EXHIBIT 10.5
AGREEMENT AND DECLARATION OF TRUST (this "TRUST AGREEMENT"), dated as of
July 6, 2001, by and between Rhythms NetConnections Inc. (the "COMPANY"), having
a principal place of business at 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
as settlor, and The Bank of Cherry Creek, N.A., having an office at 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxx, XX 00000, as Trustee.
WHEREAS, the Company has created the Rhythms NetConnections Inc. 2001
Retention Plan (the "PROGRAM"), a copy of which is attached hereto as EXHIBIT A;
and
WHEREAS, capitalized terms used herein and not otherwise defined have the
meanings given to them in the Program; and
WHEREAS, pursuant to the Program, each of the individuals named in SCHEDULE
A annexed to the original Program document was entitled to receive payment of
the First Installment amount under the Plan on or about May 1, 2001, which First
Installment was paid in full; and
WHEREAS, pursuant to the Program, each of the participants in the Program
who is employed with the Company as of the date of this Trust Agreement whose
names appear on SCHEDULE A attached hereto, as amended from time to time (the
"EMPLOYEES"), will be entitled to receive payment of the Second Installment
amount set forth next to his or her name (the "2002 PAYMENT") (1) on or about
January 2, 2002, provided that such Employee is employed by the Company on
December 31, 2001, or (2) upon the termination of such Employee's Employment
with the Company prior to January 1, 2002, but only if such Employee's
Employment with the Company is terminated on an Involuntary No Fault basis prior
to January 1, 2002; and
WHEREAS, the Program requires the Company, and the Company desires, to set
aside properties having a value sufficient to fund the 2002 Payments.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, and subject to the terms and provisions of the Program and this
Trust Agreement, it is hereby agreed as follows:
1.
DEFINITIONS AND RULES OF CONSTRUCTION
2. NAME. This trust shall be known as the Rhythms Retention Program
Trust, and is hereinafter referred to in this Trust Agreement as the
"TRUST."
3. TERMS DEFINED IN THE RECITALS. When used in this Trust Agreement,
terms defined in the recitals hereto have the meanings ascribed
therein.
4. CERTAIN OTHER TERMS DEFINED. Unless the context otherwise requires,
the following terms shall have the following meanings for all purposes
of this Trust Agreement:
5. "BENEFICIAL INTEREST": as to each Beneficiary at any given time, the
share of the Trust Fund, if any, to which such Beneficiary is, or
presumptively will be, entitled pursuant to Section 5.03.
6. "BENEFICIARIES": the Employees named in SCHEDULE A annexed hereto, as
amended from time to time.
7. "INITIAL CONTRIBUTION": the initial contribution to the Trust Fund
specified in 0.
8. RESERVED.
9. "NOTICE": the tangible expression of a communication sent, an
instruction or direction given, or an action taken, pursuant to this
Trust Agreement; provided that a Notice shall be effective only if it
conforms to the requirements of Section 13.05 of this Trust Agreement.
10. "ORIGINAL TRUSTEE": the original Trustee of the Trust first above
named.
(g) "OTHER WITHHOLDING AMOUNTS": all amounts authorized by the Beneficiary
to be withheld from any payments due to the Beneficiary from the Company and all
other amounts required to be withheld by the Company by court or administrative
order or otherwise by reason of legal process or agreement with the Beneficiary.
(h) "OTHER WITHHOLDING TAXES": any tax or taxes or other charge or charges
(other than Withholding Taxes) which have been or may be imposed on a
Beneficiary or upon the Trust with respect to the amount distributable or to be
distributed under the income tax laws of the United States or of any state or
political subdivision or entity by reason of any distribution provided for in
this Trust Agreement, whenever such withholding is determined by the Trustee, in
the Trustee's sole discretion, to be required by any law, regulation, rule,
ruling, directive or other governmental authority.
(i) "PERMITTED TRANSFEREES": the heirs, administrators, executors,
successors and assigns of a Beneficiary who are permitted, under the provisions
of 20 of this Trust Agreement, to succeed to the Beneficial Interest of a
Beneficiary.
(j) "TRUST FUND": all property (principal plus accrued, accumulated and
undistributed income) that, at any particular time, belongs to the Trust under
this Trust Agreement.
(k) "TRUSTEE": the trustee of the Trust in office from time to time;
namely the Original Trustee or its successor appointed pursuant to 60 in office
at any time.
(l) "WITHHOLDING TAXES": all taxes or similar amounts required to be
withheld, on behalf of each Beneficiary, by any law, regulation, rule, ruling,
directive or other governmental requirement and remitted to the applicable
governmental authorities with respect to all 2002 Payments.
(m) "WITHHOLDINGS": the sum of all Withholding Taxes, Other Withholding
Taxes and Other Withholding Amounts
11. GENDER, NUMBER AND SUBDIVISION REFERENCES. Except where the context
otherwise requires, words importing the masculine gender include the
feminine and the neuter, if appropriate, words importing the singular
number shall include the plural number and vice versa and words
importing persons shall include firms, associations, corporations and
other entities. All references herein to ARTICLES, Sections and other
subdivisions, unless referring specifically to the Program, refer to
the corresponding ARTICLES, Sections and other subdivisions of this
Trust Agreement.
12. TITLES. The ARTICLE titles and Section headings in this Trust
Agreement are included solely for purposes of identification, and are
not to be used to construe any provision contained in this Trust
Agreement or for any other purpose.
13.
INITIAL FUNDING; UNDERTAKINGS OF THE TRUSTEE
INITIAL FUNDING. Upon the execution of this Trust Agreement, the Company
shall transfer, assign and deliver to the Trustee, and the Trustee shall receive
and accept, U.S. Treasury Bills having a value on the date of execution of this
Agreement of at least SEVEN MILLION DOLLARS ($7,000,000), or alternatively, at
least SEVEN MILLION DOLLARS ($7,000,000) in cash, representing the Initial
Contribution to the Trust. If the Company transfers cash to the Trust in payment
of all or part of its Initial Contribution to the Trust, the Trustee agrees to
invest all of such cash (to the extent of the nearest whole dollar) in Permitted
Investments within forty eight (48) hours of receipt thereof.
14. UNDERTAKINGS OF THE TRUSTEE. The Original Trustee hereby declares that
it will hold the Trust Fund upon the terms set forth in this Trust
Agreement. Each successor Trustee shall succeed to the right, title
and interest of the Original Trustee in the Trust Fund automatically
upon its due succession or due acceptance of appointment as the
Trustee without the need for any conveyancing documents as to all or
any part of the Trust Fund. All documents effecting any transfer or
encumbrance of all or any part of the Trust Fund shall be executed and
delivered exclusively by the Trustee.
15.
BENEFICIARIES
16. RIGHTS OF BENEFICIARIES. The Beneficiaries shall be the beneficial
owners of the Trust created by this Trust Agreement and the Trustee
shall retain only such incidents of ownership as are necessary to
undertake the actions and transactions authorized herein. Each
Beneficiary shall be entitled to participation in the rights and
benefits due to a Beneficiary according to his or her Beneficial
Interest, and each Beneficiary shall take and hold his or her
Beneficial Interest subject to all of the terms and provisions of this
Trust Agreement. The interest of a Beneficiary is hereby declared and
shall be in all respects personal property.
17. OWNERSHIP AND CONTROL OF TRUST FUND. Except as is hereinafter
expressly provided, no Beneficiary shall have any title or right to,
or possession, management or control of the Trust Fund. No widower,
widow, heir or devisee of any individual who may be a Beneficiary and
no bankruptcy trustee, receiver or similar person of any Beneficiary
shall have any right, statutory or otherwise (including any right of
dower, homestead or inheritance, or of partition, as applicable), in
any property forming a part of the Trust Fund, but the whole title to
all of the Trust Fund shall be vested in the Trustee and the sole
interest of the Beneficiaries shall be the rights and benefits given
to such persons under this Trust Agreement.
18. RISK OF FORFEITURE. A Beneficiary's Beneficial Interest, and any title
or right of a Beneficiary in or to the Trust Fund, shall be forfeited
upon his or her failure to comply with the terms and conditions of the
Program that would entitle him or her to payment thereunder and,
notwithstanding anything contained in the Program or in this Agreement
to the contrary, shall be forfeited upon the Beneficiary's termination
of Employment with the Company, other than a termination of Employment
on an Involuntary No Fault basis.
19. RESTRICTION ON TRANSFER OF BENEFICIAL INTERESTS. Except as otherwise
provided in Section 3.05, the Beneficial Interest of a Beneficiary
shall not be assignable or transferable, either by such Beneficiary in
person, by a duly authorized agent or attorney of such Beneficiary or
by the properly appointed legal representative of such Beneficiary,
nor shall a Beneficiary have authority or power to sell, assign,
transfer, encumber or in any other manner anticipate or dispose of his
or her Beneficial Interest, and any such transfer shall be null and
void AB INITIO.
20. PERMITTED TRANSFERS. Notwithstanding the provisions of Section 3.04, a
Beneficial Interest may be assigned or transferred in the following
circumstances (and no other), provided that the Beneficial Interest
shall remain subject to the benefits forfeiture provisions in the
Program (as applied to the original employee Beneficiary) and the
assignee or transferee agrees in writing to be bound to the terms and
provisions of this Trust Agreement and the Program:
21. Upon the death of a Beneficiary, his or her Beneficial Interest shall
pass as personal property to his or her legal representative and may
thereafter be transferred by will, intestate succession or operation
of law as part of that individual's testamentary or intestate estate,
and such death shall in no way terminate or affect the validity of
this Trust Agreement.
22. The Beneficial Interest of any Beneficiary may be assignable or
transferable if the Trustee, in its sole discretion, has consented in
writing to such assignment or transfer.
23. CONFLICTING CLAIMS TO BENEFICIAL INTERESTS. If any conflicting claims
or demands are made or asserted with respect to the ownership or
control of the Beneficial Interest of any Beneficiary, or if there is
any disagreement among persons claiming to be Permitted Transferees of
a Beneficial Interest resulting in adverse claims or demands being
made in connection with such Beneficial Interest (an "OWNERSHIP
DISPUTE"), then, in any of such events, the Trustee shall be entitled,
at its sole election, to refuse to comply with any demand or direction
made by any party to such Ownership Dispute. In so refusing, the
Trustee may elect to make no payment or distribution with respect to
the Beneficial Interest relating to the Ownership Dispute, or any part
thereof, and to refer such Ownership Dispute to the Court having
jurisdiction over the Trust, which shall have exclusive jurisdiction
over resolution of such Ownership Dispute. In so doing, the Trustee
shall not be or become liable to any of such parties for its refusal
to comply with any demand or direction made by them nor shall the
Trustee be liable for interest on any funds which it may so withhold.
The Trustee shall be entitled to refuse to act until either (i) the
rights of the adverse claimants have been adjudicated by a final
judgment of such Court or (ii) all differences have been resolved by a
valid written agreement among all of such parties and the Trustee,
which agreement shall include a complete release of the Trustee.
24. NO SUITS BY BENEFICIARIES. No Beneficiary shall have any right by
virtue of any provision of this Trust Agreement to institute any
action or proceeding at law or in equity against any party other than
the Trustee upon or under or with respect to the Trust Fund.
25.
DURATION AND TERMINATION OF TRUST
26. DURATION. Subject to the overriding provisions of 18, the Trust shall
terminate upon the earliest date on which there are no distributions
to Beneficiaries or the Company remaining to be paid pursuant to
Section 5.03.
27. RULE AGAINST PERPETUITIES. Notwithstanding any other provision of this
Trust Agreement, and particularly notwithstanding the provisions of
17, the Trust shall terminate, if it shall not have previously
terminated, one (1) day before the twentieth (20th) anniversary of the
date of execution of this Trust Agreement.
28. TERMINATION BY BENEFICIARY. The Trust may not be revoked or terminated
at any time prior to the date specified in 17 by the Beneficiaries
and/or the Trustee.
29. CONTINUANCE OF TRUST FOR WINDING UP. After the date specified in 17,
and solely for the purpose of liquidating and winding up the affairs
of the Trust, the Trustee shall continue to act as such until its
duties have been fully performed.
30.
ADMINISTRATION OF THE TRUST FUND
31. PAYMENT OF CLAIMS, EXPENSES AND LIABILITIES. The Trustee shall pay
from the Trust Fund all claims, expenses, charges, liabilities and
obligations of the Trust Fund and such liabilities as the Trustee may
be obligated to pay as transferee of the Trust Fund, including,
without limiting the generality of the foregoing, such debts,
liabilities or obligations as may be payable from the Trust Fund,
interest, taxes, assessments, and public charges of every kind and
nature, and all other costs, charges and expenses connected with or
arising out of the execution or administration of the Trust and the
Trust Fund, and such other payments and disbursements as are provided
for in this Trust Agreement or which may be determined by the Trustee
to be proper charges against the Trust and Trust Fund.
32. ACCUMULATION OF NET INCOME. The Trustee shall (i) accumulate all of
the net income of the Trust Fund not utilized for the payment of Trust
liabilities and expenses pursuant to Section 5.01, (ii) add such
accumulated income to the Trust Fund from time to time and (iii)
invest such accumulated income in accordance with Section 7.02.
33. DISTRIBUTIONS. Distributions shall be paid out of the Trust Fund as
follows:
(a) On or about January 2, 2002, the Trustee shall pay to each of the
Beneficiaries (except (i) Employees described in clause (b) who have previously
been paid their 2002 Payment and (ii) Employees whose names appear on a Notice
received by the Trustee from the Company no later than 9:00 a.m. on January 2,
2002), in satisfaction of the Company's payment obligation under the Program,
the amount of such Beneficiary's 2002 Payment, subject to applicable withholding
pursuant to Section 6.03. The Trustee shall provide the Company with at least
five (5) business days advance Notice of the actual date of distribution of the
2002 Payment(s) and the amounts of such 2002 Payment(s) intended to be
distributed.
(b) Within two (2) business days after a Beneficiary's Employment is
terminated on an Involuntary No Fault basis, the Company will provide the
Trustee with a Notice of such termination (an "EARLY TERMINATION NOTICE").
Within five (5) business days after receipt of such Early Termination Notice
(but no later than January 2, 2002), the Trustee shall pay to each Employee who
is identified in such Early Termination the amount of such Beneficiary's 2002
Payment subject to applicable Withholdings.
(c) At such time as the Trustee determines that (i) all of the
Beneficiaries have been paid the 2002 Payments to which they are entitled under
Subsection (a) or (b) of this Section 5.03, (ii) provision has been made for the
discharge of all Withholdings and (iii) all other
claims, expenses, charges, liabilities and obligations of the Trust have been
discharged or paid from the Trust Fund, or if the existence of the Trust shall
terminate pursuant to 2 of this Trust Agreement, the Trustee shall, as
expeditiously as is consistent with the conservation and protection of the Trust
Fund, distribute the remaining Trust Fund to the Company.
(d) The Company utilizes Ceridian Employer Services ("PAYROLL AGENT," or
any successor payroll service utilized by the Company) to provide payroll
services to the Company, including, but not limited to, the direct payment of
all payroll amounts to employees, payment of all 2002 Payments to Beneficiaries
who are legally entitled to receive such 2002 Payments and the remittance of all
Withholdings to the appropriate payees. The Trustee agrees that it shall utilize
the Payroll Agent to pay all 2002 Payments to Beneficiaries who are legally
entitled to receive such 2002 Payments hereunder and under the Program and to
remit all Withholdings to the appropriate payees. The Company agrees to provide
the Trustee with direct access to the Company's payroll policies, practices and
systems as maintained by the Company and by the Payroll Agent, as in effect from
time to time. The Trustee agrees to timely deliver out of the Trust Fund to the
Paying Agent the funds necessary to pay all 2002 Payments to the Beneficiaries
and to withhold and remit all Withholdings to the appropriate payees.
(e) The Company shall provide periodic updates to the Trustee in the form
of amendments to SCHEDULE A attached hereto (or in such other form agreed to
with the Trustee) regarding changes, if any. to Schedule A, including, but not
limited to any changes in the eligible Employees, the 2002 Payment amounts to
any one or more Employees or the date of payment of any 2002 Payments. In
addition, upon reasonable advance notice form the Trustee, representatives of
the Company agree to meet with the Trustee to review Trust administration and
other Trust-related matters.
34.
TAX MATTERS; WITHHOLDINGS
35. INCOME TAX STATUS. The Trust is intended to be treated as a grantor
trust subject to the provisions of Subchapter J, Subpart E of the
Internal Revenue Code owned by the Company as grantor. Any items of
income, deduction, credit or loss of the Trust shall be allocated to
the Company for federal income tax purposes. The Trustee is authorized
to take any action that may be necessary or appropriate to minimize
any potential tax liability of the Company arising out of the
operation of the Trust.
36. TAX RETURNS AND REPORTS. The Trustee will file with the IRS annual
information tax returns (Form 1041), as provided in this Section.
Items of income, deduction and credit attributable to the Trust will
not be reported on the Form 1041. Instead, the Trustee will attach to
the Form 1041 a separate statement showing the items of income,
deduction and credit attributable to the Trust and detailing the
allocation of such items to the Company. Within thirty (30) days after
the end of each calendar year, the Trustee shall cause to be prepared
and mailed to the Company such information with respect to the Trust
as shall be necessary for the Company to complete and file its
federal, state and local income and other tax returns.
Section 6.03 WITHHOLDINGS. The Trustee shall utilize the Payroll Agent,
which shall (i) be responsible for calculating and determining the amount of all
Withholdings, including, but not limited to, all Withholding Taxes and Other
Withholding Taxes due and owing to the appropriate governmental authority, with
respect to the 2002 Payments paid to the Beneficiaries and (ii) agree to timely
deposit or pay over all Withholdings to the appropriate payees, in all cases
consistent with the Company's normal payroll practices.
37.
POWERS OF AND LIMITATIONS ON THE TRUSTEE
38. OVERRIDING LIMITATIONS ON TRUSTEE. The Trustee shall not at any time,
on behalf of the Trust, the Company or any Beneficiary, enter into or
engage in any trade or business, and no part of the Trust Fund shall
be used or disposed of by the Trustee in furtherance of any trade or
business. The Trustee shall be restricted to receiving the Initial
Contribution, investing the Trust Fund subject to the limitations
provided in 12, collecting income from the Trust Fund, effecting the
distributions specified in 6, utilize the Payroll Agent to remit
Withholding Taxes and Other Withholding Taxes specified in ARTICLE VI
above and exercising such other powers and duties as are specified
elsewhere in this Trust Agreement, including, without limitation the
duties specified in 13, for the purposes of carrying out the terms of
this Trust Agreement.
39. LIMITED INVESTMENT POWERS. The Trustee (a) shall invest all funds
received by it as Trustee or otherwise held in the Trust Fund only in
(i) marketable direct obligations of, or guaranteed as to principal
and interest by, the United States government or any agency thereof;
having a remaining maturity contemporaneous with the anticipated need
of the Trust for funds or (ii) money market funds that invest
exclusively in marketable direct obligations of, or guaranteed as to
principal and interest by the United States government or any agency
thereof; which funds permit redemption of invested funds on an
overnight basis in order to meet the anticipated need of the Trust for
funds or (b) to the extent the Trustee anticipates that funds will be
needed within 30 days or less, may also invest in insured demand
deposit accounts or interest-bearing certificates of deposit or other
similar obligations of domestic banks or other financial institutions
having a shareholders' equity or equivalent capital of not less than
One Billion Dollars ($1,000,000,000), at the then best generally
available rates of interest for like amounts and like periods
("PERMITTED INVESTMENTS").
40. SPECIFIC POWERS OF TRUSTEE. Subject to the limitations contained in
this Trust Agreement, the Trustee shall have, in addition to any
powers conferred by any other provision of this Trust Agreement, the
power to take any and all actions as, in the sole discretion of the
Trustee, are necessary or advisable to effectuate the purposes of the
Trust, including the following specific powers:
41. To retain all or any assets constituting part of the Trust Fund, to
hold legal title to property of the Trust in the name of the Trust, to
invest or reinvest funds of the Trust only as provided in 12 and to
cause such investments of any part of the Trust Fund to be registered
and held in its name, as Trustee, or in the names of nominees.
42. To maintain appropriate books and records relating to the Trust and
the Trust Fund detailing the acts and transactions of the Trustee.
43. To initiate, prosecute, defend, supervise, direct, compromise or
settle any claim, demand, action or proceeding relating to the Trust
or this Trust Agreement, and in connection therewith, at the Trustee's
discretion, to retain/utilize and employ such agents, adjusters and
professionals (including professionals affiliated with the Trustee,
the Company or any Beneficiary) and to confer upon them such authority
as the Trustee may deem expedient to carry out its duties hereunder,
and to pay reasonable compensation therefor from the Trust Fund.
(d) To retain/utilize agents and third-party professionals, advisors and
consultants to assist and/or advise the Trustee in the performance of its duties
including, specifically, the utilization of the Payroll Agent to provide the
services provided in ARTICLE VI above.
(e) To perform any and all acts, exercise any and all rights, enter into
any and all proceedings, contracts and other instruments (including, but not
limited to the preparation and filing of any and all statements and papers,
documents and instruments of any kind and nature with any governmental body
having jurisdiction over the Trust or the Program) that are not inconsistent
with the provisions of this Trust Agreement and that the Trustee deems necessary
and advisable in its opinion for the exercise by the Trustee of all the rights
and privileges accorded to it hereunder, for the protection and safekeeping of
the Trust Fund and for the administration of the Trust in accordance with the
terms of this Trust Agreement and applicable law.
44.
ACCOUNTS OF THE TRUSTEE
45. ACCOUNTS AND INSPECTION. 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 at all reasonable times to inspection and audit
by any person designated by the Company. The Trustee shall promptly
deliver to such designee any reports on the Trust Fund that are
reasonably requested.
46. ACCOUNTING REPORTS. Within a reasonable time period following the
termination of the Trust pursuant to 16 above, and within thirty (30)
days, or such other agreed-upon period, after removal or resignation
of the Trustee, the Trustee shall deliver to the Company a certified
written report, in a format
acceptable to the Company, setting forth (i) all investments, receipts
and disbursements, and other transactions effected during the period
from the date of this Trust Agreement, or from the close of any
preceding period covered by such a report to the date of such removal,
resignation or termination, (ii) all cash, securities and other
property held at the close of such period and the current value
thereof, and (iii) such other information as may be required of the
Trustee under any applicable law.
47. RIGHT TO JUDICIAL ACCOUNTING. Nothing contained in this ARTICLE VIII
shall be construed as a limitation upon or prohibition against the
Trustee's right to have its accounting judicially settled.
48. PRESERVATION OF BOOKS AND RECORDS. All records and accounts maintained
by the Trustee with respect to the Trust shall be preserved for such
period as may be required under any applicable law. Upon the
expiration of any such required retention period, the Trustee shall
have the right to destroy such records and accounts after first
notifying the Company of its intention and transferring to the Company
all records and accounts requested. The Trustee shall have the right
to preserve all records and accounts in original form, or on
microfilm, magnetic tape, or any other similar process.
49.
LIABILITIES AND INDEMNIFICATION OF THE TRUSTEE
50. GENERALLY. The Trustee accepts and undertakes to discharge the trust
created by this Trust Agreement upon the terms and conditions hereof.
The Trustee shall exercise such of the rights and powers vested in it
by this Trust Agreement, and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the
circumstances in the conduct of its own affairs. No provisions of this
Trust Agreement shall be construed to relieve the Trustee from
liability for its own recklessness or its own intentional or willful
and wanton misconduct resulting in private gain, except that:
51. The Trustee shall not be liable for any action taken in good faith in
reliance upon the advice of professionals.
52. The Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Trust
Agreement, and no implied covenants or obligations shall be read into
this Trust Agreement against the Trustee.
53. The Trustee shall not be liable for any error of judgment made in good
faith.
(d) The Trustee shall not be liable for any errors made by the Payroll
Agent.
54. REQUIREMENT OF ADEQUATE RESOURCES. Notwithstanding any other provision
of this Trust Agreement, and particularly notwithstanding the
provisions of 4,
the Trustee shall not be required to enter into or maintain any claim,
demand, action or proceeding relating to the Trust unless the Trustee
shall have sufficient funds on hand for that purpose or unless the
Trustee shall have been indemnified to its satisfaction against all
expenses and liabilities to which it may, in its judgment, be
subjected by any such action on its part.
55. RELIANCE BY TRUSTEE. Except as is otherwise specifically provided
herein:
56. The Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order or other paper or document reasonably
believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties.
57. The Trustee may consult with legal counsel to be selected by it, and
pay the cost of such consultation from the Trust Fund, and the advice
or opinion of such counsel shall be full and complete personal
protection to the Trustee and agents of the Trust in respect of any
action taken or suffered by it in good faith and in reliance on, or in
accordance with, such advice or opinion.
(c) The Trustee may rely and shall be protected with respect to any and
all actions taken or performed, or failed to be taken or performed, by the
Payroll Agent.
58. INDEMNIFICATION OF TRUSTEE. The Trustee shall be indemnified by and
receive reimbursement from the Company against and from any and all
loss, liability, damage or expense that the Trustee may incur or
sustain, in good faith and without recklessness or its own intentional
or willful and wanton misconduct resulting in personal gain, in the
exercise and performance of any of the powers and duties of the
Trustee under this Trust Agreement. The Trustee may receive advance
payments in connection with indemnification under this Section,
provided that prior to receiving any such advance, the Trustee shall
first have given a written undertaking to repay any amount advanced to
it and to reimburse the Trust in the event it is subsequently
determined that it is not entitled to such indemnification. The rights
accruing to the Trustee by reason of the foregoing shall not be deemed
to exclude any other right to which it may legally be entitled, nor
shall anything else contained herein restrict the right of the Trustee
to contribution under applicable law.
59. BOND OF TRUSTEE. Neither the Original Trustee nor any successor
Trustee shall be obliged to file or furnish any bond or surety for the
performance of its duties, unless otherwise ordered by a court, and if
so ordered, all costs and expenses of providing such bond or surety
shall be paid or reimbursed from the Trust Fund as an expense of
administration.
60. LIABILITY TO THIRD PERSONS. The Company shall not be subject to any
personal liability whatsoever, in tort, contract or otherwise, to any
person in connection with the Trust Fund or the affairs of the Trust,
and no Trustee or agent of the Trust shall be subject to any personal
liability whatsoever, in tort, contract or
otherwise, to any person in connection with the Trust Fund or the
affairs of this Trust, except for its own recklessness or its own
intentional or willful and wanton misconduct; and all such persons
shall look solely to the Trust Fund for satisfaction of claims of any
nature arising in connection with affairs of the Trust.
61. NONLIABILITY OF TRUSTEE FOR ACTS OF PREDECESSORS. Any successor
Trustee may accept and rely upon any accounting made by or on behalf
of any predecessor Trustee hereunder, and any statement or
representation made as to the assets comprising the Trust Fund or as
to any other fact bearing upon the prior administration of the Trust.
A Trustee shall not be liable for having accepted and relied upon such
accounting, statement or representation if it is later proved to be
incomplete, inaccurate or untrue. A Trustee or successor Trustee shall
not be liable for any act or omission of any predecessor Trustee, nor
have a duty to enforce any claims against any predecessor Trustee on
account of any such act or omission.
62. NONLIABILITY OF TRUSTEE FOR ACTS OF OTHERS. Nothing contained in this
Trust Agreement shall be deemed to be an assumption by the Trustee of
any of the liabilities, obligations or duties of the Company, and
shall not be deemed to be or contain a covenant or agreement by the
Trustee to assume or accept any such liability, obligation or duty.
63.
COMPENSATION OF TRUSTEES
64. TRUSTEE COMPENSATION. Each Trustee shall be entitled to such
compensation for services rendered as shall be mutually agreed upon by
the Trustee and the Company prior to such Trustee's accession to
office, to be paid as specified in such agreement, a copy of which is
appended hereto as SCHEDULE B. In addition, the Company shall pay to
the Payroll Agent the Payroll Agent's fees and expenses for providing
the payroll services to the Trustee provided in ARTICLE VI above.
65. PRIOR LIEN OF TRUSTEE. The Trustee shall have a lien upon the Trust
Assets prior to any Beneficial Interest in the Trust to secure payment
of any amounts payable to the Trustee or to employees or agents of the
Trust as compensation for services to the Trust or for indemnification
pursuant to 6 above.
66.
TRUSTEE AND SUCCESSOR TRUSTEES
67. GENERALLY. The Trustee shall be a bank or trust company authorized to
act as a corporate fiduciary under the laws of the State of Colorado.
A Trustee that changes its name or reorganizes, reincorporates or
merges with or into or consolidates with any other entity shall be
deemed to be a continuing entity and shall continue to act as a
Trustee hereunder.
68. RESIGNATION. The Trustee may resign as Trustee by delivering a Notice
of resignation to the Company. Such resignation shall become effective
on the date specified in such Notice (which shall not be less than
thirty (30) days after delivery of such Notice) or upon the
appointment of such Trustee's successor and such successor's
acceptance of such appointment, whichever is later.
69. APPOINTMENT OF SUCCESSOR. In the event of the removal, resignation,
bankruptcy or insolvency of the Trustee, a vacancy shall be deemed to
exist and a successor shall be appointed by the Company.
70. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. The removal,
resignation, bankruptcy or insolvency of the Trustee shall not operate
to terminate the Trust created by this Trust Agreement or to revoke
any existing agency created pursuant to the terms of this Trust
Agreement or invalidate any action theretofore taken by the Trustee.
Any successor Trustee appointed hereunder shall execute an instrument
accepting its appointment and shall deliver one counterpart thereof to
each of the Company, and, in case of the Trustee's resignation, to the
retiring Trustee. Thereupon such successor shall, without any further
act, become vested with all the liabilities, duties, powers, rights,
title, discretion and privileges of its predecessor in the Trust with
like effect as if originally named Trustee. The retiring Trustee shall
duly assign, transfer and deliver to such successor all property and
money held by such retiring Trustee hereunder and shall, as reasonably
requested by such successor, execute and deliver an instrument or
instruments conveying and transferring to such successor upon the
trust herein expressed, all the liabilities, duties, powers, rights,
title, discretion and privileges of such retiring Trustee.
71.
AMENDMENTS
72. AMENDMENT AUTHORITY. Whenever necessary to carry out the purposes of
the Trust, this Trust Agreement may be amended by the Trustee with the
consent and approval of the Company; provided, however, that:
73. no such amendment may be made that would have the effect of reducing
the beneficial interest of any Beneficiary at any time; and
74. no such amendment may be made under any circumstances that would have
the effect of (i) extending the termination of the Trust beyond the
date specified in 2, (ii) authorizing the Trustee to engage in a trade
or business, or (iii) expanding the amendment powers of the Trustee
under this ARTICLE XII.
75.
MISCELLANEOUS PROVISIONS
76. INTENTION OF PARTIES TO ESTABLISH TRUST. This Trust Agreement is
intended to create a trust without transferable certificated
beneficial interests (except as permitted by operation of law) and the
Trust created hereunder shall be governed and construed in all
respects as a trust.
77. GOVERNING LAW. This Trust Agreement shall be construed and enforced,
to the extent possible, according to the laws of the State of
Colorado, and all provisions hereof shall be administered according to
the laws of said State.
78. SEVERABILITY. In the event any provision of this Trust Agreement or
the application thereof to any person or circumstances shall be
finally determined by a court of proper jurisdiction to be invalid or
unenforceable to any extent, the remainder of this Trust Agreement, or
the application of such provision to persons or circumstances or in
jurisdictions other than those as to or in which it is held invalid or
unenforceable, shall not be affected thereby, and each provision of
this Trust Agreement shall be valid and enforced to the fullest extent
permitted by law.
79. INSTRUMENTS OF FURTHER ASSURANCE. The Company shall, upon the
reasonable request of the Trustee, execute, acknowledge and deliver
such further instruments and do such further acts as may be necessary
or proper to carry out effectively the purpose of this Trust
Agreement.
80. NOTICES.
81. Any Notice or other communication required or permitted to be made in
accordance with this Trust Agreement shall be in writing and shall be
deemed to have been sufficiently given, for all purposes, if delivered
personally, or if delivered during regular business hours by facsimile
transmission, telex or other electronic or telegraphic means, or if
delivered by a recognized overnight or two-day delivery service or if
mailed by first class mail:
(i) if to the TRUSTEE, at:
The Bank of Cherry Creek, N.A.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Senior Vice President
Telephone No.:
Fax No.:
E-Mail:
(ii) if to the COMPANY, at:
Rhythms NetConnections Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx, Chief Financial Officer
Telephone No.:
Fax No.:
E-Mail:
82. Any entity may change the address at which it is to receive Notices
under this Trust Agreement by furnishing written Notice thereof to the
Trustee as provided above.
83. COUNTERPARTS. This Trust Agreement may be executed in any number of
counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement
or caused this Trust Agreement to be duly executed by their respective officers
and the Trustee herein has executed this Trust Agreement, as Trustee, effective
as of the day and year first above written.
COMPANY:
RHYTHMS NETCONNECTIONS INC.
BY:
-----------------------------
NAME (PRINT):
-------------------
TITLE:
--------------------------
TRUSTEE:
THE BANK OF CHERRY CREEK, N.A.
BY:
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NAME (PRINT):
-------------------
TITLE:
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EXHIBIT A
2001 RETENTION PLAN
