Exhibit 2
TRUST AGREEMENT
XXXX GROUP -- XXXX LIQUIDATING TRUST
THIS TRUST AGREEMENT is entered into this 10th day of September, 1999
(this "Agreement"), by and among XXXX GROUP, INC., a corporation duly organized
and existing under the laws of the State of Delaware (the "Corporation"), and
XXXXXX X. XXXXX III and XXXXXXX X. XXXXXXXX, as Trustees hereunder (the
"Trustees").
WHEREAS, on May 21, 1996, the Board of Directors of the Corporation
approved a Plan of Complete Liquidation and Dissolution of Xxxx Group, Inc. (the
"Plan of Liquidation") contemplating this Agreement;
WHEREAS, on March 19, 1997, the shareholders of the Corporation
approved the Plan of Liquidation contemplating this Agreement;
WHEREAS, the Corporation has heretofore made liquidating distributions
to its shareholders and the Board of Directors of the Corporation has concluded
that a distribution pursuant to the Plan of Liquidation of the remaining assets
owned by the Corporation (such assets being hereinafter referred to as the
"Distribution Assets"), is desirable and appropriate at this time;
WHEREAS, the Board of Directors has determined that, it would not be in
the best interests of the Corporation and its shareholders for the Distribution
Assets to be distributed directly to the Corporation's shareholders at this
time;
WHEREAS, the Board of Directors of the Corporation has approved the
creation of a trust to facilitate the distribution of the Distribution Assets
and the payment or other satisfaction of the Corporation's remaining liabilities
by providing a temporary repository to which the Distribution Assets might be
transferred and assigned for the respective use and benefit of the shareholders
of record at the close of business on September 3, 1999 (the "Record Date"), of
the Corporation's Common Stock (such record holders being referred to herein as
the "Stockholder-Beneficiaries"), their successors and permitted assigns;
WHEREAS, pursuant to the Plan of Liquidation, the Corporation is hereby
appointing the Trustees as agents on behalf of the Stockholder-Beneficiaries,
their successors and permitted assigns, and not as agents, officers or directors
of the Corporation, to receive and hold for them in trust the Distribution
Assets and to distribute such Distribution Assets (or proceeds from the sale
thereof), net of the Corporation's liabilities assumed by the Trustees
hereunder, to the Stockholder-Beneficiaries at such date or dates as, in the
sole judgment and discretion of the Trustees, such distribution would be
advantageous to the Stockholder-Beneficiaries, but in any event not later than
the Final Distribution Date (as defined in Section 3 hereof), provided that the
Trustees shall have no personal liability for making or failing to make such a
distribution;
1
WHEREAS, the Trustees have agreed to act as trustees of the trust
created by this Agreement for the benefit of the Stockholder-Beneficiaries and
to assume, in their capacities as trustees and not in their individual
capacities, the liabilities of the Corporation to the extend hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed, and in order to declare the terms and provisions upon and subject to
which the Trustees are to receive, hold, administer and dispose of the
properties, property rights and agreements hereby granted and conveyed to them,
the parties hereto agree as follows:
1. ESTABLISHMENT OF THE TRUST.
(a) The Corporation hereby conveys, sets over, assigns and
delivers the Distribution Assets to the Trustees and their successors, and the
Trustees agree to accept and hold the same in trust for the benefit of the
Stockholder-Beneficiaries, their successors and permitted assigns, and either
(at the sole discretion of the Trustees) (i) to distribute the Distribution
Assets to the Stockholder-Beneficiaries, or (ii) to sell the Distribution Assets
in one or more public or private sales and distribute the proceeds of such sale
or sales to the Stockholder-Beneficiaries, or (iii) a combination of (i) above
and (ii) above; in each case net of the liabilities assumed by the Trustees (as
hereinafter set forth) and any expenses incurred by the Trustees in connection
with administration of the Trust, and in each case at such date or dates, but in
any event not later than the Final Distribution Date, as, in the sole judgment
and discretion of the Trustees, shall be advantageous to the
Stockholder-Beneficiaries, provided that the Trustees shall have no personal
liability for any such liabilities or expenses or for making or failing to make
such a distribution or sale; all subject to the terms of this Agreement (the
"Xxxx Liquidation Trust" or "Trust"). The Trustees further assume and agree to
be responsible for, on behalf of the Trust in their capacities as Trustees, and
not in their individual capacity, all liabilities and obligations of the
Corporation existing on the date hereof or that may arise in the future;
provided, however, that the Trustees and the Trust do not hereby assume, and
shall not be responsible for, any liabilities or obligations that (i) by reason
of the dissolution of the Corporation, the passage of time or otherwise, are not
or at the time asserted would not be liabilities or obligations of the
Corporation, it being the intent of the parties not to increase the Trust's or
Trustees' liabilities and obligations to an extent greater than would apply to
the Corporation had the Corporation been liquidated and dissolved without the
establishment of this Trust; or (ii) are in excess of the value of the
Distribution Assets (such assumed liabilities and obligations being hereinafter
referred to as the "Trust Liabilities").
(b) It is the intention of the parties hereto that, for
purposes of federal income taxes, any applicable state or local income or
franchise taxes, and any other applicable taxes imposed upon, measured by, or
based upon gross or net income (collectively, "Relevant Taxes"), the Trust shall
be treated as a liquidating trust that is classified as a grantor trust, or
failing that, in any event as other than an association or publicly traded
partnership taxable as a corporation. The terms of this Agreement shall be
interpreted to further this intention of the parties.
2
2. PURPOSE OF THE TRUST; POWERS OF THE TRUSTEES.
(a) The primary purpose of the Trust is to serve as a
temporary repository for the Distribution Assets so that the Corporation may
divest itself of all ownership thereof and interests therein and the
Stockholder-Beneficiaries may acquire such ownership, and to liquidate and
distribute the Distribution Assets and the proceeds thereof to the
Stockholder-Beneficiaries, all in accordance with the terms of this Agreement.
(b) The Stockholder-Beneficiaries shall be the sole
beneficiaries of the Trust and in no event shall any part of the Distribution
Assets revert or be distributed to the Corporation. Any Unclaimed Assets, as
defined in Section 3 hereof, shall be subject to disposition in accordance with
applicable laws.
(c) The Trustees shall have no power or authority to enter
into or carry on any business or trade in respect of the Distribution Assets or
otherwise, and no part of the Distribution Assets or the proceeds, dividends,
revenue or income therefrom (collectively with the Distribution Assets, the
"Trust Assets") shall be reinvested, used or disposed of by the Trustees for any
purpose other than (1) the payment of, and the creation and investment (in
accordance with the provisions of this Section 2(c)) of such reserves as the
Trustees may in their sole discretion deem reasonably necessary for the payment
of, the Trust Liabilities and expenses incurred in connection with, and claims
and contingencies arising out of, the administration of the Trust, including
such reserves as may be reasonably necessary to preserve or protect the Trust
Assets ("Reserves"); (2) the sale of the Distribution Assets in accordance with
the provisions of this Agreement; and (3) the distribution of the Trust Assets
to the Stockholder-Beneficiaries in accordance with the terms of this Agreement.
Other than the Reserves, the Trustees shall not hold any monies forming a part
of the Trust Assets for longer than 90 days, and any Reserves shall be held only
in (1) checking accounts, savings accounts or certificates of deposit maturing
in one year or less of domestic banks having in excess of $100,000,000 in
capital and surplus; or (2) checking accounts, savings accounts or certificates
of deposit maturing in one year or less issued by any savings institution
insured by the Federal Deposit Insurance Corporation or the Federal Savings and
Loan Insurance Corporation; provided no instrument with a maturity date beyond
the next scheduled distribution date shall be purchased and that any instruments
purchased shall be held until maturity unless the Trustees determine that such
instruments should be sold because monies are needed to pay expenses or monies
need no longer be retained in the Reserve and may be distributed to the
Stockholder-Beneficiaries.
(d) The powers, duties and authorities of the Trustees
hereunder are limited to holding title to the Trust Assets, the payment or
discharge of the Trust Liabilities and the expenses of the Trust, the collection
of the proceeds, dividends, income and revenue from time to time accruing to or
otherwise payable in respect of the Trust Assets, the preservation and
protection of the same, the holding of any monies forming a part of the Reserve
as provided for in Section 2(c) hereof, the sale of the Trust Assets through
public or private sale, the distribution to the Stockholder-Beneficiaries of the
proceeds, dividends, income and revenue from time to time received with respect
to
3
the Trust Assets, and the distribution of the Trust Assets to the
Stockholder-Beneficiaries at such date or dates but in any event not later than
the Final Distribution Date, as in the sole judgment and discretion of the
Trustees, such distribution would be advantageous to the
Stockholder-Beneficiaries, provided that the Trustees shall have no personal
liability for making or failing to make such a distribution. However, in the
exercise of such power and authority and the discharge of such duties, the
Trustees shall have, and are hereby granted, such incidental and additional
powers and authority, not in conflict with any of the provisions hereof or with
any provisions of applicable law, as they shall deem necessary, appropriate or
desirable to effectuate the purposes of the Trust, including (without
limitation) the following:
(1) The Trustees may employ clerks, attorneys, accountants and
other experts and may obtain any special services required, and pay the
reasonable compensation and expenses of all persons and for all such
services, in addition to the compensation of the Trustees.
(2) The Trustees may employ a corporation or other entity, or
one or more individuals, to provide general administrative services to
the Trust, regardless of whether such corporation, individual or
individuals are Stockholder-Beneficiaries of the Trust, or whether such
individual or individuals are Trustees acting hereunder, or whether any
Trustee acting hereunder is an officer, director, member, employee or
shareholder of such corporation. The Trustees shall pay such
corporation, individual or individuals the reasonable compensation and
expenses for all such general administrative services, in addition to
the compensation of the Trustees.
(3) In order to preserve and protect the Trust Assets, the
Trustees may take such action as may be reasonably necessary or
desirable to protect and preserve the Trust Assets against waste
pending sale or other disposition or distribution to the
Stockholder-Beneficiaries.
(4) The Trustees shall have the power to cast the votes
entitled to be cast by the holder of any voting securities held by the
Trust as a part of the Trust Assets but shall have no liability in
respect of the manner in which such votes are cast or for the failure
to cast any such votes.
(5) The Trustees shall have the power to sell the Distribution
Assets (or from time to time a portion or portions thereof) at public
auction or through other public or private sale for cash or other
consideration; provided, however, that the Trustees may accept
consideration other than cash only if acceptance of such consideration
is, in the sole judgment of the Trustees, reasonably advisable to
realize the value of the Distribution Assets for the
Stockholder-Beneficiaries, such consideration may be immediately
distributed to the Stockholder-Beneficiaries, and the Trustees have
obtained either an opinion of counsel or a ruling of the Internal
Revenue Service or other applicable agency that under the circumstances
at the time obtaining, the acceptance of consideration other than cash
will not cause the Trust to be treated as an association or publicly
traded
4
partnership taxable as a corporation for purposes of Relevant Taxes.
The Distribution Assets shall only be sold (in whole or in part) if the
Trustees shall, in their sole discretion, determine that either (i) the
value of some or all of the Distribution Assets has or may become
impaired or (ii) such sale is reasonably advisable to realize the value
of some or all of the Distribution Assets for the benefit of the
Stockholder-Beneficiaries.
(6) The Trustees shall have the power to pay or otherwise
discharge all Trust Liabilities and all expenses incurred in connection
with the administration of the Trust, including, without limitation,
insurance and other expenses incurred for the maintenance and
protection of the Trust Assets, insurance of the Trustees' entitlement
to indemnification and reimbursement as provided for in Section 9
hereof, taxes, expenses incurred in communicating with
Stockholder-Beneficiaries, legal, accounting and similar expenses, the
Trustees' compensation as Trustees and expenses (including reasonable
attorneys' fees) incurred by the Trustees in connection with the
performance of their obligations hereunder.
(7) In connection with the sale or other disposition or
distribution of any securities held by the Trustees, the Trustees shall
comply with all applicable Federal and state securities laws.
(8) The Trustees shall have full power and authority to
execute and deliver any conveyances, assignments, contracts, stock or
security transfer powers, or any other written instrument of any
character appropriate to any of the powers or duties conferred upon the
Trustees; as the designated attorneys-in-fact for the
Stockholder-Beneficiaries, to hold any property in bearer form or in
the name of the registered nominee, provided the Trust Assets and the
Unclaimed Assets are at all times identified as Trust Assets or
Unclaimed Assets on the books of the Trust or books of any custodian or
agent; to keep any and all of the Trust Assets in any place or places
in the United States of America; and to delegate the responsibility for
the physical custody of Trust Assets to any bank or trust company.
(9) The Trustees are authorized to contract for and to borrow
money from third parties, to pay interest thereon and to pledge the
Distribution Assets as security for such borrowing, solely for the
purpose of funding operating expenses and, in connection therewith, the
Trustees are authorized to draw, make, accept, endorse, execute, issue
and deliver promissory notes, drafts and other negotiable or
transferable instruments and evidence of indebtedness and all renewals
or extensions of same.
(10) The Trustees are authorized to submit to binding
arbitration, or to compromise or settle any claims by or against the
Trust, or in their name as Trustees, to bring, defend or intervene in
actions affecting the Trust, or for the purpose of enforcing claims
held by the Trust against others or defending claims asserted by others
against the Trust, and no Stockholder-Beneficiary shall be a necessary
party in any such proceeding; provided, however, that the Trustees
shall
5
have no obligation to bring, defend or intervene in any such legal
proceeding, or to continue prosecution or defense of any such
proceeding if once commenced, if in the good faith determination of the
Trustees the remaining Trust Assets are not sufficient to insure the
payment of all expenses incurred by the Trustees in any such
proceeding, including reasonable attorneys' fees, unless the Trustees
shall have received funds and/or assurances from one or more persons or
firms (whether or not Stockholder-Beneficiaries of the Trust)
sufficient in amount, in the sole discretion of the Trustees, to insure
payment of all costs and expenses, including attorneys' fees, which may
be incurred and, in addition, sufficient to hold the Trustees harmless
and indemnify them in respect of any liability which may be asserted or
established in connection with any such proceeding.
(11) In the event any of the property which is or may become a
part of the Trust Assets is situated in any state or other jurisdiction
in which the Trustees are not qualified to act as Trustees, the
Trustees are empowered to nominate and appoint an individual or
corporate trustee qualified to act in such state or other jurisdiction
in connection with the property situated in that state or other
jurisdiction as trustee of such property and require from such trustee
such security as may be designated by the Trustees. The trustee so
appointed shall have all the rights, powers, privileges and duties and
shall be subject to the conditions and limitations of this Agreement,
except as modified or limited by the Trustees, and except where the
same may be modified by the laws of such state or other jurisdiction
(in which case, the laws of the state or other jurisdiction in which
such trustee is acting shall prevail to the extent necessary). Such
trustee shall be answerable to the Trustees herein appointed for all
monies, assets and other property which may be received by it in
connection with the administration of such property. The Trustees
hereunder may remove such trustee, with or without cause, and appoint a
successor trustee at any time by the execution by the Trustees of a
written instrument declaring such trustee removed from office, and
specifying the effective date and time of removal.
(12) The exercise of any discretionary power vested in the
Trustees shall be final and conclusive upon all
Stockholder-Beneficiaries hereunder and upon all persons whomsoever.
(13) No bond shall be required of the Trustees appointed
herein, and no successor trustee shall be required to furnish bond.
(14) Items of income, gain, deduction, expense and credit
attributable to any portion of the Trust Assets are to be treated as
owned by the Stockholder-Beneficiaries, and to the extent required by
law such items shall be reported by the Trustees on a separate schedule
attached to Internal Revenue Service Form 1041 pursuant to Treas. Reg.
Section 1.671-4 or such other form as may be required. To the extent
required by law the Trustees shall make available to each of the
Stockholder-Beneficiaries, within a reasonable time after the close of
the taxable year, a copy of such Schedule setting forth his share
therein. The Trustee shall, to the extent required by law, prepare and
file any additional appropriate
6
Federal income tax returns and other returns and reports on behalf of
the Trust. All returns and reports filed by or on behalf of the Trust
shall be consistent with the treatment of the Trust as a grantor trust
for tax purposes.
(15) The Trustees in their discretion are authorized to retain
all or any part of the Distribution Assets until the Final Distribution
Date regardless of whether such assets are (or may become)
underproductive, unproductive or a wasting asset, or whether such
assets, if considered to be investments, might be considered to be
speculative, extra hazardous or worthless.
The Trustees' powers are exercisable solely in a fiduciary capacity
consistent with, and in furtherance of, the purposes of this Agreement, i.e.,
the dissolution of the Trust preceded by its distribution of the Trust Assets to
the Stockholder-Beneficiaries at such date or dates as, in the sole judgment and
discretion of the Trustees, such distribution shall be advantageous to the
Stockholder-Beneficiaries, but in any event not later than the Final
Distribution Date, provided that the Trustees shall have no personal liability
for making or failing to make such a distribution, or, in the event any portion
of the Trust Assets is returned or remains unclaimed, the disposition of such
Unclaimed Assets, as hereinafter defined, in accordance with applicable laws,
and the termination and dissolution of the Trust.
Notwithstanding the foregoing, the Trustees may exercise the powers set
forth in this agreement only to the extent that exercise of such powers is
advisable to maintain or preserve the value of the Trust Assets. The Trustees
may in no event acquire any assets or property other than the Trust Assets, any
cash proceeds or income derived from the Trust Assets and any other
consideration permitted by Section 2(d)(5) hereof.
3. DISPOSITION OF TRUST ASSETS; UNCLAIMED ASSETS.
In no event later than three years from the date of the execution of
this Agreement by the Corporation (the "Final Distribution Date"), the Trustees
shall distribute the remaining Trust Assets, if any, subject to any remaining
undischarged or unpaid liabilities of the Trust, to the
Stockholder-Beneficiaries, their successors and permitted assigns, at their last
known address on the Trustees' books, in proportion to their respective interest
in the Trust. If any interest of any Stockholder-Beneficiary in the Trust Assets
is unclaimed (collectively, the "Unclaimed Assets"), the Trustees shall have
disposed of such Unclaimed Assets in accordance with applicable laws in no event
later than the Final Distribution Date; provided, however, that the Trustees may
continue to hold any Unclaimed Assets for and on behalf of the owners thereof
(and not as Trust Assets) for a period not to exceed six months following the
Final Distribution Date.
(a) Within 90 days after a collection of income, dividends,
revenues or proceeds with respect to the Distribution Assets or any other Trust
Assets, the Trustees shall distribute such income or proceeds proportionately
among the Stockholder-Beneficiaries of the Trust (after establishing and
retaining a reserve in an amount deemed reasonable by the Trustees for the
payment of (1) claims and contingencies, and (2) the expenses of administering
the Trust). The Trustees shall not receive or retain for longer
7
than 90 days, cash in excess of such reserve. The Trustees shall withhold from
distributions to a Stockholder-Beneficiary any taxes required to be withheld
with respect to such Stockholder-Beneficiary under applicable law (and any
amounts so withheld will be treated as if they were distributed to such
Stockholder-Beneficiary), and shall remit any amounts so withheld to the
appropriate taxing authority in accordance with applicable law.
(b) To the extent not previously distributed, the Trustees
shall, as soon as practicable following the close of each fiscal year,
distribute to the Stockholder-Beneficiaries of the Trust their allocable shares
of the net income (if any), realized by the Trust during such fiscal year (after
reducing such amount by any amount which must be retained in the reserve for the
payment of (1) contingencies, and (2) the expenses of administering the Trust).
(c) In the event any part of the Trust Assets shall have been
retained by the Trustees pursuant to the provisions of this Agreement and it
shall subsequently be determined by the Trustees that all or such part of the
Trust Assets so retained shall not be required to be so retained, any excess
shall be distributed proportionately among the Stockholder-Beneficiaries within
45 days of such determination.
(d) All such distributions may at the discretion of the
Trustees be delivered in person or sent by first class mail, postage prepaid, or
by certified or registered mail, return receipt requested, to such
Stockholder-Beneficiary's last known address as shown on the books of the
Trustees.
(e) The Trustees shall be fully discharged from their
obligations hereunder in respect of any Trust Asset distributed as income or
principal to any Stockholder-Beneficiary and, upon final distribution after
termination of the Trust, shall be completely discharged from any and all
further responsibility under this Agreement with respect to the Trust Assets.
4. PAYMENT OF TRUST EXPENSES AND CLAIMS AGAINST THE TRUST.
(a) The Trustees shall pay or otherwise discharge all Trust
Liabilities and all expenses as may be incurred by the Trustees in connection
with the administration of the Trust out of the funds provided in Section
2(d)(6) hereof, and out of the Trust Assets, including, without limitation,
insurance and other expenses incurred for the maintenance and protection of the
Trust Assets, insurance of the Trustees' entitlement to indemnification and
reimbursement as provided for in Section 9 hereof, taxes, expenses incurred in
communicating with Stockholders-Beneficiaries, legal, accounting and similar
expenses, (including reasonable attorneys' fees) incurred by the Trustees in
connection with the performance of their obligations hereunder. The Trustees may
pay any such expense without further authorization or direction and no
Stockholder-Beneficiary shall have any claim against the Trustees for any funds
so expended.
8
(b) In the event any Stockholder-Beneficiary or any other
party shall agree in writing to indemnify the Trustees and the Trust against any
loss or liability arising out of any specified liabilities, including contingent
liabilities, then, in such event, the Trustees may, but shall not be obligated
to, make distributions to the Stockholder-Beneficiaries without reserving assets
for the payment of the liability to which such indemnity relates. The Trustees
making such distribution shall have no liability to the creditors or to the
Stockholder-Beneficiaries for their failure to reserve assets for the payment of
such claim if the Trustees shall have acted in good faith in reliance on such
indemnity. To the extent any party making such indemnity pays such claim, he
shall be entitled to be reimbursed, subject to the terms of his indemnity
agreement, out of the assets of the Trust otherwise available for distribution
to the Stockholder-Beneficiaries.
(c) If any person, firm, or governmental or regulatory entity
or body, including, without limitation, any of the Stockholder-Beneficiaries,
shall assert a claim against the Corporation or the Trust, which claim the
Trustees reasonably believe is enforceable against the Trust, the Trustees shall
pay the same out of the Trust Assets either if they determine such payment to be
proper or upon a final determination by a court or other tribunal having
jurisdiction directing or authorizing payment. The Trustees shall have the right
to apply to any state or Federal court having jurisdiction for a declaratory
judgment, judgment in interpleader, or other appropriate relief, and, upon the
filing of any such suit and the deposit into the registry of the court of the
remaining Trust Assets, the Trustees shall be discharged from any further
responsibility under this Agreement in respect of the Trust Assets. In no event
shall the Trustees have any responsibility for any liability of, or claim
against, the Trust, even though determined to be valid and properly asserted
against the Trust, in an aggregate amount exceeding the least of (1) the value
of the remaining Trust Assets held by the Trustees at the time of the assertion
of such claim(s); (2) the amount of such claim(s); or (3) the amount deposited
in the registry of a court pursuant to this paragraph.
5. IDENTIFICATION OF BENEFICIARIES. The Trustees may rely conclusively
on the accuracy and completeness of the list of Stockholder-Beneficiaries of the
Corporation as of the Record Date supplied to them by the Corporation, and the
Trustees shall maintain a similar list of the names and addresses of the
Stockholder-Beneficiaries until final distribution of the Trust. A copy of such
list and of this Agreement, and any amendments thereto, shall be made available
by the Trustees at their principal office during business hours, upon request,
for inspection (and copying at the expense of the person making the inspection)
by any Stockholder-Beneficiary.
6. BOOKS AND RECORDS. The Trustees shall maintain in respect of the
Trust and the Stockholder-Beneficiaries, books and records relating to the
assets and income of the Trust and the payment of expenses of, and claims
against, the Trust in such detail and for such period of time as may be
necessary to enable them to make full and proper accounting in respect thereof
and to comply with applicable provisions of law, including in particular, but
without limitation, state and Federal tax laws. Nothing in this Agreement is
intended to require the Trustees to file any accounting or seek approval of any
court with respect to the administration of the Trust, or as a condition for
making any
9
payment or distribution out of the Trust Assets or the Unclaimed Assets, and the
Trustees shall not be required to do so unless otherwise required by law.
7. TRANSFER OF BENEFICIAL INTERESTS.
(a) The interests of the Stockholder-Beneficiaries in the
Trust (the "Trust Interests") are transferable only by will or intestate
succession or, in the case of a corporation, partnership or other entity, to a
successor entity, and in any such case such Trust Interest in the hands of such
transferee will remain subject to the same restrictions on transfer as it was
when held by the transferor. In addition to the foregoing, any
Stockholder-Beneficiary may surrender his Trust Interest for no consideration by
instrument in writing delivered to the Trustees, in which event such
Stockholder-Beneficiary shall cease to be a Stockholder-Beneficiary as of the
date such instrument is so delivered and shall have no further interest in or
claim upon the Trust or its assets.
(b) The Trustees shall not be required to record any transfer
in favor of any transferee which, in the sole discretion of the Trustees, is or
might be construed to be ambiguous or to create uncertainty as to the owner of
the beneficial interest or does not comply with the restrictions set forth in
clause (a) of this Section 7. Until a transfer of any such beneficial interest
is in fact recorded on the books and records maintained by the Trustees for the
purpose of identifying Stockholder-Beneficiaries of the Trust, the Trustees,
whether or not in receipt of documents of transfer or other documents relating
to the transfer, may nevertheless make distribution of income and principal of
the Trust, and send communications to Stockholder-Beneficiaries of the Trust, as
though it had no notice of any such transfer, and in doing so the Trustees shall
be fully protected and incur no liability to any purported transferee or any
other person.
(c) If any conflicting claims or demands are made or asserted
as to any interest of any Stockholder-Beneficiary, or there should be any
disagreement among the transferees, assignees, heirs, representatives, or
legatees succeeding to all or part of the interest of any
Stockholder-Beneficiary resulting in adverse claims or demands in connection
with such interest, then, in any of such events, the Trustees shall be entitled
in their sole discretion, to refuse to comply with any such conflicting claims
or demands. In so refusing, the Trustees may elect to make no payment or
distribution to the interest involved, or any part thereof, and in so doing the
Trustees shall not be or become liable to any such parties for their failure or
refusal to comply with any of such conflicting claims 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 (1) the rights of
the adverse claimants have been adjudicated by a final judgment of a court of
competent jurisdiction, or (2) all differences have been adjusted by valid
written agreement among all of such parties, and the Trustees shall have been
furnished with an executed counterpart of such agreement. The Trustees may, in
their discretion, require that there be furnished a surety bond or other
security satisfactory to the Trustees, as they shall deem appropriate to fully
indemnify the Trustees as to conflicting claims or demands.
10
8. EXCULPATORY PROVISIONS.
(a) The Trustees shall have only such affirmative obligations
as are provided for in this Agreement or as may be required by law, including,
without limitation, Federal, state and local income tax laws.
(b) Except for gross negligence, fraud or willful misconduct,
the Trustees shall not be subject to any claim, suit or liability of any kind in
connection with the administration of the Trust, including a claim arising from
any loss occurring by reason of the depreciation in value, the distribution or
the failure to make a distribution of any property constituting part of the
Trust Assets, regardless of whether such claim or suit has been brought by or
such liability is to the Stockholder-Beneficiaries, persons having claims
against the Trust, or any other person.
(c) In the absence of bad faith, the Trustees may conclusively
rely on the existence of any fact or the correctness of any opinion which has
been reduced to writing and certified or signed by, or on behalf of, a person
reasonably believed by the Trustees to have knowledge of the fact or to be
competent to express the opinion.
(d) No officer, director, agent or other representative of the
Trustees shall be subject to, or incur, any personal liability in respect of the
Trust, except only for his or her gross negligence or fraudulent or willful
misconduct.
(e) The Trustees may consult with legal counsel, and the
opinion and advice of such counsel shall constitute full and complete
authorization and protection to the Trustees in respect of any action taken or
not taken in good faith and in reliance thereon.
(f) The Trustees shall have the right to rely upon and shall
be fully protected in acting upon the advice or opinion of any attorney, auditor
or other expert at any time employed by them in connection with any matter
concerning the Trust or the Trust Assets, and they shall also have the right to
rely upon and shall be fully protected in acting upon any notice, credential,
certificate, assignment or other document or instrument believed by the Trustees
to be genuine and to be signed by the proper party or parties.
9. COMPENSATION OF THE TRUSTEES AND PAYMENT OF THE TRUSTEES' EXPENSES.
(a) Each Trustee shall be entitled to receive out of the Trust
Assets a fee in the amount of $30,000 per annum (or any part thereof), in
advance, to compensate the Trustees for services rendered by them regarding the
Trust. Each Trustee shall also be entitled to reimbursement out of the Trust
Assets for any reasonable expense incurred by such Trustee in connection with
the administration of the Trust.
(b) The Trustees shall be indemnified by, and shall be
entitled to receive reimbursement, including without limitation counsel fees or
out-of-pocket costs incurred in litigation, from the Trust against and from any
and all liability claims, damage
11
or loss incurred in connection with their duties as Trustees, and in the
omission or commission of any act done or performed as Trustees of the Trust,
whether such claim is made by or on behalf of the Trust, and
Shareholders-Beneficiaries or any other person, save and except such
liabilities, claims, damages or losses as may be attributable to the fraud,
gross negligence or willful misconduct or the Trustees or of any of their
officers, directors, or employees. To the extent the Trust does not have cash
immediately available to indemnify the Trustees as provided above, the
Corporation shall promptly indemnify the Trustees on the same basis to the full
extent permitted by law. Such costs and expenses shall be reimbursed as incurred
and within 30 days after request therefor.
(c) The Trustees shall have a lien upon the Trust to secure
them for such indemnification and reimbursement as well as any other sums due
the Trustees pursuant to the terms of this Agreement.
(d) The Trustees shall be entitled to cause the Trust to
obtain an insurance policy insuring the Trustees' entitlement, pursuant to this
Section 9, to indemnification and reimbursement for certain reasonable costs and
expenses incurred by the Trustees in connection with their duties as Trustees,
in the event the Trust Assets are insufficient to so reimburse the Trustees.
10. ACTION BY TRUSTEES; REMOVAL, SUCCESSORS.
(a) The number of Trustees shall be two. Any action required
or permitted to be authorized or taken by the Trustees hereunder may be
authorized or taken by any Trustee then serving unless otherwise specified in
this Agreement.
(b) Any Trustee at any time acting hereunder may resign as
Trustee to the extent permitted by law, without leave of court. Any such
resignation shall be effective upon delivery of a written instrument of
resignation, duly signed by such Trustee, to the remaining Trustee and, if
required by law, with the approval of the court having jurisdiction over the
Trust.
(c) Any Trustee at any time acting hereunder may be removed
from office at any time for cause by the unanimous vote or approval of the
remaining Trustee then serving or, with or without cause, by a vote of a
majority in interest of the Stockholder-Beneficiaries. The Trustees shall hold a
special meeting of the Stockholder-Beneficiaries for the purpose of considering
such removal upon the written request of fifteen percent in interest of the
Stockholder-Beneficiaries.
(d) In the event of the death, incapacity, resignation or
removal of either of the Trustees, a successor Trustee shall be appointed by the
remaining Trustee. The remaining Trustee shall give notice of each resignation,
removal or vacancy of any Trustee and each appointment of a successor Trustee by
mailing written notice of such event by first-class mail, postage prepaid, to
each Stockholder-Beneficiary as their names and addresses appear on the books
and records of the Trust. The appointment of such successor Trustee shall become
effective upon the expiration of twenty-one days after the mailing of such
notice; provided, however, that fifteen percent in interest of the
12
Stockholder-Beneficiaries may, by written notice received by the remaining
Trustee within such twenty-one day period, require the Trustee to hold a special
meeting of the Stockholder-Beneficiaries for the purpose of electing a successor
Trustee. In default of such appointment, a successor Trustee or Trustees may be
appointed by a majority of those persons who constitute, or most recently
constituted, the Board of Directors, or the Executive Committee of the Board of
Directors, of the Corporation other than Messrs. Xxxxxx X. Xxxxx III and Xxxxxxx
X. Xxxxxxxx.
11. TERM OF THE TRUST.
(a) Except as hereinafter provided, the Trust is irrevocable
and shall continue and remain effective until (1) the Trust Assets have been
fully distributed or expended in accordance with the terms and provisions of
this Agreement and the Unclaimed Assets of the Trust have been disposed of in
accordance with applicable law; (2) a majority in interest of the
Stockholder-Beneficiaries, or the Trustees, approve by vote the distribution of
the Trust Assets and disposal of the Unclaimed Assets in accordance with
applicable law; or (3) the Final Distribution Date; whichever shall first occur,
at which time the Trust shall terminate; provided, however, that in the case of
clauses (2) and (3) above, the Trust shall not terminate pursuant to this
Section 11(a) so long as any payment obligation, contingent or otherwise, of the
Trust shall remain either unpaid or unprovided for but in no event longer than
six years from the date hereof. The Trustees will use their reasonable efforts
not to unduly prolong the term of the Trust.
(b) Upon termination of the Trust, the Trustees may retain the
books, records, Stockholder-Beneficiary lists and files which shall have been
delivered to or created by the Trustees. At the Trustees' discretion, they may
destroy all of such records and documents at any time after three years from the
date of termination of the Trust.
(c) For the purpose of dissolving, liquidating and winding up
the affairs of the Trust at its termination, the Trustees shall continue to act
as Trustees until their duties have been fully performed. After so doing, the
Trustees shall have no further duties nor be subject to any further liability.
12. MISCELLANEOUS.
(a) No person dealing with the Trustees shall be responsible
for, or be required to see to, the application of any money or other thing of
value paid to or delivered to the Trustees and the receipt of the Trustees shall
be a full discharge to the extent of the property so delivered.
(b) A Stockholder-Beneficiary's interests in the Trust and/or
the Trust Assets shall be evidenced by the books and records of the Trust and
not by any formal certificate or other instrument.
(c) The recitals of fact contained herein shall be taken as
statements of the Corporation, and the Trustees assume no responsibility for the
correctness of the same.
13
(d) This Agreement may be executed in a number of
counterparts, each of which when so executed shall be deemed to be an original
for all purposes, but all of such executed counterparts together shall
constitute but one and the same instrument.
(e) The Trustees shall not be responsible for the execution
and acknowledgment hereof or the validity hereof, the validity to the Trust
Assets or any part thereof, or the authority of the Corporation to make and
execute this Agreement.
(f) The Trust created hereunder shall be irrevocable except in
accordance with the express terms hereof, and, except as provided for herein, no
person shall have the right or power, whether alone or in conjunction with
others, in whatever capacity, to alter, amend, revoke or terminate the Trust, or
any of the terms of this Agreement, in whole or in part, or to designate the
persons who shall possess or enjoy the Trust Assets or the income therefrom.
13. AMENDMENT. The Trustees shall have the power to amend the Agreement
as may be necessary or appropriate to (i) correct any defect or error in the
Agreement to properly effect its intent or (ii) conform to any requirements
which are or may be imposed by applicable tax laws for treatment of the trust as
a grantor trust, or failing that, as other than an association or publicly
traded partnership taxable as a corporation for purposes of Relevant Taxes. The
Trustees shall have the power to further amend this Agreement with the consent
of a majority in interest of the Stockholder-Beneficiaries present at a meeting
called for this purpose. Notwithstanding the foregoing, no amendment shall,
without the consent of a majority in interest of the Stockholder-Beneficiaries,
materially adversely affect the rights of the Stockholder-Beneficiaries, and no
amendment shall be made whatsoever which adversely affects the status of the
Trust as a grantor trust, or failing that, as other than an association or
publicly traded partnership taxable as a corporation for purposes of Relevant
Taxes.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York applicable to contracts made and to be performed wholly within
such state. Any legal action relating to or arising out of the Trust or this
Agreement shall be brought only in the state courts of or the federal courts
sitting in the City and State of New York. This Agreement shall bind and inure
to the benefit of the Trustees, the Stockholder-Beneficiaries, and the
respective successors and permitted assigns of the foregoing. If for any reason
any part of this Agreement shall be invalid, illegal or inoperative, it is
intended, never-the-less, that the remaining part shall be fully effective and
operative. The Trustees may seek and obtain court instructions from time to time
and as often as the Trustees may deem necessary for the purpose of construing or
carrying out the terms, provisions and intentions expressed in this Agreement.
[SIGNATURE PAGE FOLLOWS]
14
IN WITNESS WHEREOF, the parties hereto have hereunto caused these
presents to be executed on their respective behalf and their seals hereunto
affixed the day and year first above written.
ATTEST: XXXX GROUP, INC.
By: /s/ Xxxx X. Xxxx
--------------------------- ------------------------------
Xxxx X. Xxxx
Vice President-Finance
ATTEST:
/s/ Xxxxxx X. Xxxxx III
--------------------------- ---------------------------------
Xxxxxx X. Xxxxx III, Trustee
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------- ---------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee
15
