointment of a
successor.
7.4. Succession to Trust Fund Assets. The title to all property held
hereunder shall vest in any successor Trustee acting pursuant to the
provisions hereof without the execution or filing of any further
instrument, but a resigning or removed Trustee shall execute all
instruments and do all acts necessary to vest title in the successor
Trustee. Each successor Trustee shall have, exercise and enjoy all of
the powers, both discretionary and ministerial, herein conferred upon
its predecessors. A successor Trustee shall not be obliged to examine
or review the accounts, records, or acts of, or property delivered by,
and previous Trustee and shall not be responsible for any action or
any failure to act on the part of any previous Trustee.
7.5. Continuation of Trust. In no event shall the legal disability,
resignation or removal of a Trustee terminate the Trust, but the Board
of Directors shall forthwith appoint a successor Trustee in accordance
with Section 7.3 to carry out the terms of the Trust.
7.6. Continuance of Trustees' Powers in Event of Termination of the Trust.
In the event of the termination of the Trust, as provided herein, the
Trustees shall dispose of the Trust Fund in accordance with the
provisions hereof. Until the final distribution of the Trust Fund, the
Trustees shall continue to have all powers provided hereunder as
necessary or expedient for the orderly liquidation and distribution of
the Trust Fund.
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8. AMENDMENT OR TERMINATION
8.1. Amendments. Except as otherwise provided herein, the Company may amend
the Trust at any time and from time to time in any manner which it
deems desirable, provided that no amendment which would adversely
effect the contingent rights of Plan participants may change (i) the
allocation requirement in Section 3.1 or Section 3.2, (ii) the terms
of Section 3.3, (iii) the provisions of Section 2.2 as to the use of
dividends, (iv) the provisions of Section 5.4, (v) the provisions of
Section 8.2, or (vi) the provisions of this Section 8.1.
Notwithstanding the foregoing, the Company shall retain the power
under all circumstances to amend the Trust to correct any errors or
clarify any ambiguities or similar issues of interpretation in this
Agreement, such interpretation to be binding on all interested
persons.
8.2. Termination. Subject to the terms of this Section 8.2, the Trust shall
terminate on December 31, 2008 or any earlier date on which the Loans
are paid in full (the "Termination Date"). The Board of Directors may
terminate the Trust at any time prior to the Termination Date. The
Trust shall also terminate automatically upon the Company giving the
Trustee notice of a Change of Control. As soon as practicable after
receiving notice from the Company of a Change of Control or upon any
other termination of the Trust, the Trustee shall sell all of the
Company Stock and other non-cash assets (if any) then held in the
Trust Fund as directed by the Board of Directors in good faith taking
into account the interests of a broad cross-section of individuals
employed by the Company. The proceeds of such sale shall first be
returned to the Company up to an amount equal to the principal amount,
plus any accrued interest, of all Loans outstanding on the effective
date of termination. The Company shall be deemed to have forgiven all
remaining amounts then outstanding under all Loans. Any funds
remaining in the Trust after such payment to the Company shall be
distributed with reasonable promptness to a broad cross-section of
Plan Participants or to individuals employed by the Company generally
or to any benefit plan or trust in which a broad cross-section of
individuals employed by the Company participate, as the Board of
Directors may in good faith determine taking into account the best
interests of the individuals employed by the Company.
8.3. Form of Amendment or Termination. Any amendment or termination of the
Trust shall be evidenced by an instrument in writing signed by an
authorized officer of the Company, certifying that said amendment or
termination has been authorized and directed by the Company or the
Board of Directors, as applicable, and, in the case of any amendment,
shall be consented to be signature of the Trustees, if required by
Section 8.1.
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9. MISCELLANEOUS
9.1. Controlling Law. The laws of the Commonwealth of Virginia shall be the
controlling law in all matters relating to the Trust, without regard
to conflicts of law.
9.2. Trustees Action. Any action required or permitted to be taken by the
Trustees may be taken on behalf of the Trustees by any individual so
authorized. The Company shall furnish to the Trustees the name and
specimen signature of each member upon whose statement of a decision
or direction the Trustees are authorized to rely. Until notified of a
change in the identity of such person or persons, the Trustees shall
act upon the assumption that there has been no change.
9.3. Notices. All notices, requests, or other communications required or
permitted to be delivered hereunder shall be in writing, delivered by
registered or certified mail, return receipt requested as follows:
To the Company: QuesTech, Inc.
0000X Xxxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Chairman & CEO
To the Trustees: Members of the Board of Directors
Of QuesTech, Inc.
c/o QuesTech, Inc.
0000X Xxxxxxxx Xxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Secretary
Any party hereto may from time to time, by written notice given as
aforesaid, designate any other address to which notices, requests or
other communications addressed to it shall be sent.
9.4. Severabiiitv. If any provision of the Trust shall be held illegal,
invalid or unenforceable for any reason, such provision shall not
affect the remaining parts hereof, but the Trust shall be construed
and enforced as if said provision had never been inserted herein.
9.5. Protection of Persons Dealing with the Trust. No person dealing with
the Trustees shall be required or entitled to monitor the application
of any money paid or property delivered to the Trustees, or determine
whether or not the Trustees are acting pursuant to authorities granted
to them hereunder or to authorizations or directions herein required.
9.6. Tax Status of Trust. It is intended that the Company, as grantor
hereunder, be treated as the owner of the entire trust and the trust
assets under Section 671, et seq. of the Code. Until advised
otherwise, the Trustee may presume that the Trust is so
14
characterized for federal income tax purposes and shall make ail
filings of tax returns on that presumption.
9.7. Participants to Have No Interest in the Comnanv by Reason of the
Trust. Neither the creation of the Trust nor anything contained in the
Trust shall be construed as giving any person, including any
individual employed by the Company or any subsidiary of the Company,
any equity or interest in the assets, business, or affairs of the
Company except to the extent that any such individuals are entitled to
exercise stockholder rights with respect to Company Stock pursuant to
Section 5.4.
9.8. Nonassignability. No right or interest of any person to receive
distributions from the Trust shall be assignable or transferable, in
whole or in part, either directly or by operation of law or otherwise,
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, or bankruptcy, but excluding death or mental
incompetency, and no right or interest of any person to receive
distributions from the Trust shall be subject to any obligation or
liability or any such person, including claims for alimony or the
support of any spouse or child.
9.9. Gender and Plurals. Whenever the context requires or permits, the
masculine gender shall include the feminine gender and the singular
form shall include the plural form and shall be interchangeable.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Agreement
to be signed, and their seals affixed hereto, by their authorized officers all
as of this day, month and year first above written.
ATTEST: QUESTECH, INC.
X. X. Xxxxxx X. X. Xxxxxxxxx
------------------------- -----------------------------------
Corporate Secretary XXXXXXX X. XXXXXXXXX
Chairman & Chief Executive Officer
TRUSTEES:
Xxxxxx X. Xxxxxxxxxx Xxxxxx X. Xxxxxxxxx
------------------------- -----------------------------------
XXXXXX X. XXXXXXXXXX XXXXXX X. XXXXXXXXX
Xxxxxxxxx X. Xxxxx Xxxxxxx Xxxxx
------------------------- -----------------------------------
XXXXXXXXX X. XXXXX XXXXXXX XXXXX
X. X. Xxxxxxxxx
-----------------------------------
XXXXXXX X. XXXXXXXXX
15
SCHEDULE A
TO
AMENDED STOCK EMPLOYEE COMPENSATION TRUST
1. QuesTech, Inc. 1982 Incentive Stock Option Plan
2. QuesTech, Inc. 1994 Incentive Stock Option Plan
3. QuesTech, Inc. 1996 Incentive Stock Option Plan
4. QuesTech, Inc. 1996 Stock Option Plan for Non-Employee Directors
16
