INDEMNIFICATION
TRUST AGREEMENT
Dated as of March 1, 2002
TABLE OF CONTENTS
ARTICLE I. TRUST FUND; TERM; NATURE OF TRUST; LIST OF INDEMNITEES..............3
Section 1.1 Trust Fund..................................................3
Section 1.2 Security Interest...........................................4
Section 1.3 Term of the Trust...........................................4
Section 1.4 Grantor Trust; Termination..................................4
Section 1.5 Indemnitees.................................................5
ARTICLE II. PAYMENTS FROM THE TRUST............................................5
Section 2.1 Payments From the Trust.....................................5
Section 2.2 Persons to Receive Payment..................................7
Section 2.3 Trust Fund, Assignments.....................................7
ARTICLE III. POWERS, DUTIES AND RIGHTS OF TRUSTEE..............................7
Section 3.1 General.....................................................7
Section 3.2 Powers of Investment........................................7
Section 3.3 Duties of Trustee...........................................8
Section 3.4 Emergencies and Delegates...................................8
Section 3.5 Expenses and Taxes..........................................8
Section 3.6 Third Parties...............................................9
ARTICLE IV. RESIGNATION, REMOVAL AND SUCCESSION................................9
Section 4.1 Resignation.................................................9
Section 4.2 Succession..................................................9
ARTICLE V. AMENDMENT; PARTIAL INVALIDITY......................................10
Section 5.1 Irrevocability of Trust; Amendment.........................10
Section 5.2 Partial Invalidity; Conformity with Law....................10
ARTICLE VI. LIABILITIES.......................................................10
Section 6.1 Liability of the Company...................................10
Section 6.2 Liability of the Trustee...................................10
Section 6.3 Indemnification of Trustee.................................11
ARTICLE VII. MISCELLANEOUS....................................................11
Section 7.1 Successors.................................................11
Section 7.2 Use of Trust Funds.........................................11
Section 7.3 Notices....................................................11
Section 7.4 Construction...............................................12
EXHIBIT A Trust Fund
EXHIBIT B Trustee Compensation Schedule
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EXHIBIT 10.25
INDEMNIFICATION TRUST AGREEMENT
This Indemnification Trust Agreement (the "Trust Agreement"), is
entered as of March 1, 2002 among Simon Worldwide, Inc., a Delaware corporation
("SWWI"), and Simon Marketing, Inc., a Delaware close corporation ("SMI") and
wholly-owned subsidiary of SWWI (SWWI and SMI are collectively referred to
herein as the "Company"), and Development Specialists, Inc., an Illinois
corporation through Xxxxxxxx X. Xxxxxx (the "Trustee").
RECITALS
WHEREAS, Section 145 ("Section 145") of the General Corporation Law of
the State of Delaware (the "Law") empowers corporations to indemnify persons
serving as a director, officer, employee or agent of the corporation, and
further specifies that the indemnification set forth in said Section 145 "shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise"; and said Section 145 further empowers
a corporation to "purchase and maintain insurance" on behalf of any of such
persons "against any liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person's status as such,
whether or not the corporation would have the power to indemnify such person
against such liability under" Section 145;
WHEREAS, the Restated Certificate of Incorporation of SWWI provides for
mandatory indemnification of the directors and officers of SWWI to the fullest
extent allowed by the Law (the "SWWI Certificate Obligations");
WHEREAS, the Amended and Restated Certificate of Incorporation of SMI
provides for mandatory indemnification of the directors, officers, employees or
agents of SMI to the fullest extent allowed by the Law (the "SMI Certificate
Obligations");
WHEREAS, Simon Marketing (Hong Kong) Limited ("SMHK") is a wholly owned
subsidiary of SMI.
WHEREAS, the Memorandum of Association of SMHK provides for the
mandatory indemnification of every director, manager and other officer or
servant of SMHK (the "SMHK Obligations");
WHEREAS, the Company has entered into and will enter into certain
Indemnification Agreements (the "Indemnification Agreements") with a number of
the Indemnitees (defined in Section 1.5), and such Indemnification Agreements
contemplate that the Company's obligations to indemnify under such
Indemnification Agreements be secured by the creation and funding of an
irrevocable indemnification trust (the "Trust") such as that created by this
Trust Agreement;
WHEREAS, in addition to the obligations under the Indemnification
Agreements, the Company has certain indemnification obligations to various of
the Indemnitees under a variety of contractual promises which have been made to
them, under various actions of the Board of Directors of SWWI (acting on behalf
of SWWI and, on certain occasions, SMI) which have been
taken, and under general legal principles (collectively, together with the SWWI
Certificate Obligations, SMI Certificate Obligations, the SMHK Obligations and
the Indemnification Agreements, the "General Indemnity Obligations");
WHEREAS, pursuant to certain of the General Indemnity Obligations, an
officer, director, agent or consultant is entitled to present the Company with a
request for a Trust as security to such officer, director, agent or consultant
for the satisfaction of the Company's obligations pursuant to the General
Indemnity Obligations; and certain of such requests have been presented to the
Company;
WHEREAS, the Company has directors and officers along with errors and
omissions insurance policies (collectively, the "Policies") in effect which will
fulfill some of the Company's obligations under the General Indemnity
Obligations;
WHEREAS, as a result of certain events which occurred immediately prior
to August 23, 2001, on that date and on various dates thereafter, the Board of
Directors of SWWI (acting on behalf of SWWI and, on certain occasions, SMI) met
as a Board and also with certain of its officers and consultants in order to
assess the Company's forward direction and management and the Company's
increasingly important need and desire to retain the services of its, and its
direct or indirect subsidiaries', directors, officers and consultants by
providing additional tangible assurances to them that the Company's General
Indemnity Obligations would be secured, whether through adequate additional
insurance or otherwise;
WHEREAS, subsequent to such initial meetings, the Board of Directors of
SWWI (acting on behalf of SWWI and, on certain occasions, SMI) again met as a
Board and also with certain of its officers and consultants and discussed the
need to provide specific additional tangible assurances to certain of the
Company's, and its direct or indirect subsidiaries', directors, officers and
consultants that the Company's General Indemnity Obligations would be secured
through the creation and adequate funding of an irrevocable indemnification
trust;
WHEREAS, the Company has undertaken a thorough investigation in order
to determine the availability of additional insurance that would be able to
fulfill some of the Company's indemnification obligations under the General
Indemnity Obligations in areas where such obligations are not presently
adequately covered under the Policies;
WHEREAS, the Company has determined, after due diligence, including a
review and consideration by the Board of Directors of SWWI (acting on behalf of
SWWI and SMI) of the various available insurance options, that not only are the
insurance premiums prohibitively expensive, but also that the Company cannot
obtain sufficient insurance to cover all possible obligations under the General
Indemnity Obligations to ensure that the aforesaid indemnity obligations will be
covered by adequate insurance and thereby sufficiently secured so that the
Company will be able to retain its, and its direct or indirect subsidiaries',
officers, directors and agents or consultants;
WHEREAS, the contractual promises made as described above and the need
to retain the services of the Indemnitees, whose willingness to continue to
provide services to the Company, and its direct or indirect subsidiaries', is
based on the enforceability in law and in fact of the
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existing General Indemnity Obligations and the establishment of the Trust,
necessitate that a Trust be created and fully funded in a sufficient amount.
AGREEMENT
NOW THEREFORE, the Company and the Trustee hereby enter into this Trust
Agreement and establish the Trust and provide for its funding and
administration. The Trustee hereby agrees to serve as such and to receive and
hold any and all cash and property which may be delivered to it as trustee
hereunder from time to time, in trust for the uses and purposes and upon the
terms and conditions hereinafter stated:
ARTICLE I.
TRUST FUND; TERM; NATURE OF TRUST; LIST OF INDEMNITEES
Section 1.1 Trust Fund
(a) For good and valuable consideration, the Company hereby
irrevocably transfers and delivers to the Trustee all right, title and interest
in and to the property listed in Exhibit A hereto, to have and to hold such
property and any other property which, pursuant to any of the provisions hereof,
the Trustee at any time hereafter may hold or acquire for the uses and purposes
and upon the terms and conditions herein set forth. All such property
constituting the principal of the Trust and any earnings thereon shall hereafter
be collectively referred to as the "Trust Fund".
(b) The Company reserves the right for itself or any other person or
entity to increase the Trust Fund by irrevocably delivering any property of any
nature, whether real, personal, or mixed, to the Trustee or by having the
proceeds from any of the Policies ("Policy Proceeds") made payable directly to
the Trustee. Such property shall be deemed added to Exhibit A. Any supplemental
funding or other augmentation of the Trust Fund that is not received for the
benefit of a particular Indemnitee for reimbursement under Sections 1.1(c) or
(d) shall increase the Trust Fund.
(c) The Company agrees to replenish the Trust Fund and to immediately
and irrevocably pay to the Trustee any amount (and concurrently transfer all
right, title and interest in and to such amount) paid out from the Trust Fund on
account of any General Indemnity Obligation. Such replenished funds shall be
deemed added to Exhibit A and shall credit the Account (defined in Section
1.1(e)) of the Indemnitee to which such funds are related or applicable.
(d) The Company covenants to pay and assign to the Trustee and to
immediately and irrevocably transfer and deliver to the Trustee to replenish the
Trust Fund, all right, title and interest in and to Policy Proceeds that are
received by the Company in reimbursement for any amount previously paid out from
the Trust Fund. Such Policy Proceeds shall be deemed added to Exhibit A and
shall credit the Account of the Indemnitee to which such proceeds are related or
applicable. The Company shall seek an endorsement of all Policies to provide for
direct payment of Policy Proceeds to the Trustee in accordance herewith in
reimbursement for any amount previously paid out from the Trust Fund and to
reflect the Trust as an additional insured.
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(e) The Trustee shall establish an account for each Indemnitee (an
"Account"), and shall charge such Account for the net amount of disbursements
(subject to Section 2.1(e)) to such Indemnitee hereunder pursuant to claims for
payment by, or on behalf of, the applicable Indemnitee, and shall credit to such
Account future increases of the Trust Fund in accordance with Sections 1.1(c)
and 1.1(d), as applicable. Such Accounts may be established by book entries, and
the Trust Fund need not be further segregated.
Section 1.2 Security Interest
In order to secure the payment and performance of the Company's
obligations under Section 1.1(c) and Section 1.1(d), above, the Company hereby
assigns, pledges and grants to the Trustee a first priority and continuing lien
and security interest in all Policy Proceeds, subject to the obligations under
each Policy to pay insured parties other than the Company. Upon the Company's
failure to immediately perform under Section 1.1(c) and Section 1.1(d), above,
the Trustee shall have the remedies of a secured party under the Delaware
Uniform Commercial Code and may require the Company to assemble the Policy
Proceeds and transfer them to the Trustee. The Company hereby expressly waives
and releases all rights to have any of the Policy Proceeds marshaled upon the
exercise of the Trustee's remedies hereunder. The Company further agrees to
execute and deliver any documents reasonably contemplated in connection with the
perfection of the security interest granted hereunder and as may be reasonably
requested and/or required by the Trustee and/or the Trustee's counsel in
connection therewith.
Section 1.3 Term of the Trust
(a) The Trust hereby established is irrevocable and shall continue
until the earlier to occur of:
(i) The later of: (a) four years from the date hereof; or (b) as
soon thereafter as no claim is pending against any Indemnitee which is
indemnifiable under the General Indemnity Obligations; or
(ii) March 1, 2022.
For purposes of this Section, a claim is pending only if the Trustee
has actual knowledge of its pendency.
Section 1.4 Grantor Trust; Termination
(a) The Trust is intended to be a grantor trust of the Company, within
the meaning of Section 671 of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), and shall be construed accordingly.
(b) The Trust Fund shall not be paid to the Company or any trustee in
bankruptcy of the Company, shall be held separate and apart from other funds of
the Company, and shall be used exclusively for the uses and purposes herein set
forth. The Indemnitees shall have no preferred claim on any assets of the Trust
Fund prior to the time such assets are paid to any Indemnitee as provided
herein. However, the Indemnitees and each of them are third party beneficiaries
of this Trust Agreement, and each of them may enforce its terms.
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(c) Immediately prior to the termination of the Trust, all assets and
liabilities remaining in the Trust shall be first applied to pay any and all
administrative fees and expenses of the Trust and to satisfy all liabilities of
the Trust to the Trustee and to third parties and then, to the extent funds are
available, to pay any unsatisfied Overclaims (as defined in Section 2.1(e)) of
such Indemnitee in accordance with Section 2.1(e). If immediately prior to the
termination of the Trust, sufficient funds are not available to fully pay all
Overclaims, each Indemnitee with a claim for Overclaims will be paid a
percentage of his or her Overclaim equal to the percentage of funds available as
compared to the total of all Overclaims. Such payments shall satisfy all
obligations of the Trust to the Indemnitees. If, after payment of the foregoing,
there are funds remaining in the Trust, notwithstanding Section 1.4(b), such
funds and all other assets of the Trust shall be distributed to SMI.
Section 1.5 Indemnitees
The sole and only beneficiaries of the Trust are any persons (a) who,
as of the date hereof or hereafter, serve SWWI, SMI or SMHK as directors,
officers or individual consultants (including any officers of a consultant that
is a legal entity if such officer is an insured under a Policy), and (b) who are
entitled to indemnification from the Company pursuant to General Indemnity
Obligations. Each such individual shall herein be called an "Indemnitee" and
collectively the "Indemnitees").
ARTICLE II.
PAYMENTS FROM THE TRUST
Section 2.1 Payments From the Trust
(a) The obligation of the Trustee is to pay (as herein provided) to
any Indemnitee out of the Trust Fund, to the extent funds are available therein,
any amounts to which the Indemnitee is legally and properly entitled under any
General Indemnity Obligation and which amounts are not paid to the Indemnitee by
the adverse party, the Company, SMHK, or an insurer under a Policy. To be paid,
an Indemnitee must make a claim for payment from the Trust only by delivering to
the Trustee:
(i) a demand certifying that the Indemnitee has incurred expenses
which are indemnifiable by the Company under his or her Indemnification
Agreement or under any other General Indemnity Obligation (which
certification is accompanied by (x) evidence of payment of such
expenses or obligation to pay, and (y) documentation regarding such
person's status as an Indemnitee and a brief explanation supporting why
Indemnitee asserts such expenses are covered by a General Indemnity
Obligation);
(ii) a written notice describing in reasonable detail the nature
of the claim for which a right to receive payments hereunder is
asserted, the identity of the persons who have made or threatened the
claim, and the identity of any legal counsel retained by the Indemnitee
to defend the claim;
(iii) copies of all papers served on the Indemnitee in connection
with the claim;
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(iv) a written undertaking to promptly repay to the Trust any
amounts paid or applied to or for the use of such Indemnitee pursuant
to this Section in the event a determination is made by a court of
competent jurisdiction (which such determination is not subject to
further appeal) that under applicable law payments to such Indemnitee
are not lawful and proper in the circumstances, or in the event and to
the extent that such Indemnitee receives payment (whether in full or in
part) for the same items from the adverse party, the Company, SMHK or
an insurer under a Policy;
(v) a certificate executed by the Indemnitee stating that a
request for indemnity to the Company or an applicable insurer under a
Policy has remained unsatisfied for thirty (30) days; and
(vi) a certificate executed by the Indemnitee stating that he or
she is an "Indemnitee" as defined under Section 1.5 hereof, that his or
her claim is lawful and proper, that his or her claim is due, owing,
and unpaid under the Indemnification Agreement or any other General
Indemnity Obligation, and that his or her claim has not been paid or
reimbursed by the adverse party, the Company, SMHK or an insurer under
a Policy.
(b) The Trustee may seek an opinion in writing from independent legal
counsel as to the legality under applicable law of payments pursuant to this
Article for such claim.
(c) The payment in respect of any claim shall be charged to the
Account of the claimant, except that a portion of the payment may be charged to
the Account of any other Indemnitee if such other Indemnitee agrees thereto in
writing, directly or through his or her authorized representative, and so
directs the Trustee in writing. For the purpose of this provision, an
"authorized representative" is any person or entity appointed by an Indemnitee
in writing to act as such, provided the Trustee has received due notice.
(d) The Trustee shall pay all claims within thirty (30) days of
receipt by the Trustee of a notice of claim and the documents required under
this Article; provided, that if the Trustee has sought an opinion from
independent legal counsel pursuant to subparagraph (b), the Trustee shall not
pay such claim if the Trustee does not receive a written opinion of said
independent legal counsel that payment of such claim would be lawful and proper
and is due and owing. The Trustee shall not be liable to the Company or any
third party for payment of a claim if the documents provided to the Trustee are
regular on their face.
(e) Notwithstanding the foregoing and subject to Section 1.4(c), the
net disbursements charged to the Account of any one Indemnitee shall not exceed
$350,000.00 ("Account Disbursement Limit"). To the extent any claim by an
Indemnitee would exceed such Indemnitee's Account Disbursement Limit, the unpaid
amount due to and claimed by the Indemnitee, plus interest at the rate of five
percent (5%) per annum thereafter, compounded monthly, shall be deemed an
"Overclaim". The Trustee shall, to the extent newly received funds become
available in the Account of the Indemnitee under Section 1.1(e) from time to
time, pay and satisfy all accumulated Overclaims of such Indemnitee without
further demand from the Indemnitee at the time of quarterly accounting.
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(f) To the extent the Trustee pays any claims to an Indemnitee for
which the Indemnitee is subsequently directly paid or reimbursed (whether in
full or in part, the "Reimbursed Amount") by the adverse party, the Company,
SMHK or an insurer under a Policy, and the Indemnitee fails to promptly return
such amounts to the Trustee, then the Trustee shall charge the Account of the
Indemnitee for such Reimbursed Amount.
Section 2.2 Persons to Receive Payment
The Trustee shall pay all amounts payable hereunder only to the
Indemnitee or Indemnitees to whose Accounts the funds were charged (or such
Indemnitees' legal beneficiary or representative upon death) and not to any
other person or entity unless specifically directed in writing by the
Indemnitee. The receipt by the person to whom such payment is made shall be a
complete discharge of the Trustee for any sums so paid.
Section 2.3 Trust Fund, Assignments
No part of the Trust Fund shall be liable for the debts, contracts or
engagements of any Indemnitee, or be taken in execution by levy, attachment or
garnishment or by any other legal or equitable proceeding, while in the hands of
the Trustee, nor shall any such person have any right to alienate, anticipate,
commute, pledge, encumber or assign any benefits or payments hereunder in any
manner whatsoever, except that upon the disability or death of an Indemnitee,
such person's legal beneficiaries and representatives may succeed to his or her
interest hereunder for the purposes provided pursuant to any General Indemnity
Obligation that is for his or her benefit.
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF TRUSTEE
Section 3.1 General
(a) It shall be the duty of the Trustee to hold, manage, invest and
reinvest the Trust Fund; to collect and hold the increase, earnings and profits
thereon, and to make payment from the Trust Fund, all as herein provided.
(b) Subject to the provisions of this Trust Agreement, the assets of
the Trust Fund shall be prudently invested and managed in accordance with
California Probate Code Section 16040.
(c) Notwithstanding the above, sufficient liquidity shall be
maintained to meet the reasonably anticipated requirements of the Trust Fund for
payment of expenses of administration, investment and management and for
payments to the Indemnitees.
Section 3.2 Powers of Investment
(a) Subject to the limitations and requirements hereof, and applicable
laws, the Trustee shall have full power to invest and reinvest and/or cause to
be invested and reinvested the assets of the Trust Fund in such manner as it
deems beneficial and appropriate for the conservation and growth of the Trust
Fund without being limited or bound by any rule or custom relating to
investments by trustees.
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(b) For the avoidance of doubt, the Trustee shall have the power and
authority to invest and reinvest all uninvested cash into obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and in
notes and other instruments, including repurchase agreements, collateralized or
secured by such obligations, or in units or shares of mutual funds thereof.
(c) The Trustee shall have the power and authority to register any
investment held in the Trust Fund in its own name or in the name of a nominee
and to hold any investment in bearer form. The books and records of the Trustee
shall show that all such investments are part of the Trust Fund. The Trustee
shall be liable for all acts of its nominees.
Section 3.3 Duties of Trustee
(a) The Trustee shall exercise its powers from time to time as may be
appropriate or as required by law.
(b) The Trustee shall maintain or cause to be maintained suitable
records, data and information relating to its functions hereunder.
(c) The Trustee shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other actions hereunder. Its books and
records relating thereto shall be open to inspection and audit at all reasonable
times by the Indemnitees, or their duly authorized representatives.
(d) Within thirty (30) days after the close of business on the last
business day of each fiscal quarter (and within thirty (30) days after the
resignation of the Trustee, as provided in Article IV hereof), and at any other
time as requested by an Indemnitee in writing, the Trustee shall render to the
Indemnitees who have made themselves and their notice information known in
writing to the Trustee or to the requesting Indemnitee, as the case may be, a
written account showing in reasonable summary the investments, receipts,
disbursements and other transactions engaged in by the Trust during the
preceding fiscal quarter, and setting forth the assets and liabilities of the
Trust.
Section 3.4 Emergencies and Delegates
(a) In case of an emergency, the Trustee may act with respect to the
matter involved and shall incur no liability in so acting.
(b) By written notice, the Trustees may authorize a delegate to act on
matters in the ordinary course of the business of the Trust or on specific
matters.
Section 3.5 Expenses and Taxes
(a) The Trustee shall be entitled to compensation for its services and
reimbursement for its costs as and when incurred in accordance with the
provisions set forth on Exhibit B attached hereto. The compensation of the
Trustee and all its expenses hereunder shall constitute a charge upon the Trust
Fund. The Trustee shall have a lien on the Trust for such compensation and
expenses until paid.
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(b) Proper expenses of the Trust include the following:
(i) reasonable counsel fees incurred by the Trustee;
(ii) reasonable accountants' fees incurred by the Trustee for the
preparation of yearly tax returns for the Trust;
(iii) reasonable costs, expenses and charges of the Trustee
incurred or made in the performance of its duties;
(iv) reasonable expenses relating to investment of the Trust Fund
such as brokers' commissions and similar items;
(v) all taxes of any and all kinds that may be levied or assessed
under existing or future laws upon or in respect of the Trust Fund or
the income thereof; and
(vi) the Trustee's reasonable charges for issuing payment checks
to Indemnitees and their legal beneficiaries or representatives.
Section 3.6 Third Parties
(a) No third party dealing with the Trustee shall be required to
follow the use by the Trustee of moneys paid or loaned to the Trustee or to
inquire as to whether the Trustee has complied with the requirements of this
Trust Agreement.
(b) In any judicial, arbitration or administrative proceeding, only
the Company, the Trustee, and the Indemnitees who have made themselves and their
notice information known in writing to the Trustee (or, upon notice to the
Trustee, their legal beneficiaries or representatives upon death) shall be
necessary parties, and no other person shall be entitled to any notice or
service of process (except as required by law). Any judgment, decision or award
entered in any such proceeding or action (unless inconsistent with any General
Indemnity Obligation) shall be conclusive upon all interested persons.
ARTICLE IV.
RESIGNATION, REMOVAL AND SUCCESSION
Section 4.1 Resignation
The Trustee may resign at any time upon thirty (30) days' prior written
notice to Messrs. Xxxxxx Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxx
(which notice may be waived by each at his sole discretion).
Section 4.2 Succession
(a) Upon resignation of the Trustee, the majority of Messrs. Xxxxxx
Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxx shall promptly appoint a
successor Trustee, who shall have the same powers and duties as those conferred
herein. Any resigning Trustee shall transfer the Trust Fund to its successor and
shall deliver the books, accounts and records thereof thereto.
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The resigning Trustee is authorized, however, to reserve such amount as may be
necessary for the payment of its fees and expenses under Section 3.5 incurred
prior to resignation or removal.
(b) If a successor Trustee is not appointed within sixty (60) days
after the Trustee gives notice of its resignation, then the Trustee may apply to
any court of competent jurisdiction for appointment of a successor. The Trustee
shall continue to serve until the successor assumes its office hereunder.
ARTICLE V.
AMENDMENT; PARTIAL INVALIDITY
Section 5.1 Irrevocability of Trust; Amendment
The Trust created by this Trust Agreement shall be irrevocable and
shall not be revoked or terminated by the Company or any person other than as
specifically provided in Section 1.3 nor shall it be amended, modified or
supplemented except in accordance with Section 5.2.
Section 5.2 Partial Invalidity; Conformity with Law
If any provision of this Trust Agreement is held to be illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining portions of this Trust Agreement, unless such illegality or invalidity
prevents accomplishment of the objectives and purposes of this Trust Agreement.
In the event of any such holding, and notwithstanding anything herein to the
contrary, this Trust Agreement may be amended prospectively or retroactively at
any time by the Company or its duly authorized representative, upon reasonable
notice to the Trustee and to Messrs. Xxxxxx Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxxxx
and Xxxxx X. Xxxxx, if deemed necessary to remedy such defect, to conform to the
provisions and requirements of the Internal Revenue Code or regulations
promulgated pursuant thereto, or to conform to the provisions and requirements
of any law, regulation, order or ruling affecting the character or purpose of
the Indemnification Agreements or the Trust.
ARTICLE VI.
LIABILITIES
Section 6.1 Liability of the Company
The Company shall not be liable or responsible for
(a) any debts, liabilities or obligations of the Trustee, or
(b) the acts or omissions (except as specifically undertaken by
agreement of indemnity or insurance) of any fiduciary or other person relating
to the rendering of services to the Trust Fund.
Section 6.2 Liability of the Trustee
(a) The Trustee shall have no liability for the acts or omissions of
the Company.
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(b) The Trustee shall have no liability for following proper
directions, including investment directions, which are made in accordance with
this Trust Agreement.
Section 6.3 Indemnification of Trustee
The Company agrees, to the extent permitted by applicable law, to
indemnify the Trustee and hold it harmless from and against any claim or
liability that may be asserted against it, other than on account of the
Trustee's own gross negligence or willful misconduct, by reason of the Trustee's
taking or refraining from taking any action in connection with the
administration of the Trust or, if the Trustee is the prevailing party therein,
arising out of or relating to any action, suit or proceeding to which the
Trustee is a party or otherwise involved by reason of it serving as the Trustee
hereunder. The indemnities contained in this Section shall be applicable whether
or not the Trustee is then serving as the Trustee and shall survive termination
of the Trust.
ARTICLE VII.
MISCELLANEOUS
Section 7.1 Successors
This Trust Agreement and the Trust created hereby shall be binding upon
and shall inure to the benefit of the heirs, executors, personal and legal
representatives, successors and assigns of the parties hereto and of the
Indemnitees. For the purpose of Sections 4.1, 4.2(a) and 5.2, if any one of
Messrs. Xxxxxx Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxxxx or Xxxxx X. Xxxxx ceases to be
able to serve for the purposes of any of such Sections, the other two remaining
individuals may collectively appoint a third Indemnitee as a successor and shall
provide the Trustee with notice of such appointment.
Section 7.2 Use of Trust Funds
Except as herein provided, under no circumstances shall any
contributions to the Trust or any part of the Trust Fund be recoverable by the
Company from the Trustee, or be used for or diverted to purposes other than for
the exclusive purposes of providing benefits to Indemnitees. Upon execution of
this Trust Agreement, the Company shall have no right, title or interest in the
Trust Fund other than the reversionary interest in Section 1.4(c).
Section 7.3 Notices
Any claim or notice required or permitted by this Trust Agreement shall
be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or facsimile, or forty-eight (48) hours after
being deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, addressed to the party to be notified at such party's address as set
forth below, or as subsequently modified by written notice:
11
If to Trustee: Development Specialists, Inc.
Xxxxx Fargo Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx
If to Company: Simon Marketing, Inc.
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Board of Directors
with a copy to: Xxxxxx Xxxx & Xxxxxxx
Exchange Plaza
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Cameron Bunk Read, Esq.
If to Xxxxxx Xxxxxxx Xxxxx: 0000 0xx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx Xxxxx
If to Xxxxxx X. Xxxxxxxx: 00 Xx Xxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
If to Xxxxx X. Xxxxx: 0000 Xx Xxxxxx Xxx
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
Section 7.4 Construction
This Trust Agreement shall be construed, administered and enforced
according to the Internal Revenue Code and, where state law is applicable, under
Delaware laws, fairly, equitably and, as applicable, in accordance with the
purposes of the General Indemnity Obligations.
[SIGNATURE PAGE FOLLOWS]
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Executed at Los Angeles, California, the day and year first written
above.
COMPANY TRUSTEE
Simon Worldwide, Inc. Development Specialists, Inc.,
a Delaware corporation an Illinois corporation,
through Xxxxxxxx X. Xxxxxx
By: By:
------------------------------------- ---------------------------------
Name: Xxxxxx Xxxxxxx Xxxxx Name: Xxxxxxxx X. Xxxxxx
----------------------------------- -------------------------------
Title: Executive Committee Member of the Title:
----------------------------------
Board of Directors of SWWI
----------------------------------
Simon Marketing, Inc.,
a Delaware corporation
By:
-------------------------------------
Name: Xxxxxx Xxxxxxx Xxxxx
-----------------------------------
Title: Executive Committee Member of the
----------------------------------
Board of Directors of SWWI
----------------------------------
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EXHIBIT A
TRUST FUND
$2,700,000
A-1
EXHIBIT B
TRUSTEE COMPENSATION SCHEDULE
As full compensation for its services from the date of the execution of this
Trust Agreement through April 1, 2006, the Company shall pay the Trustee an
up-front fee of $40,000 (the "Up-Front Fee"). If the Trustee resigns prior to
April 1, 2006, the Trustee shall pay and transfer the pro-rata portion of the
Up-Front Fee from the time of resignation until April 1, 2006 to the successor
Trustee.
So long as the Trust has not been terminated and continues past April 1, 2006,
the Trustee shall receive an additional fee of $2,500 on the last day of each
succeeding fiscal quarter until the Trust terminates. If the Trust terminates in
the middle of a fiscal quarter, then the Trustee shall be entitled to
compensation pro-rata based on the number of days the Trust was in existence in
such final fiscal quarter. The additional fee shall constitute a charge upon the
Trust Fund.
The Trustee shall also be entitled to reimbursement for its reasonable costs and
expenses in accordance with the terms of the Trust Agreement.
B-1
