LONE STAR LIQUIDATING TRUST AGREEMENT
Dated as of February 19, 1997
Established by
I.C.H. CORPORATION
(including CARE FINANCIAL CORPORATION
and SWL HOLDING CORPORATION)
and
Accepted by
▇▇▇▇▇ ▇. ▇▇▇▇▇
as
Managing Trustee
TABLE OF CONTENTS
Page
I. DEFINITIONS 2
1.1 General 2
1.2 Certain Definitions 2
II. CREATION OF THE TRUST 4
2.1 Purpose of Trust 4
2.2 Appointment and Acceptance of Managing Trustee 4
2.3 Appointment and Acceptance of Supervisory Trustees 4
2.4 Name of Trust 4
2.5 Transfer of Trust Assets to Trust 4
2.6 Causes of Action 5
2.7 Termination of The Trust 5
III. RIGHTS, POWERS AND DUTIES OF MANAGING TRUSTEE 6
3.1 Declaration Acknowledged in Beneficial Interest 6
3.2 Management of Trust 6
3.3 May Incur Debt 7
3.4 Recovery on Causes of Action 7
3.5 Distribution of Available Cash 7
3.6 Assets Distributable to Unlocated Beneficiaries 7
3.7 Investments 8
3.8 Reserves 8
3.8.1 Disputed Claims Reserves 8
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3.8.2 Operating Reserve 8
3.9 Selection of Agents 8
3.10 Records and Reporting 9
3.10.1 Records 9
3.10.2 Periodic Reports 9
3.10.3 Tax Information 10
3.10.4 Additional Reports and Filings 10
3.11 Disposition of Assets to Debtors and Other Interested Parties 10
IV. TRUSTEES 10
4.1 The Managing Trustee 10
4.4.1 Independent Managing Trustee 10
4.1.2 Managing Trustee's Compensation and Reimbursement 11
4.1.3 Resignation 11
4.1.4 Removal 11
4.1.5 Appointment of Successor Managing Trustee 11
4.2 Supervisory Trustees 12
4.2.1 Resignation 12
4.2.2 Removal 12
4.2.3 Appointment of Successor Supervisory Trustee 12
4.2.4 Supervisory Trustees' Compensation and Expenses 12
4.3 Actions Requiring the Consent of Supervisory Trustees 12
4.3.1 Termination, Extension of Trust; Amendment of Agreement 12
4.3.2 Agreements, Documents, Instruments 12
4.3.3 Borrowing 13
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4.3.4 Investment 13
4.3.5 Reserves 13
4.3.6 Distributions from Trust 13
4.3.7 Action and Proceedings 13
4.3.8 Transfers of Trust Certificates 13
4.3.9 Governmental Filings 13
4.3.10 Sales or Transfers of Assets 13
4.4 Method of Obtaining Approval of Supervisory Trustees 13
4.5 Reliance by Trustees 14
4.6 Trustee's Standard of Care; Exculpation 14
4.7 Indemnification 15
4.8 Insurance 15
4.9 No Liability for Acts of Predecessors 15
4.10 No Implied Obligations 15
4.11 No Personal Obligation for Trust Liabilities 15
4.12 Bond Requirement; Exercise of Powers 15
4.13 Trust Continuance 15
4.14 Effect of Trust on Third Parties 15
V. [RESERVED] 15
VI. RIGHTS, POWERS AND DUTIES OF BENEFICIARIES 15
6.1 Nature of Certificates 15
6.2 Transfer and Exchange 16
6.2.1 Appointment of Registrar and Transfer Agent 16
6.2.2 Registration and Transfer of Trust Interests 16
iii
6.2.3 Access to Register by Trust Beneficiaries 17
6.3 Absolute Owners 17
6.4 Issuance of Certificates Upon Transfer 17
6.5 Mutilated, Lost, Stolen or Destroyed Certificates 17
6.6 Record Date 17
6.7 Interest Beneficial Only 18
6.8 Exemption from Registration 18
6.9 Votes by Beneficiaries 18
6.10 Effect of Death, Incapacity, or Bankruptcy of Beneficiary 18
6.11 Conflicting Claims 18
VII. MISCELLANEOUS 19
7.1 Applicable Law 19
7.2 Relationship Created 19
7.3 Interpretation 19
7.4 Partial Invalidity 19
7.5 Entire Agreement 19
7.6 Counterparts 19
7.7 Notices 20
7.8 Effective Date 20
7.9 Tax Provisions 20
7.9.1 Income Tax Status 20
7.9.2 Tax Returns and Reports 21
7.9.3 Withholding 21
7.9.4 Tax Identification Numbers 21
iv
7.9.5 Tax Year 21
7.10 Amendment of Trust 21
VIII. RETENTION OF JURISDICTION 21
8.1 21
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LONE STAR LIQUIDATING TRUST AGREEMENT
This Lone Star Liquidating Trust Agreement (the "Agreement"), dated as of
February 19, 1997, is established by I.C.H. Corporation (including Care
Financial Corporation and SWL Holding Corporation, the "Debtors") pursuant to
the Debtors' First Amended Joint Amended Plan of Reorganization, as amended (the
"Joint Plan") in the Chapter 11 case styled In re I.C.H. Corporation et al, Case
No. 395-36351-RCM-11 (the "Case"), in the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division (the "Court"), and is accepted by
the Managing Trustee (as defined in Section 1.2 of this Agreement) for the
benefit of the Trust Beneficiaries (as defined in Section 1.2 of this
Agreement).
WHEREAS, on October 10, 1995, the Debtor filed its voluntary petition
pursuant to Chapter 11 of the Bankruptcy Code with the Court;
WHEREAS, the Court confirmed the Joint Plan by entering the Order
Confirming Joint Plan on February 7, 1997;
WHEREAS, the Joint Plan provides for the creation of a trust to be composed
of all assets of the Debtors and of their Estates (except the Retained Assets)
to be administered and liquidated for the benefit of the holders of Allowed ICH
Class 5 Claims as provided in the Joint Plan and is further to provide for
distributions of certain property or cash to other classes under the Joint Plan;
WHEREAS, the Trust is intended to be treated as a liquidating trust
pursuant to Treasury Regulations ss. 301.7701-4(d), and as a grantor trust
subject to the provisions of Subchapter J, Subpart E of the Internal Revenue
Code of 1986, as amended (the "Tax Code"), owned by the Trust Beneficiaries as
grantors.
WHEREAS, the Joint Plan provides for the orderly disposition and
liquidation of the Trust Assets (as defined in Section 1.2 of this Agreement)
during a period not to exceed three (3) years from the formation of this Trust
(unless extended as provided in Section 2.7 of this Agreement), and further
provides that the Managing Trustee shall deliver Available Cash (as defined in
Section 1.2 of this Agreement) in compliance with the terms of the Joint Plan;
WHEREAS, pursuant to the terms of the Joint Plan, this Trust shall be
managed by the Managing Trustee, and supervised by the Supervisory Trustees
appointed in this Agreement and the Joint Plan, and approved by the Court, all
as provided in this Agreement;
WHEREAS, the Joint Plan provides for and requires the appointment of the
Managing Trustee for the purposes outlined herein and the Managing Trustee has
been appointed and approved and has agreed to serve in such capacity under the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby
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acknowledged, the parties hereto do hereby covenant and agree as follows:
I. DEFINITIONS
1.1 General. All capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned thereto in the Joint Plan, or, if not
defined in the Joint Plan and defined in the Bankruptcy Code shall have the
meanings assigned thereto in the Bankruptcy Code unless the context clearly
requires otherwise.
1.2 Certain Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Section 1.2 shall have the meaning assigned to them in this
Section 1.2 , and shall include the plural as well as the singular, and the
masculine as well as the feminine and vice versa.
"Agreement" shall mean this Lone Star Liquidating Trust Agreement dated as
of February 19, 1997.
"Available Cash" shall mean as of any date of calculation, the aggregate of
all cash or cash equivalents available for immediate distribution held by the
Trust, as reflected on the books and records of the Trust, less (i) until
released from reserve or paid, cash required to be placed in reserve or paid on
the Effective Date as provided in Article II of the Joint Plan, (ii) until
distributed, cash required to fund distributions with respect to Secured Claims
as provided in Section 4.1(a)(i) of the Joint Plan, (iii) until released from
reserve, cash, if any, required to fund the Contested Claim Reserve, (iv) the
Operating Reserve, (v) any such cash or cash equivalents deriving from SWL
Holding Corporation or Care Financial Corporation, or their respective assets,
and necessary to make the payments, if any, to the classes of Claimants in such
Estates and (vi) until the Final BML Reconciliation Date, cash, if any, required
to fund a $5,000,000 reserve against the obligation of the Trust under Section
7.5(c) of the Joint Plan.
"Case" shall have the meaning given to such term in the introductory
paragraph of this Agreement.
"Contested Claims Reserve" shall have the meaning given to such term in
Section 3.8.1 hereof.
"Court" shall have the meaning given to such term in the introductory
paragraph of this Agreement.
"Debtors" shall have the meaning given to such term in the introductory
paragraph of this Agreement.
"Distribution Date" means an Initial Distribution Date, and thereafter,
subject to Section 3.5 hereof, such dates as the Managing Trustee and
Supervisory Trustees from time to time designate as a Distribution Date.
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"Initial Distribution Date" has the meaning set forth in the Joint Plan.
"Managing Trustee" means ▇▇▇▇▇ ▇. ▇▇▇▇▇, or any successor thereto appointed
pursuant to the terms of this Agreement.
"Operating Reserve" shall mean the operating reserve established pursuant
to Section 3.8.2 hereof.
"Permitted Investments" means:
(i) securities issued or directly and fully guaranteed or insured by
the government of the United States or any agency or
instrumentality thereof having maturities of not more than one
year from the date of acquisition;
(ii) time deposits, certificates of deposit and bankers' acceptances
of any domestic commercial bank the short term debt obligations
of which have been rated A-1 by Standard & Poor's Corporation or
P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. and which mature in not
more than one year;
(iii)commercial paper rated A-1 or the equivalent thereof by Standard
& Poor's Corporation or P-1 or the equivalent thereof by ▇▇▇▇▇'▇
Investors Service, Inc., and in each case having maturities of
not more than 90 days from the date of acquisition; and
(iv) money market funds or money market mutual funds (other than
closed-end funds) which maintain a constant net asset value and
have at the time of such investment a rating by ▇▇▇▇▇'▇ Investors
Service, Inc. or Standard & Poor's Corporation at least
equivalent to "A."
"Joint Plan" shall have the meaning given to such term in the introductory
paragraph of this Agreement.
"Supervisory Trustees" means ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, or any successors thereto appointed pursuant to the terms of this
Agreement.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended.
"Termination Date" shall have the meaning given to such term in Section 2.7
hereof.
"Trust" shall mean the Lone Star Liquidating Trust constituted and
established pursuant to this Agreement.
"Trust Assets" shall mean all (i) funds, assets and properties of the
Debtors and their Estates of any kind and character and (ii) claims and causes
of action against third parties on account of any indebtedness or liability to
the Debtors or to their Estates, and all other claims owed to and all other
causes of action in favor of the Debtors and their Estate (to the extent not
specifically compromised or released pursuant to the Joint
3
Plan or an agreement referred to and incorporated in the Joint Plan), in each
case as the same exist as of the date hereof but excluding Retained Assets (and
claims and causes of action against third parties related to the Retained
Assets).
"Trust Beneficiary" shall mean a holder of an Allowed ICH Class 5 Claim in
accordance with the Joint Plan.
"Trustees" shall mean the Managing Trustee and the Supervisory Trustees,
and their respective successors appointed pursuant to the terms of this
Agreement.
II. CREATION OF THE TRUST
2.1 Purpose of Trust. The Debtor and the Managing Trustee, in compliance
with the Joint Plan, hereby constitute and create this Lone Star Liquidating
Trust for the purpose of effecting an orderly disposition, liquidation and
distribution of the Trust Assets, distributing the Available Cash to the Trust
Beneficiaries and making the other distributions and payments called for in the
Joint Plan to be made by the Trust, and with no objective to continue or engage
in the conduct of a trade or business. The Trust shall engage only in those
activities that shall be reasonably necessary to that purpose and consistent
with its objective not to continue or engage in the conduct of a trade or
business.
2.2 Appointment and Acceptance of Managing Trustee. In accordance with the
provisions of the Joint Plan, ▇▇▇▇▇ ▇. ▇▇▇▇▇ is hereby named, constituted, and
appointed as Managing Trustee, to act and serve as Managing Trustee of the Trust
and to hold, manage, liquidate the Trust Assets and to distribute Available Cash
subject to the conditions set forth herein and in the Joint Plan and to make the
other distributions and payments called for in the Joint Plan to be made by the
Trust. The Managing Trustee is willing, and does hereby accept the appointment,
to act and serve as Managing Trustee of the Trust, and to hold the Trust Assets
and administer the Trust pursuant to the terms of this Agreement.
2.3 Appointment and Acceptance of Supervisory Trustees. In accordance with
the provisions of the Joint Plan, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ are hereby named, constituted, and appointed as Supervisory Trustees, to
act and serve as Supervisory Trustees of the Trust and to supervise the
management and liquidation of the Trust Assets and distribution of the Available
Cash subject to the conditions set forth herein and in the Joint Plan. Each
Supervisory Trustee is willing, and does hereby accept the appointment, to act
and serve as a Supervisory Trustee of the Trust and to supervise the
administration of the Trust pursuant to the terms of this Agreement.
2.4 Name of Trust. The Trust established hereby shall bear the name "Lone
Star Liquidating Trust." In connection with the exercise of their powers as
Trustees hereunder, a Trustee may use this name or such variation thereon as
such Trustee sees fit, or may use her or his own name, as Managing Trustee or
Supervisory Trustee, as applicable.
2.5 Transfer of Trust Assets to Trust. In accordance with the provisions of
the Joint Plan, all right, title, and interests of the Debtors and their Estates
in and to the Trust Assets are hereby vested in the Trust and
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preserved for the benefit of the Trust Beneficiaries. From and after the
Effective Date, all Trust Assets, together with the Available Cash, shall be
administered by the Managing Trustee, subject to Section 4.3 hereof, on behalf
of the Trust Beneficiaries and the other intended recipients of distributions
from the Trust as provided in the Joint Plan. Prior to the creation of the
Trust, the Debtors shall have executed or caused to be executed, and
simultaneously with the creation of the Trust shall deliver or cause to be
delivered to, or upon the order of, the Managing Trustee, any and all documents
and other instruments as may be necessary or useful to convey and to confirm
title to the Trust Assets to the Trust, including those listed or described on
Exhibit A hereto. The Debtors (and any successor entity thereto) will, upon the
reasonable request of the Managing Trustee, execute, acknowledge and deliver
such further instruments and do such further acts as may be necessary or proper
to transfer to the Managing Trustee any portion of the Trust Assets intended to
be conveyed hereby in the form and manner provided for in the Joint Plan and to
vest in the Managing Trustee the powers, instruments or funds in trust
hereunder. Except to the extent provided by Section 7.5(c)(iii) of the Joint
Plan, the Debtors, for themselves and any predecessor or successor entity,
hereby disclaim and waive any and all right to any reversionary interest in any
of the Trust Assets.
2.6 Causes of Action. As provided in Sections 10.2(a) and 10.2(c) of the
Joint Plan, all claims and causes of action which are Trust Assets, are hereby
vested in the Trust and preserved for enforcement by the Managing Trustee for
the benefit of the Trust Beneficiaries. To the extent permitted by law, all
rights under Section 363(h) of the Bankruptcy Code are also preserved for the
benefit of the Debtors' estate, and the Managing Trustee shall have the right to
exercise same subject to Court approval.
2.7 Termination of The Trust. The Trust shall terminate upon the earlier to
occur (the "Termination Date") of: (A) the fulfillment of the Trust's purpose by
the liquidation of all of the Trust Assets and the distribution of the Available
Cash or (B) three (3) years after the Effective Date. In order to terminate the
Trust prior to three (3) years after the Effective Date, the Managing Trustee,
subject to Section 4.3 hereof, shall deliver a notice to all Trust Beneficiaries
setting forth the date on which the Trust will terminate, and if no Trust
Beneficiary files an objection with the Court within forty-five (45) days after
the date of such notice the Trust shall terminate on the date set forth in the
notice. Notwithstanding the foregoing, in the event the Managing Trustee shall
have been unable after continuing reasonable efforts to sell or otherwise
dispose of and realize upon the Trust Assets in the initial three (3) year term
of the Trust or if other circumstances require such extension, the Managing
Trustee, subject to Section 4.3 hereof, shall have the right to apply to the
Court to extend the term of the Trust for additional periods of time, provided
that each such extension must be approved by the Court within six (6) months of
the beginning of the extended term. Upon such application the Trust shall
continue until the date approved by the Court, or if the extension is
disapproved by the Court, the expiration of the six month period; provided that
in no event shall the Termination Date occur later than the tenth anniversary of
the Effective Date.
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III. RIGHTS, POWERS AND DUTIES OF MANAGING TRUSTEE
3.1 Declaration Acknowledged in Beneficial Interest. The Managing Trustee
hereby acknowledges that, on and after the Effective Date, the Trust
Beneficiaries and their successors and assigns as permitted in Article 6 hereof,
as their interests may appear, will have a beneficial interest in all Trust
Assets. The Managing Trustee will retain only such powers as are necessary to
collect, liquidate, or otherwise convert the Trust Assets into cash and to
invest cash in Permitted Investments pending distribution and to pay all
expenses, taxes, and other payments referred to in this Trust.
3.2 Management of Trust. Subject to the terms hereof and the Joint Plan,
including, without limitation, Section 4.3 hereof, the Managing Trustee shall
take charge of the Trust Assets and shall endeavor to collect, conserve,
protect, and liquidate, or otherwise convert into cash, all claims, causes of
action, and assets which constitute the Trust Assets and all such other property
incidental thereto as may hereafter be acquired from time to time under this
Trust. To this end and subject to the provisions of Section 4.3, the Managing
Trustee shall manage the affairs of the Trust, negotiate and consummate sales of
the Trust Assets, enter into agreements binding the Trust, and execute,
acknowledge, and deliver any and all instruments which are necessary, required,
or deemed by the Managing Trustee to be advisable in connection with the
performance of the Managing Trustee's duties hereunder and shall have full power
and authority to take any action consistent with the purpose and provisions of
the Joint Plan. Except as otherwise provided in this Agreement, and without
prior or further authorization of the Court, but subject to Section 4.3 hereof,
the Managing Trustee may control and exercise authority over the Trust Assets,
the acquisition, management, and disposition thereof, and the management and
conduct of the business of the Trust to the same extent as if the Managing
Trustee were the sole legal and beneficial owner thereof in her own right. No
person dealing with the Trust shall be obligated to inquire into the authority
of the Managing Trustee in connection with the acquisition, management, or
disposition of Trust Assets. In connection with the management and use of the
Trust Assets, the Managing Trustee, without limitation of her power and
authority, may do the following:
(i) accept the assets transferred and provided to the Trust pursuant
to this Agreement and the Joint Plan;
(ii) distribute to recipients other than Trust Beneficiaries those
amounts or assets contemplated to be distributed by the Trust in
the Joint Plan and distribute Available Cash to the Trust
Beneficiaries in accordance with the terms of this Trust and the
Joint Plan;
(iii)endorse the payment of notes or other obligations of any person
or make contracts withrespect thereto;
(iv) engage in all acts that would constitute ordinary course of
business in performing the obligations of a trustee under a trust
of this type;
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(v) cause Trust Certificates to be issued to Trust Beneficiaries in
the number and manner provided in the Joint Plan;
(vi) invest Trust Assets in Permitted Investments;
(vii)execute deeds, bills of sale and other instruments of transfer in
connection with the sale, assignment or transfer of the Trust
Assets; and
(viii) establish such bank accounts as she may deem necessary or
appropriate, draw checks on such bank accounts and perform such
other necessary and appropriate duties with respect to such
accounts, or designate individuals as signatories to draw checks
on such bank accounts and to perform such other duties as she may
direct and authorize.
3.3 May Incur Debt. Subject to Section 4.3, the Trust may borrow such sums
of money at any time and from time to time for such periods of time upon such
terms and conditions from such persons or corporations for such purposes as the
Managing Trustee may deem advisable, and secure such loans with any of the Trust
Assets, provided that no recourse shall be had to the Trustees or any Trust
Beneficiary on any such debt.
3.4 Recovery on Causes of Action. The Managing Trustee shall investigate
all claims and causes of action that are Trust Assets and make recommendations
to the Supervisory Trustees regarding the same, and, subject to Section 4.3, may
▇▇▇ upon, mediate, arbitrate, and/or compromise and settle all such claims and
causes of action.
3.5 Distribution of Available Cash. Pursuant to the terms of the Joint
Plan, on the dates provided for in the Joint Plan the Managing Trustee shall
distribute from the Trust Assets the amounts required in Articles II and IV of
the Joint Plan. The Managing Trustee shall distribute at least annually all
Available Cash to holders of record of Trust Interests and to other Claimants in
accordance with the treatment of Claims provided in the Joint Plan. In
determining whether there is any Available Cash available for distribution, the
Managing Trustee may, in her discretion, give due consideration to the
possibility that there may exist unasserted Claims against the Trust or asserted
Claims which are not yet Allowed Claims or otherwise not yet due and payable and
may establish reserves therefor in accordance with Section 3.8.1. The Managing
Trustee shall make vigorous and continuing efforts to dispose of the Trust
Assets, to make prompt and timely distributions, and to avoid undue prolongation
of the duration of the Trust. The Trust shall not retain cash or cash
equivalents in excess of a reasonable amount to meet claims and contingent
liabilities or to maintain the value of the Trust Assets.
3.6 Assets Distributable to Unlocated Beneficiaries. The Managing Trustee
shall, or shall appoint the Distribution Agent to, hold any unclaimed
distributions or other payments to any Trust Beneficiaries or other person
entitled thereto who cannot be located. The Managing Trustee shall, and shall
instruct the Distribution Agent to, make disposition of any such distributions
or payments in accordance with the Joint Plan.
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3.7 Investments. Pending distribution, the Managing Trustee shall invest
the Trust Assets in Permitted Investments.
3.8 Reserves.
3.8.1 Disputed Claims Reserves. On or as soon as practicable following the
Effective Date, the Managing Trustee shall establish a reserve for distributions
on account of Contested Claims as of the Initial Distribution Date (the
"Contested Claims Reserve"). Upon any distribution to holders of Allowed Claims
in Classes in which Contested Claims still exist, the Managing Trustee shall
withhold from such distributions and set aside in the Contested Claims Reserve
an amount as provided in Section 9.5 of the Joint Plan. At such time thereafter
that any Contested Claim, or portion thereof, becomes an Allowed Claim, the
Managing Trustee shall distribute to the holders of such Allowed Claim from the
Contested Claims Reserve cash in an amount equal to the amount such holder would
have received through such date had such holder's claim been an Allowed Claim as
of the Effective Date. The Contested Claims Reserve shall be terminated when all
Contested Claims are resolved; provided however, that as a Contested Claim may
be resolved, to the extent that the amount reserved for the Contested Claim
exceeds the amount due, if any, under a distribution as such Contested Claim
becomes an Allowed Claim, such funds shall become Trust Assets available for
distribution to Trust Beneficiaries. Any property remaining in the Contested
Claims Reserve upon its termination and after any distributions pursuant to this
section shall no longer be restricted and shall be Trust Assets available for
liquidation and distribution to Trust Beneficiaries.
3.8.2 Operating Reserve. On or as soon as practicable following the
Effective Date, the Managing Trustee shall establish the Operating Reserve with
cash in an amount reasonably determined to be necessary to fund the expenses of
the Trust, including costs of the Distribution Agent for distributions made
pursuant to the Joint Plan, in an amount approved by the Supervisory Trustees.
Thereafter, the amount of the Operating Reserve may be increased or decreased by
the Managing Trustee with the consent of the Supervisory Trustees if the
Managing Trustee determines that a greater or lesser amount is prudent and
reasonably sufficient to satisfy the obligations and liabilities, including tax
liabilities (whether absolute, contingent, asserted, unasserted, payable, not
yet payable or otherwise) of, or assumed by, the Trust. The amount of the
Operating Reserve shall not exceed $2,000,000; subject to increase by any amount
as determined by the Managing Trustee, with the consent of the Supervisory
Trustee, to be prudent and reasonably sufficient to satisfy the obligations and
liabilities of the Trust with respect to third party obligations assumed by the
Trust, including without limitation obligations of the Trust under or pursuant
to the Modern/Western Agreement and the Philadelphia American Agreement.
3.9 Selection of Agents. The Managing Trustee may select and employ
brokers, banks, custodians, investment advisors, attorneys, accountants,
auditors, and other agents on behalf of the Trust. Except as otherwise required
to fulfill the terms hereof, such agents may be employed without regard to prior
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employment of such agents by any Trust Beneficiary or by the Creditors'
Committee. The Managing Trustee may retain as a consultant to the Trust any
person or persons having particular knowledge of the Debtors' affairs
(including, without limitation, any officer or director or former officer or
director of any Debtor or any entity owned by a Debtor), and may place reliance
upon the advice of any such person. The Managing Trustee may pay the salaries,
fees, and expenses of agents and consultants engaged by the Managing Trustee out
of the Trust Assets. No Trustee shall be liable for any loss to the Trust or any
person interested therein by reason of any mistake or default of any such agent
or consultant as shall be selected and employed or retained without fraud,
willful misconduct or without gross negligence.
3.10 Records and Reporting.
3.10.1 Records. The Managing Trustee shall maintain good and
sufficient books and records of account relating to the Trust Assets, the
Available Cash, the management thereof, all transactions undertaken by the
Managing Trustee, all expenses incurred by or on behalf of the Trust, all
distributions either contemplated or effectuated under the Joint Plan or
this Agreement.
3.10.2 Periodic Reports. The Managing Trustee shall prepare the
following reports and shall distribute such reports to each Supervisory
Trustee and any Trust Beneficiary who requests a copy:
(A) on a monthly basis, within two (2) weeks after the end of
each month, an unaudited report of the receipts and disbursements of
the Trust and the Cash position of the Trust; and
(B) on a quarterly basis commencing with the first calendar
quarter ending after the Effective Date, within forty-five (45) days
after the end of such calendar quarter, a report of the activities of
the Trust detailing for the preceding quarterly period the activities
of the Trust including:
(i) an unaudited operating statement (prepared on a cash
basis) showing all revenues received by the Trust and all
expenses of operations of the Trust (including all expenses
associated with the sale of any Trust Assets paid by the Trust);
(ii) an unaudited written report and accounting showing (a)
the assets and liabilities of the Trust at the end of such
period, (b) any changes in the Trust Assets, (c) the amount of
any reserves or escrows of the Trust, (d) any material action
taken by the Managing Trustee or the Supervisory Trustees in the
performance of their duties under the Joint Plan and this
Agreement; and
(iii) an overall status report of the Trust for the next
quarterly period.
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Monthly reports for any month ending a quarterly period may be
included in the quarterly report for such period. Quarterly
reports for the fourth quarter of each calendar year may be
included within the annual reports described below, if such
annual reports are prepared.
(C) to the extent required by the Court or by applicable law (or
to gain an exemption from applicable law), within 90 days after the
end of each calendar year, beginning with the first year end occurring
after the Effective Date, the Trust will prepare reports for the prior
year as described in clause (i) and (ii) above, except that such
reports shall be for a full year (or portion thereof in which the
Trust has been in existence) and shall be audited.
(D) The Managing Trustee shall prepare and furnish to the
Supervisory Trustees such additional reports and accountings as the
Supervisory Trustees may from time to time reasonably request.
All monthly, quarterly and, if prepared, annual reports shall be
filed with the Court. In addition, all monthly, quarterly and, if
prepared, annual reports may be filed with the Securities and Exchange
Commission (the "Commission") to the extent the Managing Trustee deems
such action to be in the best interest of the Trust or to the extent
required by applicable law or in order to gain an exemption from
compliance with applicable law.
3.10.3 Tax Information. The Managing Trustee shall furnish to the
Trust Beneficiaries and other recipients of distributions from the Trust
such information and returns with respect to any federal or state tax as
shall be required by law.
3.10.4 Additional Reports and Filings. The Managing Trustee shall (i)
prepare, file and distribute such additional registration statements,
reports and submissions as may be necessary to cause the Trust and the
Trustees to be in compliance with applicable law and (ii) prepare and file
with the Court such reports and submissions as are required by the Joint
Plan. Copies of any such reports, registration statements and submissions
shall be distributed to the Supervisory Trustees and, in the discretion of
the Managing Trustee, filed with the Commission.
3.11 Disposition of Assets to Debtors and Other Interested Parties. Subject
to Section 4.3, the Managing Trustee is specifically authorized and empowered to
negotiate at arms' length and enter into agreements with the Debtors'
affiliates, the Trust Beneficiaries and other interested parties for the sale of
any portion of the Trust Assets.
IV.TRUSTEES
4.1 The Managing Trustee.
4.4.1 Independent Managing Trustee. The Managing Trustee may not be a
Trust Beneficiary.
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4.1.2 Managing Trustee's Compensation and Reimbursement. As
compensation for services rendered in the administration of this Trust, the
proposed Managing Trustee shall be compensated in an amount and upon terms
which are mutually acceptable to the proposed Managing Trustee and the
Supervisory Trustees; provided that the initial Managing Trustee shall be
compensated on terms substantially in conformity with the compensation
provided for in the employment agreement between ▇▇▇▇▇ ▇. ▇▇▇▇▇ and the
Debtors dated as of January 1, 1996. The Managing Trustee shall be
reimbursed for all reasonable expenses (including, but not limited to,
attorneys fees) incurred in the performance of her duties hereunder.
4.1.3 Resignation. The Managing Trustee may resign as such by
executing and delivering an instrument in writing to the Supervisory
Trustees upon no less than thirty (30) days advance notice.
4.1.4 Removal. The Managing Trustee may be removed from office (a) for
fraud or willful misconduct in connection with the affairs of the Trust
upon the motion of the Supervisory Trustees, and upon a finding by the
Court of fraud or willful misconduct by such Managing Trustee after a
hearing before the Court upon not less than 30 days' Notice, (b) for such
physical or mental disability as substantially prevents the Managing
Trustee from performing her duties as Managing Trustee upon the motion of
the Supervisory Trustees, and upon a finding by the Court of such physical
or mental disability after a hearing before the Court on not less than 30
days' Notice or (c) for cause, which shall include a breach of fiduciary
duty or an unresolved conflict of interest, (other than as specified in the
foregoing clauses (a) and (b)) upon the motion of the Supervisory Trustees,
and upon finding by the Court that cause for such removal has been shown
after a hearing before the Court on not less than 30 days' Notice.
4.1.5 Appointment of Successor Managing Trustee. In the event of the
death or incompetency, resignation, or removal of the Managing Trustee, the
Supervisory Trustees shall appoint a successor Managing Trustee. Such
appointment shall specify the date on which such appointment shall be
effective. Every successor Managing Trustee appointed hereunder shall
execute, acknowledge, and deliver to the Supervisory Trustees and to the
retiring Managing Trustee an instrument accepting such appointment, and
thereupon such successor Managing Trustee, without any further act, deed,
or conveyance, shall become vested with all the rights, powers, trusts, and
duties of the retiring Managing Trustee. In the event of the resignation or
removal of the Managing Trustee, such Managing Trustee shall promptly (a)
execute and deliver such documents, instruments, and other writings as may
be requested by the Supervisory Trustees or reasonably requested by the
successor Managing Trustee to effect the termination of the retiring
Managing Trustee's capacity under the Trust and the conveyance of the Trust
Assets then held by the retiring Managing Trustee to her successor Managing
Trustee; (b) deliver to the Supervisory Trustees or the successor Managing
Trustee all documents, instruments, records, and other writings related to
the Trust as may be in the possession of the retiring Managing Trustee; and
(c) otherwise assist and cooperate in effecting the assumption of its
obligations and functions by such successor Managing Trustee.
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4.2 Supervisory Trustees
4.2.1 Resignation. A Supervisory Trustee may resign as such by
executing and delivering an instrument in writing to the Managing Trustee
and the remaining Supervisory Trustees.
4.2.2 Removal. A Supervisory Trustee may be removed in the event
physical or mental disability prevents a Supervisory Trustee from
substantially performing his duties hereunder upon the unanimous consent of
the other Supervisory Trustees. A majority of the Trust Beneficiaries
voting pursuant to this Agreement may at any time remove any Supervisory
Trustee with or without cause.
4.2.3 Appointment of Successor Supervisory Trustee. Upon the death,
resignation or removal of a Supervisory Trustee, the remaining Supervisory
Trustees may (but shall not be required to) appoint a Trust Beneficiary (or
employee or member thereof) as a successor Supervisory Trustee. If there
are no remaining Supervisory Trustees, the Managing Trustee may apply to
the Court for the appointment of a Supervisory Trustee or Supervisory
Trustees. Such appointment shall specify the date on which such appointment
shall be effective. In no event shall any insider or affiliate of the
Debtors serve as a Supervisory Trustee. In the event of the resignation or
removal of a Supervisory Trustee, such Supervisory Trustee shall promptly
(a) execute and deliver such documents, instruments, and other writings as
may be requested by the Managing Trustee to effect the termination of the
retiring Supervisory Trustee's capacity under the Trust; (b) deliver to the
Managing Trustee all documents, instruments, records, and other writings
related to the Trust as may be in the possession of the retiring
Supervisory Trustee; and (c) otherwise assist and cooperate in effecting
the assumption of its obligations and functions by such successor
Supervisory Trustee.
4.2.4 Supervisory Trustees' Compensation and Expenses. As compensation
for services rendered to the Trust, each Supervisory Trustee shall receive
$2,000 per month. The Trust shall reimburse the reasonable expenses of the
Supervisory Trustees (including, but not limited to, attorneys fees)
incurred in connection with their service as Supervisory Trustees.
4.3 Actions Requiring the Consent of Supervisory Trustees. The following
actions may be taken by the Managing Trustee on behalf of the Trust only with
the approval of the Supervisory Trustees
4.3.1 Termination, Extension of Trust; Amendment of Agreement. The
delivery of a notice seeking to terminate the Trust prior to three years
after the Effective Date or application to the Court to extend the Trust
term as provided in Section 2.7 or the amendment of this Agreement as
provided in Section 7.10 hereof;
4.3.2 Agreements, Documents, Instruments. The execution by the
Managing Trustee of any agreement, document or instrument (A) with any
affiliate or former affiliate or employee or former employee of any Debtor
or a Trust Beneficiary; (B) that obligates the Trust in excess of $50,000;
or
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(C) the term of which extends beyond one year;
4.3.3 Borrowing. The borrowing of any sums of money;
4.3.4 Investment. The investment of Trust Assets and Available Cash in
any manner other than in Permitted Investments;
4.3.5 Reserves. The establishment, increase or decrease of the
Operating Reserve;
4.3.6 Distributions from Trust. The distribution of any amounts from
the Trust and the designation of a Distribution Date with respect thereto,
provided that the Managing Trustee without further approval by the
Supervisory Trustees may make the distributions set forth in the Joint Plan
to persons other than Trust Beneficiaries and distributions to persons as
specifically ordered by the Court; provided, further that the Trust shall
make the annual distribution as set forth in Section 3.5;
4.3.7 Action and Proceedings. The commencement or bringing of any
action or proceeding, the defense of any action or proceeding against the
Trust, the settlement of any such action or proceeding, and the expenditure
by the Trust of amounts in respect thereof, including legal fees;
4.3.8 Transfers of Trust Certificates. Any change to either the form
of Trust Certificate or the placement of a legend on a Trust Certificate as
contemplated by Section 6.1 the effect of which may impede the transfer of
the Trust Interest represented by a Trust Certificate, appointment of a
Registrar other than the Trust or the Distribution Agent, or the
establishment of any additional requirements for transfer of Trust
Certificates;
4.3.9 Governmental Filings. Any material filing with or application to
any governmental agency relating to the Trust, the Trust Assets or the
Trust Certificates other than ordinary routine filings and applications
incidental to the activity of the Trust and the administration of the Trust
Assets; provided that the Managing Trustee may without further approval of
the Supervisory Trustees file any reports expressly contemplated to be
filed by this Agreement or the Joint Plan; and
4.3.10 Sales or Transfers of Assets. The sale, assignment or transfer
of any Trust Asset, except as otherwise set forth herein or approved by
order of the Court, in an amount exceeding $500,000.
4.4 Method of Obtaining Approval of Supervisory Trustees. Whenever called
for in this Agreement, the approval of the Supervisory Trustees shall mean the
affirmative consent of at least two (2) Supervisory Trustees or, if only one
Supervisory Trustee is serving hereunder at any time, with the consent of such
Supervisory Trustee or, if no Supervisory Trustees are serving hereunder at any
time, upon Order of the Court (and the Managing Trustee shall be authorized to
file an appropriate motion for relief with the
13
Court). Affirmative consent of a Supervisory Trustee shall be had by written
confirmation of a Supervisory Trustee upon the written request of the Managing
Trustee to all Supervisory Trustees serving hereunder delivered at the time at
least five (5) business days in advance of the proposed action and delivered as
provided in Section 7.7 by facsimile or hand or overnight delivery. Each
Supervisory Trustee shall respond promptly to any request by the Managing
Trustee for the approval of the Supervisory Trustees. If (A) the Supervisory
Trustees do not respond promptly to the request of the Managing Trustee for
consent or (B) there is only one Supervisory Trustee serving hereunder at the
time and such Supervisory Trustee disapproves the proposed action, the Managing
Trustee may file an appropriate motion for relief with the Court.
4.5 Reliance by Trustees. A Trustee may rely, and shall be fully protected
personally in acting upon, any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, or other instrument or
document which such Trustee has no reason to believe to be other than genuine
and to have been signed or presented other than by the proper party or parties
or, in the case of facsimile transmissions, to have been sent other than by the
proper party or parties, in each case without obligation to satisfy himself or
herself that the same was given in good faith and without responsibility for
errors in delivery, transmission, or receipt. In the absence of fraud, willful
misconduct or gross negligence, a Trustee may rely as to the truth of statements
and correctness of the facts and opinions expressed therein and shall be fully
protected personally in acting thereon. The Trustees may consult with and rely
on the advice of legal counsel and such other experts, advisors, consultants or
other professionals as shall have been retained pursuant to this Agreement and
shall be fully protected in respect of any action taken or suffered by them in
accordance with the written opinion of legal counsel.
4.6 Trustee's Standard of Care; Exculpation. No Trustee, (and no director,
officer, affiliate, employee, employer, agent or representative of any Trustee)
shall be personally liable in connection with the affairs of the Trust to any
other Trustee, any Trust Beneficiary, or the Trust, or any other person, except
for such of the Trustee's acts or omissions as shall constitute fraud, willful
misconduct or gross negligence.
4.7 Indemnification. Except in those situations in which a Trustee is not
exonerated of personal liability as aforesaid, a Trustee (including each former
Trustee or estate of a decedent Trustee) shall be defended, held harmless and
indemnified from time to time from the Trust Assets against any and all losses,
claims, costs, expenses and liabilities (including legal fees and expenses) and
any costs of defending any action to which a Trustee may be subject in
connection with any action, suit, proceeding or investigation brought or
threatened against such Trustee in such Trustee's capacity as Trustee or in any
other capacity contemplated by this Agreement, the Joint Plan or in any matter
arising out of or related to this Trust Agreement or the affairs of the Trust.
The Trust may indemnify and hold harmless employees and agents of the Trust to
the same extent as is provided in this Section 4.7 for the Trustees. It is the
intention of this Agreement that the Trustees shall be indemnified for their
negligence.
4.8 Insurance. If requested by a Supervisory Trustee, or if the Managing
Trustee so desires, and if available on commercially reasonably terms, the
Managing Trustee shall endeavor to obtain insurance
14
covering liabilities of all of the Trustees (and such insurance coverage may
extend beyond the term of the Trust for a reasonable period), or employees or
agents of the Trust incurred in connection with their services to the Trust and
with such coverages and limits as the Trustees deem desirable.
4.9 No Liability for Acts of Predecessors. No successor Trustee shall be in
any way responsible for the acts or omissions of the Debtors, or officers,
directors, agents, predecessors or successors thereof; or of any Trustee in
office prior to the date on which such person becomes Trustee, unless a
successor Trustee expressly assumes such responsibility.
4.10 No Implied Obligations. No Trustee shall be liable except for the
performance of such duties and obligations as are specifically set forth herein,
and no implied covenants or obligations shall be read into this Trust.
4.11 No Personal Obligation for Trust Liabilities. Persons dealing with the
Trustees, or seeking to assert claims against the Debtor, shall look only to the
Trust Assets to satisfy any liability incurred by the Trustees to such person in
carrying out the terms of this Trust, and the Trustees shall have no personal,
individual obligation to satisfy any such liability.
4.12 Bond Requirement; Exercise of Powers. The Trustees shall not be
required to furnish a bond to secure the proper performance of their respective
duties hereunder. Except as other expressly provided in this Agreement, the
Trustees shall not be required to procure authorization by any court in the
exercise of any power conferred upon the Trustees by this Trust.
4.13 Trust Continuance. The death or incompetency, resignation, or removal
of a Trustee shall not operate to terminate the Trust created by this Agreement
or to revoke any existing agency created pursuant to the terms of this Agreement
or invalidate any action previously taken by the Trust or Trustees.
4.14 Effect of Trust on Third Parties. There is no obligation on the part
of any purchaser or purchasers from the Trust or any agent of the Trust, or on
the part of any other persons dealing with the Trust or any agent of the Trust,
to see to the application of the purchase money or other consideration passing
to the Trust or any agent of the Trust, or to inquire into the validity,
expediency, or propriety of any such transaction by the Trust or any agent of
the Trustees.
V. [RESERVED]
VI. RIGHTS, POWERS AND DUTIES OF BENEFICIARIES
6.1 Nature of Certificates. Beneficial interests in the Trust ("Trust
Interests") with respect to Trust Beneficiaries shall be allocated in accordance
with Section 7.3(e) of the Plan. The Trust Interests may be represented by
certificates substantially in the form attached hereto as Exhibit B, with such
changes as the Managing Trustee may from time to time find necessary or
desirable to conform to the provisions of this Trust Agreement, the Joint Plan
and any applicable laws or regulations. The Managing Trustee may cause to be
placed on any Trust Certificate such legends as she deems on advice of counsel
are required or appropriate under securities, tax or other laws and regulations
in connection with tax withholding pursuant to Section 7.9.3 or otherwise. Any
person to whom a Trust Certificate is issued or transferred, by virtue of the
15
acceptance thereof, shall assent to and be bound by the terms and conditions of
this Agreement and the Joint Plan. The principal amount of Trust Interests
represented by any single certificate shall be designated on the face of such
certificate. All certificates shall be executed by the manual or facsimile
signatures of the Managing Trustee. In case any Managing Trustee who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be Managing Trustee before such certificate is issued by the Trust it
may be issued with the same effect as if any such Managing Trustee had not
ceased to be Managing Trustee. All Trust Certificates shall be legended as
provided in the forms for such certificates attached hereto as Exhibit B.
6.2 Transfer and Exchange.
6.2.1 Appointment of Registrar and Transfer Agent. The Managing
Trustee shall appoint a Registrar and Transfer Agent for the purpose of
registering and transferring Trust Interests as herein provided. The
Registrar and Transfer Agent may be a duly qualified institution or the
Trust itself. For its services hereunder, the Registrar and Transfer Agent,
unless it is the Trust, shall be entitled to receive reasonable
compensation from the Trust.
6.2.2 Registration and Transfer of Trust Interests. The Managing
Trustee shall cause to be kept at the office of the Registrar and Transfer
Agent, or at such other place or places as shall be designated by her from
time to time, the Trust Register. Prior to the distribution, if any, of
Trust Certificates, Trust Interests may not be transferred and no purported
transfer of any Trust Interest will be registered on the Trust Register.
After any such distribution of Trust Certificates, any Trust Interest may
be transferred by the registered holder of any Trust Certificate or in or
by the duly authorized attorney of the registered holder of any Trust
Certificate, upon presentation of the Trust Certificate to the Registrar
and Transfer Agent for cancellation, accompanied by delivery of a duly
executed written instrument of transfer in the form approved by the
Registrar and Transfer Agent and such other documents as may be reasonably
required by the Managing Trustee as well as evidence satisfactory to the
Managing Trustee that such transfer is in accordance with all applicable
federal and state securities laws. Any such transfer shall be registered in
the Trust Register. The transferor shall pay reasonable transfer charges
established by the Registrar and Transfer Agent for the purpose of
reimbursing the Trust and the Registrar and Transfer Agent for the expenses
incident thereto, including any tax or other governmental charge.
Notwithstanding the above, no Trust Interest may be transferred unless such
transfer is made (i) pursuant to a registration statement effective under
the Securities Act of 1933, as amended ("Securities Act"), or pursuant to
an available exemption from the registration requirements of the Securities
Act and (ii) in accordance with all applicable state securities laws.
16
6.2.3 Access to Register by Trust Beneficiaries. Trust Beneficiaries
and their duly authorized representatives shall have the right, upon
reasonable prior written notice to the Registrar and Transfer Agent and the
Managing Trustee, and in accordance with reasonable regulations prescribed
by the Registrar and Transfer Agent and the Managing Trustee, to inspect
and, at the expense of the Trust Beneficiary, make copies of the Trust
Register, in each case for a purpose reasonably related to such Trust
Beneficiary's beneficial interest in the Trust.
6.3 Absolute Owners. The Trustees may deem and treat the Trust Beneficiary
of record as the absolute owner of such Trust Interests for the purpose of
receiving distributions and payments thereon or on account thereof and for all
other purposes whatsoever.
6.4 Issuance of Certificates Upon Transfer. Whenever any Trust Certificate
shall be presented for transfer or exchange as permitted by the provisions of
Section 6.1 and 6.2, the Managing Trustee shall cause the Registrar and Transfer
Agent to issue, authenticate and deliver in exchange therefor, the new Trust
Certificate(s) in respect to the Trust Interests which the transferee, and if
any Trust Interest is retained, the transferor, will be entitled to receive new
Trust Certificate(s) for the retained interest.
6.5 Mutilated, Lost, Stolen or Destroyed Certificates. If a Trust
Beneficiary claims that his Trust Certificate has been mutilated, defaced, lost,
stolen or destroyed, the Trust shall issue and the Registrar and Transfer Agent
shall authenticate a replacement Trust Certificate if the Managing Trustee's
requirements are met. Such Trust Beneficiary shall pay reasonable charges
established by the Managing Trustee and the Registrar and Transfer Agent for the
purpose of reimbursing the Trust and the Registrar and Transfer Agent for the
expenses incident thereto, including any tax or other governmental charges. In
the case of lost, stolen or destroyed certificates, such Trust Beneficiary will
indemnify, and if required by the Managing Trustee or the Registrar and Transfer
Agent, provide a bond or other security sufficient in the judgment of the
Managing Trustee to protect the Trust, the Trustees, the Registrar and Transfer
Agent or any authenticating agent from any loss which any of them may suffer if
a Trust Certificate is replaced. The Trustees shall incur no liability to anyone
by reason of anything done or omitted to be done by them in good faith under the
provisions of this Section 6.5. All Trust Certificates shall be held and owned
upon the express condition that the provisions of this Section 6.5 are exclusive
in respect of the replacement or payment of mutilated, defaced, lost, stolen, or
destroyed certificates and shall, to the extent permitted by law, preclude any
and all other rights or remedies respecting such replacement or the payment in
respect thereto. Any duplicate certificate issued pursuant to this Section 6.5
shall constitute original interests in the Trust and shall be entitled in the
manner provided herein to equal and proportionate benefits with all other Trust
Interests issued hereunder in any moneys or property at any time held by the
Trustees for the benefit of the Trust Beneficiaries. The Trustees and the
Registrar and Transfer Agent shall not treat the original certificate as
outstanding.
6.6 Record Date. The date of record for determining entitlement of any
holder of a Trust Interest to any payments shall be (a) in the case of the
Initial Distribution Date, the Effective Date, and with respect to a subsequent
Distribution Date 15 Business Days prior to a Distribution Date, and (b) in all
other cases
17
(including entitlement of a holder of a Trust Interest to any notice hereunder),
may be fixed by the Managing Trustee but shall not be more than 30 days nor less
than 10 days before the date upon which notice is to be given, subject to any
terms of the Joint Plan that provide otherwise. Except with respect to an
Initial Distribution Date, as to which no notice need be given hereunder, the
Managing Trustee shall give notice of a Distribution Date to holders of Trust
Interests and the record date in connection therewith in the monthly report
prepared under Section 3.10.2(B) and filed with the Court at least 10 Business
Days prior to the corresponding record date.
6.7 Interest Beneficial Only. The ownership of a beneficial interest
hereunder shall not entitle any beneficiary to any title in or to the Trust
Assets as such, or to any right to call for a partition or division of the same,
or to require an accounting except as specifically required by the terms hereof.
6.8 Exemption from Registration. The parties hereto intend that the rights
of the Trust Beneficiaries arising under this Trust shall not be "securities"
under applicable laws, but none of the parties hereto represent or warrant that
such rights shall not be securities or shall be entitled to exemption from
registration under applicable securities laws. If such rights constitute
securities, the parties hereto intend for the exemption from registration
provided by Section 1145 of the Bankruptcy Code to apply to their issuance under
the Joint Plan.
6.9 Votes by Beneficiaries. The outcome of any vote of holders of Trust
Certificates shall be determined in favor of the majority of holders of Trust
Certificates actually voting, based upon the face amount of their Trust
Certificates.
6.10 Effect of Death, Incapacity, or Bankruptcy of Beneficiary. The death,
incapacity, bankruptcy or dissolution of a holder of a Trust Certificate during
the terms of this Trust shall not operate to terminate the Trust, nor shall it
entitle the representatives or creditors of a holder of a Trust Certificate to
an accounting, or to take any action in the courts or elsewhere for the
distribution of the Trust Assets or for a partition thereof; nor shall it
otherwise affect the rights and obligations of any holder of a Trust
Certificate.
6.11 Conflicting Claims. In the event the Managing Trustee becomes aware of
any disagreement or conflicting claims with respect to the Trust Assets, or if
the Managing Trustee in good faith is in doubt as to any action which should be
taken under this Trust after consultation with the Supervisory Trustees, who,
after a vote are deadlocked, or, if the Supervisory Trustees have disapproved
the Managing Trustee's request for approval and the Managing Trustee reasonably
believes that the effect of such disapproval is in violation of her duty to the
Trust Beneficiaries under this Agreement, the Managing Trustee shall have the
absolute right at her election to do any or all of the following:
(i) To the extent of such disagreement or conflict, or to the extent
deemed by her necessary or appropriate in light of such disagreement or
conflict, withhold or stop all further performance under this Trust (save
and except the safekeeping of the Trust Assets) until the Managing Trustee
is satisfied that such disagreement or conflicting claims have been fully
and finally resolved; or
18
(ii) File a suit in interpleader or in the nature of interpleader in
the Court and obtain an order requiring all persons and parties involved to
litigate in the Court their respective claims arising out of or in
connection with this Trust; or
(iii) File any other appropriate motion for relief in the Court.
VII. MISCELLANEOUS
7.1 Applicable Law. The Trust created herein shall be construed, regulated,
and administered under the laws of the State of Texas and the United States of
America; provided that the Trust and any interpretation or enforcement of the
provisions of this Agreement shall be subject to the jurisdiction of the Court
as contemplated by Section 8.1 hereof.
7.2 Relationship Created. The only relationship created by this Trust is
the trustee-beneficiary relationship between the Trustees and the Trust
Beneficiaries. No other relationship or liability is created. Nothing contained
herein shall be construed so as to constitute the Trustees and the Trust
Beneficiaries or their successors in interest as creating any association,
partnership, or joint venture of any kind.
7.3 Interpretation. The enumeration and headings contained in this Trust
are for convenience of reference only and are not intended to have any
substantive significance in interpreting the same.
7.4 Partial Invalidity. If any term or provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Agreement, such term or provision shall be fully
severable and this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining terms and provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement and this
Agreement shall be construed so as to limit any term or provision so as to make
it legal, valid and enforceable within the requirements of applicable law, in
lieu of such illegal, invalid or unenforceable provision, provided that such
construction, to the maximum extent possible, shall give effect to the purposes
of the Joint Plan.
7.5 Entire Agreement. This Agreement (including the recitals hereof) and
the Joint Plan constitute the entire agreement by and among the parties, and
there are no representations, warranties, covenants, or obligations except as
set forth herein and in the Joint Plan. This Agreement and the Joint Plan
supersede all prior and contemporaneous agreements, understandings negotiations,
and discussions, written or oral, if any, of the parties hereto relating to any
transaction contemplated hereunder. Except as otherwise specifically provided
herein or in the Joint Plan, nothing in this Agreement is intended or shall be
construed to confer upon or to give any person other than the parties hereto and
the Trust Beneficiaries any rights or remedies under or by reason of this
Agreement.
7.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an
19
original document, but all of which counterparts shall together constitute one
and the same instrument.
7.7 Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be addressed (i) if to the Managing
Trustee, to ▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Trustee, (A) and if on or prior to March
31, 1997, to ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, telephone number
(▇▇▇) ▇▇▇-▇▇▇▇ and facsimile number (▇▇▇) ▇▇▇-▇▇▇▇ and (B) if after March 31,
1997, to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇,
telephone number (▇▇▇) ▇▇▇-▇▇▇▇ and facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or such
other address as such Managing Trustee will have furnished to the Supervisory
Trustees and set forth in the monthly report prepared under Section 3.10.2(A)
hereof; (ii) if to any Trust Beneficiary, in writing to the record holders of
the Trust Interests as such address as is set forth in the Trust Register; (iii)
if to the Supervisory Trustees, to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, c/▇ ▇▇▇▇▇▇▇ Investment
Management Corp., #▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇, telephone number (▇▇▇) ▇▇▇-▇▇▇▇, and facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇/▇ ▇▇▇▇▇▇▇▇▇ Brothers University, ▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, telephone number (▇▇▇) ▇▇▇-▇▇▇▇,
and facsimile number (▇▇▇) ▇▇▇-▇▇▇▇; and ▇▇▇▇ ▇. ▇▇▇▇▇, c/o ▇▇▇ Associates, One
Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, telephone
number (▇▇▇) ▇▇▇-▇▇▇▇, and facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or such other
respective addresses as the Supervisory Trustees will have furnished to the
Managing Trustee in writing in accordance with this Section 7.7, or (iv) if to
the Debtors, to Chief Executive Officer, I.C.H. Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telephone number (▇▇▇) ▇▇▇-▇▇▇▇,
and facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or such other address as the Debtors will
have furnished to the Managing Trustee in writing in accordance with this
Section 7.7. All such notices, requests, consents and other communications shall
be given by facsimile, hand delivery, overnight delivery or, to a Trust
Beneficiary only, first class mail, postage prepaid, and shall be deemed given
when actually delivered or, with respect to a Trust Beneficiary only, if mailed,
three (3) business days after deposit in the U.S. Mail.
7.8 Effective Date. This Trust, and the transfer of Trust Assets to the
Managing Trustee, shall become effective on the Effective Date of the Joint
Plan.
7.9 Tax Provisions.
7.9.1 Income Tax Status. For all purposes of the Tax Code, the Debtor
shall be deemed to have transferred the Trust Assets to the Trust
Beneficiaries and the other recipients of distributions hereunder pursuant
to the Joint Plan and thereupon the Trust Beneficiaries shall be deemed to
have transferred their share of the Trust Assets to the Trust. For all
federal income tax purposes, consistent valuations shall be used by the
Trust and the Trust Beneficiaries for the transferred Trust Assets. The
Trust is intended to be treated as a liquidating trust pursuant to Treasury
Regulations ss. 301.7701-4(d), and as a grantor trust subject to the
provisions of Subchapter J, Subpart E of the Tax Code, owned by the Trust
Beneficiaries as grantors. Any items of income, deduction, credit, or loss
of the Trust shall be allocated for federal income tax purposes among the
Trust Beneficiaries pro-rata on the basis of their beneficial interests.
The Managing Trustee is authorized to take any action that may be necessary
20
or appropriate to minimize any potential tax liability of the Trust
Beneficiaries arising out of the operations of the Trust.
7.9.2 Tax Returns and Reports. In accordance with Treasury Regulation
ss. 1.671-4(a), the Managing Trustee shall cause to be prepared and filed,
at the cost and expense of the Trust, an annual information tax return
(Form 1041) with the Internal Revenue Service, with a schedule attached
showing the item of income, deduction, and credit attributable to the Trust
and detailing the allocation of such items of income, deduction, and credit
among the Trust Beneficiaries as required pursuant to the Form 1041
instructions for grantor trusts. Copies of such Form 1041 and attached
schedules will be delivered promptly to each Trust Beneficiary. In
addition, the Managing Trustee shall cause to be prepared and filed in a
timely manner, such other state or local tax returns as are required by
applicable law by virtue of the existence and operation of the Trust and
shall pay any taxes shown as due thereon. Within thirty (30) days after the
end of each calendar year, the Managing Trustee shall cause to be prepared
and mailed to a Trust Beneficiary such other information as may be
requested by such Trust Beneficiary in writing to enable such Trust
Beneficiary to complete and file his, her, or its federal, state and local
income and other tax returns.
7.9.3 Withholding. The Managing Trustee may withhold from the amount
distributable from the Trust at any time such sum or sums as may be
sufficient to pay any tax or taxes or other charge or charges which have
been or may be imposed on the distributee 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 any law, regulation, rule, ruling,
directive, or other governmental requirement.
7.9.4 Tax Identification Numbers. The Managing Trustee may require any
Trust Beneficiary or other distributee to furnish to the Managing Trustee
its Employer or Taxpayer Identification Number as assigned by the Internal
Revenue Service and the Managing Trustee may condition any distribution to
any Trust Beneficiary or other distributee upon receipt of such
identification number.
7.9.5 Tax Year. The taxable year of the Trust shall, unless otherwise
required by the Internal Revenue Code, be the calendar year.
7.10 Amendment of Trust. This Trust Agreement may be amended, modified or
altered only upon (i) the recommendation of the Managing Trustee to the
Supervisory Trustees and the approval of the Supervisory Trustees, and (ii)
Order of the Court.
VIII. RETENTION OF JURISDICTION
8.1 As provided in the Joint Plan, the Court has retained jurisdiction over
the Trust, the Trustees, and the Trust Assets, including, without limitation,
the determination of all controversies and disputes arising under or in
connection with this Trust.
21
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed as of the day and year first above written.
I.C.H. CORPORATION, a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Co-Chief Executive Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Co-Chief Executive Officer
MANAGING TRUSTEE
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
SUPERVISORY TRUSTEES
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
22
EXHIBIT A
ICH Assets and Securities Transferred to Lone Star Liquidating Trust
1. All cash and short-term investments (excluding $2.5 million,
$500,000 Tenneco settlement proceeds);
2. All restricted cash including:
- Republic Tower Rental Trust Account;
- Consolidated Fidelity tax obligation escrow;
- The escrow relating to the PennCorp Purchase agreement;
- Rights under the Modern/Western Escrow Agreement with
Reassure America Life Insurance Company;
3. All real property, other than the Perry Park, KY land and
improvements, including:
- Baton Rouge, LA land;
- Ponderosa Inn, Burly, ID;
- Deltona Lakes, FL land;
- Real property known as Post Oak Park, located in
Houston, Texas.
4. All Facilities Management Installation stock:
5. BML Agency stock;
6. SLC Financial Services stock;
7. All First Commonwealth Corporation stock;
8. All ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ stock;
9. All XRC Corp. stock;
10. All National Energy Group, Inc. stock;
11. All Kentucky Central Life Insurance Co. stock;
12. All Kentucky Investors, Inc. stock;
13. All Worthington Industries. Inc. stock;
14. All IMO Delaval Inc. stock;
15. All Transamerica Corporation stock;
16. Southwestern Financial Corp. $40 million Note due 2005;
Exhibit A-1
17. Distribution and Liquidation Interest in Stone Capital Corp.;
18. Penncorp Purchase Agreement, including without limitation any and
all rights, claims, counterclaims, choses and causes of action
that may be asserted or enforced under Article VI (including
without limitation Section 6.5);
19. All ICH Funding Corporation stock;
20. Reinsurance receivables owed to BML;
21. Mississippi Power and Light Co. Debenture;
22. Fund America Investors Corp. Bonds;
23. Vanguard American Finance ABS 93-C5;
24. All Certified Capital Corp. stock;
25. ▇▇▇▇▇ Muse Limited Partnership (Hatbrands L.P.);
26. ▇▇▇▇▇ Muse Limited Partnership (Hatbrands Montana L.P.);
27. Rights, claims or actions under the Modern/Western Agreement
and/or the Philadelphia American Agreement;
28. Receivable from BML for Capital and Surplus Retention Assets; and
29. All claims, choses and causes of action relating to the assets
transferred to Lone Star Liquidating Trust pursuant to the terms
of the Joint Plan and the Order.
Exhibit A-2
EXHIBIT B
[FORM OF FACE OF TRUST CERTIFICATE]
Beneficial Interest ("Trust Interest") in the
Lone Star Liquidating Trust Established Under the
Lone Star Liquidating Trust Agreement
Certificate No. Face Amount of Trust
Interests
T-___________ Represented by this Certificate
See Reverse for Description of Certain Terms,
Conditions and Restrictions on the Trust Interest
This certifies that _______________ is the registered holder of Trust
Interests in the face amount of ______________________ in the Trust established
under the Lone Star Liquidating Trust Agreement ("Trust Agreement"), dated as of
February ___, 1997, established by I.C.H. Corporation pursuant to the First
Amended Joint Plan of Reorganization in the Chapter 11 case styled In re I.C.H.
Corporation et al., Case No. 395- 36351-RCM-11 (the "Case"), in the United
States Bankruptcy Court for the Northern District of Texas, Dallas Division (the
"Court") as confirmed by the order of such Court entered on ___________, 1997
(as so confirmed, the "Joint Plan"), and accepted by the Managing Trustee for
the benefit of the Trust Beneficiaries. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement and the
Joint Plan, to which Trust Agreement and Joint Plan the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. All terms not specifically defined herein shall have the meanings set
forth in the Trust Agreement. Subject to the Trust Agreement and the limitations
set forth therein, including the payment of all fees related to transfers, the
transfer of Trust Interests represented by this Certificate is registerable in
the Trust Register kept by the Registrar and Transfer Agent upon surrender of
this Certificate for that purpose, duly endorsed by, or accompanied by a written
instrument of transfer satisfactory in form to the Managing Trustee and the
Registrar and Transfer Agent, duly executed by, the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing a like amount of Trust Interests will be issued to the
designated transferee or transferees; provided, however, that no Certificates
evidencing less than $1,000 shall be issued.
In Witness Whereof, this Certificates has been executed by the Managing
Trustee hereunto duly authorized.
Dated:
[Name of Managing Trustee], as Managing Trustee
for the Lone Star Liquidating Trust]
Exhibit B-1
Countersigned and Registered:
[Name of Registrar and Transfer Agent]
By:
Authorized Signature
Exhibit B-2
[FORM OF FACE OF TRUST CERTIFICATE]
Beneficial Interest ("Trust Interest") in the
Lone Star Liquidating Trust Established Under the
Lone Star Liquidating Trust Agreement
The Trust Interests represented by this Certificate represent beneficial
interests in the Trust established under the Trust Agreement and Joint Plan as
confirmed by the United States Bankruptcy Court, Northern District of Texas,
Dallas Division, by Order entered on _________________, 1997.
The Managing Trustee will furnish without charge to each holder who so
requests complete copies of the Trust Agreement and the Joint Plan. Such
requests should be made in writing to the Managing Trustee at her principal
office at:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
The record date for determining entitlement to distributions of Available
Cash, if any, from the Trust to Trust Interest holders listed in the Trust
Register shall be established pursuant to the Trust Agreement.
At the office or agency of the Managing Trustee maintained for such purpose
and in the manner and subject to the limitations provided in the Trust
Agreement, this Certificate may be exchanged for new Certificates evidencing a
like aggregate amount of Trust Interests. Upon due presentation for registration
of transfer of this Certificate at the above-mentioned office or agency and the
payment of all fees provided in the Trust Agreement related to such transfer,
and subject to the limitations set forth in the Trust Agreement, a new
Certificate or Certificates evidencing a like aggregate number of Trust
Interests will be issued to the transferee or transferees as provided in the
Trust Agreement. The Managing Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection with any
exchange or registration of transfer of this Certificate in addition to the fees
provided in the Trust Agreement.
The Managing Trustee or any agent of the Managing Trustee may deem and
treat the Person in whose name this Certificate is registered upon the Trust
Register as the absolute owner hereof for all purposes, and neither the Managing
Trustee nor any such agent shall be affected by any notice to the contrary until
changed in the Trust Register in accordance with the Trust Agreement.
The obligations and responsibilities of the Managing Trustee and
Supervisory Trustees with respect to the Trust Interest under the Trust
Agreement shall terminate upon the payment to holders of Trust Interests of all
amounts held in the Trust and required to be paid to them pursuant to the Trust
Agreement and, in any event, upon termination of the Trust.
Exhibit B-3
In the event of any omissions in the terms of this Certificate, or in the
event of any conflict between the terms of this Certificate and the terms of the
Trust Agreement, the terms of the Trust Agreement shall control.
-----------------------------------------
THE EXERCISE OF VOTING RIGHTS WITH RESPECT TO THE INTERESTS REPRESENTED BY
THE TRUST CERTIFICATES AND THE TRANSFER OF TRUST CERTIFICATES ARE SUBJECT TO
RESTRICTIONS SET FORTH IN THE TRUST AGREEMENT.
-----------------------------------------
THE TRUST INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATES SECURITIES
LAWS AND HAVE BEEN ISSUED PURSUANT TO THE EXEMPTION TO THE REGISTRATION
REQUIREMENTS THEREOF AFFORDED BY 11 U.S.A. ss. 1145. ACCORDINGLY, THIS
CERTIFICATE CAN ONLY BE SOLD OR OTHERWISE TRANSFERRED. PLEDGED OR HYPOTHECATED
PURSUANT TO THE PROVISIONS OF SUCH SECTION.
Exhibit B-4