EXHIBIT 10.11
INNOTRAC CORPORATION
GRANTOR TRUST AGREEMENT
This Grantor Trust Agreement (the "Trust Agreement") is made this 16th day of
October, 1997 by and between Innotrac Corporation ("the Company") and Wachovia
Bank, N.A. ("the Trustee").
RECITALS
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(a) WHEREAS, the Company has adopted the nonqualified deferred compensation
Plans and Agreements (the "Arrangements") as listed in Attachment I;
(b) WHEREAS, the Company has incurred or expects to incur liability under the
terms of such Arrangements with respect to the individuals participating in
such Arrangements (the "Participants and Beneficiaries");
(c) WHEREAS, the Company hereby establishes a Trust (the "Trust") and shall
contribute to the Trust assets that shall be held therein, subject to the
claims of the Company's creditors in the event of the Company's Insolvency,
as herein defined, until paid to Participants and their Beneficiaries in
such manner and at such times as specified in the Arrangements and in this
Trust Agreement;
(d) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Arrangements as an unfunded plan maintained for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees for purposes of Title I of the Employee Retirement
Income Security Act of 1974; and
(e) WHEREAS, it is the intention of the Company to make contributions to the
Trust to provide itself with a source of funds (the "Fund") to assist it in
satisfying its liabilities under the Arrangements.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF THE TRUST
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(a) The Trust is intended to be a Grantor Trust, of which the Company is the
Grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(b) The Company shall be considered a Grantor for the purposes of the Trust.
(c) The Trust hereby established is revocable by the Company; it shall become
irrevocable upon a Change of Control, as defined herein.
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(d) The Company hereby deposits with the Trustee in the Trust one-thousand
dollars and zero cents ($1,000.00) which shall become the principal of the
Trust to be held, administered and disposed of by the Trustee as provided
in this Trust Agreement.
(e) The principal of the Trust, and any earnings thereon shall be held separate
and apart from other funds of the Company and shall be used exclusively for
the uses and purposes of Participants and general creditors as herein set
forth. Participants and their Beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Arrangements and this Trust Agreement shall be
unsecured contractual rights of Participants and their Beneficiaries
against the Company. Any assets held by the Trust will be subject to the
claims of the general creditors of the Company under federal and state law
in the event the Company is Insolvent, as defined in Section 3(a) herein.
(f) The Company, in its sole discretion, may at any time, or from time to time,
make additional deposits of cash or other property acceptable to the
Trustee in the Trust to augment the principal to be held, administered and
disposed of by the Trustee as provided in this Trust Agreement. Prior to a
Change of Control, neither the Trustee nor any Participant or Beneficiary
shall have any right to compel additional deposits.
(g) Upon a Potential Change of Control, the Company shall, as soon as possible,
but in no event longer than thirty (30) days following the occurrence of a
Potential Change of Control, as defined herein, make a contribution to
the Trust in an amount that is sufficient to fund the Trust in an amount
equal to no less than 100% but no more than 120% of the amount necessary to
pay each Participant or Beneficiary the benefits to which Participants or
their Beneficiaries would be entitled pursuant to the terms of the
Arrangements as of the date on which the Potential Change of Control
occurred.
(h) In the event a Change of Control does not occur within one year of a
Potential Change of Control, the Company shall have the right to recover
any amounts contributed to and remaining on hand in the Trust pursuant to
Section 1(g).
(i) Upon a Change of Control, the Company shall, as soon as possible, but in no
event longer than thirty (30) days following the occurrence of a Change of
Control, as defined herein, make an irrevocable contribution to the Trust
in an amount that is sufficient to fund the Trust in an amount equal to no
less than 100 % but no more than 120% of the amount necessary to pay each
Participant or Beneficiary the benefits to which Participants or their
Beneficiaries would be entitled pursuant to the terms of the Arrangements
as of the date on which the Change of Control occurred.
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SECTION 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES
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(a) Prior to a Change of Control, distributions from the Trust shall be made by
the Trustee to Participants and Beneficiaries at the direction of the
Company. The entitlement of a Participant or his or her Beneficiaries to
benefits under the Arrangements shall be determined by the Company or such
party or professional administrator as it shall designate under the
Arrangements as the Company's agent, and any claim for such benefits shall
be considered and reviewed under the procedures set out in the
Arrangements.
(b) The Company may make payment of benefits directly to Participants or their
Beneficiaries as they become due under the terms of the Arrangements. The
Company shall notify the Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to Participants or
their Beneficiaries. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits in
accordance with the terms of the Arrangements, the Company shall make the
balance of each such payment as it falls due in accordance with the
Arrangements. The Trustee shall notify the Company where principal and
earnings are not sufficient. Nothing in this Agreement shall relieve the
Company of its liabilities to pay benefits due under the Arrangements
except to the extent such liabilities are met by application of assets of
the Trust.
(c) After a Potential Change of Control and before a Change of Control, the
Company shall deliver to the Trustee a schedule of benefits due under the
Arrangements. Subsequent to a Change of Control, the Trustee shall pay
benefits due in accordance with such schedule. After a Change of Control,
the Company shall continue to make the determination of benefits due to
Participants or their Beneficiaries and shall provide the Trustee with an
updated schedule of benefits due; provided however, a Participant or their
Beneficiaries may make application to the Trustee for an independent
decision as to the amount or form of their benefits due under the
Arrangements. In making any determination required or permitted to be made
by the Trustee under this Section, the Trustee shall, in each such case,
reach its own independent determination, in its absolute and sole
discretion, as to the Participant's or Beneficiary's entitlement to a
payment hereunder. In making its determination, the Trustee may consult
with and make such inquiries of such persons, including the Participant or
Beneficiary, the Company, legal counsel, actuaries or other persons, as the
Trustee may reasonably deem necessary. Any reasonable costs incurred by
the Trustee in arriving at its determination shall be reimbursed by the
Company and, to the extent not paid by the Company within a reasonable
time, shall be charged to the Trust. The Company waives any right to
contest any amount paid over by the Trustee hereunder pursuant to a good
faith determination made by the Trustee notwithstanding any claim by or on
behalf of the Company (absent a manifest abuse of discretion by the
Trustee) that such payments should not be made.
(d) The Trustee agrees that it will not itself institute any action at law or
at equity, whether in the nature of an accounting, interpleading action,
request for a declaratory judgment or otherwise, requesting a court or
administrative or quasi-judicial body to make the determination required to
be made by the Trustee under this Section 2 in the place and stead of the
Trustee. The Trustee may institute an action to collect a contribution due
the
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Trust following a Change of Control or in the event that the Trust should
ever experience a short-fall in the amount of assets necessary to make
payments pursuant to the terms of the Arrangements.
(e) In the event any Participant or his or her Beneficiary is determined to be
subject to federal income tax on any amount to the credit of his or her
account under any Arrangement prior to the time of payment hereunder,
whether or not due to the establishment of or contributions to this Trust,
a portion of such taxable amount equal to the federal, state and local
taxes (excluding any interest or penalties) owed on such taxable amount,
shall be distributed by the Trustee as soon thereafter as practicable to
such Participant or Beneficiary. The Company shall promptly reimburse the
Trust for any such distribution in an amount certified by the Trustee to be
needed for the Participant's benefits. For these purposes, a Participant
or Beneficiary shall be deemed to pay state and local taxes at the highest
marginal rate of taxation in the state in which the Participant resides or
is employed (or both) where a tax is imposed and federal income taxes at
the highest marginal rate of taxation, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes. Such distributions shall be at the direction of the
Company or the Trustee, or upon proper application of the Participant or
Beneficiary; provided that the actual amount of the distribution shall be
determined by the Company prior to a Change of Control and the Trustee
following a Change of Control. An amount to the credit of a Participant's
Account shall be determined to be subject to federal income tax upon the
earliest of: (a) a final determination by the United States Internal
Revenue Service addressed to the Participant or his Beneficiary which is
not appealed to the courts; (b) a final determination by the United States
Tax Court or any other federal court affirming any such determination by
the Internal Revenue Service; or (c) an opinion by the Company's tax
counsel, addressed to the Company and the Trustee, to the effect that by
reason of Treasury Regulations, amendments to the Internal Revenue Code,
published Internal Revenue Service rulings, court decisions or other
substantial precedent, amounts to the credit of Participants hereunder are
subject to federal income tax prior to payment. The Company shall
undertake at its sole expense to defend any tax claims described herein
which are asserted by the Internal Revenue Service against any Participant
or Beneficiary, including attorney fees and cost of appeal, and shall have
the sole authority to determine whether or not to appeal any determination
made by the Service or by a lower court. The Company also agrees to
reimburse any Participant or Beneficiary for any interest or penalties in
respect of tax claims hereunder upon receipt of documentation of same. Any
distributions from the Fund to a Participant or Beneficiary under this
Section 2(e) shall be applied in accordance with the provisions of the
Arrangement to reduce the Company liabilities to such Participant and/or
Beneficiary under the Arrangement with such reductions to be made on a pro-
rata basis over the term of benefit payments under the Arrangement;
provided, however, that in no event shall any Participant, Beneficiary or
estate of any Participant or Beneficiary have any obligation to return all
or any part of such distribution to the Company if such distribution
exceeds benefits payable under an Arrangement. Any reduction in accordance
with the foregoing sentence and the Arrangements shall be determined by the
Company prior to a Change of Control. Following a Change of Control, the
Company shall continue to make such determination subject to the right of a
Participant to petition the Trustee under Section 2(c).
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SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO THE TRUST
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BENEFICIARY WHEN THE COMPANY IS INSOLVENT
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(a) The Trustee shall cease payment of benefits to Participants and their
Beneficiaries if the Company is Insolvent. The Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) the Company is
unable to pay its debts as they become due, or (ii) the Company is subject
to a pending proceeding as a debtor under the United States Bankruptcy
Code.
(b) At all times during the continuance of this Trust, the principal and income
of the Trust shall be subject to claims of general creditors of the Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer of the Company
shall have the duty to inform the Trustee in writing that the Company
is Insolvent. If a person claiming to be a creditor of the Company
alleges in writing to the Trustee that the Company has become
Insolvent, the Trustee shall determine whether the Company is
Insolvent and, pending such determination, the Trustee shall
discontinue payment of benefits to Participants or their
Beneficiaries.
(2) Unless the Trustee has actual knowledge that the Company is Insolvent,
or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, the Trustee shall
have no duty to inquire whether the Company is Insolvent. The Trustee
may in all events rely on such evidence concerning the Company's
solvency as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination concerning
the Company's solvency.
(3) If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue payments to Participants or
their Beneficiaries and shall hold the assets of the Trust for the
benefit of the Company's general creditors. Nothing in this Trust
Agreement shall in any way diminish any rights of Participants or
their Beneficiaries to pursue their rights as general creditors of the
Company with respect to benefits due under the Arrangements or
otherwise.
(4) The Trustee shall resume the payment of benefits to Participants or
their Beneficiaries in accordance with Section 2 of this Trust
Agreement only after the Trustee has determined that the Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee discontinues the
payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments,
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the first payment following such discontinuance shall include the aggregate
amount of all payments due to Participants or their Beneficiaries under the
terms of the Arrangements for the period of such discontinuance, less the
aggregate amount of any payments made to Participants or their
Beneficiaries by the Company in lieu of the payments provided for hereunder
during any such period of discontinuance.
SECTION 4. PAYMENTS WHEN A SHORT-FALL OF THE TRUST ASSETS OCCURS
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(a) If there are not sufficient assets for the payment of benefits pursuant to
Section 2 or Section 3(c) hereof and the Company does not otherwise make
such payments within a reasonable time after demand from the Trustee, the
Trustee shall make payment of benefits from the Trust to the Participants
or their Beneficiaries in the following order of priority:
(1) retired Participants and their Beneficiaries;
(2) vested Participants over the age of 55 who were terminated within two
years following a Change of Control and their Beneficiaries;
(3) vested active Participants over the age of 55 and their Beneficiaries;
(4) any other vested active Participants and their Beneficiaries;
(5) vested former Participants and their Beneficiaries; and
(6) non-vested Participants and their Beneficiaries.
(b) Within each category set forth under Section 4(a), payments shall be
prioritized in the following order:
(1) Participants and their Beneficiaries with 5 (five) or more years of
participation in the Arrangements;
(2) balance to be paid pro-rata to remaining Participants and their
Beneficiaries.
(c) Upon receipt of a contribution from the Company necessary to make up for a
short-fall in the payments due, the Trustee shall resume payments to all
the Participants and Beneficiaries under the Arrangements. Following a
Change of Control, the Trustee shall have the right to compel a
contribution to the Trust from the Company to make-up for any short-fall.
SECTION 5. PAYMENTS TO THE COMPANY
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Except as provided in Section 3 hereof, after the Trust has become irrevocable,
the Company shall have no right or power to direct the Trustee to return to the
Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Participants and their Beneficiaries pursuant to the
terms of the Arrangements. After all payments under the
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Arrangements are made to the Participants and their Beneficiaries, any remaining
funds will be returned to the Company.
SECTION 6. INVESTMENT AUTHORITY
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(a) The Trustee shall not be liable in discharging its duties hereunder,
including without limitation its duty to invest and reinvest the Fund, if
it acts for the exclusive benefit of the Participants and their
Beneficiaries, in good faith and as a prudent person would act in
accomplishing a similar task and in accordance with the terms of this
Trust Agreement and any applicable federal or state laws, rules or
regulations.
(b) Subject to investment guidelines agreed to in writing from time to time by
the Company and the Trustee prior to a Change of Control, the Trustee shall
have the power in investing and reinvesting the Fund in its sole
discretion:
(1) To invest and reinvest in any readily marketable common and preferred
stocks, bonds, notes, debentures (including convertible stocks and
securities but not including any stock or security of Innotrac
Corporation other than a de minimus amount held in a collective or
mutual fund), certificates of deposit or demand or time deposits
(including any such deposits with the Trustee) and shares of
investment companies and mutual funds, without being limited to the
classes or property in which the Trustees are authorized to invest by
any law or any rule of court of any state and without regard to the
proportion any such property may bear to the entire amount of the
Fund;
(2) To commingle for investment purposes all or any portion of the Fund
with assets of any other similar trust or trusts established by the
Company with the Trustee for the purpose of safeguarding deferred
compensation or retirement income benefits of its employees and/or
directors;
(3) To retain any property at any time received by the Trustee;
(4) To sell or exchange any property held by it at public or private sale,
for cash or on credit, to grant and exercise options for the purchase
or exchange thereof, to exercise all conversion or subscription rights
pertaining to any such property and to enter into any covenant or
agreement to purchase any property in the future;
(5) To participate in any plan of reorganization, consolidation, merger,
combination, liquidation or other similar plan relating to property
held by it and to consent to or oppose any such plan or any action
thereunder or any contract, lease, mortgage, purchase, sale or other
action by any person;
(6) To deposit any property held by it with any protective, reorganization
or similar committee, to delegate discretionary power thereto, and to
pay part of the expenses and compensation thereof any assessments
levied with respect to any such property to deposited;
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(7) To extend the time of payment of any obligation held by it;
(8) To hold uninvested any moneys received by it, without liability for
interest thereon, but only in anticipation of payments due for
investments, reinvestments, expenses or disbursements;
(9) To exercise all voting or other rights with respect to any property
held by it and to grant proxies, discretionary or otherwise;
(10) For the purposes of the Trust, to borrow money from others, to issue
its promissory note or notes therefor, and to secure the repayment
thereof by pledging any property held by it;
(11) To employ suitable contractors and counsel, who may be counsel to the
Company or to the Trustee, and to pay their reasonable expenses and
compensation from the Fund to the extent not paid by the Company;
(12) To register investments in its own name or in the name of a nominee;
to hold any investment in bearer form; and to combine certificates
representing securities with certificates of the same issue held by it
in other fiduciary capacities or to deposit or to arrange for the
deposit of such securities with any depository, even though, when so
deposited, such securities may be held in the name of the nominee of
such depository with other securities deposited therewith by other
persons, or to deposit or to arrange for the deposit of any securities
issued or guaranteed by the United States government, or any agency or
instrumentality thereof, including securities evidenced by book
entries rather than by certificates, with the United States Department
of the Treasury or a Federal Reserve Bank, even though, when so
deposited, such securities may not be held separate from securities
deposited therein by other persons; provided, however, that no
securities held in the Fund shall be deposited with the United States
Department of the Treasury or a Federal Reserve Bank or other
depository in the same account as any individual property of the
Trustee, and provided, further, that the books and records of the
Trustee shall at all times show that all such securities are part of
the Trust Fund;
(13) To settle, compromise or submit to arbitration any claims, debts or
damages due or owing to or from the Trust, respectively, to commence
or defend suits or legal proceedings to protect any interest of the
Trust, and to represent the Trust in all suits or legal proceedings in
any court or before any other body or tribunal; provided, however,
that the Trustee shall not be required to take any such action unless
it shall have been indemnified by the Company to its reasonable
satisfaction against liability or expenses it might incur therefrom;
(14) To hold and retain policies of life insurance or interests therein,
annuity contracts, and other property of any kind which policies are
contributed to the Trust by the Company or any subsidiary of the
Company or are purchased by the Trustee;
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(15) To hold any other class of assets which may be contributed by the
Company and that is deemed reasonable by the Trustee, unless expressly
prohibited herein;
(16) To loan any securities at any time held by it to brokers or dealers
upon such security as may be deemed advisable, and during the terms of
any such loan to permit the loaned securities to be transferred into
the name of and voted by the borrower or others; and
(17) Generally, to do all acts, whether or not expressly authorized, that
the Trustee may deem necessary or desirable for the protection of the
Fund.
(c) Prior to a Change of Control, the Company shall have the right, subject to
this Section to direct the Trustee with respect to investments.
(1) The Company may at any time direct the Trustee to segregate all or a
portion of the Fund in a separate investment account or accounts and
may appoint one or more investment managers and/or an investment
committee established by the Company to direct the investment and
reinvestment of each such investment account or accounts. In such
event, the Company shall notify the Trustee of the appointment of each
such investment manager and/or investment committee. No such
investment manager shall be related, directly or indirectly, to the
Company, but members of the investment committee may be employees of
the Company.
(2) Thereafter, the Trustee shall make every sale or investment with
respect to such investment account as directed in writing by the
investment manager or investment committee. It shall be the duty of
the Trustee to act strictly in accordance with each direction. The
Trustee shall be under no duty to question any such direction of the
investment manager or investment committee, to review any securities
or other property held in such investment account or accounts acquired
by it pursuant to such directions or to make any recommendations to
the investment managers or investment committee with respect to such
securities or other property.
(3) Notwithstanding the foregoing, the Trustee, without obtaining prior
approval or direction from an investment manager or investment
committee, shall invest cash balances held by it from time to time in
short term cash equivalents including, but not limited to, through the
medium of any short term mutual fund established and maintained by the
Trustee subject to the instrument establishing such trust fund, U.S.
Treasury Bills, commercial paper (including such forms of commercial
paper as may be available through the Trustee's Trust Department),
certificates of deposit (including certificates issued by the Trustee
in its separate corporate capacity), and similar type securities, with
a maturity not to exceed one year; and, furthermore, sell such short
term investments as may be necessary to carry out the instructions of
an investment manager or investment committee regarding more permanent
type investment and directed distributions.
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(4) The Trustee shall neither be liable nor responsible for any loss
resulting to the Fund by reason of any sale or purchase of an
investment directed by an investment manager or investment committee
nor by reason of the failure to take any action with respect to any
investment which was acquired pursuant to any such direction in the
absence of further directions of such investment manager or investment
committee.
(5) Notwithstanding anything in this Agreement to the contrary, the
Trustee shall be indemnified and saved harmless by the Company from
and against any and all personal liability to which the Trustee may be
subjected by carrying out any directions of an investment manager or
investment committee issued pursuant hereto or for failure to act in
the absence of directions of the investment manager or investment
committee including all expenses reasonably incurred in its defense in
the event the Company fails to provide such defense; provided,
however, the Trustee shall not be so indemnified if it participates
knowingly in, or knowingly undertakes to conceal, an act or omission
of an investment manager or investment committee, having actual
knowledge that such act or omission is a breach of a fiduciary duty;
provided further, however, that the Trustee shall not be deemed to
have knowingly participated in or knowingly undertaken to conceal an
act or omission of an investment manager or investment committee with
knowledge that such act or omission was a breach of fiduciary duty by
merely complying with directions of an investment manager or
investment committee or for failure to act in the absence of
directions of an investment manager or investment committee. The
Trustee may rely upon any order, certificate, notice, direction or
other documentary confirmation purporting to have been issued by the
investment manager or investment committee which the Trustee believes
to be genuine and to have been issued by the investment manager or
investment committee. The Trustee shall not be charged with knowledge
of the termination of the appointment of any investment manager or
investment committee until it receives written notice thereof from the
Company.
(d) Following a Change of Control, the Trustee shall have the sole and absolute
discretion in the management of the Trust assets and shall have all the
powers set forth under Section 6(b). In investing the Trust assets, the
Trustee shall consider:
(1) the needs of the Arrangements;
(2) the need for matching of the Trust assets with the liabilities of the
Arrangements; and
(3) the duty of the Trustee to act solely in the best interests of the
Participants and their Beneficiaries.
(e) The Trustee shall have the right, in its sole discretion, to delegate its
investment responsibility to an investment manager who may be an affiliate
of the Trustee. In
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the event the Trustee shall exercise this right, the Trustee shall remain,
at all times responsible for the acts of an investment manager. The Trustee
shall have the right to purchase an insurance policy or an annuity to fund
the benefits of the Arrangements.
(f) The Company shall have the right at any time, and from time to time in its
sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust. This right is exercisable by the Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
SECTION 7. INSURANCE CONTRACTS
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(a) To the extent that the Trustee is directed by the Company prior to a Change
of Control to invest part or all of the Trust Fund in insurance contracts,
the type and amount thereof shall be specified by the Company. The Trustee
shall be under no duty to make inquiry as to the propriety of the type or
amount so specified.
(b) Each insurance contract issued shall provide that the Trustee shall be the
owner thereof with the power to exercise all rights, privileges, options
and elections granted by or permitted under such contract or under the
rules of the insurer. The exercise by the Trustee of any incidents of
ownership under any contract shall, prior to a Change of Control, be
subject to the direction of the Company. After a Change of Control, the
Trustee shall have all such rights.
(c) The Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or to loan
to any person the proceeds of any borrowing against an insurance policy
held in the Trust Fund.
(d) No insurer shall be deemed to be a party to the Trust and an insurer's
obligations shall be measured and determined solely by the terms of
contracts and other agreements executed by the insurer.
SECTION 8. DISPOSITION OF INCOME
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(a) Prior to a Change of Control, all income received by the Trust, net of
expenses and taxes, may be returned to the Company or accumulated and
reinvested within the Trust at the direction of the Company.
(b) Following a Change of Control, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested within the Trust.
SECTION 9. ACCOUNTING BY THE TRUSTEE
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The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements,
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and all other transactions required to be made, including such specific records
as shall be agreed upon in writing between the Company and the Trustee within
forty-five (45) days following the close of each calendar year and within forty-
five (45) days after the removal or resignation of the Trustee. The Trustee
shall deliver to the Company a written account of its administration of the
Trust during such year or during the period from the close of the last preceding
year to the date of such removal or resignation setting forth all investments,
receipts, disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be. The Company may approve such account by an
instrument in writing delivered to the Trustee. In the absence of the Company's
filing with the Trustee objections to any such account within ninety (90) days
after its receipt, the Company shall be deemed to have so approved such account.
In such case, or upon the written approval by the Company of any such account,
the Trustee shall, to the extent permitted by law, be discharged from all
liability to the Company for its acts or failures to act described by such
account. The foregoing, however, shall not preclude the Trustee from having its
accounting settled by a court of competent jurisdiction. The Trustee shall be
entitled to hold and to commingle the assets of the Trust in one Fund for
investment purposes but at the direction of the Company prior to a Change of
Control, the Trustee shall create one or more sub-accounts.
SECTION 10. RESPONSIBILITY OF THE TRUSTEE
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(a) The Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
the Trustee shall incur no liability to any person for any action taken
pursuant to a direction, request or approval given by the Company which is
contemplated by, and in conformity with, the terms of the Arrangements or
this Trust and is given in writing by the Company. In the event of a
dispute between the Company and a party, the Trustee may apply to a court
of competent jurisdiction to resolve the dispute, subject, however to
Section 2(d) hereof.
(b) The Company hereby indemnifies the Trustee against losses, liabilities,
claims, costs and expenses in connection with the administration of the
Trust, unless resulting from the negligence or misconduct of Trustee. To
the extent the Company fails to make any payment on account of an
indemnity provided in this paragraph 10(b), in a reasonably timely manner,
the Trustee may obtain payment from the Trust. If the Trustee undertakes
or defends any litigation arising in connection with this Trust or to
protect a Participant's or Beneficiary's rights under the Arrangements, the
Company agrees to indemnify the Trustee against the Trustee's costs,
reasonable expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable
for such payments. If the Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, the Trustee may obtain payment
from the Trust.
(c) Prior to a Change of Control, the Trustee may consult with legal counsel
(who may also be counsel for the Company generally) with respect to any of
its duties or obligations
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hereunder. Following a Change of Control the Trustee shall select
independent legal counsel and may consult with counsel or other persons
with respect to its duties and with respect to the rights of Participants
or their Beneficiaries under the Arrangements.
(d) The Trustee may hire agents, accountants, actuaries, investment advisors,
financial consultants or other professionals to assist it in performing any
of its duties or obligations hereunder and may rely on any determinations
made by such agents and information provided to it by the Company.
(e) The Trustee shall have, without exclusion, all powers conferred on the
Trustee by applicable law, unless expressly provided otherwise herein.
(f) Notwithstanding any powers granted to the Trustee pursuant to this Trust
Agreement or to applicable law, the Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the
Internal Revenue Code.
SECTION 11. COMPENSATION AND EXPENSES OF THE TRUSTEE
----------------------------------------
The Trustee's compensation shall be as agreed in writing from time to time by
the Company and the Trustee. The Company shall pay all administrative expenses
and the Trustee's fees and shall promptly reimburse the Trustee for any fees and
expenses of its agents. If not so paid, the fees and expenses shall be paid
from the Trust.
SECTION 12. RESIGNATION AND REMOVAL OF THE TRUSTEE
--------------------------------------
(a) Prior to a Change of Control, the Trustee may resign at any time by written
notice to the Company, which shall be effective sixty (60) days after
receipt of such notice unless the Company and the Trustee agree otherwise.
Following a Change of Control, the Trustee may resign only after the
appointment of a successor Trustee.
(b) The Trustee may be removed by the Company on sixty days (60) days notice or
upon shorter notice accepted by the Trustee prior to a Change of Control.
Subsequent to a Change of Control, the Trustee may only be removed by the
Company with the consent of a majority of the Participants.
(c) If the Trustee resigns within two years after a Change of Control, as
defined herein, the Company, or if the Company fails to act within a
reasonable period of time following such resignation, the Trustee shall
apply to a court of competent jurisdiction for the appointment of a
successor Trustee or for instructions.
(d) Upon resignation or removal of the Trustee and appointment of a successor
Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within sixty (60) days after
receipt of notice of resignation, removal or transfer, unless the Company
extends the time limit.
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(e) If the Trustee resigns or is removed, a successor shall be appointed by the
Company, in accordance with Section 13 hereof, by the effective date of
resignation or removal under paragraph(s) (a) or (b) of this section. If
no such appointment has been made, the Trustee may apply to a court of
competent jurisdiction for appointment of a successor or for instructions.
All expenses of the Trustee in connection with the proceeding shall be
allowed as administrative expenses of the Trust.
SECTION 13. APPOINTMENT OF SUCCESSOR
------------------------
(a) If the Trustee resigns or is removed in accordance with Section 12 hereof,
the Company may appoint, subject to Section 12, any third party national
banking association with a market capitalization exceeding $100,000,000 to
replace the Trustee upon resignation or removal. The successor Trustee
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust. The former Trustee shall execute any
instrument necessary or reasonably requested by the Company or the
successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any prior
Trustee and may retain or dispose of existing Trust assets, subject to
Section 8 and 9 hereof. The successor Trustee shall not be responsible for
and the Company shall indemnify and defend the successor Trustee from any
claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at the time
it becomes successor Trustee.
SECTION 14. AMENDMENT OR TERMINATION
------------------------
(a) This Trust Agreement may be amended by a written instrument executed by
the Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Arrangements or shall make
the Trust revocable after it has become irrevocable in accordance with
Section 1 hereof.
(b) The Trust shall not terminate until the date on which Participants and
their Beneficiaries have received all of the benefits due to them under the
terms and conditions of the Arrangements.
(c) Upon written approval of all Participants or Beneficiaries entitled to
payment of benefits pursuant to the terms of the Arrangements, the Company
may terminate this Trust prior to the time all benefit payments under the
Arrangements have been made. All assets in the Trust at termination shall
be returned to the Company.
(d) This Trust Agreement may not be amended or terminated by the Company for
two (2) years following a Change of Control without the written consent of
a majority of the Participants.
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SECTION 15. CHANGE OF CONTROL
-----------------
(a) For purposes of this Trust, the following terms shall be defined as set
forth below:
(1) Potential Change of Control shall mean:
the purchase or other acquisition after the date hereof by any person,
entity or group of persons, within the meaning of section 13(d) or
14(d) of the Securities Exchange Act of 1934 ("Act"), or any
comparable successor provisions, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of 15 percent or more
of either the outstanding shares of common stock or the combined
voting power of the Company's then outstanding voting securities
entitled to vote generally, or the approval by the shareholders of the
Company of a reorganization, merger, or consolidation, in each case,
with respect to which persons who were stockholders of the Company
immediately prior to such reorganization, merger, or consolidation do
not, immediately thereafter, own more than 75 percent of the combined
voting power entitled to vote generally in the election of the
directors of the reorganized, merged or consolidated Company's then
outstanding securities, or a liquidation or dissolution of Company or
the sale of all or substantially all of the Company's assets. The
acquisition of common stock of the Company by an employee benefit plan
sponsored or maintained by the Company or its affiliate (or a trust
maintained for such plan) shall not be considered a Change in Control.
(2) Change of Control shall mean:
the purchase or other acquisition after the date hereof by any person,
entity or group of persons, within the meaning of section 13(d) or
14(d) of the Securities Exchange Act of 1934 ("Act"), or any
comparable successor provisions, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of 30 percent or more
of either the outstanding shares of common stock or the combined
voting power of the Company's then outstanding voting securities
entitled to vote generally, or the approval by the shareholders of the
Company of a reorganization, merger, or consolidation, in each case,
with respect to which persons who were stockholders of the Company
immediately prior to such reorganization, merger, or consolidation do
not, immediately thereafter, own more than 50 percent of the combined
voting power entitled to vote generally in the election of the
directors of the reorganized, merged or consolidated Company's then
outstanding securities, or a liquidation or dissolution of Company or
the sale of all or substantially all of the Company's assets. The
acquisition of common stock of the Company by an employee benefit plan
sponsored or maintained by the Company or its affiliate (or a trust
maintained for such plan) shall not be considered a Change in Control.
For purposes of this Section 15(a), the Incumbent Board, by a majority
vote, shall have the power to determine on the basis of information known
to them (a) the number of shares beneficially owned by any person, entity
or group; (b) whether there exists an agreement, arrangement or
understanding with another as to matters referred to in this Section 15(a);
and (c) such other matters with respect to which a determination is
necessary under this Section 15(a).
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(b) The General Counsel of the Company shall have the specific authority to
determine whether a Potential Change of Control or Change of Control has
transpired under the guidance of this Section 15(a) and shall be required
to give the Trustee notice of a Change of Control or a Potential Change of
Control. The Trustee shall be entitled to rely upon such notice, but if
the Trustee receives notice of a Change of Control from another source, the
Trustee shall make its own independent determination.
SECTION 16. MISCELLANEOUS
-------------
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) The Company hereby represents and warrants that all of the Arrangements
have been established, maintained and administered in accordance with all
applicable laws, including without limitation, ERISA. The Company hereby
indemnifies and agrees to hold the Trustee harmless from all liabilities,
including attorney's fees, relating to or arising out of the establishment,
maintenance and administration of the Arrangements. To the extent the
Company does not pay any of such liabilities in a reasonably timely manner,
the Trustee may obtain payment from the Trust.
(c) Benefits payable to Participants and their Beneficiaries under this Trust
Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(d) This Trust Agreement shall be governed by and construed in accordance with
the laws of Georgia.
IN WITNESS WHEREOF, this Grantor Trust Agreement has been executed on behalf of
the parties hereto on the day and year first above written.
INNOTRAC CORPORATION WACHOVIA BANK, N.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ---------------------------------
Its: President Its:
-------------------------------- ---------------------------------
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ATTACHMENT I
Innotrac Corporation Deferred Compensation Plan
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