LIQUIDATION TRUST AGREEMENT
Exhibit 4.1
This LIQUIDATION TRUST
AGREEMENT is made and entered into as of the
23rd day of October, 2001, by and among Hechinger Investment Company of
Delaware, Inc., a Delaware corporation (“Hechinger”), and
each of the other Debtors (as such term is defined in the Plan (as hereinafter
defined)) (such other Debtors, together with Hechinger, being referred to
herein as the “Debtors”), the official committee of unsecured creditors
appointed in the Debtors’ Chapter 11 Cases (the “Committee”) and
Xxxxxx X. Xxxxxxx (the “Liquidation Trustee”). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed
to them in the Plan (as hereinafter defined).
R E C I T A L S:
WHEREAS, on
June 11, 1999, the Debtors filed voluntary petitions for
reorganization under chapter 11 of title 11, United States Code
(the “Bankruptcy Code”), in the United States Bankruptcy Court
for the District of Delaware (the “Bankruptcy Court”); and
WHEREAS, on
June 25, 2001, the Committee filed a consolidated plan of
liquidation (as the same may be amended or modified from time to
time, the “Plan”) pursuant to the Bankruptcy Code; and
WHEREAS, by
order dated October 5, 2001, the Bankruptcy Court confirmed the Plan; and
WHEREAS, under
the terms of the Plan, all cash and other property of the Debtors as of the
Plan Effective Date will be transferred to and held by the Liquidation Trust
created by this Agreement (the “Liquidation Trust”) so that, among
other things: (i) the Trust Assets (defined below) can be disposed of in
an orderly and expeditious manner, including prosecution of Litigation Claims; (ii) objections
to claims can be pursued, and disputed claims can be resolved; and (iii) distributions
can be made to the beneficiaries of the Liquidation Trust in accordance with the Plan; and
WHEREAS, the Plan
also provides for the appointment of the Liquidation Trustee to administer the
Liquidation Trust to and for the benefit of creditors of the Debtors as provided
in the Plan, and to provide administrative services relating to the implementation of the Plan; and
WHEREAS, the
Liquidation Trustee has agreed to serve as such upon the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in
accordance with the Plan and in consideration of the
promises and of the mutual covenants and agreements contained herein, the parties hereto agree
as follows:
DECLARATION OF TRUST
The Debtors hereby
absolutely assign to the Liquidation Trust, and to its successors
in trust and its successors and assigns, all right, title and interest of the Debtors in and
to the Trust Assets (as defined below);
TO HAVE AND TO HOLD unto the
Liquidation Trust and its successors in trust and its successors and assigns forever;
IN TRUST NEVERTHELESS
upon the terms and subject to the conditions set forth herein and for
the benefit of the holders of Allowed Claims, as and to the extent provided in
the Plan, and for the performance of and compliance with the terms hereof and of the Plan;
PROVIDED,
HOWEVER, that upon termination of the Liquidation Trust in accordance
with Article V hereof, this Agreement shall cease, terminate and be of no further
force and effect; and
IT IS HEREBY
FURTHER COVENANTED AND DECLARED that the Trust Assets are
to be held and applied by the Liquidation Trustee upon the further covenants and
terms and subject to the conditions herein set forth.
I. NAME; PURPOSE; TRUST
ASSETS
1.1.
Name of Trust. The trust created by this Agreement shall be known as
the “Hechinger Liquidation Trust” or sometimes herein
as the “Liquidation Trust”. The Liquidation Trust is authorized
to retain Otterbourg, Steindler, Houston & Xxxxx, P.C. and Xxxxxx Xxxxxxxx LLP
as co-counsel and such other professional persons retained by the Committee or by the
Debtors as have previously been approved by the Bankruptcy Court, or as necessary and
appropriate, who shall be compensated from the Trust Assets on a monthly basis.
1.2.
Purpose. The purpose of the Liquidation Trust is to hold and effectuate
an orderly disposition of the Trust Assets and to distribute or pay over the
Trust Assets or proceeds thereof in accordance with this Agreement and
the Plan, with no objective or authority to engage in any trade or business.
1.3.
Transfer of Trust Assets. In accordance with the provisions of the Plan,
on the Effective Date, the Debtors and their Chapter 11 estates shall be deemed to have
transferred, assigned and conveyed to the Liquidation Trust any and all assets of the Debtors,
including but not limited to the Litigation Claims (all such assets, together with the income,
proceeds, rents, offspring, products and profit therefrom, being the “Trust
Assets”), to be held by the Liquidation Trustee in trust for the
holders, from time to time, of Allowed Claims as and to
the extent provided in the Plan (such holders collectively the “Trust
Beneficiaries”), on the terms and subject to the conditions set forth
herein and in the Plan. In addition, and as also provided for in the Plan, the
claims asserted by HSBC Bank USA on behalf of the holders of Senior Notes
and Senior Debentures in the Bondholder Action shall also be assigned to the Liquidation Trust
and be deemed Trust Assets.
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1.4.
Acceptance by the Liquidation Trustee. The Liquidation Trustee is
willing and hereby accepts the appointment to serve as Liquidation Trustee pursuant to this
Agreement and the Plan and agrees to observe and perform all duties and obligations imposed
upon the Liquidation Trustee by this Agreement and under the Plan, including, without
limitation, to accept and hold and administer the Trust Assets and otherwise to carry out the
purpose of the Liquidation Trust in accordance with the terms and subject to the conditions set
forth herein. The Liquidation Trustee shall have the fiduciary duties to the beneficiaries of the
Liquidation Trust in the same manner that members of an official committee of creditors
appointed pursuant to section 1102 of the Bankruptcy Code have fiduciary duties to the creditor
constituents represented by such a committee.
1.5.
New Committee.
(a)
Pursuant to the Plan, prior to the Plan Effective Date, the Committee
shall appoint up to six members of the Creditors Committee as of the Confirmation Date to remain and
serve on the Committee after the Effective Date (the “New Committee”). The other members of
the Committee shall be deemed to have resigned as of the Effective Date. Any member of the
New Committee may resign upon reasonable notice to the Liquidation Trustee and other
members of the New Committee and may be removed by the Bankruptcy Court for cause.
Twenty (20) days prior written notice shall constitute reasonable notice under this section. In the
event of a vacancy on the New Committee, the remaining members of the New Committee,
without further order of the Court but upon 7 business days prior notice to the U.S. Trustee, the
Liquidation Trustee and any party who serves the New Committee with written request for such
notice, shall select a proposed member who, to the extent reasonably possible, shall be a holder
of an Allowed General Unsecured Claim that has been classified in Class 4B under the Plan.
The New Committee is authorized to retain Otterbourg, Steindler, Houston & Xxxxx, P.C. as
counsel and such other professional persons as have previously been approved by the
Bankruptcy Court, including counsel for the Debtors, or as it deems necessary and appropriate,
who shall be compensated from the Trust Assets on a monthly basis. Members of the New
Committee shall have fiduciary duties to the beneficiaries of the Liquidation Trust in the same
manner that members of an official committee of creditors appointed pursuant to section 1102 of
the Bankruptcy Code have fiduciary duties to the creditor constituents represented by such
committee.
(b)
A majority of members of the New Committee must be present to
constitute a quorum, and no business of the New Committee may be conducted absent a quorum.
Meetings may be held in person, telephonically or electronically, as determined by the New
Committee as appropriate. The New Committee shall elect a chairperson who shall be charged
with the responsibility of scheduling, arranging for minutes to be kept and overseeing
administration of all New Committee matters. Any member of the New Committee shall not
participate in and shall abstain from any discussion of or vote with respect to any New
Committee matter, claim objection or litigation involving such New Committee member. The
New Committee shall meet at least quarterly during the first year after the Plan Effective Date,
and at least semi-annually thereafter, unless the New Committee, in its discretion, elects to meet
more or less frequently. The New Committee shall adopt the existing Committee By-Laws or
adopt new By-Laws addressing its conduct.
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(c)
The Liquidation Trustee shall report to the New Committee on at least a
monthly basis, or such other period as subsequently agreed to between the New Committee and
the Liquidation Trustee, as to the status of all material litigations and claims objections, and all
other material matters affecting the Liquidation Trust. The Liquidation Trustee shall obtain
approval of the New Committee prior to taking any action regarding the following matters:
(i) All
settlements for which prior procedures approved by the Bankruptcy Court required
approval by the Committee;
(ii) All
distributions to creditors made pursuant to the terms of the Plan;
(iii) Engaging and compensating consultants,
agents, employees and all professional persons to assist the Liquidation Trustee
with respect to the Liquidation Trustee’s responsibilities, other than those
professionals and persons already approved by the Bankruptcy Court to be retained by the
Debtors; and
(iv) All other material matters and decisions.
For purposes of this Section, the Liquidation Trustee’s failure to receive objections from a majority of the members of the New Committee within ten (10) days after written notice is provided to the New Committee of such proposed action (which notice may be in the form of the monthly report submitted to the Committee) shall be deemed approval of the New Committee for purposes of this Section.
II. RIGHTS, POWERS AND DUTIES OF
LIQUIDATION TRUSTEE
2.1.
General. As of the Effective Date, the Liquidation Trustee shall take
charge of the Trust Assets and, subject to the provisions hereof and the Plan, shall have full right,
power and discretion to manage the affairs of the Liquidation Trust, subject to Section 1.5.(c.)
above. Except as otherwise provided herein and in the Plan, the Liquidation Trustee shall have
the right and power to enter into any covenants or agreements binding the Liquidation Trust and
in furtherance of the purpose hereof and to execute, acknowledge and deliver any and all
instruments which are necessary or deemed by the Liquidation Trustee to be consistent with and
advisable in connection with the performance of his duties hereunder. In addition, subject to
Section 1.5.(c.) above, the Liquidation Trustee shall have the power and responsibility to do all
acts contemplated by the Plan to be done by the Liquidation Trustee and all other acts that may
be necessary or appropriate in connection with the disposition of the Trust Assets and the
distribution of the proceeds thereof in consultation with the New Committee, as contemplated by
the Plan, including, without limitation:
(a) To exercise all
power and authority that may be or could have been
exercised, commence all proceedings that may be or could have been commenced
and take all actions that may be or could have been taken by any officer, director
or shareholder of the Debtors with like effect as if authorized, exercised and taken
by unanimous action of such officers, directors and shareholders; including,
without limitation, amendment of the certificates of incorporation and by-laws of
the Debtors, merger of any Debtor into another Debtor and the dissolution of any
Debtor;
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(b) To maintain
escrows and other accounts, make Distributions to holders
of Allowed Claims and take other actions consistent with the Plan and the implementation
hereof, including the establishment, re-evaluation, adjustment and maintenance of
appropriate reserves, in the name of the Debtors or the Liquidation Trust, even in the event
of the dissolution of the Debtors;
(c) To make decisions in
consultation with the New Committee, without further Court approval,
regarding the retention or engagement of professionals, employees and consultants by the
Liquidation Trust and to pay, from the Wind-down Reserve, the fees and charges incurred
by the Liquidation Trust on or after the Effective Date for fees of
professionals, disbursements, expenses or related support services relating to the winding
down of the Debtors and implementation of the Plan and this Agreement without
application to the Court;
(d) To enter into
any agreement or execute any document required
by or consistent with the Plan and this Agreement and perform all of the obligations of
the Debtors or the Liquidation Trustee thereunder;
(e) To implement
and/or enforce all provisions of the Plan;
(f) To invest Cash
in accordance with section 345 of the Bankruptcy
Code or as otherwise permitted by a Final Order of the Court and as deemed appropriate by
the Liquidation Trustee;
(g) To collect
and liquidate any accounts receivable or other claims or
assets of the Debtors or the Estates pursuant to the Plan and this Agreement or not
otherwise disposed of pursuant to the Plan;
(h) To prosecute and/or settle
Litigation Claims and exercise, participate
in or initiate any proceeding before the Court or any other court of appropriate jurisdiction
and participate as a party or otherwise in any administrative, arbitrative or
other nonjudicial proceeding and litigate or settle such Litigation Claims on behalf
of the Liquidation Trust, and pursue to settlement or judgment such actions;
(i) To utilize Trust
Assets to purchase or create and carry all
appropriate insurance policies and pay all insurance premiums and costs he deems
necessary or advisable to insure the acts and omissions
of the Liquidation Trustee, and if appropriate, the Committee;
(j) To object to
any Claims (Disputed or otherwise), including, without
limitation, as discussed in Section 10.1 of the Plan, in consultation
with the New Committee and to defend, compromise and/or settle any Claims,
and to seek Court approval if required by existing Order of the Court;
(k) To pay fees
incurred pursuant to 28 U.S.C. § 1930(a)(6) and to File with
the Bankruptcy Court
and serve on the United States Trustee monthly financial
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reports until
such time as a final decree is entered closing these Cases or the Cases are converted or
dismissed, or the Bankruptcy Court orders otherwise;
(1) To maintain
appropriate books and records;
(m) To cause, on behalf
of the Liquidation Trust, the Debtors and
the Estates, all necessary tax returns and all other appropriate or necessary documents related
to municipal, State, Federal or other tax law to be prepared or filed timely;
(n) To provide the New
Committee, as soon as reasonably
practicable after the end of each month, with a monthly report setting forth (i) the receipt and
disposition by the Liquidation Trustee of property of the Estates or the Debtors during the prior
month, including the disposition of funds in the Liquidation Trust, the Wind-down Reserve and
Distribution Fund; (ii) all Disputed Claims resolved by the Liquidation Trustee during such period
and all remaining Disputed Claims; (iii) all known material non-Cash assets of the Debtors
remaining to be disposed of; (iv) an itemization of all expenses the Liquidation Trustee
anticipates will become due and payable within the subsequent three months; and (v) the Liquidation
Trustee’s forecast of cash receipts and disbursements for the subsequent three months;
(o) To abandon in any
commercially reasonable manner, including
abandonment or donation to a charitable organization of the Liquidation Trustee’s choice, any
assets that the Liquidation Trustee concludes, in consultation with the New Committee, are of no
benefit to creditors of the Estates or, at the conclusion of the Chapter 11 Cases, are determined
to be too impractical to distribute;
(p) To administer
the winding-up of the affairs of the Debtors including, but
not limited to, causing the dissolution of each Debtor and closing the Chapter 11
Cases; and
(q) To do all other
acts or things not inconsistent with the provisions of the
Plan and this Agreement that the Liquidation Trustee deems reasonably necessary
or desirable with respect to implementing the Plan and this Agreement.
Other than the obligations of the Liquidation Trustee enumerated or referred to herein or under the Plan, the Liquidation Trustee shall have no duties or obligations of any kind or nature respecting the implementation of the Plan or this Agreement. The Liquidation Trust and the Liquidation Trustee, as applicable, shall have the same authority as the Debtors pursuant to those certain orders (a) pursuant to section 105(a) of the Bankruptcy Code and Bankruptcy Rule 9019(b) authorizing the establishment of procedures to settle certain prepetition claims against the Debtors’ estates, dated July 12, 2000 and (b) authorizing and establishing procedures for certain future preference claim settlements in these cases, dated May 15, 2001.
2.2. Costs. Upon the Effective Date, the
Liquidation Trustee shall
reserve from the Trust Assets an amount necessary in his discretion to be held in a Liquidation
Trust wind-down fund (hereunder the “Wind-down Fund”). Amounts held in the Wind-down Fund shall be
used to pay amounts payable to the Liquidation Trustee pursuant to Section 2.7 hereof
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and the fees and expenses of any counsel, consultant or other advisor or agent retained by the Liquidation Trustee pursuant to this Agreement as well as other expenses of the liquidation process. In the event that amounts held in the Wind-down Fund, together with proceeds of any disposition of Trust Assets available for such purpose, are insufficient to make payments as provided in this Section 2.2, the Liquidation Trustee shall, unless funds sufficient for such purpose have otherwise been made available from any other sources including other accounts held by the Liquidation Trustee, have no obligation to make such payments.
2.3. Distributions. Pursuant to
the Plan, the Liquidation Trustee shall
record and account for all proceeds received upon any disposition of Trust Assets (after deduction
therefrom of amounts payable or reasonably estimated to be payable as provided in Section 2.2 or
2.7 hereof), for distribution in accordance with the provisions of the Plan.
2.4. Limitations on Investment
Powers of Liquidation Trustee. Funds in
the Liquidation Trust shall be invested consistent with the liquidity needs of the Liquidation
Trust in accordance with section 345 of the Bankruptcy Code or as otherwise provided in an order of
the Bankruptcy Court.
2.5. Liability of
Liquidation Trustee.
(a) Standard of Care. Except
in the case of willful misconduct, gross
negligence or fraud, the Liquidation Trustee shall not be liable for any loss or damage by reason
of any action taken or omitted by it pursuant to the discretion, powers and authority conferred, or
in good faith believed by the Liquidation Trustee to be conferred, on the Liquidation Trustee by
this Agreement or the Plan.
(b) No Liability for
Acts of Predecessors. No successor Liquidation Trustee
shall be in any way responsible for the acts or omissions of any Liquidation Trustee in office
prior to the date on which such successor becomes the Liquidation Trustee, unless a successor
Liquidation Trustee expressly assumes such responsibility.
(c) No Implied
Obligations. Subject to Section 1.4 hereof, the Liquidation
Trustee shall not be liable except for the performance of such duties and obligations as are
specifically set forth herein, and no implied covenants or obligations shall be read into this
Agreement against the Liquidation Trustee.
(d) No Liability
for Good Faith Error of Judgment. The Liquidation Trustee
shall not be liable for any error of judgment made in good faith, unless it shall be proved that the
Liquidation Trustee was grossly negligent in ascertaining the pertinent facts.
(e) Reliance by Liquidation
Trustee on Documents or Advice of Counsel or
Other Persons. Except as otherwise provided herein, the Liquidation Trustee may rely and shall
be protected in acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order or other paper or document believed by the Liquidation Trustee to
be genuine and to have been signed or presented by the proper party or parties. The Liquidation
Trustee also may engage and consult with legal counsel for the Liquidation Trust and other
agents and advisors and shall not be liable for any action taken or suffered by the Liquidation
Trustee in reliance upon the advice of such counsel, agents or advisors. The Liquidation Trustee
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shall have the right at any time to seek instructions from the Bankruptcy Court concerning the administration or disposition of the Trust Assets.
(f) No Personal Obligation
for Trust Liabilities. Persons dealing with the Liquidation Trustee, or seeking to assert claims
against the Debtors, shall look only to the Trust Assets to satisfy any liability incurred by the
Liquidation Trustee to any such Person in carrying out the terms of this Agreement, and the
Liquidation Trustee shall have no personal, individual obligation to satisfy any such liability.
2.6. Selection of Agents. Subject
to Bankruptcy Court approval of the
retention of bankruptcy professionals (to the extent that the Debtors or the Committee did not
previously obtain approval by the Bankruptcy Court), the Liquidation Trustee may employ employees
of the Debtors or other Persons, and also may employ or retain brokers, banks, custodians,
investment and financial advisors, attorneys (including existing counsel to the Committee or the
Debtors), accountants (including existing accountants for the Committee or the Debtors) and other
advisors and agents. The Liquidation Trustee may pay the salaries, fees and expenses of such
Persons from amounts in the Wind-down Fund, or, if such amounts are insufficient therefor, out of
the Trust Assets or proceeds thereof. In addition, the parties acknowledge that Trust Assets may
be advanced to satisfy such salaries, fees and expenses. The Liquidation Trustee shall not be
liable for any loss to the Liquidation Trust or any Person interested therein by reason of any
mistake or default of any such Person referred to in this Section 2.6 selected by the Liquidation
Trustee in good faith and without gross negligence.
2.7. Liquidation
Trustee’s Compensation, Indemnification and Reimbursement.
(a) As compensation for
services in the administration of this
Liquidation Trust, the Liquidation Trustee shall be compensated as specified on Schedule A hereto.
The Liquidation Trustee shall also be reimbursed for all documented actual, reasonable and
necessary out-of-pocket expenses incurred in the performance of its duties hereunder.
(b) In addition, the
Liquidation Trustee shall be indemnified by and
receive reimbursement from the Trust Assets against and from any and all loss, liability, expense
(including attorneys’ fees) or damage which the Liquidation Trustee incurs or sustains, in good
faith and without gross negligence, acting as Liquidation Trustee under this Agreement.
(c) It is anticipated and intended
that the Liquidation Trustee devote
his attention to the prompt and orderly administration of the Liquidation Trust and Plan.
Accordingly, for a period of one year after the Plan Effective Date or as otherwise mutually agreed
between the Liquidation Trustee and Committee as described herein (the “Initial Period”), it is
intended that the Liquidation Trustee be retained full-time under this Agreement. After such
Initial Period, it is anticipated and intended that the Liquidation Trustee may be able to fulfill
his/her obligations under this Agreement and the Plan by devoting a portion of each work-day or
work-week to performing the services set forth herein. Thus, subject to re-evaluation at such
time, the Liquidation Trustee would be retained only on a part-time basis on terms to be agreed
upon between the Liquidation Trustee and New Committee. The Liquidation Trustee may accept
employment elsewhere during such period (other than the said Initial Period) in which the
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Liquidation Trustee is performing services pursuant to this Agreement, provided such additional employment does not result in a conflict of interest with his obligations hereunder. Either the New Committee or the Liquidation Trustee may provide twenty days prior written notice to the other party notifying such party that the New Committee or Liquidation Trustee as applicable, believes that the Liquidation Trustee’s full-time employment hereunder is no longer required, whereupon the parties agree to in good faith negotiate satisfactory part time employment terms. If within such twenty-day notice period the New Committee and Liquidation Trustee cannot agree upon mutually agreed upon part time employment terms, the New Committee or Liquidation Trustee may opt to have the Liquidation Trustee’s employment deemed terminated as of thirty days after the expiration of the twenty-day notice period, or when the appointment of a successor Liquidation Trustee becomes effective.
(d) The Liquidation
Trustee is hereby authorized to obtain all reasonable necessary insurance coverage
for himself, his agents, representatives, employees or independent contractors,
including, without limitation, coverage with respect to the liabilities, duties
and obligations of the Liquidation Trustee and his agents, representatives, employees
or independent contractors under the Plan and this Agreement.
(e) It is
agreed that as of the Effective Date of the Plan, Xxxxxx X. Xxxxxxx shall have irrevocably
earned his severance pursuant to that certain Retention Program approved by the
Bankruptcy Court by order dated September 10, 1999 (the “Severance
Payment”). Xx. Xxxxxxx has agreed to defer receipt of such payment until the earliest
of (i) his resignation as Liquidation Trustee, (ii) termination of his appointment
or removal as Liquidation Trustee, or (iii) reduction of his duties as Liquidation
Trustee to a part-time basis of less than forty hours per week.
2.8. Tax Treatment
and Obligation to File Returns.
(a) It is
intended that the Liquidation Trust qualify as a grantor trust for federal income
tax purposes, all of the interests which are owned by the Trust Beneficiaries, such
that all items of income, gain, loss, deduction and credit will be included in the
income of the Trust Beneficiaries as if such items had been recognized directly
by the Trust Beneficiaries in the proportions in which they own beneficial interests
in the Liquidation Trust.
(b) The Liquidation
Trustee shall comply with all tax reporting requirements and, in connection therewith,
the Liquidation Trustee may require Trust Beneficiaries to provide certain tax information
as a condition to receipt of distributions, including, without limitation, filing
returns for the Liquidation Trust as a grantor trust pursuant to Treasury Regulation
s1.671-4(a).
2.9. Conflicting
Claims. In the event that the Liquidation Trustee becomes aware of any disagreement
or conflicting claims with respect to the Trust Assets, or if the Liquidation Trustee
in good faith is in doubt as to any action that should be taken under this Agreement,
the Liquidation Trustee shall have the absolute right to do any or all of the following:
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(i) to the
extent of such disagreement or conflict, or to the extent deemed by the Liquidation
Trustee necessary or appropriate in light of such disagreement or conflict, withhold
or stop all further performance under this Agreement with respect to the matter
of such dispute (except, in all cases, the safekeeping of the Trust Assets) until
the Liquidation Trustee is satisfied that such disagreement or conflicting claims
have been fully and finally resolved; or
(ii) file
a suit in interpleader or in the nature of interpleader in the Bankruptcy Court
and obtain an order requiring all Persons involved to litigate in the Bankruptcy
Court their respective claims arising out of or in connection with this Agreement;
or
(iii) file
any other appropriate motion for relief in the Bankruptcy Court.
2.10. Records
of Liquidation Trustee. The Liquidation Trustee shall maintain accurate records
of receipts and disbursements and other activity of the Liquidation Trust, and duly
authorized representatives of the New Committee shall have reasonable access to
the records of the Liquidation Trust.
III. RIGHTS,
POWERS AND DUTIES OF BENEFICIARIES.
3.1. Interests
of Beneficiaries. The Trust Beneficiaries shall have beneficial interests in the
Trust Assets as provided in the Plan. The Trust Beneficiaries’ proportionate
interests in the Trust Assets as thus determined shall not be transferable except
upon notice acceptable to the New Committee or Liquidation Trustee or pursuant to
the laws of descent and distribution or otherwise by operation of law.
3.2. Interests
Beneficial Only. The ownership of a beneficial interest hereunder shall not entitle
any Trust Beneficiary to any title in or to the Trust Assets as such (which title
shall be vested in the Liquidation Trustee) or to any right to call for a partition
or division of Trust Assets or to require an accounting.
IV. AMENDMENT
OF TRUST OR CHANGE IN TRUSTEE.
4.1. Resignation
of the Liquidation Trustee. The Liquidation Trustee may resign by an instrument
in writing signed by the Liquidation Trustee and filed with the Bankruptcy Court
with notice to the New Committee, provided that the Liquidation Trustee shall continue
to serve as such after his resignation until the time when appointment of his successor
shall become effective in accordance with Section 4.3 hereof.
4.2. Removal
of the Liquidation Trustee. Twenty days after a request of the majority of the
New Committee, or immediately upon cause, the Liquidation Trustee shall be removed.
Upon removal of the Liquidation Trustee by the New Committee in accordance with
this Section 4.2 other than for cause, the Liquidation Trustee shall be entitled
to a lump sum payment equal to $100,000 which payment shall be made from the Wind-down
Fund within 10 days of the removal of the Liquidation Trustee. For purposes of
this Agreement, “cause” shall mean (a) the willful and continued refusal
by the Liquidation Trustee to perform his duties as set forth herein (other than
due to physical illness or disability); or (b) gross negligence, gross misconduct,
fraud, embezzlement or theft.
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4.3. Appointment
of Successor Liquidation Trustee. In the event of the death, resignation, termination,
incompetence or removal of the Liquidation Trustee, the New Committee may appoint
a successor Liquidation Trustee and shall obtain Bankruptcy Court approval of such
appointment. Every successor Liquidation Trustee appointed hereunder shall execute,
acknowledge and deliver to the Bankruptcy Court and to the predecessor Liquidation
Trustee (if practicable) an instrument accepting such appointment and the terms
and provisions of this Agreement, and thereupon such successor Liquidation Trustee,
without any further act, deed or conveyance, shall become vested with all the rights,
powers and duties of the retiring Liquidation Trustee.
4.4. Continuity.
Unless otherwise ordered by the Bankruptcy Court, the death, resignation, incompetence
or removal of the Liquidation Trustee shall not operate to terminate or to remove
any existing agency created pursuant to the terms of this Agreement or invalidate
any action theretofore taken by the Liquidation Trustee. In the event of the resignation
or removal of the Liquidation Trustee, the Liquidation Trustee shall promptly execute
and deliver such documents, instruments and other writings as may be reasonably
requested from time to time by the Bankruptcy Court, the New Committee or the successor
Liquidation Trustee.
4.5. Amendment
of Agreement. This Agreement may be amended, modified, terminated, revoked or altered
only upon (i) order of the Bankruptcy Court and (ii) agreement of the Liquidation
Trustee and the New Committee.
V. TERMINATION
OF TRUST
5.1. The Liquidation
Trust shall terminate upon the earliest to occur of (a) the fulfillment of the Liquidation
Trust’s purpose by the liquidation of all of the Trust Assets and the distribution
of the proceeds of the liquidation thereof in accordance with the Plan; or (b) four
(4) years after the Effective date (the “Termination Date”). Reasonable
efforts shall be made to see to it that the Termination Date shall be no later than
the time reasonably necessary to accomplish the Liquidation Trust’s purpose
of liquidating assets and discharging liabilities. Notwithstanding the foregoing,
however, if warranted by the facts and circumstances and subject to the approval
of the Bankruptcy Court, upon proper notice to interested parties who have requested
such notice, upon a finding that the extension is necessary to the purpose of the
Liquidation Trust, the term of the Liquidation Trust may be extended for a finite
term based on its particular facts and circumstances. Each extension must be approved
by the Bankruptcy Court within six (6) months of the beginning of the extended term.
VI. RETENTION
OF JURISDICTION
6.1. The Bankruptcy
Court shall have exclusive jurisdiction over the Liquidation
Trust, the Liquidation Trustee and the Trust Assets as provided in the Plan, including
the determination of all controversies and disputes arising under or in connection
with the Liquidation Trust or this Agreement.
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VII. MISCELLANEOUS
7.1. Applicable
Law. The Liquidation Trust created by this Agreement shall
be construed in accordance with and governed by the laws of the State of Delaware,
subject to applicable provisions of the Bankruptcy Code.
7.2. Waiver.
No failure or delay of any party to exercise any right or remedy pursuant to this
Agreement shall affect such right or remedy or constitute a waiver by such party
of any right or remedy pursuant to this Agreement.
7.3. Relationship
Created. Nothing contained herein shall be construed to constitute any relationship
created by this Agreement as an association, partnership or joint venture of any
kind.
7.4. Interpretation.
Section and paragraph headings contained in this Agreement are for convenience
of reference only and shall not affect the meaning or interpretation of any provision
hereof.
7.5. Savings
Clause. If any clause or provision of this Agreement shall for any reason be held
invalid or unenforceable by any court or governmental agency of competent jurisdiction,
such invalidity or unenforceability shall not affect any other clause or provision
hereof, but this Agreement shall be construed, to the extent consistent with the
purpose hereof, as if such invalid or unenforceable provision had never been contained
herein.
7.6. Entire
Agreement. This Agreement and the Plan constitute the entire agreement by and among
the parties and there are no representations, warranties, covenants or obligations
with respect to the subject matter hereof except as set forth herein or therein.
This Agreement together with the Plan supersedes all prior and contemporaneous
agreements, understandings, negotiations and discussions, written or oral, of the
parties hereto, relating to such subject matter. Not withstanding the foregoing,
this Agreement shall have no effect on that certain Retention Program approved by
the Bankruptcy Court pursuant to an order dated September 10, 1999. Except as otherwise
authorized by the Court or specifically provided in this Agreement or in the Plan,
nothing in this Agreement is intended or shall be construed to confer upon or to
give any Person other than the parties hereto, the Committee, and the Trust Beneficiaries
any rights or remedies under or by reason of this Agreement.
7.7. Counterparts.
This Agreement may be executed in any number of counterparts, each of which when
so executed and delivered shall be an original document, but all of which counterparts
shall together constitute one and the same instrument.
7.8. Notices.
(a) All notices, requests or other communications required or permitted to be
made in accordance with this Agreement shall be in writing and shall be mailed by
first class mail or delivered by courier service or such other means that shall
be reasonable and appropriate under the circumstances:
(i) if to the
Liquidation Trust or Liquidation Trustee:
-12-
Xxxxxx X. Xxxxxxx
Xxxxxxxxx
0000 XxXxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
with a copy
to:
Otterbourg, Steinder, Houston & Xxxxx, P.C.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
and
Xxxxxx Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
and
Xxxxxx Xxxxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx
Xxxxxxxxxx Xxxxx, Esq.
(ii) if to
the Debtors:
Hechinger
0000 XxXxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
with a copy
to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xx, Esq.
(iii) if to the
New Committee:
-00-
Xxxxxxxxxx, Xxxxxxxx, Xxxxxxx & Xxxxx, P.C.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
and
Xxxxxx Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
and
Xxxxxx Xxxxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxxx Xxxxx, Esq.
(ii) If to
any Trust Beneficiary, to such address as such Trust Beneficiary shall have furnished
to the Debtors in writing prior to the Effective Date.
(b) Any Person
may change the address at which it is to receive notices under this Agreement by
furnishing written notice to the Liquidation Trustee.
7.9. Effective
Date. This Agreement shall become effective as of the Effective Date.
7.10. Tax
Identification Numbers. The Liquidation Trustee may require any Trust Beneficiary
to furnish to the Liquidation Trustee its employer or taxpayer identification number
as assigned by the Internal Revenue Service, and the Liquidation Trustee may condition
any distribution to any Trust Beneficiary upon such receipt of such identification
number and any other information required for the Liquidation Trustee to comply
with Internal Revenue Service requirements.
7.11. Successors
and Assigns. This Agreement shall be binding upon each of the parties hereto and
their respective successors and assigns and shall inure to the benefit of the parties,
Committee, the Trust Beneficiaries and, subject to the provisions hereof, their
respective successors and assigns.
-14-
7.12. Conflict
with the Plan. In the event of any conflict between the terms of this Agreement
and the Plan, the terms of the Plan shall govern.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
|
HECHINGER INVESTMENT COMPANY OF DELAWARE, INC., ET AL. |
|
| By: /s/ Xxxxxx X. Xxxxxxx | |
| /s/ Xxxxxx X. Xxxxxxx | |
|
XXXXXX X. XXXXXXX, as Liquidation Trustee |
|
| THE OFFICIAL COMMITTEE OF | |
|
UNSECURED CREDTORS OF HECHINGER INVESTMENT CO. OF DELAWARE, INC., ET AL. |
|
| By: /s/ Xxxxx X. Xxxxxx. | |
|
XXXXX X. XXXXXX Otterbourg, Steindler, Houston & Xxxxx, P.C. Counsel to the Official Committee of Unsecured Creditors |
|
-15-
SCHEDULE A
TERMS OF COMPENSATION
AND REIMBURSEMENT OF EXPENSES OF THE
LIQUIDATION TRUSTEE
1. COMPENSATION
(a) Beginning
at the Effective Date (as defined in the Plan), the Liquidation Trustee shall remain
employed full-time and be compensated at his current salary, until the occurrence
of (b) below.
(b) After
determination by the New Committee or the Liquidation Trustee that the Liquidation
Trustee is required solely on a part-time basis, in accordance with the Liquidation
Trust Agreement, the Liquidation Trustee shall be employed part-time and be compensated
at the rate of $190.00 per hour.
2. COMPUTATION OF HOURS; RECORDKEEPING
(a) For the
purpose of calculating the days and hours in respect of which the Liquidation Trustee
may receive compensation under Section 1 above, travel times shall be included in
the number of hours expended only if such travel is for the purpose of conducting
Liquidation Trustee activities. Travel by the Liquidation Trustee for personal
reasons, including travel to and from any residence of the Liquidation Trustee,
shall not be included in the number of hours expended.
(b) The Liquidation
Trustee shall maintain a record of his time expended in his capacity as Liquidation
Trustee, which shall include a brief description for such activities. The record
shall be available for inspection and copying by the New Committee. Beginning with
the first full calendar month ending after the Effective Date, the Liquidation Trustee
shall report to the New Committee as to the amount of time so expended during the
month and each month thereafter.
3. REIMBURSEMENT OF EXPENSES
The Liquidation Trustee shall be entitled to reimbursement for documented actual and reasonable expenses incurred in performing his duties as the Liquidation Trustee, and shall submit a report of said expenses with each report under Section 2 above.
