EXHIBIT 4.7
KMART CREDITOR TRUST AGREEMENT
dated as of April 30, 2003
among
KMART CORPORATION,
THE OTHER AFFILIATED
DEBTORS PARTY HERETO
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
as Trustee
TABLE OF CONTENTS
ARTICLE I ESTABLISHMENT OF TRUST..............................................................................- 2 -
Section 1.1 Creation and Name........................................................................- 2 -
Section 1.2 Declaration of Trust.....................................................................- 2 -
Section 1.3 Purposes of Trust........................................................................- 3 -
Section 1.4 Trustee's Acceptance.....................................................................- 3 -
ARTICLE II DEFINITIONS........................................................................................- 3 -
Section 2.1 Certain Terms Defined in the Plan.......................................................- 3 -
Section 2.2 "Additional Deposit".....................................................................- 3 -
Section 2.3 "Allowed Claim".........................................................................- 3 -
Section 2.4 "Allowed Interest"......................................................................- 3 -
Section 2.5 "Bankruptcy Code".......................................................................- 4 -
Section 2.6 "Beneficiary List"......................................................................- 4 -
Section 2.7 "Beneficiaries".........................................................................- 4 -
Section 2.8 "Business Day"..........................................................................- 4 -
Section 2.9 "Cash"..................................................................................- 4 -
Section 2.10 "Causes of Action"......................................................................- 4 -
Section 2.11 "Claim".................................................................................- 4 -
Section 2.12 "Code"..................................................................................- 4 -
Section 2.13 "Debtors"...............................................................................- 4 -
Section 2.14 "Debtors' Estates"......................................................................- 4 -
Section 2.15 "Deferred Compensation Distributions"...................................................- 4 -
Section 2.16 "Designated Trust Recoveries"...........................................................- 4 -
Section 2.17 "Disputed Claim"........................................................................- 4 -
Section 2.18 "Disputed Interest".....................................................................- 4 -
Section 2.19 "Distribution Date".....................................................................- 4 -
Section 2.20 "Distribution Reserve Account"..........................................................- 4 -
Section 2.21 "Escrow Account"........................................................................- 5 -
Section 2.22 "Final Order"...........................................................................- 5 -
Section 2.23 "Initial Deposit".......................................................................- 5 -
Section 2.24 "Interest"..............................................................................- 5 -
Section 2.26 "Net Trust Recoveries"..................................................................- 5 -
Section 2.27 "New Holding Company"...................................................................- 5 -
Section 2.28 "New Operating Company".................................................................- 5 -
Section 2.29 "Plan"..................................................................................- 5 -
Section 2.30 "Pro Rata"..............................................................................- 6 -
Section 2.31 "Reorganized Debtors"...................................................................- 6 -
Section 2.33 "Securities Actions"....................................................................- 6 -
Section 2.34 "Terminated Plan Distributee"...........................................................- 6 -
(i)
Section 2.35 "Trust".................................................................................- 6 -
Section 2.36 "Trust Advisory Board"..................................................................- 6 -
Section 2.37 "Trust Assets"..........................................................................- 6 -
Section 2.39 "Trust Claim Defendant".................................................................- 6 -
Section 2.40 "Trust Distribution Date"...............................................................- 6 -
Section 2.41 "Trust Expenses"........................................................................- 6 -
Section 2.42 "Trust Recoveries"......................................................................- 7 -
Section 2.43 "Trustee"...............................................................................- 7 -
Section 2.44 "Trustee's Professionals"...............................................................- 7 -
ARTICLE III FUNDING OF THE TRUST..............................................................................- 7 -
Section 3.1 Initial Deposit..........................................................................- 7 -
Section 3.2 Additional Deposit.......................................................................- 7 -
ARTICLE IV TRUST CLAIMS.......................................................................................- 8 -
Section 4.1 Liquidation of Trust Claims..............................................................- 8 -
Section 4.2 Intervention.............................................................................- 8 -
Section 4.3 Trust Recoveries Distribution and Reserve................................................- 8 -
Section 4.4 Trust Claim Defendant Escrow............................................................- 10 -
ARTICLE V DISTRIBUTION OF TRUST ASSETS.......................................................................- 11 -
Section 5.1 Allowed Claims and Allowed Interests....................................................- 11 -
Section 5.2 Delivery of Distributions...............................................................- 12 -
Section 5.3 Undeliverable Distributions............................................................- 12 -
Section 5.4 Fractional Dollars......................................................................- 12 -
ARTICLE VI DISPUTED CLAIMS AND DISPUTED INTERESTS............................................................- 12 -
Section 6.1 Deposit into Reserve....................................................................- 12 -
Section 6.2 Distributions After Allowance...........................................................- 13 -
Section 6.3 No Partial Distributions................................................................- 13 -
Section 6.4 Trust Claims Pending....................................................................- 14 -
ARTICLE VII GENERAL POWERS, RIGHTS AND OBLIGATIONS OF THE TRUSTEE............................................- 14 -
Section 7.1 Appointment of Trustee..................................................................- 14 -
Section 7.2 Legal Title............................................................................- 14 -
Section 7.3 General Powers..........................................................................- 14 -
Section 7.4 Retention of Attorneys, Accountants and Other Professionals.............................- 16 -
Section 7.5 Co-Trustees or Separate Trustees........................................................- 17 -
Section 7.6 Compensation of Trustee and its Professionals...........................................- 17 -
Section 7.7 Standard of Care; Indemnification; Exculpation..........................................- 18 -
Section 7.8 Reliance by Trustee.....................................................................- 19 -
Section 7.9 Action Upon Instructions................................................................- 19 -
Section 7.10 Investment Obligations.................................................................- 19 -
Section 7.11 Annual Audited Financial Statements....................................................- 20 -
(ii)
Section 7.12 Tax Filings and Notices................................................................- 20 -
Section 7.13 Compliance with Securities Laws........................................................- 20 -
Section 7.14 Timely Performance.....................................................................- 21 -
Section 7.15 Consultation with the Trust Advisory Board.............................................- 21 -
Section 7.16 Resignation............................................................................- 21 -
ARTICLE VIII
THE TRUST ADVISORY BOARD............................................................................- 21 -
Section 8.1 Establishment of Trust Advisory Board...................................................- 21 -
Section 8.2 Composition; Replacement...............................................................- 21 -
Section 8.3 By-Laws.................................................................................- 21 -
Section 8.4 Litigation of Trust Claims..............................................................- 22 -
Section 8.5 Settlement of Trust Claims..............................................................- 22 -
Section 8.6 Advice and Direction to Trustee.........................................................- 22 -
Section 8.7 Investments.............................................................................- 22 -
Section 8.8 Removal of Trustee; Removal of Trust Advisory Board Member..............................- 22 -
Section 8.9 Appointment of Successor Trustee........................................................- 22 -
Section 8.10 Expenses...............................................................................- 22 -
Section 8.11 Standard of Care; Exculpation..........................................................- 23 -
Section 8.12 Termination of the Trust Advisory Board................................................- 23 -
ARTICLE IX
COORDINATION WITH REORGANIZED DEBTORS...............................................................- 23 -
Section 9.1 Access to Debtors and Reorganized Debtors...............................................- 23 -
ARTICLE X
RETENTION OF JURISDICTION...........................................................................- 24 -
ARTICLE XI
TERMINATION.........................................................................................- 24 -
ARTICLE XII
MISCELLANEOUS.......................................................................................- 24 -
Section 12.1 Notices................................................................................- 24 -
Section 12.2 Effectiveness..........................................................................- 26 -
Section 12.3 Intention of Parties to Establish Trust................................................- 26 -
Section 12.4 Investment Company Act.................................................................- 26 -
Section 12.5 Taxation...............................................................................- 26 -
Section 12.6 Counterparts...........................................................................- 26 -
Section 12.7 Governing Law..........................................................................- 26 -
Section 12.8 Headings...............................................................................- 27 -
(iii)
Section 12.9 Interpretative Provisions..............................................................- 27 -
Section 12.10 Severability..........................................................................- 27 -
Section 12.11 Amendments............................................................................- 27 -
Section 12.12 Non-transferability of Beneficial Interests; Interests Beneficial Only; No Voting
Rights; Successors..........................................................................- 27 -
Section 12.13 No Suits by Claimholders or Interestholders...........................................- 27 -
Section 12.14 Irrevocability........................................................................- 27 -
Section 12.15 Trust Continuance.....................................................................- 28 -
Section 12.16 Enforcement and Administration........................................................- 28 -
(iv)
(v)
(vi)
(vii)
KMART CREDITOR TRUST AGREEMENT
THIS TRUST AGREEMENT (the "Trust Agreement"), dated as of April 30,
2003, is entered into and executed by and among KMART CORPORATION, a Michigan
corporation, debtor and debtor-in-possession in the Chapter 11 Cases referred to
below ("Kmart"), the undersigned Affiliate Debtors (as defined in the Plan
referred to below), debtors and debtors-in-possession in such Chapter 11 Cases
(together with Kmart, collectively, the "Debtors", as hereinafter further
defined), as settlors, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as Trustee (the "Trustee"), and the
undersigned Reorganized Debtors (as defined below).
RECITALS:
WHEREAS, this Trust Agreement is executed to facilitate the
implementation of (a) the First Amended Joint Plan of Reorganization of Kmart
Corporation and Its Affiliated Debtors and Debtors-in-Possession, dated February
25, 2003 (as amended, modified or supplemented, the "Plan"), which Plan provides
for the establishment of the Kmart Creditor Trust (as defined below) created by
this Trust Agreement and the retention and preservation of the Trust Assets (as
defined in the Plan) by the Trustee, all for the benefit of (i) the holders of
Allowed Claims (as defined in the Plan) in the following Classes (as defined in
the Plan) if and to the extent that such holders of Allowed Claims are entitled
to share in Trust Recoveries (as defined below) in accordance with the terms of
the Plan: Prepetition Note Claimholders (as defined in the Plan) in Class 4,
each holder of Allowed Trade Vendor/Lease Rejection Claims (as defined in the
Plan) in Class 5, each holder of Allowed Other Unsecured Claims (as defined in
the Plan) in Class 6, each holder of Allowed General Unsecured Convenience Claim
(as defined in the Plan) in Class 7 who has elected to be treated as an Allowed
Trade Vendor/Lease Rejection Claimholder, each holder of an Allowed Trust
Preferred Obligation (as defined in the Plan) in Class 8, each holder of an
Allowed Subordinated Securities Claim in Class 10 (as such Classes are
designated in the Plan and the Claimholders (as defined in the Plan) in such
Classes being collectively referred to herein as the "Trust Recoveries
Claimholders") and (ii) the holders of Allowed Interests (as defined in the
Plan) pertaining to Existing Common Stock (as defined in the Plan) in Class 11
(as such Class is designated in the Plan and the Interestholders (as defined in
the Plan) in such Class being collectively referred to herein as the "Trust
Recoveries Interestholders") and (b) the other Articles of the Plan that deal
with the collection, liquidation, and distribution of the Trust Assets,
including the litigation of Trust Claims (as defined in the Plan), as required
by the Plan; and
WHEREAS, the Trust (as defined below) is organized for the primary
purposes of (x) holding and preserving the value of the Trust Assets for
distribution, (y) litigating Trust Claims, and (z) making distribution of Trust
Recoveries (as defined below), as set forth in the Plan; and
WHEREAS, the Trustee's activities, powers and duties are those
determined to be reasonably necessary to, and consistent with, accomplishment of
these purposes; and
WHEREAS, the Plan contemplates, among other things, the litigation and
settlement of Trust Claims and distribution of the net proceeds therefrom to the
Trust Recoveries Claimholders and to the Trust Recoveries Interestholders (the
Trust Recoveries Claimholders and the Trust Recoveries Interestholders are
hereinafter collectively referred to as the "Beneficiaries"), all as described
in greater detail in the Plan and in this Trust Agreement; and
WHEREAS, pursuant to the Plan, the Trust is being created to litigate
and settle Trust Claims on behalf, and for the benefit, of the Beneficiaries and
to make distributions to the Beneficiaries of Trust Recoveries and other Trust
Assets, in accordance with the Plan and this Trust Agreement; and
WHEREAS, under the terms of the Plan and the Confirmation Order (as
defined in the Plan), effective as of the Effective Date (as defined in the
Plan), the Debtors' Estates (as defined below) shall be deemed to have
irrevocably granted, transferred, conveyed, and delivered to the Trustee, on
behalf of, and for the benefit of, the Beneficiaries, control of, and all the
rights, title and interests in and to, the Trust Assets, with no reversionary
interest therein in favor of the Debtors and/or the Reorganized Debtors; and
WHEREAS, on April 22, 2003, the Bankruptcy Court (as defined in the
Plan) entered the Confirmation Order; and
WHEREAS, the Reorganized Debtors (as defined below) are joining in the
execution of this Trust Agreement as of the Effective Date in accordance with
the Plan;
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
ESTABLISHMENT OF TRUST
SECTION 1.1 CREATION AND NAME. In accordance with the Plan, there is
hereby created a trust which shall be known as the "Kmart Creditor Trust," which
is the Trust created pursuant to Article XI of the Plan.
SECTION 1.2 DECLARATION OF TRUST. In consideration of the confirmation
of the Plan under the Bankruptcy Code, the Debtors, the Reorganized Debtors and
the Trustee have executed this Trust Agreement and, effective on the Effective
Date of the Plan, in accordance with Article 11.2(a) of the Plan, the Debtors'
Estates are hereby deemed to have irrevocably assigned, transferred and
conveyed, to the Trustee, and to its successors and assigns, all the right,
title and interests of the Debtors and the Debtors' Estates in and to the Trust
Assets, with no reversionary interest whatsoever therein of the Debtors and the
Reorganized Debtors, to have and to hold unto the Trustee and its successors and
assigns forever, in trust nevertheless, under and subject to the
- 2 -
terms and conditions set forth in this Trust Agreement and in the Plan for the
benefit of the Beneficiaries and their successors and assigns permitted under
the Plan and this Trust Agreement, as provided for in the Plan and in this Trust
Agreement. The use and distribution of Trust Recoveries (including, without
limitation, Designated Trust Recoveries) shall be made in accordance with this
Trust Agreement and the Plan.
SECTION 1.3 PURPOSES OF TRUST. The Trust is organized for the primary
purposes of litigating and settling the Trust Claims transferred to it and
distributing to the Beneficiaries the proceeds of the Trust Claims and the Trust
Recoveries therefrom, along with all other Trust Assets, with no objective to
engage in the conduct of a trade or business. In furtherance of such purposes
with respect to the Trust Claims (subject to authorization by the Trust Advisory
Board), by its majority vote, the Trustee shall be responsible for pursuing,
litigating, settling or waiving all Trust Claims including, without limitation,
any causes of action, counterclaims and defenses which are transferred to the
Trust, and to be the representative of all Beneficiaries in all litigation
relating to Trust Claims, and to perform all obligations specified for the
Trustee under the Plan. In the event of any inconsistency between the recitation
of the duties and powers of the Trustee as set forth in the Trust Agreement and
as set forth in the Plan, the provisions of this Trust Agreement shall govern.
SECTION 1.4 TRUSTEE'S ACCEPTANCE. The Trustee accepts the trust imposed
on the Trustee by this Trust Agreement and agrees to observe and perform that
trust, on and subject to the terms and conditions set forth in this Trust
Agreement. In connection with and in furtherance of the purposes of the Trust,
the Trustee hereby expressly accepts the transfer of the Trust Assets, subject
to the provisions of the Confirmation Order, the Plan and this Trust Agreement,
and the Trustee hereby further expressly assumes, undertakes and shall control
the litigation of Trust Claims, subject to the terms of this Trust Agreement.
ARTICLE II
DEFINITIONS
SECTION 2.1 CERTAIN TERMS DEFINED IN THE PLAN. The capitalized terms
used but not defined in this Trust Agreement shall have the meanings given to
them in the Plan.
SECTION 2.2 "ADDITIONAL DEPOSIT" means funding that shall be made by
the Reorganized Debtors to the Kmart Creditor Trust after the Effective Date, in
the amount and to the extent required, if at all, by Article 11.3(d)(ii) and
Article 11.3(d)(iii) of the Plan.
SECTION 2.3 "ALLOWED CLAIM" has the meaning set forth in the Plan.
SECTION 2.4 "ALLOWED INTEREST" has the meaning set forth in the Plan.
SECTION 2.5 "BANKRUPTCY CODE" means 11 U.S.C. Sections 101-1330, as
amended.
- 3 -
SECTION 2.6 "BENEFICIARY LIST" has the meaning set forth in Section 5.1
hereof.
SECTION 2.7 "BENEFICIARIES" has the meaning set forth in the Recitals
hereof.
SECTION 2.8 "BUSINESS DAY" has the meaning set forth in the Plan.
SECTION 2.9 "CASH" has the meaning set forth in the Plan.
SECTION 2.10 "CAUSES OF ACTION" means any and all claims, actions,
causes of action, suits, accounts, controversies, agreements, promises, rights
to legal remedies, rights to equitable remedies, and rights to payment, whether
known, unknown, reduced to judgment, not reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured and whether asserted or assertable directly or
derivatively, in law, equity or otherwise, including, without limitation,
Avoidance Actions (as defined in the Plan) that are not Retained Actions (as
defined in the Plan) and Trust Claims.
SECTION 2.11 "CLAIM" has the meaning set forth in the Plan.
SECTION 2.12 "CODE" means the Internal Revenue Code of 1986, as
amended, and any successor thereto.
SECTION 2.13 "DEBTORS" has the meaning set forth in the Recitals
hereof.
SECTION 2.14 "DEBTORS' ESTATES" has the meaning set forth in the Plan.
SECTION 2.15 "DEFERRED COMPENSATION DISTRIBUTIONS" has the meaning set
forth in Section 4.4 hereof.
SECTION 2.16 "DESIGNATED TRUST RECOVERIES" has the meaning set forth in
the Plan.
SECTION 2.17 "DISPUTED CLAIM" has the meaning set forth in the Plan.
SECTION 2.18 "DISPUTED INTEREST" has the meaning set forth in the Plan.
SECTION 2.19 "DISTRIBUTION DATE" has the meaning set forth in the Plan.
SECTION 2.20 "DISTRIBUTION RESERVE ACCOUNT" means, individually and
collectively, one or more bank and/or other investment accounts established and
maintained by the Trustee, as shall be directed by the Trust Advisory Board,
into which the Trustee shall, in accordance with Section 5.3 and Section 6.1 of
this Trust Agreement, deposit undeliverable distributions and Trust Recoveries
that are not then distributable to a holder of a Disputed Claim or a Disputed
Interest and shall be held by the Trustee, pending a final determination as to
Allowance of such Disputed Claim or Disputed Interest.
- 4 -
SECTION 2.21 "ESCROW ACCOUNT" means, individually and collectively, one
or more bank and/or other investment accounts established and maintained by the
Trustee, as shall be directed by the Trust Advisory Board, into which the
Trustee shall, in accordance with Article 7.7 of the Plan and Section 4.4 of
this Trust Agreement, deposit all Deferred Compensation Distributions that would
be otherwise distributable for the account of Trust Claim Defendants pursuant to
Article 7.7 of the Plan (i.e., if such account holders were not Trust Claim
Defendants), the amount of which funds shall be determined by the Trustee in
accordance with Section 4.4 of this Trust Agreement, and which funds, in the
case of each Trust Claim Defendant, shall be held in escrow pending a final
determination of liability or non-liability in respect of the Trust Claim with
respect to such Trust Claim Defendant.
SECTION 2.22 "FINAL ORDER" has the meaning set forth in the Plan.
SECTION 2.23 "INITIAL DEPOSIT" means the funding to be made on the
Effective Date by Debtors and/or Reorganized Debtors to the Kmart Creditor
Trust, in accordance with Article 11.3(d)(i) and Article 11.3(d)(ii) of the
Plan.
SECTION 2.24 "INTEREST" has the meaning set forth in the Plan.
SECTION 2.25 "INVESTIGATIONS" has the meanings set forth in the
Disclosure Statement (as such term is defined in the Plan).
SECTION 2.26 "NET TRUST RECOVERIES" means the amount by which the
aggregate amount of Trust Recoveries exceeds the aggregate amount of (a) the
compensation paid to the Trustee pursuant to Section 7.6 below and reasonable
and necessary expenses incurred by the Trustee or to be incurred by the Trustee
(as estimated by the Trustee in consultation with the Trust Advisory Board and
including, without limitation, the fees and expenses of the Trustee's
Professionals) in fulfilling the obligations set forth in the Plan and this
Trust Agreement plus (b) the reasonable and necessary expenses incurred or to be
incurred by the Trust Advisory Board (as estimated by the Trust Advisory Board
and including, without limitation, the fees and expenses of any counsel and
other professionals retained directly by the Trustee Advisory Board, separate
from the Trustee's Professionals).
SECTION 2.27 "NEW HOLDING COMPANY" has the meaning set forth in the
Plan.
SECTION 2.28 "NEW OPERATING COMPANY" has the meaning set forth in the
Plan.
SECTION 2.29 "PLAN" has the meaning set forth in the Recitals hereof.
SECTION 2.30 "PRO RATA" has the meaning set forth in the Plan.
SECTION 2.31 "REORGANIZED DEBTORS" means, collectively, New Holding
Company, New Operating Company and the Debtors, in each case from and after the
Effective Date.
- 5 -
SECTION 2.32 "RETAINED ACTIONS" has the meaning set forth in the Plan.
SECTION 2.33 "SECURITIES ACTIONS" has the meaning set forth in the
Plan.
SECTION 2.34 "TERMINATED PLAN DISTRIBUTEE" has the meaning set forth in
Section 4.4 hereof.
SECTION 2.35 "TRUST" means the trust established pursuant to the
Article XI of the Plan and under this Trust Agreement.
SECTION 2.36 "TRUST ADVISORY BOARD" means the board that has been, or
is about to be, created pursuant to Article 11.4 of the Plan for the purpose of
either advising or, in the case of certain proposed actions, providing direction
or authorization to the Trustee (as required by the Plan and/or this Trust
Agreement) with respect to actions and decisions affecting the Trust.
SECTION 2.37 "TRUST ASSETS" means: (a) those assets irrevocably
assigned, transferred, conveyed and delivered to the Trust on the Effective Date
pursuant to Article 11.2 of the Plan, which are: (i) all Trust Claims, and (ii)
the Initial Deposit; (b) any Additional Deposit required, if at all, by Article
11.3(d)(ii) or Article 11.3(d)(iii) of the Plan; (c) all Trust Recoveries at any
time received by the Trustee in respect of the Trust Claims, including, without
limitation, all funds (if any) repaid to Debtors and/or Reorganized Debtors at
any time subsequent to the Effective Date on account of loans made by the
Debtors to certain of their senior management pursuant to the 2001 Retention
Program; and (d) all income at any time received by the Trustee in respect of
any of the foregoing.
SECTION 2.38 "TRUST CLAIMS" has the meaning set forth in the Plan.
SECTION 2.39 "TRUST CLAIM DEFENDANT" means any Person who is (a) a
defendant in any Cause of Action arising out of any Trust Claims that was
commenced by Debtors and that is pending as of the Effective Date, (b) a
defendant in any Cause of Action arising out of any Trust Claim that was
commenced by the Trustee at any time on or after the Effective Date or (c) is
identified by the Trustee in good faith on or before the Distribution Date as a
potential defendant in any Cause of Action arising out of the Trust Claims that
the Trustee shall or may commence, as determined by the Trustee based on
evidence relating to the Trust Claims then available to the Trustee.
SECTION 2.40 "TRUST DISTRIBUTION DATE" has the meaning set forth in
Section 4.3(c) hereof.
SECTION 2.41 "TRUST EXPENSES" means all reasonable costs, expenses and
fees paid or incurred or to be incurred (as estimated by the Trustee in
consultation with the Trust Advisory
- 6 -
Board) by the Trustee in the administration of the Trustee's duties or as
contemplated pursuant to this Trust Agreement, including, without limitation,
the compensation paid to and expenses incurred or to be incurred (as estimated
by the Trustee in consultation with the Trust Advisory Board) by the Trustee and
the expenses incurred or to be incurred by members of the Trust Advisory Board
(as estimated by the Trust Advisory Board), the fees and expenses of the
Trustee's Professionals and the fees and expenses of any counsel and other
professionals directly retained by the Trust Advisory Board (separate from the
Trustee's Professionals), all as provided for in this Trust Agreement.
SECTION 2.42 "TRUST RECOVERIES" means any and all proceeds received by
the Trust arising from a Trust Claim, including, without limitation, (a) the
prosecution to, and collection of, a final judgment with respect to a Trust
Claim, (b) the settlement or other compromise of a Trust Claim, and (c) all
funds recovered by the Trustee from the escrow established pursuant to Section
4.4 hereof. For the avoidance of doubt, Trust Recoveries do not include
Designated Trust Recoveries, except to the extent that any asset or property
that constitutes a part of Designated Trust Recoveries is expressly included
within this definition of Trust Recoveries.
SECTION 2.43 "TRUSTEE" means the trustee under the Trust, or any
successor, as designated by a majority vote of the Trust Advisory Board pursuant
to Article 11.4(f) of the Plan.
SECTION 2.44 "TRUSTEE'S PROFESSIONALS" has the meaning set forth in
Section 7.4.
ARTICLE III
FUNDING OF THE TRUST
SECTION 3.1 INITIAL DEPOSIT. In accordance with the Plan, the Initial
Deposit shall be funded by the Debtors and/or Reorganized Debtors by delivering
the full amount of the Initial Deposit to the Trustee on the Effective Date, in
immediately available funds. The Trustee shall use the Initial Deposit
consistent with the purposes of the Trust and subject to the terms and
conditions of the Plan and this Trust Agreement.
SECTION 3.2 ADDITIONAL DEPOSIT. In accordance with the Plan, the
Additional Deposit shall be funded by the Debtors and/or Reorganized Debtors
delivering to the Trustee, the amounts, in immediately available funds, and at
such times, if and to the extent required by Article 11.3(d)(ii) and Article
11.3(d)(iii) of the Plan. The Trustee shall use the Additional Deposit
consistent with the purposes of the Trust and subject to the terms and
conditions of the Plan and this Trust Agreement.
- 7 -
ARTICLE IV
TRUST CLAIMS
SECTION 4.1 LIQUIDATION OF TRUST CLAIMS.
(a) The Trustee shall take such steps as the Trustee deems
necessary to investigate, pursue, litigate, settle and/or compromise or abandon
the Trust Claims (provided that, any such litigation, settlement, compromise or
abandonment shall be authorized by the Trust Advisory Board, by its majority
vote), to reduce the Trust Claims to cash proceeds and to make distributions of
the cash proceeds to the Beneficiaries as required under the Plan and this Trust
Agreement. The Trustee's actions with respect to disposition of the Trust Claims
shall in all events be taken in a manner so as reasonably to maximize the value
of the Trust Claims.
(b) The Trustee may transfer, sell, dispose of, settle or
otherwise compromise or abandon the Trust Claims (or any of them) on the
authorization of the Trust Advisory Board, by its majority vote.
SECTION 4.2 INTERVENTION. On the Effective Date, and without having to
obtain any further order of the Bankruptcy Court, the Trustee is authorized to
intervene as plaintiff, movant or additional party, as appropriate, in any
Causes of Action (whether asserted in actions, adversary proceedings, contested
matters, avoidance actions or motions or otherwise which were filed prior to the
Effective Date), where the subject matter of any such Cause of Action involves a
Trust Claim; but the Trustee shall not be authorized to intervene with respect
to any Retained Action.
SECTION 4.3 TRUST RECOVERIES DISTRIBUTION AND RESERVE.
(a) DISTRIBUTIONS OF TRUST RECOVERIES. Prior to distribution
of any portion of the Trust Recoveries to any Beneficiaries, Trust Recoveries
shall be first paid (i) to the Trustee, in accordance with Section 7.6(a), for
the Trustee's compensation and reasonable and necessary expenses incurred
through the date of such distribution in fulfilling the Trustee's obligations
set forth in the Plan and in this Trust Agreement, and (ii) to the members of
the Trust Advisory Board, in accordance with Section 8.10, for their reasonable
and necessary expenses incurred through the date of such distribution in
fulfilling the obligations of the Trust Advisory Board set forth in the Plan and
in this Trust Agreement.
(b) DISTRIBUTIONS OF NET TRUST RECOVERIES. The Trustee shall
distribute Net Trust Recoveries as follows: first, to pay the Trust Expenses (in
addition to those paid in accordance with Section 4.3(a) above); and second, to
the Beneficiaries, their respective shares thereof as required by the Plan and
this Trust Agreement. For the purposes of this Section 4.3(b), the Initial
Deposit and any Additional Deposit shall not be included in the calculation of
Net Trust Recoveries distributable to any Beneficiaries on any Trust
Distribution Date, and shall not be distributed on any Trust Distribution Date
or otherwise, until such time as the Trustee and the
- 8 -
Trust Advisory Board have determined that all Trust Claims have been resolved
and/or will not be further pursued.
(c) TIME OF DISTRIBUTIONS. Distributions of Net Trust
Recoveries by the Trustee to Beneficiaries, in accordance with their respective
interests in the Trust as set forth in the Plan and in this Trust Agreement,
shall be made at least semi-annually, beginning with a date in the calendar
quarter that is not later than the end of the second calendar quarter after the
Effective Date (each, such date, a "Trust Distribution Date)"; provided that,
(i) the Trustee shall not distribute any Net Trust Recoveries to any
Beneficiaries in a particular Class prior to the earliest date on which the
Claimholders or Interestholders in such Class are entitled to receive Net Trust
Recoveries in accordance with the Plan, (ii) the Trustee shall not be required
to make any such semi-annual distribution if the Net Trust Recoveries and income
therefrom (if any) available for distribution to the Beneficiaries are not
sufficient, in the Trustee's discretion (after consultation with the Trust
Advisory Board) to justify incurring the Trust Expenses necessarily associated
with making distribution of monies, (iii) in connection with any interim (as
opposed to final) distribution, the Trustee shall retain at least the amount of
any funds remitted to the Trustee pursuant to Article 11.3(d)(i) and Article
11.3(d)(ii) of the Plan, (iv) with respect to distributions to Interestholders
in Class 11 holding Allowed Interests that cannot be economically distributed as
aforesaid, the Trustee shall divide such aggregate amount of distributions into
$50.00 increments and thereafter make such $50.00 distributions to
Interestholders who otherwise were entitled to, but did not receive, a
distribution under Article 5.11 of the Plan and who are randomly selected by
Trustee, and (v) concurrently with the termination of this Trust Agreement in
accordance with Article XI hereof below, the Trustee shall distribute to the
Beneficiaries, in accordance with Section 4.3(b) above, any amount of the
Initial Deposit or Additional Deposit that has not been expended by the Trustee
on Trust Expenses in the course of the winding up and final liquidation of the
Trust.
(d) DISTRIBUTION RESERVE ACCOUNT. The Trustee shall establish
the Distribution Reserve Account as of the initial Trust Distribution Date. The
Trustee shall deposit into the Distribution Reserve Account on each Trust
Distribution Date, pending resolution of Disputed Claims and/or pending a final
determination as to whether a Disputed Interest will become an Allowed Interest,
that portion of Trust Recoveries that would otherwise be distributable in
accordance with the Plan in respect of such Disputed Claims and such Disputed
Interest, if such Disputed Claim or Disputed Interest had then constituted an
Allowed Claim or an Allowed Interest entitled to receive Trust Recoveries in
accordance with the Plan. The amount of such deposits made by the Trustee into
the Distribution Reserve Account on any Distribution Date shall be in an amount
consistent with the Beneficiary List. The Trustee shall distribute the Net Trust
Recoveries on deposit in the Distribution Reserve Account to the holder of any
Disputed Claims and Disputed Class 11 Interests that become Allowed Claims or
Allowed Class 11 Interests (as applicable) only upon the Trustee's receipt of
written notice from Reorganized Debtors, in accordance with Section 5.1 below,
that any such Disputed Claim or Disputed Interest has become an Allowed Claim or
Allowed Interest, as applicable, and in accordance with the provisions of
Section 6.2 below.
- 9 -
SECTION 4.4 TRUST CLAIM DEFENDANT ESCROW. At least ten (10) Business
Days prior to the date on which the Debtors and/or the Reorganized Debtors will
terminate their existing deferred compensation plans in accordance with Article
7.7 of the Plan, the Debtors and/or the Reorganized Debtors shall deliver to the
Trustee a list of all individuals who will receive any of the funds that will be
distributed on account of the termination of such deferred compensation plans
(each, a "Terminated Plan Distributee"; and such funds being herein referred to
as "Deferred Compensation Distributions"), including the amount of Deferred
Compensation Distributions distributable to each Terminated Plan Distributee.
Notwithstanding anything to the contrary set forth in such Article 7.7 or
otherwise in the Plan, the Debtors and the Reorganized Debtors will not make any
Deferred Compensation Distributions to (a) any Terminated Plan Distributee who
is an actual Trust Claim Defendant as of the proposed date of distribution of
Deferred Compensation Distributions or (b) any other Terminated Plan Distributee
prior to the date that is thirty (30) days after the date on which the Trustee
has received such list of Terminated Plan Distributees, in order to permit the
Trustee adequate time to make a determination as to whether any of such other
Terminated Plan Distributees will or may become Trust Claim Defendants (as
determined by the Trustee in good faith, based on evidence relating to the Trust
Claims then available to the Trustee). On or before the expiration of such
thirty (30) day period, the Trustee shall deliver notice in writing to
Reorganized Debtors if the Trustee has designated additional Terminated Plan
Distributees as Trust Claim Defendants, advising Reorganized Debtors to that
effect, and the Trustee shall concurrently deliver such written notice to each
such Terminated Plan Distributee so designated as a Trust Claim Defendant.
Reorganized Debtors shall thereupon deliver to the Trustee all Deferred
Compensation Distributions that, but for the provisions of this Section 4.4,
would have otherwise been distributable to the Terminated Plan Distributees who
have been so designated as Trust Claim Defendants, to be held by the Trustee in
the Escrow Account in accordance with Article 7.7 of the Plan, pending a final
resolution, in the case of each Trust Claim Defendant, of the Trust Claim with
respect to such Trust Claim Defendant. If upon resolution of a Trust Claim with
respect to a Trust Claim Defendant (howsoever resolved, whether pursuant to a
final judgment rendered by the Court in which the Cause of Action related
thereto was pending or pursuant to an agreement between the Trustee and the
Trust Claim Defendant), such Trust Claim Defendant has any liability in respect
of any Trust Claim asserted against such Trust Claim Defendant, then all
Deferred Compensation Distributions held in the Escrow Account for the account
of such Trust Claim Defendant shall thereupon be deemed and shall constitute
Trust Recoveries, to the full extent of such Trust Claim liability (but without
prejudice to the Trustee's rights to seek recovery of the balance of such
liability (if any) in excess of Deferred Compensation Distributions held in the
Escrow Account for the account of such Trust Claim Defendant), and shall be
distributed to the Beneficiaries in accordance with this Trust Agreement and the
Plan, and any Deferred Compensation Distributions held in the Escrow Account for
the account of such Trust Claim Defendant in excess of such Trust Claim
liability shall be remitted by the Trustee to such Trust Claim Defendant as soon
as practicable thereafter, and shall be deemed received by such Trust Claim
Defendant in full discharge and satisfaction of such Trust Claim Defendant's
rights (if any) to receive Deferred Compensation Distributions.
- 10 -
ARTICLE V
DISTRIBUTION OF TRUST ASSETS
SECTION 5.1 ALLOWED CLAIMS AND ALLOWED INTERESTS. The Trustee shall
deliver to the Reorganized Debtors written notice of the first Trust
Distribution Date on which the Trustee intends to make the initial distribution
of any Net Trust Recoveries. As soon as practicable after the Reorganized
Debtors' receipt of such written notice, the Reorganized Debtors shall provide
to the Trustee a list of all Beneficiaries (by Class) who hold Allowed Claims
and Allowed Class 11 Interests, a list of holders of all Disputed Claims and
Disputed Class 11 Interests (by Class) whose Pro Rata share of Trust Recoveries
will be deposited by the Trustee into the Distribution Reserve Account in
accordance with Section 4.3(d) above, and the share (i.e., the proportion
determined in accordance with the Plan) in respect of each such Claim and
Interest (both Allowed and Disputed), including the address and the name of a
contact person (if known to the Reorganized Debtors) for each such Claimholder
and Interestholder (both Allowed and Disputed), all as then reflected on the
registry of claims maintained in the Debtors' Chapter 11 Cases (such list being
herein referred to as a "Beneficiary List"). The purpose of the Beneficiary List
is to enable the Trustee to calculate as of such initial Trust Distribution Date
hereunder the Pro Rata share of Trust Recoveries to be distributed to, or
deposited into the Distribution Reserve Account for the account of, each
Claimholder or Interestholder in each Class that is entitled under the Plan to
share in Trust Recoveries. The Reorganized Debtors shall similarly deliver to
the Trustee a revised, then current Beneficiary List as soon as practicable
after the Trustee delivers notice of its intent to make additional distributions
on any subsequent Trust Distribution Date, including a revised calculation of
the share (i.e., the proportion determined in accordance with the Plan) of Trust
Recoveries to be distributed to, or deposited into the Distribution Reserve
Account, for the account of, each Claimholder or Interestholder as provided for
above in this Section 5.1. If the Trustee or the Trust Advisory Board disagrees
with any of the information set forth on a Beneficiary List delivered by the
Debtors or Reorganized Debtors, then the Trustee shall so notify the Debtors or
the Reorganized Debtors (as applicable) as soon as practicable, and the Debtors
or the Reorganized Debtors (as applicable) and the Trustee shall cooperate and
attempt to resolve any such differences as expeditiously as possible. In making
distributions of Trust Recoveries to Beneficiaries in accordance with Section
5.2 below, the Trustee may, in the absence of manifest error, rely fully,
without inquiry, upon the Beneficiary List most recently delivered by the
Debtors or the Reorganized Debtors to the Trustee, and the Trustee shall be
fully exculpated from any and all liability of any kind or nature to any
Claimholder or Interestholder to the extent that the Trustee so relies upon any
such Beneficiary List in making distributions of Net Trust Recoveries. Without
limiting the generality of the exculpation of the Trustee provided for
hereinabove, the Trustee shall have no liability to any Claimholder or
Interestholder if a check payable to a Beneficiary in payment of such
Beneficiary's share of Net Trust Proceeds is delivered to a Beneficiary's
address listed on the then current Beneficiary List, but that is not the correct
address for such Beneficiary, and such check is not returned to the Trustee
and/or is cashed by a Person who is not an authorized agent of such Beneficiary.
Nothing contained in this
- 11 -
Trust Agreement, however, shall be deemed to limit or impair the right of any
Claimholder or Interestholder to challenge in the Bankruptcy Court the Debtors'
or the Reorganized Debtors' designation as Disputed any portion of a Claim or
Interest or the calculation of any Beneficiary's Share of Trust Recoveries to
which any Allowed Claim or Allowed Interest is entitled in accordance with the
Plan and this Trust Agreement.
SECTION 5.2 DELIVERY OF DISTRIBUTIONS. Distributions by the Trustee
shall be made to Beneficiaries at the addresses set forth in the Beneficiary
List most recently provided to the Trustee by the Debtors or the Reorganized
Debtors.
SECTION 5.3 UNDELIVERABLE DISTRIBUTIONS.
(a) If any Beneficiary's distribution that has been made by
the Trustee in accordance with Section 5.2 is returned to the Trustee as
undeliverable, no further distributions to such Beneficiary shall be made unless
and until the Trustee is notified by the Debtors, by the Reorganized Debtors or
by such Beneficiary of such Beneficiary's then current address, at which time
all missed distributions shall be made to such Beneficiary, without interest.
Pending the Trustee's receipt of such current address and subject to Section
5.3(b) below, all missed distributions shall be deposited by the Trustee into
the Distribution Reserve Account.
(b) All requests by Beneficiaries for undeliverable
distributions with respect to any Trust Distribution Date shall be made to the
Trustee in writing, at its address set forth in Section 12.1 below, on or before
six (6) months after the applicable Trust Distribution Date. After that date,
all unclaimed property relating to such missed distributions shall revert to the
Trust. Upon such reversion, the claim of any Beneficiary (and of any successor
to or any assignee of such Beneficiary permitted pursuant to the Plan and this
Trust Agreement) with respect to such property shall be discharged and forever
barred, notwithstanding any federal or state escheat laws to the contrary.
SECTION 5.4 FRACTIONAL DOLLARS. Notwithstanding anything to the
contrary contained in this Trust Agreement, the Trustee shall not be required to
make distributions or payments of fractions of dollars. Whenever any payment of
a fraction of a dollar under the Plan or this Trust Agreement would otherwise be
called for, the actual payment shall reflect a rounding of such fraction to the
nearest whole dollar (up or down), with half dollars or more being rounded up.
ARTICLE VI
DISPUTED CLAIMS AND DISPUTED INTERESTS
SECTION 6.1 DEPOSIT INTO RESERVE. Distributions of Trust Assets with
respect to Disputed Claims and Disputed Class 11 Interests shall be deposited
into the Distribution Reserve Account as set forth in Section 4.3(d) of this
Trust Agreement and consistent with Article 9.8 of the Plan. The amount
deposited shall be determined by the Trustee based upon each Beneficiary List
- 12 -
delivered to the Trustee, or as otherwise agreed to by the Debtors or the
Reorganized Debtors (as applicable) and the Trustee in accordance with Section
5.1 (in cases where the Trustee and/or the Trust Advisory Board disagreed with
any information contained in a Beneficiary List), in each case as set forth in
Section 4.3(d) of this Trust Agreement and consistent with the procedures set
forth in Article 9.8 of the Plan. The Trustee will also place in the applicable
Distribution Reserve Account any dividends, payments or other income received on
account of the property withheld in the Distribution Reserve Account, to the
extent that such property continues to be held in the Distribution Reserve
Account at the time such dividends and/or other income are received by the
Trustee. The Trustee may, in the Trustee's sole discretion, unless otherwise
instructed by the Trust Advisory Board, invest any Cash that is withheld in the
Distribution Reserve Account in a manner that will yield a reasonable net
return, taking into account the safety of the investment. Notwithstanding any
such investment and the addition to Trust Assets of any income earned in respect
thereof, nothing in this Trust Agreement shall be deemed to entitle the holder
of a Disputed Claim or a Disputed Interest to postpetition interest on such
Claim or Interest, in the event such Claim or Interest ultimately becomes an
Allowed Claim or an Allowed Interest.
SECTION 6.2 DISTRIBUTIONS AFTER ALLOWANCE.
(a) On the next Trust Distribution Date after the date when
the order or judgment of the Bankruptcy Court allowing all or part of a Disputed
Claim or a Disputed Interest becomes a Final Order, the Trustee will distribute
to the holders of Disputed Claims or Disputed Class 11 Interests that have
become Allowed any property in the Distribution Reserve Account that would have
been distributed to such Claim or Interest holders on the Trust Distributions
Dates on which distributions previously were made to Beneficiaries, if the
Disputed Claims and/or Disputed Class 11 Interests that have become Allowed had
been Allowed Claims and Allowed Class 11 Interests, respectively, on such
earlier Trust Distribution Dates. All distributions made under this Section 6.2
of the Trust Agreement on account of an Allowed Claim or Allowed Interest will
be made together with any dividends, payments or other distributions made on
account of, as well as subject to any obligations arising from, the distributed
property as if such Allowed Claim or Allowed Interest had been an Allowed Claim
or Allowed Interest on the Trust Distribution Dates on which distributions were
previously made to Beneficiaries.
(b) After (i) a Final Order has been entered, or other final
resolution has been reached with respect to all Disputed Claims and Disputed
Class 11 Interests, and (ii) the Securities Actions have been finally concluded,
whether pursuant to a final non-appealable judgment with respect thereto,
settlement thereof, or the withdrawal or dismissal thereof, any remaining
property held in the Distribution Reserve Account will be distributed to the
Beneficiaries in accordance with the Plan and this Trust Agreement.
SECTION 6.3 NO PARTIAL DISTRIBUTIONS. The Trustee shall not make any
partial distributions to any holder of any Disputed Claims or Disputed Class 11
Interests in any Class
- 13 -
pending resolution of such Disputed Claims or Disputed Class 11 Interests, as
applicable, provided that, the foregoing shall not limit, impair or otherwise
affect the right of such holder to receive, in accordance with the Plan and this
Trust Agreement, Net Trust Recoveries in respect of any other Claims or other
Class 11 Interests of such holder that are Allowed Claims or Allowed Class 11
Interests, as applicable.
SECTION 6.4 TRUST CLAIMS PENDING. Notwithstanding anything to the
contrary contained in the Plan or in this Trust Agreement, the Trust Advisory
Board may not authorize or direct the Trustee to pay, and the Trustee shall not
pay, any distribution to Beneficiaries who have or may have any liability to the
Trust with respect to a Trust Claim, which distribution may be paid, if at all,
only after the holder of such Claim or Interest has discharged its liability to
the Trust on account of such Trust Claim, by settlement or otherwise.
ARTICLE VII
GENERAL POWERS, RIGHTS AND OBLIGATIONS OF THE TRUSTEE
SECTION 7.1 APPOINTMENT OF TRUSTEE. Pursuant to Article XI of the Plan,
the Trustee shall become the Trustee on the Effective Date.
SECTION 7.2 LEGAL TITLE. The Trustee shall hold legal title to all
Trust Assets except that the Trustee may, upon approval by the Trust Advisory
Board, by its majority vote, cause legal title or evidence of title to any of
the Trust Assets to be held by any nominee or person, on such terms, in such
manner and with such power as the Trustee may determine advisable.
SECTION 7.3 GENERAL POWERS.
(a) Except as otherwise provided in the Plan or in this Trust
Agreement, and subject to the retained jurisdiction of the Bankruptcy Court as
provided for in the Plan, but without prior or further authorization, the
Trustee may control and exercise authority over the Trust Assets, over the
acquisition, management and disposition thereof and over the management and
conduct of the affairs of the Trust to the same extent as if the Trustee were
the sole owner of the Trust Assets in its own right, provided, however, that
such control and authority over the Trust Assets shall be subject to the
provisions of Section 7.3(b) and, in addition, in the discretion of the Trust
Advisory Board, either (a) the Trustee's delivery of a fiduciary bond or surety
issued by such insurance company or other firm, and in such amount, as shall be
reasonably acceptable to the Trust Advisory Board or (b) the designation by the
Trust Advisory Board of a Person to serve as a co-signatory with the Trustee on
such bank and/or other investment accounts maintained from time to time by the
Trustee, as shall be determined by the Trust Advisory Board. No Person dealing
with the Trust shall be obligated to inquire into the Trustee's authority in
connection with the acquisition, management or disposition of Trust Assets.
(b) In connection with the management and use of the Trust
Assets, subject to the
- 14 -
delivery of a fiduciary bond or surety or signature of a co-signatory on Trust
accounts, if and to the extent required by the Trust Advisory Board pursuant to
Section 7.3(a) above, and except as otherwise expressly limited in this Trust
Agreement, the Plan, or the Confirmation Order, the Trustee shall have, in
addition to any powers conferred on the Trustee by any other provision of this
Trust Agreement, and subject to the approval of the Trust Advisory Board, by its
majority vote, the power to take any and all actions as are necessary or
advisable to effectuate the purposes of the Trust, including, without
limitation, the power and authority:
(i) to accept the Trust Assets transferred and provided to the
Trust under this Trust Agreement and the Plan;
(ii) to distribute the proceeds from the liquidation of the
Trust Claims to Beneficiaries in accordance with the terms of the Plan and this
Trust Agreement;
(iii) to sell, convey, transfer, assign, liquidate, collect or
abandon Trust Claims, or any part thereof or any interest therein, on such terms
and for such consideration as the Trustee deems desirable or appropriate,
subject to authorization with respect thereto by the Trust Advisory Board, by
its majority vote;
(iv) to prosecute all Trust Claims and such other suits as may
be necessary, appropriate or incident to the purposes of the Trust, including,
without limitation, the prosecution of claims relating to the Investigations and
fraudulent transfer and other claims available under the Bankruptcy Code, or
otherwise, that are Trust Claims, but excluding any such claims that are
Retained Actions;
(v) to endorse the payment of notes or other obligations of
any person or to make contracts with respect thereto;
(vi) to engage in all acts that would constitute ordinary
course of business in performing the obligations of a trustee under a trust of
this type;
(vii) if authorized in writing by the Trust Advisory Board, to
remove all or any of the Trust Assets or the situs of administration of the
Trust from one jurisdiction to another jurisdiction at any time or from time to
time;
(viii) in connection with any property held under this Trust
Agreement that is distributable or payable to a minor, to transfer and pay over
all or any portion of the property to the minor, or to a guardian of the minor's
property, whenever appointed, without requiring ancillary guardianship, or to
the minor's parent or the person with whom the minor resides, or to any
custodian under any Uniform Gifts to Minors Act or Uniform Transfer to Minor Act
with power to select any person or trust company (including any fiduciary
hereunder) to be such custodian and with power to extend such custodianship to
age twenty-one (21) years, without any obligation to see to the use or
application of the property or to make inquiry with respect to any
- 15 -
other property available for the use of the minor, the receipt by such minor,
guardian, parent, person or custodian to be a complete discharge as to such
transfer or payment;
(ix) if authorized in writing by all members of the Trust
Advisory Board, to borrow sums of money, at any time and from time to time, for
periods of time and on terms and conditions from persons or corporations
(including any fiduciary hereunder) for purposes as may be deemed advisable, and
secure such loans by the pledge or hypothecation of any property held under this
Trust Agreement;
(x) to establish the funds, reserves and accounts (other than
investment accounts) within the Trust as deemed by the Trustee, in its
discretion, to be useful in carrying out the purposes of the Trust;
(xi) to ▇▇▇ and be sued and participate, as a party or
otherwise, in any judicial, administrative, arbitration or other proceeding;
(xii) if authorized in writing by the Trust Advisory Board, in
accordance with this Trust Agreement, to purchase insurance indemnifying the
Trustee and the members of the Trust Advisory Board and to indemnify (and
purchase insurance indemnifying) the employees, agents and representatives of
the Trust or the Trustee (including, without limitation, the Trustee's
Professionals), to the fullest extent that a corporation organized under the
laws of the Trust's domicile is from time to time entitled to indemnify its
directors, officers, employees, agents and representatives;
(xiii) to delegate any or all of the discretionary power and
authority herein conferred at any time with respect to all or any portion of the
Trust to any one or more reputable individuals or, in connection with
investments authorized by the Trust Advisory Board pursuant to Section 8.7, to
recognized institutional advisors or investment managers, in each case without
liability for any action taken or omission made because of such delegation,
except for such liability as is expressly provided for in this Trust Agreement;
(xv) to consult with the Debtors and/or the Reorganized
Debtors at such times and with respect to such issues relating to the conduct of
the Trust as the Trustee considers desirable; and
(xvi) to perform such other acts and undertake such other
conduct as the Trustee believes is necessary to carry out the purposes and
intent of this Trust.
(c) The Trustee shall not at any time, on behalf of the Trust
or any Beneficiaries, enter into or engage in any trade or business, and the
Trustee shall not use or dispose of any part of the Trust Assets in furtherance
of any trade or business.
SECTION 7.4 RETENTION OF ATTORNEYS, ACCOUNTANTS AND OTHER
PROFESSIONALS. The
- 16 -
Trustee shall, subject to the approval or direction of the Trust Advisory Board,
by majority vote thereof, retain the following professionals ("Trustee's
Professionals") to aid in the performance of its responsibilities pursuant to
the terms of the Plan and this Trust Agreement including, without limitation,
the litigation of Trust Claims and distribution of Trust Assets:
(a) Such law firm(s) as counsel to the Trustee and the Trust
as the Trustee may deem advisable to aid in the liquidation of the Trust Claims
and to perform such other functions as may be appropriate to carry out the
primary purposes of the Trust. The Trustee may commit the Trust to and shall,
subject to Section 7.6(b) hereof, pay such law firm(s) reasonable compensation
from the Trust Assets for services rendered and expenses incurred, which
expenses may include, without limitation, the fees and expenses of Persons
retained by such counsel to perform any services or otherwise assist in
connection with the prosecution of Trust Claims, including, without limitation,
expert witnesses and consultants. The Trustee may also engage such law firm(s)
on a contingent fee basis as permitted by applicable law;
(b) An independent public accounting firm to audit the
financial books and records of the Trust, to prepare and file all federal, state
and local tax returns and related tax forms on behalf of the Trust that the
Trustee is obligated to prepare, provide and file pursuant to Section 7.12
below, and to perform such other reviews and/or audits as the Trustee may deem
advisable to carry out the primary purposes of the Trust. The Trustee may commit
the Trust to and shall pay such accounting firm reasonable compensation from the
Trust Assets for services rendered and expenses incurred; and
(c) Such forensic accountants, experts, advisors, consultants,
investigators, appraisers, auctioneers or other professionals as are advisable
to carry out the purposes of the Trust. The Trustee may commit the Trust to and
shall pay all such Persons reasonable compensation from the Trust Assets for
services rendered and expenses incurred.
SECTION 7.5 CO-TRUSTEES OR SEPARATE TRUSTEES. In order to (and only to
the extent necessary to) meet any legal requirements of any jurisdiction in
which any of the Trust Assets may from time to time be located, the Trustee
shall have the power to appoint one or more Persons who have been expressly
approved by the Trust Advisory Board either to act as co-trustee jointly with
the Trustee of all or any part of the Trust Assets or to act as separate trustee
of all or any part of the Trust Assets and to vest in such Person or Persons, in
such capacity, such title to the Trust Assets or any part thereof, and such
rights, powers, duties, trusts or obligations as the Trust Advisory Board shall
determine at any time may be necessary for the Trustee to perform its duties
under this Trust Agreement, subject to such terms, conditions and limitations as
shall be determined in any case by the Trust Advisory Board.
SECTION 7.6 COMPENSATION OF TRUSTEE AND ITS PROFESSIONALS.
(a) The Trust Advisory Board shall negotiate with and
authorize the payment of reasonable compensation from the Trust Assets to the
Trustee (and to any co-trustee that may
- 17 -
be appointed pursuant to Section 7.5 above) for services rendered and expenses
incurred in fulfilling its duties pursuant to this Trust Agreement. For the
first six full months following the month in which the Effective Date occurs,
the Trustee shall receive compensation of $8,333 per month. The fee payable for
the month in which the Effective Date occurs shall be payable on the first day
of the month following the Effective Date, and shall be prorated based on a
$8,333 monthly fee and calculated for the actual number of days during the month
that the Trustee has served. In all other cases, the fee will be payable on the
first Business Day of the month (being the first day on which banking
institutions in the State of New York are not authorized or required by law or
regulation to be closed) following the month for which service has been
rendered. Six months following the Effective Date, and annually thereafter, the
Trust Advisory Board members and the Trustee shall negotiate the amount and
payment terms of the compensation to the Trustee for the following one-year
period. If no agreement is reached, the parties may seek the determination of
the Bankruptcy Court as to reasonable compensation. The compensation and
reimbursement of expenses of the Trustee shall be paid out of Trust Assets.
(b) On or before the last day of each month following the
month for which compensation is sought, each of the Trustee's Professionals
seeking compensation shall serve a monthly statement on the Trustee and the
Trust Advisory Board; provided, however, that failure of any of the Trustee's
Professionals to serve a monthly statement on the Trustee and Advisory Board for
any one or more months shall not waive or impair the right of such Trustee's
Professionals to subsequently seek compensation for all or any number of such
months in a later statement delivered to the Trustee and the Trust Advisory
Board. The Trustee and Trust Advisory Board will have fifteen (15) days from the
date such statement is received to review the statement and object to such
statement by serving a written objection on the Trustee's Professional setting
forth the precise nature of the objection and the amount at issue. At the
expiration of the fifteen (15) day period, the Trustee shall promptly pay out of
Trust Assets 100% of the amounts requested, except for the portion of such fees
and disbursements to which an objection has been made. The parties shall attempt
to consensually resolve objections, if any, to any monthly statement. If the
parties are unable to reach a consensual resolution of any such objection, the
party which received an objection to its fees may seek payment of such fees by
filing a motion with the Bankruptcy Court on proper notice to the Trustee and
the Trust Advisory Board.
SECTION 7.7 STANDARD OF CARE; INDEMNIFICATION; EXCULPATION. The Trustee
shall perform the duties and obligations imposed on the Trustee by this Trust
Agreement with reasonable diligence and care under the circumstances. The
Trustee shall not be personally liable to the Trust or to any Beneficiary (or
any successor of such entities) for any reason whatsoever, except for such of
its own acts as shall constitute willful misconduct, gross negligence, willful
disregard of the Trustee's duties or material breach of this Trust Agreement.
Except as aforesaid, the Trustee shall be defended, held harmless and
indemnified from time to time from the Trust Assets (but not from or by the
Beneficiaries or any of the parties released in the Plan), against any and all
losses, claims, costs, expenses and liabilities to which the Trustee may be
subject by reason of the Trustee's execution in good faith of the Trustee's
duties under this Trust Agreement. The Trustee's officers, employees, agents
(including, without limitation, the
- 18 -
Trustee's Professionals) and any co-trustees appointed pursuant to Section 7.5
above may be likewise defended, held harmless and indemnified upon authorization
of the Trust Advisory Board. Without limiting the generality of the foregoing,
the Trustee shall have no liability to any Beneficiary on account of the
Trustee's investment or non-investment of any Trust Assets or any losses with
respect to any such investments of Trust Assets, provided such investments are
made, or the Trustee's decision not to invest any Trust Assets in any case is
made, in accordance with the terms of this Trust Agreement. The Trustee shall
not be obligated to give any bond or surety or other security for the
performance of any of its duties, unless otherwise required by the Trust
Advisory Board pursuant to Section 7.3(a) above or otherwise ordered by the
Bankruptcy Court and, if so otherwise required or ordered, all costs and
expenses of procuring any such bond shall be deemed Trust Expenses.
SECTION 7.8 RELIANCE BY TRUSTEE. The 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 that the Trustee has no reasonable belief 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 itself that the same was given in good faith and without responsibility
for errors in delivery, transmission or receipt. In the absence of the Trustee's
willful misconduct, gross negligence, willful disregard of the Trustee's duties
or material breach of this Trust Agreement, the 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 Trustee may consult
with legal counsel and shall be fully protected in respect of any action taken
or suffered by the Trustee in accordance with the opinion of legal counsel
(whether or not written). The Trustee may at any time seek instructions from the
Bankruptcy Court concerning the acquisition, management or disposition of the
Trust Assets.
SECTION 7.9 ACTION UPON INSTRUCTIONS. If in performing the Trustee's
duties under this Trust Agreement, the Trustee is required to decide between
alternative courses of action, or the Trustee is unsure of the application of
any provision of this Trust Agreement or the Plan, then the Trustee may promptly
deliver a notice to the Trust Advisory Board requesting written instructions as
to the course of action to be taken by the Trustee. If the Trustee does not
receive such written directions within ten (10) Business Days after the Trustee
has delivered such notice, the Trustee may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
the Trustee shall deem advisable. If the Trustee does not receive direction from
the Trust Advisory Board within such ten (10) Business Day period or the Trustee
believes that a court order is necessary or advisable to protect the interests
of the Beneficiaries or to otherwise determine the Trustee's rights or duties in
any respect under this Trust Agreement, then the Trustee may apply to the
Bankruptcy Court for a determination as to the course of action to be taken by
the Trustee.
SECTION 7.10 INVESTMENT OBLIGATIONS. The Trustee shall invest and
reinvest the liquid
- 19 -
Trust Assets consistent with the obligations of a trustee under Bankruptcy Code
section 345 and otherwise pursuant to any Trust Advisory Board authorization in
accordance with Section 8.7. The Trustee shall not be liable in any way for any
loss or other liability arising from any investment, or the sale or other
disposition of any investment, made in accordance with this Section 7.10, except
for any such loss or liability arising from the Trustee's gross negligence,
willful misconduct or bad faith.
SECTION 7.11 ANNUAL AUDITED FINANCIAL STATEMENTS. The Trustee shall
make available to the Beneficiaries copies of the Trust's annual audited
financial statements prepared by the Trust's auditors for each fiscal year of
the Trust by making copies of such audited financial statements available on an
Internet website to be maintained by the Trustee for such purpose (and the
Trustee shall notify all Beneficiaries of the address of such Internet website),
except that, the Trustee shall discontinue such website and shall have no
obligation to make such copies of annual audited financial statements available
if the Trust Advisory Board at any time determines that the cost of continued
maintenance of such website is no longer in the best interests of the Trust.
SECTION 7.12 TAX FILINGS AND NOTICES. The Trustee shall prepare and
provide to, or file with, the appropriate taxing authorities and other parties
such notices, tax returns and other filings, including all federal, state and
local tax returns for the Trust, as may be required under the Code, the Plan, or
as may be required by applicable law of other jurisdictions including, if
required under applicable law, notices required to report interest or dividend
income ("Tax Reports"). To the extent required by applicable law and, if not so
required, then when specifically requested by a Beneficiary in writing, the
Trustee shall provide such Beneficiary with such tax information as is necessary
for the preparation by such Beneficiary of such Beneficiary's income tax return.
If such tax information is provided at the specific request of a Beneficiary
(and not as required by applicable law), then such Beneficiary shall pay a
reasonable fee to the Trustee, in an amount to be then determined by the
Trustee, together with all costs and expenses incurred by the Trustee in
providing such tax information to such Beneficiary. In connection with the
Trustee's performance of its duties pursuant to this Section 7.12, the Trustee
may require any Beneficiary to furnish to the Trustee its employer or taxpayer
identification number as assigned by the Internal Revenue Service, together with
such other information, returns or forms as the Trustee may determine are
required, and the Trustee may condition any distribution of Net Trust Recoveries
to any Beneficiary upon such receipt of such identification number, any other
information and returns and forms as are required for the Trustee to comply with
Internal Revenue Service requirements. The Trustee shall consult with the tax
department of New Holding Company, New Operating Company or Kmart, as
appropriate, in advance of issuing or filing any Tax Reports, and shall in good
faith consider (but shall have no obligation to accept or comply with) all
reasonable suggestions of such tax department. The Trustee shall cooperate with
and provide Reorganized Debtors with all information reasonably requested in
connection with tax matters of the Reorganized Debtors, all at the sole cost and
expense of Reorganized Debtors.
SECTION 7.13 COMPLIANCE WITH SECURITIES LAWS. If and to the extent
required by
- 20 -
applicable federal and/or state securities laws, the Trustee shall file with the
Securities and Exchange Commission and other applicable federal and state
governmental agencies the reports and other documents and take any other actions
necessary to comply with such federal or state securities laws.
SECTION 7.14 TIMELY PERFORMANCE. The Trustee will make continuing
efforts to prosecute or settle the Trust Claims, make timely distributions, and
not unduly prolong the duration of the Trust.
SECTION 7.15 CONSULTATION WITH THE TRUST ADVISORY BOARD. The Trustee
shall consult with the Trust Advisory Board regularly and at all such times when
the Trustee deems it necessary or appropriate in connection with carrying out
the purposes of the Trust and shall obtain approvals from the Trust Advisory
Board as required under the Plan and this Trust Agreement.
SECTION 7.16 RESIGNATION. The Trustee may resign as Trustee by giving
written notice of its resignation to the Trust Advisory Board. The Trustee shall
continue to serve as trustee for the shorter of (a) 90 days following the tender
of the notice of resignation and (b) until the appointment of a successor
Trustee shall become effective in accordance with Section 8.9 of this Trust
Agreement.
ARTICLE VIII
THE TRUST ADVISORY BOARD
SECTION 8.1 ESTABLISHMENT OF TRUST ADVISORY BOARD. On the Effective
Date, the Trust Advisory Board shall be established, using the procedures
described in the Article XI of Plan. The members of the Trust Advisory Board
shall disclose to the Trustee and all other members of the Trust Advisory Board
whether any general unsecured claim or equity interest (relating to the Debtors
or the Reorganized Debtors) that is held by them personally, by any relative or
by any entity with which they are employed or affiliated, has been sold,
transferred or otherwise assigned, disposed of or satisfied by any entity other
than the Trust.
SECTION 8.2 COMPOSITION; REPLACEMENT. The Trust Advisory Board shall be
comprised of four (4) members and the initial four (4) members shall be
designated in accordance with the procedures described in Article XI of the
Plan. In the case of an inability or unwillingness of any member of the Trust
Advisory Board to serve subsequent to his or her original appointment and
acceptance, such member shall be replaced by designation of the remaining
members of the Trust Advisory Board. The remaining members shall endeavor in
good faith and use all reasonable efforts to designate a replacement member who
holds Claims in the same Class as the member then being replaced. If any
position on the Trust Advisory Board remains vacant for more than thirty (30)
days, such vacancy shall be filled within fifteen (15) days thereafter by the
designation of the Trustee without the requirement of a vote by the other
members of the Trust Advisory Board. Each replacement member of the Trust
Advisory Board must be a Beneficiary of this Trust.
SECTION 8.3 BY-LAWS. The Trust Advisory Board shall govern its
proceedings through the adoption of by-laws, which the Trust Advisory Board may
adopt by majority vote. No provision of such by-laws shall supersede any express
provision of the Plan or of this Trust Agreement. Without limiting the
generality of the foregoing, the Trust Advisory Board by-laws shall provide that
all authorizations, directions and advice rendered by the Trust Advisory Board
to the Trustee
- 21 -
at any time pursuant to the Plan and this Trust Agreement shall be by majority
vote of the Trust Advisory Board members voting in any case and that at least
three (3) members of the Trust Advisory Board shall constitute a necessary
quorum required to vote on any matter to be voted upon by the Trust Advisory
Board.
SECTION 8.4 LITIGATION OF TRUST CLAIMS. The Trust Advisory Board may,
by majority vote, authorize the Trustee to file judicial or administrative
proceedings on Trust Claims as proposed by the Trustee or any member of the
Trust Advisory Board.
SECTION 8.5 SETTLEMENT OF TRUST CLAIMS. The Trust Advisory Board shall,
by majority vote, approve or reject all settlements of Trust Claims which the
Trustee or any member of the Trust Advisory Board may propose, but (i) no member
of the Trust Advisory Board may cast a vote with respect to any Trust Claim to
which it is a party, and (ii) the Trustee may seek Bankruptcy Court approval of
a settlement of a Trust Claim if the Trust Advisory Board fails to act on a
proposed settlement of the Trust Claim within thirty (30) days of receiving
notice of the proposed settlement by the Trustee or as otherwise deemed
necessary or advisable by the Trustee.
SECTION 8.6 ADVICE AND DIRECTION TO TRUSTEE. The Trust Advisory Board
shall provide advice, instruction and direction on matters arising in the
administration and in the disposition and distribution of Trust Assets, and in
the pursuit of Trust Claims, as requested by the Trustee, or as otherwise
specifically provided herein.
SECTION 8.7 INVESTMENTS. The Trust Advisory Board may, by majority
vote, authorize the Trustee to invest the corpus of the Trust in prudent
investments other than those described in section 345 of the Bankruptcy Code.
SECTION 8.8 REMOVAL OF TRUSTEE; REMOVAL OF TRUST ADVISORY BOARD MEMBER.
(a) The Trust Advisory Board may, by majority vote, remove the
Trustee in its discretion. If the requisite approval is not obtained, the
Trustee may be removed by the Bankruptcy Court for cause shown on a motion by
any member of the Trust Advisory Board.
(b) Any member of the Trust Advisory Board may be removed by
the Bankruptcy Court for cause shown on a motion by any member of the Trust
Advisory Board or by the Trustee.
SECTION 8.9 APPOINTMENT OF SUCCESSOR TRUSTEE. In the event of the death
(in the case of a Trustee that is a natural person), dissolution (in the case of
a Trustee that is not a natural person), resignation, incompetency or removal of
the Trustee, the members of the Trust Advisory Board shall, by majority vote,
designate a person to serve as successor Trustee. Such appointment shall specify
the date when such appointment shall be effective. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to the Bankruptcy
Court and to the retiring Trustee an instrument accepting the appointment and
shall additionally file with the Bankruptcy Court an affidavit demonstrating
that such Person is disinterested, as defined by Section 101(14) of the
Bankruptcy Code, and thereupon the successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee.
SECTION 8.10 EXPENSES.
(a) Each member of the Trust Advisory Board shall be entitled
to the reimbursement of the member's reasonable and necessary expenses in
carrying out his or her duties as a member of the Trust Advisory Board. The
reimbursement of expenses of the Trust Advisory Board members shall be paid out
of Trust Assets.
- 22 -
(b) On or before the last date of each month following the
month for which reimbursement is sought, each member of the Trust Advisory Board
shall serve upon the Trustee and the other members of the Trust Advisory Board a
monthly statement of expenses incurred in carrying out the member's duties. The
Trustee shall promptly pay 100% of the amounts requested.
SECTION 8.11 STANDARD OF CARE; EXCULPATION. Neither the Trust Advisory
Board nor any of its members, designees, counsel, financial advisors or any duly
designated agent or representatives of any such party shall be liable for the
act, default or misconduct of any other member of the Trust Advisory Board, nor
shall any member be liable for anything other than such member's own gross
negligence or willful misconduct. The Trust Advisory Board may, in connection
with the performance of its duties, and in its sole and absolute discretion,
consult with the Trustee's counsel and any other of the Trustee's Professionals
and/or with counsel and other professional advisors directly retained by the
Trust Advisory Board, and the Trust Advisory Board shall not be liable for
anything done or omitted or suffered to be done in accordance with the advice or
opinions of such professionals. If the Trust Advisory Board determines not to
consult with counsel, accountants or other professionals, it shall not be deemed
to impose any liability on the Trust Advisory Board, or its members and/or
designees.
SECTION 8.12 TERMINATION OF THE TRUST ADVISORY BOARD. Upon the
certification by the Trustee that all Trust Assets have been distributed,
abandoned or otherwise disposed of, the members of the Trust Advisory Board
shall resign their positions, whereon they shall be discharged from further
duties and responsibilities.
ARTICLE IX
COORDINATION WITH REORGANIZED DEBTORS
SECTION 9.1 ACCESS TO DEBTORS AND REORGANIZED DEBTORS. In furtherance
of the Order of the Bankruptcy Court entered on September 4, 2002, the Debtors
and the Reorganized Debtors shall make available to the Trustee reasonable
access during normal business hours, on reasonable notice, to personnel and
books and records of the Debtors and the Reorganized Debtors, (including,
without limitation, access to company documents and records gathered by counsel
in the course of the Investigations; documents produced by the Debtors to the
Securities and Exchange Commission, United States Attorney and/or to the U.S.
Congress; memoranda of witness interviews conducted by counsel in connection
with the Investigations; transcripts of depositions conducted in connection with
the Investigations; written materials reflecting presentations summarizing
findings of the Investigations; materials gathered and memoranda and outlines
generated in connection with preparing for depositions; any other materials
contained in the "Data Room" that was maintained for use by the Statutory
Committees at Kmart's headquarters in Troy, Michigan; and memoranda regarding
legal research concerning potential claims arising out of the Investigations and
any other information related to the Trust Claims that is reasonably requested
by the Trustee), all in order to enable the Trustee to perform the Trustee's
tasks under the Trust Agreement and the Plan; but the Debtors and the
Reorganized Debtors will not be required to make expenditures in response to the
requests determined by them to be unreasonable. The Debtors and the Reorganized
Debtors shall not be entitled to compensation or reimbursement (including
reimbursement for professional fees) with respect to fulfilling their
obligations as set forth in this section.
- 23 -
ARTICLE X
RETENTION OF JURISDICTION
Pursuant to the Plan and Confirmation Order, except as otherwise set
forth in the Plan, in the Confirmation and herein, the Bankruptcy Court shall
retain exclusive jurisdiction over:
(a) prosecution of or disputes concerning Trust Claims and any
motion to compromise or settle such disputes, except that, if it is determined
that the Bankruptcy Court does not have jurisdiction with respect to the
foregoing, or if the Trustee chooses to pursue any Trust Claim in another court
of competent jurisdiction, the Trustee will have authority to bring such action
in any other court of competent jurisdiction;
(b) disputes arising in connection with the interpretation,
implementation or enforcement of the Trust, including without limitation, the
reasonableness of a request to the Debtors and/or the Reorganized Debtors by the
Trustee for access pursuant to Section 9.1 and/or any expenditure related
thereto and any claims against the Trustee; and
(c) motions or objections regarding compensation and
reimbursement of expenses made by the Trustee or any professionals retained by
the Trustee pursuant to Article 11.3 of the Plan and Section 7.5 of this Trust
Agreement, including, without limitation, the ability of the Bankruptcy Court to
enter an order to show cause and commence a hearing to examine any issue
concerning the fees and expenses of the Trustee and the Trust Advisory Board or
any professionals retained by the Trustee.
ARTICLE XI
TERMINATION
The Trust shall continue for a term terminating on the earlier to occur
of (a) the third anniversary of the Effective Date, without prejudice, however,
to the rights of the Trust Advisory Board to extend such three (3) year term for
an additional finite term, conditioned upon the Trust not then becoming subject
to the Exchange Act and subject to the approval of the Bankruptcy Court, and (b)
approval by the Bankruptcy Court of termination of the Trust after distribution
of all of the Trust Assets. The Trustee shall at all times endeavor to liquidate
the Trust Assets expeditiously, and in no event shall the Trustee unduly prolong
the duration of the Trust. On termination of this Trust, the Trustee shall
advise the Bankruptcy Court in writing of its termination. Notwithstanding the
foregoing, after the termination of the Trust, the Trustee shall have the power
to exercise all the powers, authorities and discretions herein conferred solely
for the purpose of winding up the affairs of the Trust. On distribution of all
of the Trust Assets, the Trustee shall retain the books, records and files that
shall have been delivered to or created by the Trustee. At the Trustee's
discretion, all of such records and documents may be destroyed at any time after
two (2) years from the date of the final distribution of the Trust Assets.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 NOTICES. All notices, requests or other communications
required or permitted to be made in accordance with this Trust Agreement shall
be in writing and shall be delivered personally or by facsimile transmission or
mailed by first class mail or by overnight delivery service:
- 24 -
If to the Trustee, at:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as Trustee
c/o Huron Consulting Group
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
the Trust Advisory Board, at:
Euler American Credit Indemnity
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and
Pepsi Americas, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: W. ▇▇▇▇▇ ▇▇▇▇, Esq.
and
American Greetings Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
ESL Investments, LLC
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. S. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
with copies to:
Otterbourg, Steindler, Houston &
▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
- 25 -
If to the Debtors or Reorganized Debtors,
at:
Kmart Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
(Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇. ▇▇▇▇▇▇, Jr., Esq.
J. ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Notices sent out by facsimile transmission shall be deemed delivered
when actually received, and notices sent by first-class mail shall be deemed
delivered three (3) Business Days after mailing and notices sent by overnight
delivery service shall be deemed delivered the next Business Day after mailing.
SECTION 12.2 EFFECTIVENESS. This Trust Agreement shall become effective
on the Effective Date.
SECTION 12.3 INTENTION OF PARTIES TO ESTABLISH TRUST. This Trust
Agreement is intended to create a trust, and the Trust created hereunder shall
be governed and construed in all respects as a Trust.
SECTION 12.4 INVESTMENT COMPANY ACT. The Trust is organized as a
liquidating entity in the process of liquidation, and therefore should not be
considered, and the Trust does not and will not hold itself out as, an
"investment company" or an entity "controlled" by an "investment company", as
such terms are defined in the Investment Company Act.
SECTION 12.5 TAXATION. For United States federal income tax purposes,
it is intended that the Trust be classified as a liquidating trust under Section
301.7701-4 of the Procedure and Administration Regulations and as a grantor
trust subject to the provisions of Subchapter J, Subpart E of the Code that is
owned by its beneficiaries as grantors. Accordingly, the parties hereto intend
that, for United States federal income tax purposes, the Beneficiaries be
treated as if they had received a distribution of an undivided interest in the
Trust Assets and then contributed such interests to the Trust.
SECTION 12.6 COUNTERPARTS. This Trust Agreement may be executed in one
or more counterparts (via facsimile or otherwise), each of which shall be deemed
an original but which together shall constitute but one and the same instrument.
SECTION 12.7 GOVERNING LAW. This Trust Agreement shall be governed by,
construed under and interpreted in accordance with the laws of the State of New
York.
- 26 -
SECTION 12.8 HEADINGS. Sections, subheadings and other headings used in
this Trust Agreement are for convenience only and shall not affect the
construction of this Trust Agreement.
SECTION 12.9 INTERPRETATIVE PROVISIONS.
(a) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(b) All references to the Debtors, the Reorganized Debtors and
the Trustee pursuant to the definitions set forth in the Recitals hereto, or to
any other Person herein, shall include their respective successors and assigns.
(c) The words "hereof", "herein", "hereunder", "this Trust
Agreement" and words of similar import when used in this Trust Agreement shall
refer to this Trust Agreement as a whole and not any particular provision of
this Trust Agreement and as this Trust Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(d) The word "including" when used in this Trust Agreement
shall mean "including, without limitation".
SECTION 12.10 SEVERABILITY. Any provision of this Trust Agreement which
is prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions of this Trust Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable any such provision in any other jurisdiction.
SECTION 12.11 AMENDMENTS. This Trust Agreement may be amended from time
to time by written instrument executed by the Reorganized Debtors and the
Trustee, upon authorization by the Trust Advisory Board on majority vote, except
that, no such Trust Advisory Board authorization shall be required if the
Trustee's counsel advises the Trustee that any such amendment is required to
ensure that the Trust will not become subject to the Exchange Act.
SECTION 12.12 NON-TRANSFERABILITY OF BENEFICIAL INTERESTS; INTERESTS
BENEFICIAL ONLY; NO VOTING RIGHTS; SUCCESSORS.
(a) All interests of the Beneficiaries of this Trust shall be
uncertificated and non-transferable, except upon the death of a Beneficiary that
is a natural Person or by operation of law.
(b) The rights to a beneficial interest hereunder shall not
entitle any Beneficiary to (i) any title in or to the Trust Assets as such
(which title is vested in the Trustee) or to any right to call for a partition
or division of Trust Assets or to require an accounting, or (ii) any voting
rights with respect to the administration of the Trust and the actions of the
Trustee in connection therewith.
(c) This Trust Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and permitted assigns
hereunder.
SECTION 12.13 NO SUITS BY CLAIMHOLDERS OR INTERESTHOLDERS. No
Claimholder or Interestholder shall have any right by virtue of any provision of
this Trust Agreement to institute any action or proceeding in law or in equity
against any party other than the Trustee on or under or with respect to the
Trust Assets.
SECTION 12.14 IRREVOCABILITY. The Trust is irrevocable, but is subject
to amendment as provided for herein.
- 27 -
SECTION 12.15 TRUST CONTINUANCE. The death, dissolution, resignation,
incompetency or removal of the Trustee shall not operate to terminate the Trust
created by this Trust Agreement or to revoke any existing agency created under
the terms of this Trust Agreement or invalidate any action theretofore taken by
the Trustee. In the event of the resignation or removal of the Trustee, the
Trustee shall promptly (a) execute and deliver such documents, instruments and
other writings as may be requested by the Bankruptcy Court or reasonably
requested by the Trust Advisory Board or a successor Trustee to effect the
termination of the Trustee's capacity under this Trust Agreement and the
conveyance of the Trust Assets then held by the Trustee to the successor, (b)
deliver to the Bankruptcy Court or the successor Trustee all documents,
instruments, records and other writings related to the Trust as may be in the
possession of the Trustee and (c) otherwise assist and cooperate in effecting
the assumption of its obligations and functions by such successor Trustee.
SECTION 12.16 ENFORCEMENT AND ADMINISTRATION. The Bankruptcy Court
shall enforce and administer the provisions of this Trust Agreement, as set
forth in the Plan.
[SIGNATURE PAGE FOLLOWS]
- 28 -
IN WITNESS WHEREOF, the parties hereto have executed this Trust
Agreement or caused this Trust Agreement to be duly executed by their respective
officers thereunto duly authorized as of the date first above written.
KMART CORPORATION,
THE DEBTOR AFFILIATES AND
THE REORGANIZED DEBTORS
By: _________________________________
Name: ▇▇▇▇▇▇ ▇. Day
Title: Chief Executive Officer of Kmart
Corporation and authorized signatory
of each of the other Debtors and of
each of the Reorganized Debtors
_____________________________, AS TRUSTEE
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Trustee
- 29 -