EXHIBIT 1
LIQUIDATING TRUST AGREEMENT
This AGREEMENT AND DECLARATION OF TRUST is made by and between CONSUMERS
FINANCIAL CORPORATION, a Pennsylvania corporation (the "Company"), and
and (the "Trustees").
WHEREAS, the Company is in the process of a voluntary liquidation and
dissolution pursuant to a Plan of Liquidation and Dissolution (the "Plan")
adopted by the shareolders of the Company at a Special Meeting of Shareholders
held on January ___, 1998 (the Special Meeting ); and
WHEREAS, pursuant to the Plan, the Company shall not engage in any
business activities except to the extent necessary for preserving the values of
its assets, winding up its business affairs and distributing its assets in
accordance with the Plan; and
WHEREAS, pursuant to the terms of an Asset Purchase Agreement (the
"Agreement") dated as of December 30, 1997 by and among the Company, Consumers
Life Insurance Company, a wholly-owned subsidiary of the Company, Investors
Fidelity Life Assurance Corp., a wholly-owned subsidiary of Consumers Life
Insurance Company, and Life of the South Corporation ("LOTS"), the Company has
transferred to LOTS effective October 1, 1997, its inforce credit insurance
business and certain related assets in exchange for cash (the Sale of Assets),
and its credit insurance and fee income accounts, in exchange for cash to be
received over a five-year period; and
WHEREAS, the shareholders of the Company have approved the Sale of Assets
this Liquidating Trust Agreement at the Special Meeting and have authorized the
Company to make distributions, on behalf of the shareholders, to the Trustees,
subject to the limitations of this Trust;
NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company hereby grants, releases, assigns, transfers, conveys and delivers
to the Trustees all of the Company's right, title and interest in and to all
assets it currently owns, holds or in which it otherwise possesses any
interest, subject to the assumption by the Trustees of all of the Company's
liabilities and obligations, whether ascertained, unascertained or contingent,
in trust for the uses and purposes stated herein and subject to the terms and
provisions set forth below, and the Trustees hereby accept such assets and
such Trust and hereby assume such liabilities and obligations of the Company
subject to the terms and provisions set forth below.
ARTICLE 1
NAMES AND DEFINITIONS
1.1 Name. This Trust shall be known as the CFC Liquidating Trust (the
"Trust")
1.2 Definitions.
(a) Agreement or Agreement of Trust shall mean this instrument as
originally executed or as it may from time to time hereafter be
amended pursuant to the terms hereof.
(b) Beneficiaries shall mean the shareholders of the Company as
they appear in the records of the Company at the close of business
on the record date fixed by the Board of Directors for the
liquidation of the Company (the Final Record Date).
(c) Trust Corpus shall mean the property held from time to time in
the Trust by the Trustees, subject to all of the liabilities and
obligations assumed by the Trustees, under this Agreement.
ARTICLE 2
NATURE OF TRANSFER
2.1 Nature and Purpose of Trust, The Trust exists solely for the purposes
of holding, liquidating and disposing of any assets received by it and paying
or settling the ascertained, unascertained and contingent liabilities and
obligations of the Company and thereafter distributing the remaining Trust
Corpus to the Beneficiaries. In connection with such purposes, it is intended
that the Trust serve as a vehicle for the preservation and maintenance of the
Trust Corpus, with a view to its liquidation and not the conduct of a
continuing business. This Agreement is intended to create a trust, and to be
governed and construed in all respects as a trust. The Trust is not intended
to be, shall not be deemed to be and shall not be treated as a general
partnership, limited partnership, joint venture, corporation, joint stock
company or association, nor shall the Trustees or the Beneficiaries, or any of
them, for any purposes be, or be deemed to be or treated in any way whatsoever
to be, liable or responsible hereunder as partners or joint venturers. The
relationship of the Beneficiaries to the Trustees shall be solely that of
beneficiaries of a trust, and their rights shall be limited to those conferred
upon them by this Agreement. In no event shall any part of the Trust Corpus
revert or be distributed to the Company. Notwithstanding any other provision
hereof, the Trustees are authorized and empowered to take only such action as
is necessary or advisable to preserve the Trust Corpus pending its
distribution to the Beneficiaries, and the Trustees shall have no power or
authority to enter into or engage in the conduct of any trade or business in
respect of the Trust Corpus.
2.2 Instruments of Further Assurance. The Company and such persons as
shall have the right and power after the dissolution of the Company will, upon
request of the Trustees, execute, acknowledge, and deliver such further
instruments and do such further acts as may be necessary or proper to
effectively carry out the purposes of this Agreement, to confirm the transfer
to the Trustees of any property covered or intended to be covered hereby and
the assumption of all liabilities pertaining thereto, and to vest in the
Trustees, their successors and assigns, the estate, powers, instruments or
funds in trust hereunder.
2.3 Unknown Property and Liabilities. The Trustee shall be responsible for
only the property delivered to them or registered in their names and shall have
no duty to make, nor incur any liability for failing to make, any search for
unknown property. The Trustees shall be responsible for only those liabilities
and obligations of which they are informed and shall have no duty to make, nor
any liability for failing to make, any search for unknown liabilities.
2.4 Transferee Liability. In the event that any liability is asserted
against the Trustees as recipients of the property transferred to the Trustees
hereunder, on account of any claimed liability of or through the Company, the
Trustees may use such part of the Trust Corpus as may be reasonable for
contesting any such liability and in payment thereof, including reasonable
attorneys' fees incurred in connection therewith.
2.5 Limitation of Liability. No personal liability shall attach to the
Trustees or the Beneficiaries with respect to any liabilities or obligations
arising under this Agreement, and all persons dealing with the Trust must look
solely to the Trust Corpus for the enforcement of any claims against the Trust.
2.6 Assignment for Benefit of Beneficiaries. The Trustees hereby assign
tothe Beneficiaries the beneficial interest in all the Trust Corpus, and retain
only such incidents of ownership therein as are necessary to undertake the
actions and transactions authorized herein.
ARTICLE 3
BENEFICIARIES
3.1 Beneficial Interests. The beneficial interests of the Beneficiaries
shall be recorded by the Trustees or their agent on the books of the Trust. The
beneficial interests of the Beneficiaries will be evidenced only by the Trust's
records and there will be no certificates or other tangible evidence of such
interests. The beneficial interests of the Beneficiaries will not be
transferable expect pursuant to the laws of descent and distribution or by
operation of law.
If any conflicting claims or demands are made or asserted with respect to
beneficial interests herein, or if there should be any disagreement among the
transferees, assignees, heirs, representatives or legatees succeeding to all or
a part of the interest on any Beneficiary resulting in adverse claims or
demands being made in connection with such interest, then, in any of such
events, the Trustee shall be entitled, at their sole election, to refuse to
comply with any such conflicting claims or demands. In so refusing, the
Trustees may elect to make no payment or distribution in respect of the
beneficial interest involved, and in so doing the Trustees shall not be or
become liable to any of the parties for their failure or refusal to comply
with any of such or demands, nor shall the Trustees be liable for interest on
any funds which they may so withhold. The Trustees shall be entitled to
refrain and refuse to act until (i) the rights of
the adverse claimants have been adjudicated by a final judgment of a court of
competent jurisdiction from which there is no appeal pending and the applicable
appeal period shall have expired, (ii) all differences have been adjusted by
valid written agreement between all of such parties, and the Trustees shall
have been furnished with an executed counterpart of such agreement, or (iii)
there is furnished to the Trustees a surety bond or other security
satisfactory to the Trustees, as they shall deem appropriate, to fully
indemnify them as between all conflicting claims or demands.
3.2 Rights of Beneficiaries. The Beneficiaries shall take and hold their
beneficial interests subject to all the terms and provisions of this Agreement
of Trust. The interest of the Beneficiaries is hereby declared to, and shall be
in all respects, personal property. The Beneficiaries shall have no title to,
possession of, management of, or control of, the Trust Corpus except as herein
expressly provided. The whole title to all the Trust Corpus shall be vested in
the Trustees and the sole interest of the Beneficiaries shall be the rights and
benefits given to them under this Agreement of Trust.
3.3 Applicable Law. As to matters affecting the title, ownership,
transferability, or attachment of the interest of the Beneficiaries in the
Trust, the laws from time to time in force in the Commonwealth of Pennsylvania
shall govern except as otherwise herein specifically provided.
ARTICLE 4
DURATION AND TERMINATION OF TRUST
4.1 Duration. The existence of this Trust shall extend for such period as
is reasonably necessary to collect and distribute all of the assets of the
Trust Corpus; provided that the Trustees will make continuing efforts to
dispose of the Trust Corpus, make timely distributions, and not unduly prolong
the duration of the Trust.
4.2 Continuance of Trust for Winding Up. After the termination of the
Trust and for the purpose of liquidating and winding up the affairs of the
Trust, the Trustees shall continue to act as such until their duties have been
fully performed. Upon distribution of all the Trust Corpus, the Trustees shall
retain the books, records, shareholder lists, Beneficiary lists, and
certificates and other documents and files which shall have been delivered to
or created by the Trustees. At the Trustees' discretion, all of such records
and documents may, but need not, be destroyed at any time after three years
from the completion and winding up of the affairs of the Trust. Except as
otherwise specifically
provided herein, upon the discharge of all liabilities
of the Trust and final distribution of all of the Trust Corpus, the Trustees
shall have no further duties or obligations hereunder except to account as
provided in Section 5.3 hereof.
ARTICLE 5
ADMINISTRATION OF TRUST ESTATE
5.1 Payment of Claims, Expenses and Liabilities. The Trustees shall pay
from the Trust Corpus all claims, expenses, charges, liabilities, and
obligations of the Trust and all liabilities and obligations which the Trustees
specifically assume and agree to pay pursuant to this Agreement and such
transferee liabilities as the Trustees may be obligated to pay as transferees
of the assets comprising the Trust Corpus, and the costs, charges, and expenses
connected with or growing out of the execution or administration of the Trust
and such other payments and disbursements as are provided in this Agreement or
as may be determined to be a proper charge against the Trust Corpus by the
Trustees.
5.2 Interim Distributions. The Trust shall distribute at least annually
to the Beneficiaries its net income plus all net proceeds from the sale of
assets, except that the Trust may retain an amount of net income or net
proceeds reasonably necessary to maintain the value of the Trust Corpus or
to meet claims and contingent liabilities, including but not limited to tax
liabilities.
5.3 Final Distribution. If the Trustees determine that all claims, debts,
liabilities, and obligations of the Trust have been paid or discharged and that
the remaining assets of the Trust may be conveniently sold and the proceeds
distributed, or if the existence of the Trust shall terminate pursuant to
Section 4.1 hereof, the Trustees shall, as expeditiously as is consistent with
the conservation and protection of the Trust Corpus, sell the Trust Corpus and
distribute the proceeds to the Beneficiaries of record on the Final Record
Date.
5.4 Reports to Beneficiaries. As soon as practicable after the end of each
fiscal year of the Trust and after termination of the Trust, the Trustees shall
submit a written report to the Beneficiaries (which report shall constitute the
accounting of the Trust for such period) showing (i) the assets and liabilities
of the Trust at the end of such fiscal year or upon termination and the
receipts and disbursements of the Trustees for such fiscal year or period,
(ii) any changes in the Trust Corpus which have not been previously reported,
and (iii) any action taken by the Trustees in the performance of their duties
under this Agreement of Trust which they have not previously reported and
which, in their opinion, materially affects the Trust Corpus. The fiscal year
of the Trust shall end on December 31 of each year unless the Trustees deem it
advisable to establish some other date as the date on which the fiscal year of
the Trust shall end.
5.5 Federal Income Tax Information. As soon as practicable after the close
of each fiscal year, the Trustees shall mail to the Beneficiaries a statement
showing the dates and amounts of all distributions made by the Trustees, if
any, and such other information as is reasonably available to the Trustees
which may be helpful in determining the amount and character of items of
income, deductions and credits of the Trust that the Beneficiaries should
include in their federal income tax returns for the preceding year.
ARTICLE 6
POWERS OF AND LIMITATIONS UPON THE TRUSTEES
6.1 General Powers of and Limitations upon Trustees. The Trustees, subject
only to the specific limitations contained in this Agreement, shall have,
without further or other authorization, and free from any power or control on
the part of the Beneficiaries, full, absolute and exclusive power, control and
authority over the Trust Corpus and over the affairs of the Trust to the same
extent as if the Trustees were the sole owners thereof in their own right,
provided, however, that such power, control and authority shall only be
exercised to do such acts and things as in their sole judgment and discretion
are necessary or incidental to, or desirable for, the carrying out of any of
the purposes of the Trust. Any determination made in good faith by the
Trustees of the prrposes of the Trust or the existence of any power or
authority hereunder shall be conclusive and binding upon the Beneficiaries. In
construing the provisions of this Agreement, presumption shall be in favor of
the grant of powers and authority to the Trustees, except insofar as the
existence or exercise of any such power or authority would jeopardize the
status of the Trust as a grantor trust for federal income tax purposes. The
enumeration of any specific power or authority herein shall not be construed
as limiting the general powers or authority or any other specified power or
authority conferred herein upon the Trustees. As set forth in Section 2.1
hereof, the Trustees shall not at any time, on behalf of the Trust or the
Beneficiaries, enter into or engage in any trade or business, and no part of
the Trust Corpus shall be used or disposed of by the Trustees in furtherance
of any trade or business. This liquidation shall apply irrespective of whether
the conduct of any such business activities is deemed by the Trustees to be
necessary or proper for the conservation and protection of the Trust Corpus.
The Trustees shall invest the funds of the Trust Corpus in demand and time
deposits in banks or savings institutions, or temporary investments such as
short-term certificates of deposit or Treasury bills. The sole purpose of the
Trust shall be to collect all outstanding assets of the Company and to
liquidate the Trust Corpus and discharge the liabilities transferred to it
with no objective to continue or engage in the conduct of any trade or
business. In no event shall the Trustees receive any property, make any
distribution, satisfy or discharge any obligation, claim, liability, or
expense or otherwise take any action which is inconsistent with a complete
liquidation of the Company as that term is used and interpreted by Section 331
of the Code, the Treasury Regulations promulgated thereunder, and rulings,
decisions and determinations of the Internal Revenue Service or any court of
competent jurisdiction, or take any action that would jeopardize the status of
the Trust as a liquidating trust for federal income tax purposes within the
meaning of Treasury Regulation Section 301.7701-4(d). The Trust does not, and
will not, receive or retain cash in excess of a reasonable amount to meet
contingent liabilities. In addition, the Trust does not, and will not, receive
transfers of any unlisted stock of a single issuer that represents 80 percent
or more of the stock of such issuer, and the Trust does not, and will not,
receive transfers of any general partnership interests.
6.2 Specific Powers of Trustees. Subject to the provisions of Section 6.1
hereof, the Trustees shall have the following specific powers in addition to
any powers conferred upon them by any other Section or provision of this
Agreement of Trust or by virtue of any present or future statute or rule of
law, in all instances without any action or consent required by the
Beneficiaries; provided, however, that the enumeration of the following powers
shall not be considered in any way to limit or control the power of the
Trustees to act as specifically authorized by any other Section or provision
of this Agreement and to act in such a manner as the Trustees may deem
necessary or appropriate, in their sole discretion, to conserve, protect,
and administer the Trust Corpus or otherwise to confer upon the Beneficiaries
the benefits intended to be conferred upon them by this Agreement:
(a) To retain and set aside such funds out of the Trust Corpus as
the Trustees shall deem necessary or expedient to pay, or provide
for the payment of, (i) unpaid claims, liabilities, debts or
obligations of the Trust, (ii) contingencies, and (iii) the
expenses of administering the Trust Corpus;
(b) To do and perform any acts or things necessary or appropriate
for the conservation and protection of the Trust Corpus, and in
connection therewith to employ any agents or representatives as the
Trustees deem expedient and to pay reasonable compensation
therefor;
(c) To sell, transfer, assign, borrow against, pledge, hypothecate
or deal in any other manner with any of the Trust Corpus, in such
manner as the Trustees may deem advisable for any Trust purpose;
(d) To engage in, intervene in, prosecute, join, defend, compound,
settle, compromise, abandon or adjust by arbitration or otherwise,
any actions, suits, proceedings, disputes, claims, controversies,
demands or other litigation to enforce any instruments, contracts,
agreements, claims or causes of action relating to the Trust, the
Trust Corpus or the Trust's affairs, to enter into agreements
relating to the foregoing, whether or not any suit is commenced or
claim has accrued or been asserted and, in advance of any
controversy, to enter into agreements regarding arbitration,
adjudication or settlement thereof, all in the name of the Trust or
of the Company if otherwise required;
(e) To file any and all documents and take any and all such other
action as the Trustees, in their sole judgment, may deem necessary
in order that the Trust may lawfully carry out its purposes in any
jurisdiction:
(f) To change the name of the Trust; and
(g) To prepare and file, or assist in the preparation and filing of
federal and state tax returns and reports required to be filed on
behalf of the Trust or the Trustees.
ARTICLE 7
LIABILITY OF TRUSTEES AND BENEFICIARIES AND OTHER MATTERS
7.1 Generally. No Trustee shall be liable to the Trust or to any Trustee
or Beneficiary for any act or omission of any other Trustee, Beneficiary, or
agent of the Trust, or be held to any personal liability whatsoever in tort,
contract, or otherwise in connection with the affairs of the Trust, except only
that arising from his or her own bad faith, wilful misfeasance, gross
negligence, or reckless disregard of duty. No Trustee shall be liable except
for the performance of such duties and obligations as are specifically set
forth in this agreement, and no implied covenants or obligations shall be read
into this agreement against the Trustee. No Trustee shall be liable with
respect to any action taken or omitted to be taken by him or her in good
faith, in accordance with the direction of Beneficiaries having an aggregate
beneficial interest of more than 50% of the total beneficial interests in the
Trust. In addition to, and not in limitation of, the foregoing, no successor
Trustee shall be in any way liable for the acts or omissions of any Trustee or
agent of the Trust occurring prior to the date on which he or she became
Trustee.
7.2 Reliance by Trustees. The Trustees may consult with counsel, auditors
or other experts, and the advice or opinion of such counsel, auditors, or other
experts shall be full and complete personal protection to the Trustees in
respect of any action taken or suffered by them in good faith and in reliance
or in accordance with such advice or opinion. In discharging their duties,
Trustees may rely upon financial statements of the Trust represented to the
Trustees to be correct by the person or persons having charge of the Trust s
of account. The Trustees shall and be personally protected in acting, upon
any instrument or document of any sort whatsoever reasonably believed by them
to be genuine.
7.3 Limitation of Liability of Trustees and Beneficiaries. The Trustees,
in incurring any debts, liabilities, or obligations, or in taking or omitting
any other actions for or in connection with the Trust, are, and shall be deemed
to be, acting as Trustees of the Trust and not in their own individual
capacities. Except to the extent provided in Section 7.1 hereof, no Trustee
shall, nor shall any Beneficiary, be liable for any debt, claim, demand,
judgment, decree, liability, or obligation of any kind of, against, or with
respect to the Trust, arising out of any action taken or omitted for or on
behalf of the Trust, and the Trust shall be solely liable therefor, and resort
shall be had solely to the Trust Corpus for the payment or performance thereof.
A Beneficiary shall be entitled to pro rata indemnity from the Trust Corpus,
if, contrary to the provisions hereof, the Beneficiary shall be held to any
such personal liability.
7.4 Express Exculpatory Clauses in Instruments. As far as practicable, the
Trustees shall cause any written instrument creating an obligation of the Trust
to include a reference to this Agreement and to provide that neither the
Beneficiaries nor the Trustees shall be liable thereunder and that the other
parties to such instrument shall look solely to the Trust Corpus for the
payment of any claim thereunder or the performance thereof; provided, however,
that the omission of such provision from any such instrument shall not render
the Beneficiaries or any Trustee liable nor shall the Trustees be liable to
anyone for such omission.
7.5 Indemnification of Trustees.
(a) Each Trustee shall be indemnified from the Trust Corpus
against any loss, liability, expense (including attorney's fees and
costs), or damage which such Trustee may incur or sustain by reason of
being or having been a Trustee of the Trust or for performing any
functions incidental to such service; provided, however, that the
foregoing shall not relieve such person of liability for bad faith,
willful misfeasance, gross negligence, or reckless disregard of duty.
(b) Indemnification under paragraph (a) of this Section 7.5 shall
be made by the Trust as authorized in the specific case unless a
determination has been mde that indemnification of the Trustee is
improper in the circumstances because he or she has not met the
applicable standards of conduct. Such determination shall be made by
independent legal counsel (who may be counsel to the Trust) in a
written opinion.
(c) Expenses incurred in connection with a civil, criminal,
administrative, or investigative action, suit, or proceeding, or threat
thereof, may be paid by the Trust in advance of the final disposition of
such action, suit, or proceeding upon receipt of an undertaking by or on
behalf of the Trustee to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Trust
as authorized herein.
(d) The indemnification provided in this Section 7.5 shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any other agreement or otherwise, both as to action as
Trustee and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a Trustee and
shall inure to the benefit of the heirs, executors, and administrators
of such person.
(e) The Trust shall have the power to purchase and maintain at the
expense of the Trust insurance on behalf and for the benefit of any
person who is or was a Trustee of the Trust against such person as
Trustee, whether or not the Trust should have the power to indemnify
such person against such liability under the provisions of this
Section 7.5.
ARTICLE 8
PROTECTION OF PERSONS DEALING WITH THE TRUSTEES
8.1 Reliance upon Acts of Trustees. Any act of a Trustee purporting to be
done in his or her capacity as such shall, as to any persons dealing with such
Trustee, be conclusively deemed to be within the purpose of this Trust and
within the powers of the Trustee. As to any matter requiring or involving
action by the Beneficiaries, any person dealing with a Trustee shall be fully
protected in relying upon the Trustee's certificate setting forth the facts
concerning the calling of any meeting of the Beneficiaries, the giving of
notice thereof, and the action taken at such meeting, including the aggregate
beneficial interests of the Beneficiaries taking such action.
ARTICLE 9
COMPENSATION OF TRUSTEES
9.1 Amount of Compensation. In lieu of commissions or other compensation
fixed by law for trustees, the Trustees shall be entitled to receive reasonable
fees as compensation for their services as Trustees.
9.2 Dates of Payment. The compensation payable to the Trustees pursuant to
the provisions of Section 9.1 hereof shall be paid monthly or at such other
times as the Trustees may determine.
9.3 Expenses. The Trustees shall be reimbursed from the Trust Corpus for
all expenses reasonably incurred in accordance with this Agreement.
ARTICLE 10
CONCERNING THE TRUSTEES
10.1 Number and Qualification. Subject to the provisions of Section 10.3
hereof relating to the period pending the appointment of a successor Trustee,
there shall be at least one Trustee of the Trust.
10.2 Resignation and Removal. Any Trustee may resign and be discharged
from the Trust hereby created by giving written notice thereof to the
Beneficiaries. Such resignation shall become effective on the day specified in
such notice or the appointment of such Trustee's successor and such successor's
acceptance of such appointment, whichever is earlier, without need for prior
accounting. Any Trustee may be removed at any time, with or without cause, by
vote of Beneficiaries holding more than 50% of the total beneficial interests
in the Trust.
10.3 Appointment of Successor. Should at any time a Trustee resign or be
removed, or die or become incapable of action, or be adjudged bankrupt or
insolvent, a vacancy shall be deemed to exist and a successor shall be
appointed by any remaining Trustee. If any vacancy is not filled by any
remaining Trustee within 90 days, or if there is no remaining Trustee, the
Beneficiaries may, pursuant to Article 12 hereof, appoint a successor Trustee
or Trustees. If the Beneficiaries have not filled all vacancies to be filled
by them within 60 days after they have the authority to do so pursuant to this
Section 10.3, a Beneficiary may apply to a court of competent jurisdiction in
accordance with Pennsylvania law to fill such vacancies.
10.4 Acceptance of Appointments by Successor Trustee. Any successor
Trustee appointed hereunder shall execute an instrument accepting such
appointment hereunder and shall deliver one counterpart thereof to each other
Trustee and, in the case of a resignation, to the retiring Trustee.
Thereupon such successor Trustee shall, without any further act, become vested
with all the estates, properties, rights, powers, trusts, and duties of his or
her predecessor in the Trust hereunder with like effect as if originally named
herein.
10.5 Bonds. Unless a bond is required by law, no bond shall be required of
the original Trustees hereunder. Unless required by a Trustee prior to a
successor Trustee's acceptance of an appointment as such pursuant to Section
10.4 hereof, or unless a bond is required by law, no bond shall be required of
any successor Trustee hereunder. If a bond is required by law, no surety or
security with respect to such bond shall be required unless required by law or
unless required by a Trustee in the case of a successor Trustee.
ARTICLE 11
CONCERNING THE BENEFICIARIES
11.1 Evidence of Action by Beneficiaries. Whenever in this Agreement it is
provided that a Beneficiary may take any action (including the making of any
demand or request, the giving of any notice, consent, or waiver, the removal of
a Trustee, the appointment of a successor Trustee, or the taking of any other
action), the fact that at the time of taking any such action such Beneficiary
having joined therein may be evidenced (i) by any instrument or any number of
instruments of similar tenor executed by a Beneficiary in person or by agent or
attorney appointed in writing, or (ii) by the record of the Beneficiary voting
in favor thereof at any meeting of Beneficiaries duly called and held in
accordance with the provisions of Article 12 hereof.
11.2 Limitation upon Suits by Beneficiaries. No Beneficiary shall have any
right by virtue of any provision of this Agreement to institute any action or
proceeding at law or in equity against any party other than the Trustees upon
or with respect to the Trust Corpus or the assets relating to or forming part
of the Trust Corpus and the Beneficiaries do hereby waive any such right,
unless Beneficiaries having an aggregate beneficial interest of more than 50%
of the total beneficial interests in the Trust shall have made written request
upon the Trustees to institute such action or proceeding in their own names
as Trustees hereunder and shall have offered to the Trustees reasonable
indemnity against the costs and expenses to be incurred therein or thereby,
and the Trustees for 30 days after their receipt of such notice, request, and
offer of indemnity shall have failed to institute any such action or
proceeding.
11.3 Requirement of Undertaking. The Trustees may request any court to
require, and any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Trustees for any action taken or omitted by them as Trustees, the filing by
any party litigant in such suit of an undertaking to pay the costs of such
suit, and such court may in its discretion assess reasonable costs, including
reasonable attorney's fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; provided, that the provisions of this Section 11.3 shall not
apply to any suit by the Trustees and such undertaking shall not be requested
by the Trustees or otherwise required in any suit by any Beneficiary or group
of Beneficiaries having an aggregate beneficial interest of more than 25% of
the total beneficial interests of the Trust.
ARTICLE 12
MEETING OF BENEFICIARIES
12.1 Purpose of Meetings. A meeting of the Beneficiaries may be called at
any time and from time to time pursuant to the provisions of this Article 12
for taking any action which the terms of this Agreement permit having a
specified aggregate beneficial interest to take either alone or with the
Trustees or with any other Beneficiary or Beneficiaries.
12.2 Meeting Called by Trustees. The Trustees may at any time call a
meeting of the Beneficiaries to be held at such time and at such place within
the Commonwealth of Pennsylvania (or elsewhere if so determined by the
Trustees) as the Trustees shall determine. Written notice of every meeting of
the Beneficiaries shall be given by the Trustees (except as provided in Section
12.3 hereof), which written notice shall set forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
and shall be mailed not more than 60 days nor less than ten days before such
meeting is to be held to all of the Beneficiaries of record not more than 60
days before the date of such meeting, such record date to be fixed by the
Trustees. The notice shall be directed to the Beneficiaries at their
respective addresses as they appear in the records of the Trust.
12.3 Meeting Called Upon Request of Beneficiary. Except as hereinafter
provided in this section 12.3, within 30 days after written request to the
Trustees by Beneficiaries having an aggregate beneficial interest of more than
50% of the total beneficial interests in the Trust to call a meeting of all the
Beneficiaries, which written request shall specify in reasonable detail the
action proposed to be taken, the Trustees shall proceed under the provisions of
Section 12.2 hereof to call a meeting of the Beneficiaries, and if the Trustees
fail to call such a meeting within such 30 day period then such meeting may be
called by Beneficiaries having an aggregate beneficial interest of more than
50% of the total beneficial interests in the Trust or by their designated
representative or representatives. If the purpose of the meeting is to fill one
or more vacancies in accordance with Section 10.3 hereof, any Beneficiary may
make written request to the Trustees to call such meeting and the Trustees
shall do so forthwith; if there are no Trustees, any Beneficiary may call such
a meeting. If the purpose of the meeting is other than to fill one or more
vacancies and if there are no Trustees, Beneficiaries having an aggregate
beneficial interest of more than 50% of the total beneficial interests in the
Trust, or their designated representative or representatives, may call such
meeting without first applying to the Trustees or waiting the 30-day period
provided for in the first sentence of this Section 12.3. Any meeting called by
one or more Beneficiaries shall be subject to the same notice requirements as
are set forth in Section 12.2 hereof, and the Beneficiary or Beneficiaries
calling the meeting shall fix the record date therefor.
12.4 Persons Entitled to Vote at Meeting of Beneficiaries. Each
Beneficiary on the record date shall be entitled to vote at a meeting of the
Beneficiaries either in person or by proxy duly authorized in writing and shall
have one vote for each share of Common Stock of the Company previously
registered on the books of the Trust in the name of such Beneficiary. The
signature of the Beneficiary on such written authorization need not be
witnessed or notarized.
12.5 Quorum. At any meeting of Beneficiaries, the presence of
Beneficiaries having an aggregate beneficial interest sufficient to take action
on any matter for which such meeting was called shall be necessary to consti-
tute a quorum.
12.6 Conduct of Meetings. The Trustees shall appoint the Chairman and the
Secretary of the meeting. The vote upon any resolution submitted to any meeting
of Beneficiaries shall be by written ballot.
12.7 Record of Meeting. A record of the proceedings of each meeting of
Beneficiaries shall be prepared by the Secretary of the meeting. The record
will be signed and verified by the Secretary of the meeting and shall be
delivered to the Trustees to be preserved by them. Any record so signed and
verified shall be conclusive evidence of all the matters therein stated.
ARTICLE 13
AMENDMENTS
13.1 With Consent of Beneficiaries. At the direction or with the consent
(evidenced in the manner provided in Section 11.1 hereof) of Beneficiaries
having an aggregate beneficial interest of more than 50% of the total
beneficial interests in the Trust, the Trustees shall promptly make and
execute a declaration amending this Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or amendments hereto: provided, however, that no such
amendment shall permit the Trustees hereunder to engage in any activity
prohibited by Section 2.1 or 6.1 hereof, or adversely affect the
Beneficiaries' right to receive their pro rata shares of the Trust Corpus at
the time of distribution.
13.2 Without Consent of Beneficiaries. The Trustees may from time to time
and at any time make or execute a declaration amending this Agreement without
the consent of the Beneficiaries pursuant to Section 13.1 hereof for the pur-
pose of (a) curing any ambiguity or correcting or supplementing any provision
contained herein or in any amendment to this Agreement which may be defective or
inconsistent with any other provision contained herein or in any amendment to
this Agreement, (b) making such other provisions or modifications in regard to
matters or questions relating to this Agreement or any amendment hereto,
provided the same shall not adversely affect the interests of the Benefi-
ciaries, or (c) having the Trust continue to qualify as a "liquidating
trust" for federal income tax purposes.
13.3 Notice and Effect of Amendment. Promptly after the execution by the
Trustees of any such declaration of amendment, the Trustees shall send a
summary or copy of the amendment to each Beneficiary. Upon the execution of
any such declaration of amendment by the Trustees, this Agreement shall be
deemed to be modified and amended in accordance therewith.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Filing Documents. This Agreement shall be filed in such governmental
office or offices, if any, and in such other office or offices as the Trustees
way determine to be necessary or desirable. A copy of this Agreement and all
amendments thereof shall be filed in the office of the Trustees and shall be
available during regular business hours upon reasonable notice for inspection
by any beneficiary or his or her duly authorized representative. The Trustees
shall file each amendment to this Agreement in the same place where the
Original Agreement is filed or recorded. The Trustees shall file or record any
instrumeent which relates to any change in the office of Trustee in the same
places where the original Agreement is filed or recorded.
14.2 Laws as to Construction. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
14.3 Separability. In the event any provision of this Agreement or the
application thereof to any person or circumstances shall be finally determined
a court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
14.4 Notices. Any notice or other communication by the Trustees to any
Beneficiary shall be deemed to have been sufficiently given, for all purposes,
if given by being deposited, postage prepaid, in a post office or letter box
and being addressed to such Beneficiary at its address as shown in the records
of the Trust.
14.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
14.6 Headings for Reference Only. The Article and Section headings
contained herein have been inserted for convenience and reference only and
shall not be construed to affect the meaning, construction or effect of this
Agreement.
14.7 No Court Supervision. The Trust shall not be administered under the
direction or jurisdiction of any court except as provided in Section 10.3
hereof, nor shall there be any duty of the Trustees to account to any court
with respect to their administration of the Trust or the Trust Corpus.
14.8 Irrevocable Trust. This Trust is irrevocable except to the extent
contemplated by Article 13 hereof.
IN WITNESS WHEREOF, Consumers Financial Corporation has caused this
Agreement to be signed by its duly authorized officer and the Trustees have
signed this Agreement, effective this ___ day of ____________, 1998.
CONSUMERS FINANCIAL CORPORATION
By
Its
Trustee
Trustee
