LIQUIDATING TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST, dated as of April 30, 2004, by
and among Shelbourne Properties II, Inc., a Delaware corporation (the "Company")
and Xxxxxx X. Xxxxxx (the "Trustee").
WHEREAS, the Company's Board of Directors (the "Board") and the
Company's stockholders have approved the dissolution of the Company pursuant to
a Plan of Liquidation (the "Plan");
WHEREAS, the Plan provides, among other things, that the Board will
cause the Company to dispose of all of the assets of the Company, wind up its
affairs, pay or adequately provide for the payment of all of its liabilities and
distribute to or for the benefit of its stockholders all of the Company's
assets;
WHEREAS, as of the date hereof, substantially all of the assets of
the Company have been sold or otherwise disposed of;
WHEREAS, the Board believes it to be in the best interest of the
Company to complete the liquidation of the Company by transferring all remaining
assets of the Company to a liquidating trust (the "Trust") with Xxxxxx X. Xxxxxx
serving as its initial trustee (the "Trustee"), including a cash reserve set
aside for the contingent and existing obligations of the Company and the Trust
(the "Cash Reserve");
WHEREAS, the Trustee shall administer the Trust pursuant to the
terms of this Agreement and, upon satisfaction of all liabilities and
obligations of the Company and the Trust, the Trustee shall distribute the
residue of the proceeds of the liquidation of the assets of the Company in
accordance with the terms hereof; and
WHEREAS, pursuant to a Redemption Assignment and Assumption
Agreement (the "Redemption Agreement"), immediately prior to the transfer and
assumption of liabilities hereunder, all assets of the Company's operating
partnership, other than Excluded Assets (as defined in the Redemption Agreement)
will be transferred and assigned to, and all liabilities of the Company's
operating partnership, other than Excluded Liabilities (as defined in the
Redemption Agreement) will be assumed by, the Trustee in trust for the benefit
of the Beneficiaries.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
NAMES AND DEFINITIONS
1.1 Name. The Trust shall be known as the Shelbourne II Liquidating
Trust.
1.2 Defined Terms. For all purposes of this instrument, unless the
context otherwise requires:
(a) "Affiliate" of any Person means any entity that controls, is
controlled by, or is under common control with such Person. As used
herein, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such entity, whether through ownership of voting securities or other
interests, by contract or otherwise.
(b) "Agreement" shall mean this instrument as originally executed or
as it may from time to time be amended pursuant to the terms hereof.
(c) "Beneficial Interest" shall mean each Beneficiary's
proportionate share of the Trust Assets determined by the ratio of the
number of Units held by such Beneficiary to the total number of Units held
by all Beneficiaries.
(d) "Beneficiary" shall mean each holder of Units.
(e) "Class B Units" shall mean Class B Partnership Units in
Shelbourne Properties II, L.P.
(f) "Excluded Liabilities" shall have the meaning set forth in that
certain Redemption Agreement, on or about the date hereof, among
Shelbourne Properties II L.P., the Company and HX Investors, L.P.
(g) "Liabilities" shall mean all of the Company's unsatisfied debts,
claims, liabilities, commitments, suits and other obligations, whether
contingent or fixed or otherwise (including, without limitation, any costs
and expenses incurred or to be incurred in connection with the liquidation
of the Company). For the avoidance of doubt, in no event shall Liabilities
include any Excluded Liabilities.
(h) "Person" shall mean an individual, a corporation, a partnership,
an association, a joint stock company, a limited liability company, a
trust, a joint venture, any unincorporated organization, or a government
or political subdivision thereof.
(i) "Record Date" shall mean April 23, 2004.
(j) "Retained Assets" shall mean all of the Company's right, title
and interest in, to and under, all of the Company's assets, including,
without limitation, its unsold properties, accounts receivable, cash,
securities, claims, causes of action, contingent claims and reserves
distributed to the Trustee.
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(k) "Shares" shall mean the shares of common stock, $0.01 par value
per share, of the Company.
(l) "Stockholders" shall mean the holders of record of the
outstanding Shares of the Company at the close of business on the Record
Date.
(m) "Transfer Date" shall mean April 30, 2004.
(n) "Trust" shall mean the Trust created by this Agreement.
(o) "Trust Assets" shall mean all the property held from time to
time by the Trustee under this Agreement, which initially shall consist of
the Retained Assets (excluding any liquidating distributions declared, but
unpaid, having a record date prior to the Transfer Date), and in addition,
shall thereafter include all dividends, distributions, rents, royalties,
income, payments and recoveries of claims, proceeds and other receipts of,
from, or attributable to any assets held by the Trust, less any of the
foregoing utilized by the Trustee to pay expenses of the Trust, satisfy
Liabilities or to make distributions to the Beneficiaries pursuant to the
terms and conditions hereof.
(p) "Trustee" shall mean the original Trustee under this Agreement
and any successors thereto, pursuant to and in accordance with the terms
of this Agreement.
(q) "Units" shall have the meaning given to such term in Section
3.1(a).
ARTICLE II
GRANT TO AND NATURE OF TRANSFER
2.1 Grant. The Company hereby grants, delivers, releases, assigns
and conveys to the Trustee, to be held in trust for the benefit of the
Beneficiaries of the Trust, all of the Company's right, title, interest in, to
and under, the Retained Assets, for the uses and purposes stated herein, subject
to the terms and provisions set out below, and the Trustee hereby accepts such
Retained Assets, subject to the following terms and provisions.
2.2 Purpose of Trust.
(a) The Trust is organized for the sole purpose of winding up the
Company's affairs and the liquidation of the Retained Assets with no
objective to continue or engage in the conduct of a trade or business,
except as necessary for the orderly liquidation of the Trust Assets.
(b) The Retained Assets granted, assigned and conveyed to the
Trustee shall be held in the Trust, and the Trustee will (i) further
liquidate the Trust Assets as it deems necessary to carry out the purpose
of the Trust and facilitate distribution of the Trust Assets, (ii)
allocate, protect, conserve and manage the Trust Assets in accordance with
the terms and conditions hereof, (iii) complete the winding up of the
Company's affairs, (iv) act on behalf of the Beneficiaries, and (v)
distribute the Trust Assets in accordance with the terms and conditions
hereof.
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(c) It is intended that for Federal, state and local income tax
purposes, the Trust shall be treated as a liquidating trust under Treasury
Regulation Section 301.7701-4(d) and any analogous provision of state or
local law, and the Beneficiaries shall be treated as the owners of their
respective share of the Trust pursuant to Sections 671 through 679 of the
Internal Revenue Code of 1986, as amended (the "Code") and any analogous
provision of state or local law, and shall be taxed on their respective
share of the Trust's taxable income (including both ordinary income and
capital gains) pursuant to Section 671 of the Code and any analogous
provision of state or local law. The Trustee shall file all tax returns
required to be filed with any governmental agency consistent with this
position, including, but not limited to, any returns required of grantor
trusts pursuant to Section 1.671-4(a) of the Income Tax Regulations.
2.3 No Reversion to the Company. In no event shall any part of the
Trust Assets revert to or be distributed to the Company.
2.4 Instruments of Further Assurance. The Company will, upon
reasonable request of the Trustee, execute, acknowledge, and deliver such
further instruments and do such further acts as may be necessary or proper to
carry out effectively the purposes of this Agreement, to confirm or effectuate
the transfer to the Trustee of any property intended to be covered hereby, and
to vest in the Trustee and its successors and assigns, the estate, powers,
instruments or funds in trust hereunder.
2.5 Payment of Liabilities. The Trustee, in its capacity as Trustee
hereunder and not in its individual capacity, hereby assumes all Liabilities and
agrees hereafter to cause the Trust to pay, discharge and perform when due all
of the Liabilities. Should any Liability be asserted against the Trustee as the
transferee of the Trust Assets or as a result of the assumption made in this
Section 2.5, the Trustee may use such part of the Trust Assets as may be
necessary in contesting any such Liability or in payment thereof, but in no
event shall the Trustee, Beneficiaries or agents of the Trust be personally
liable, nor shall resort be had to the private property of such Persons, in the
event that the Trust Assets are not sufficient to satisfy the Liabilities.
ARTICLE III
BENEFICIARIES
3.1 Beneficial Interests.
(a) The Beneficial Interest of each Stockholder shall be determined
in accordance with a certified copy of the Company's stockholder list as
of the Record Date. The Company's transfer agent will deliver such a
certified copy of the Company's stockholder list to the Trustee within a
reasonable time after such date. The Trustee shall be entitled to rely and
shall be fully protected in relying upon the certified copy of the
Company's stockholder list. For ease of administration, the Trustee shall
express the Beneficial Interest of each Beneficiary in terms of units
("Units"). Each record owner of Shares as of the close of business on the
Record Date shall receive one Unit for each Share then held of record. In
addition, from and after the Transfer Date, the record owner(s) of Class B
Units as of the Record Date shall hold, without any further action, such
number of Units as determined in accordance with the provisions of
Schedule A hereto. Each Beneficiary shall have a pro rata interest in the
Trust Assets equal to the number of Units held by such owner divided by
the total number of Units held by all Beneficiaries.
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(b) On and after the Transfer Date, all outstanding Shares shall
automatically be deemed cancelled.
(c) The rights of Beneficiaries in, to and under the Trust Assets
and the Trust shall not be represented by any form of certificate or other
instrument, and no Beneficiary shall be entitled to such a certificate.
The Trustee shall maintain at its place of business a record of the name
and address of each Beneficiary and such Beneficiary's aggregate Units in
the Trust.
(d) If any conflicting claims or demands are made or asserted with
respect to the ownership of any Units, or if there is any disagreement
between the transferees, assignees, heirs, representatives or legatees
succeeding to all or part of the interest of any Beneficiary resulting in
adverse claims or demands being made in connection with such Units, then,
in any of such events, the Trustee shall be entitled, at its sole
election, to refuse to comply with any such conflicting claims or demands.
In so refusing, the Trustee may elect to make no payment or distribution
with respect to such Units, or to make such payment to a court of
competent jurisdiction or an escrow agent, and in so doing, the Trustee
shall not be or become liable to any of such parties for its failure or
refusal to comply with any of such conflicting claims or demands or to
take any other action with respect thereto, nor shall the Trustee be
liable for interest on any funds which it may so withhold. Notwithstanding
anything to the contrary set forth in this Section 3.1(d), the Trustee
shall be entitled to refrain and refuse to act until either (i) the rights
of the adverse claimants have been adjudicated by a final judgment of a
court of competent jurisdiction, (ii) all differences have been adjusted
by valid written agreement between all of such parties, and the Trustee
shall have been furnished with an executed counterpart of such agreement,
or (iii) there is furnished to the Trustee a surety bond or other security
satisfactory to the Trustee, as it shall deem appropriate, to fully
indemnify it as between all conflicting claims or demands.
3.2 Rights of Beneficiaries. Each Beneficiary shall be entitled to
participate in the rights and benefits due to a Beneficiary hereunder according
to the Beneficiary's Beneficial Interest. Each Beneficiary shall take and hold
the same subject to all the terms and provisions of this Agreement. The interest
of each Beneficiary hereunder is declared, and shall be in all respects,
personal property and upon the death of an individual Beneficiary, the
Beneficiary's Beneficial Interest shall pass as personal property to the
Beneficiary's legal representative and such death shall in no way terminate or
affect the validity of this Agreement. A Beneficiary shall have no title to,
right to, possession of, management of, or control of, the Trust Assets except
as expressly provided herein. No widower, widow, heir or devisee of any person
who may be a Beneficiary shall have any right of dower, homestead, or
inheritance, or of partition, or of any other right, statutory or otherwise, in
any property forming a part of the Trust Assets but the whole title to all the
Trust Assets shall be vested in the Trustee and the sole interest of the
Beneficiaries shall be the rights and benefits given to such Persons under this
Agreement.
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3.3 Limitations on Transfer of Interests of Beneficiaries.
(a) THE BENEFICIAL INTEREST OF A BENEFICIARY MAY NOT BE TRANSFERRED;
PROVIDED THAT THE BENEFICIAL INTERESTS SHALL BE ASSIGNABLE OR TRANSFERABLE
BY WILL, INTESTATE SUCCESSION, OR OPERATION OF LAW.
(b) Except as may be otherwise required by law, the Beneficial
Interests of the Beneficiaries hereunder shall not be subject to
attachment, execution, sequestration or any order of a court, nor shall
such interests be subject to the contracts, debts, obligations,
engagements or liabilities of any Beneficiary, but the interest of a
Beneficiary shall be paid by the Trustee to the Beneficiary free and clear
of all assignments, attachments, anticipations, levies, executions,
decrees and sequestrations and shall become the property of the
Beneficiary only when actually received by such Beneficiary.
3.4 Trustee as Beneficiary. The Trustee, either individually or in a
representative or fiduciary capacity, may be a Beneficiary to the same extent as
if it were not a Trustee hereunder and shall have all rights of a Beneficiary,
including, without imitation, the right to vote and to receive distributions, to
the same extent as if it was not the Trustee hereunder.
ARTICLE IV
DURATION AND TERMINATION OF THE TRUST
4.1 Duration. The existence of the Trust shall terminate upon the
earliest of (i) the distribution of all the Trust Assets as provided in Section
5.7, or (ii) the expiration of a period of three years from the Transfer Date.
The Trust shall not in any event terminate pursuant to subparagraph (ii) of this
Section 4.1 prior to the date on which the Trustee is permitted to make a final
distribution in accordance with Section 5.7.
4.2 Other Obligations of Trustee upon Termination. Upon termination
of the Trust, the Trustee shall provide for the retention of the books, records,
lists of holders of Units, certificates for Shares and files which shall have
been delivered to or created by the Trustee. At the Trustee's discretion, all of
such records and documents may be destroyed at any time after seven years from
the distribution of all the Trust Assets. Except as otherwise specifically
provided herein, upon the distribution of all the Trust Assets, the Trustee
shall have no further duties or obligations hereunder.
ARTICLE V
ADMINISTRATION OF TRUST ASSETS
5.1 Sale of Trust Assets. Subject to the terms and conditions of
this Agreement, the Trustee shall, at such times as the Trustee deems
appropriate, collect, liquidate, reduce to cash, transfer, assign, or otherwise
dispose of all or any part of the Trust Assets as it deems appropriate at public
auction or at private sale for cash, securities or other property, or upon
credit (either secured or unsecured as the Trustee shall determine). The Trustee
shall make continuing efforts to dispose of the Trust's assets, make timely
distributions and not unduly prolong the duration of the Trust.
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5.2 Efforts to Resolve Claims and Liabilities. Subject to the terms
and conditions of this Agreement, the Trustee shall make appropriate efforts to
resolve any contingent or unliquidated claims and outstanding contingent
Liabilities for which the Trust may be responsible, dispose of the Trust Assets,
make timely distributions and not unduly prolong the duration of the Trust.
5.3 Continued Collection of Property of Trust Assets. All property
that is determined to be a part of the Trust Assets shall continue to be
collected by the Trustee and held as a part of the Trust. The Trustee shall hold
the Trust Assets without being obligated to provide for or pay any interest
thereon to any Beneficiary, except to the extent of such Beneficiary's share of
interest actually earned by the Trust after payment of the Trust's liabilities
and expenses as provided in Section 5.5.
5.4 Restriction on Trust Assets. The Trustee shall cause to be
distributed any assets prohibited by Revenue Procedure 82-58 (as amplified by
Revenue Procedure 91-15), as the same may be further amended, supplemented, or
modified, including, but not limited to, any listed stocks or securities, any
readily-marketable assets, any operating assets of a going business, any
unlisted stock of a single issuer that represents 80% or more of the stock of
such issuer, or any general or limited partnership interest, except that the
Trust may receive and hold for disposition, the ownership interests in real
property identified in Schedule C hereto. The Trustee shall not retain cash in
excess of a reasonable amount to meet expenses, charges and obligations of the
Trust, the Trust Assets and all Liabilities.
5.5 Payment of Expenses and Liabilities. The Trustee shall pay from
the Trust Assets all expenses, charges, and obligations of the Trust and of the
Trust Assets and all Liabilities and obligations which the Trustee specifically
assumes and agrees to pay pursuant to this Agreement and such transferee
liabilities which the Trustee may be obligated to pay as transferees of the
Trust Assets, including, but not limited to, interest, penalties, taxes,
assessments, and public charges of any kind or nature 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 which may be determined to be a proper charge against the Trust
Assets by the Trustee.
5.6 Interim Distributions. At such times as may be determined in its
sole discretion, the Trustee shall distribute, or cause to be distributed to the
Beneficiaries, in proportion to the number of Units held by each Beneficiary on
the record date for such distribution as determined by the Trustee in its sole
discretion, such cash or other property comprising a portion of the Trust Assets
as the Trustee may in its sole discretion determine may be distributed;
provided, however, that the Trustee shall distribute, or cause to be
distributed, at least annually to the Beneficiaries all cash proceeds from the
sale of the Trust Assets in excess of a reasonable amount (as determined by the
Trustee) to satisfy the Liabilities and expenses described in Section 5.5.
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5.7 Final Distribution. If the Trustee determines that the
Liabilities and all other claims, expenses, charges, and obligations of the
Trust have been paid or discharged, the Trustee shall, as expeditiously as is
consistent with the conservation and protection of the Trust Assets, distribute
the remaining Trust Assets, if any, to the Beneficiaries in proportion to the
number of Units held by each Beneficiary.
5.8 Reports to Beneficiaries and Others.
(a) As soon as practicable after the Transfer Date, the Trustee will
mail to each Beneficiary a notice indicating how many Units such person
beneficially owns and the Trustee's address and other contact information.
As soon as practicable after the end of each tax year and after
termination of the Trust, but in any event within 90 days after each such
event, the Trustee shall submit a written report and account to the
Beneficiaries showing (i) the assets and liabilities of the Trust at the
end of such taxable year or upon termination and the receipts and
disbursements of the Trustee for such taxable year or period, prepared in
accordance with generally accepted accounting principles, (ii) any changes
in the Trust Assets and Liabilities that they have not previously
reported, (iii) statements of cash flow for such taxable year, and (iv)
any action taken by the Trustee in the performance of its duties under
this Agreement that it has not previously reported, and which, in its
opinion, materially affects the Trust Assets or Liabilities.
(b) The tax year of the Trust shall end on December 31 of each year.
(c) During the course of a tax year, whenever a material event
relating to the Trust's Assets occurs, the Trustee shall, within a
reasonable period of time after such occurrence, prepare and mail to the
Beneficiaries an interim report describing such event. The occurrence of a
material event need not be reported in an interim report if an annual
report pursuant to Section 5.8(a) will be issued at approximately the same
time that such interim report would be issued and such annual report
describes the material event as it would be discussed in an interim
report. The occurrence of a material event will be determined solely by
the Trustee or as may be required by the rules and regulations promulgated
by the Securities and Exchange Commission.
(d) Title 12, Section 3585 of the Delaware Code shall apply to the
Trustee's reports pursuant to this Section.
5.9 Federal Income Tax Information. As soon as practicable after the
close of each tax year, the Trustee shall mail to each Person who was a
Beneficiary during such year, a statement showing, on a per Unit basis, the
information necessary to enable a Beneficiary to determine its taxable income
(if any) from the Trust as determined for Federal income tax purposes. In
addition, after receipt of a request in good faith, the Trustee shall furnish to
any Person who has been a Beneficiary at any time during the preceding year, at
the expense of such Person and at no cost to the Trust, a statement containing
such further tax information as is reasonably requested by such Person.
5.10 Books and Records. The Trustee shall maintain in respect of the
Trust and the holders of Units books and records relating to the Trust Assets,
income and liabilities of the Trust in such detail and for such period of time
as may be necessary to enable it to make full and proper accounting in respect
thereof in accordance with this Article V and to comply with applicable law.
Such books and records shall be maintained on a basis or bases of accounting
necessary to facilitate compliance with the tax reporting requirements of the
Trust and the reporting obligations of the Trustee under Section 5.8. Except as
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provided in Section 5.8, nothing in this Agreement requires the Trustee to file
any accounting or seek approval of any court with respect to the administration
of the Trust or as a condition for managing any payment or distribution out of
the Trust Assets. Beneficiaries shall have the right upon 30 days' prior written
notice delivered to the Trustee to inspect during normal business hours such
books and records (including financial statements); provided that, if so
requested, such Beneficiaries shall have entered into a confidentiality
agreement satisfactory in form and substance to the Trustee.
5.11 Appointment of Agents, etc.
(a) The Trustee shall be responsible for the general policies of the
Trust and for the general supervision of the activities of the Trust
conducted by all agents, advisors or managers of the Trust. The Trustee
shall have the power to appoint or contract with any Person or Persons as
the Trustee may deem necessary or proper for the transaction of all or any
portion of the activities of the Trust.
(b) The Trustee shall have the power to determine the terms and
compensation of any Person with whom it may contract pursuant to Section
5.11(a), subject to the provisions of Section 5.12.
(c) The Trustee shall not be required to administer the Trust as its
sole and exclusive function and the Trustee may have other business
interests and may engage in other activities similar or in addition to
those relating to the Trust, including the rendering of advice or services
of any kind to investors or any other Persons and the management of other
investments, subject to the Trustee's obligations under this Agreement and
applicable law.
5.12 Fiduciary Duty.
(a) To the extent that, at law or in equity, the Trustee has duties
(including fiduciary duties) and liabilities relating thereto to the
Trust, the Beneficiaries or to any other Person, a Trustee acting under
this Agreement shall not be liable to the Trust, the Beneficiaries or to
any other Person for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of the Trustee otherwise existing at
law or in equity are agreed by the parties hereto to replace such other
duties and liabilities of the Trustee.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
the Trustee or any of its Affiliates, on the one hand, and the Trust or
any Beneficiaries or any other Person, on the other hand; or
(ii) whenever this Agreement or any other agreement
contemplated herein or therein provides that the Trustee shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust, any Beneficiaries or any other Person,
the Trustee shall resolve such conflict of interest, take such action or provide
such terms, considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
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or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Trustee, the
resolution, action or terms so made, taken or provided by the Trustee shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or of any duty or obligation of the Trustee at law or in equity or otherwise.
(c) Notwithstanding any other provision of this Agreement or
otherwise applicable law, whenever in this Agreement the Trustee is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Trustee shall be entitled to consider such interests and factors as it
desires, including its own interests, and, to the fullest extent permitted
by applicable law, shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust, the
Beneficiaries or any other Person; or
(ii) in its "good faith" or under another express standard,
the Trustee shall act under such express standard and shall not be subject
to any other or different standard.
(d) The Trustee and any Affiliate of the Trustee may engage in or
possess an interest in other profit-seeking or business ventures of any
nature or description, independently or with others, whether or not such
ventures are competitive with the Trust and the doctrine of corporate
opportunity, or any analogous doctrine, shall not apply to the Trustee. No
Trustee who acquires knowledge of a potential transaction, agreement,
arrangement or other matter that may be an opportunity for the Trust shall
have any duty to communicate or offer such opportunity to the Trust, and
such Trustee shall not be liable to the Trust or to the Beneficiaries for
breach of any fiduciary or other duty by reason of the fact that such
Trustee pursues or acquires for, or directs such opportunity to another
Person or does not communicate such opportunity or information to the
Trust. Neither the Trust nor any Beneficiary shall have any rights or
obligations by virtue of this Agreement or the trust relationship created
hereby in or to such independent ventures or the income or profits or
losses derived therefrom, and the pursuit of such ventures, even if
competitive with the activities of the Trust, shall not be deemed wrongful
or improper. Any Trustee may engage or be interested in any financial or
other transaction with the Beneficiaries or any Affiliate of the Trust or
the Beneficiaries, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other
obligations of the Trust or the Beneficiaries or their Affiliates.
ARTICLE VI
POWERS OF AND LIMITATIONS ON THE TRUSTEE
6.1 Limitations on Trustee. The Trustee shall not at any time, on
behalf of the Trust or Beneficiaries, enter into or engage in any trade or
business except as necessary for the orderly liquidation of the Trust Assets.
The Trustee shall be restricted to the holding, collection and sale of the Trust
Assets and the payment and distribution thereof for the purposes set forth in
this Agreement and to the conservation and protection of the Trust Assets and
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the administration thereof in accordance with the provisions of this Agreement.
In no event shall the Trustee take any action which 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 Trustee shall not
invest any of the cash held as Trust Assets, except that the Trustee may invest
in (i) direct obligations of the United States of America or obligations of any
agency or instrumentality thereof which mature not later than one year from the
date of acquisition thereof, (ii) money market deposit accounts, checking
accounts, savings accounts, or certificates of deposit, or other time deposit
accounts which mature not later than one year from the date of acquisition
thereof which are issued by a commercial bank or savings institution organized
under the laws of the United States of America or any state thereof, or (iii)
other temporary investments not inconsistent with the Trust's status as a
liquidating trust for tax purposes. Neither the Trustee nor any Affiliate of the
Trustee shall take any action to facilitate or encourage trading in the
Beneficial Interests or in any instrument tied to the value of the Beneficial
Interests such as due xxxx trading.
6.2 Specific Powers of Trustee. Subject to the provisions of the
terms and conditions of this Agreement, the Trustee shall have the following
specific powers in addition to any powers conferred upon it by any other Section
or provision of this Agreement or any laws of the State of Delaware; provided
that the enumeration of the following powers shall not be considered in any way
to limit or control the power of the Trustee to act as specifically authorized
by any other Section or provision of this Agreement and to act in such a manner
as the Trustee may deem necessary or appropriate to conserve and protect the
Trust Assets or to confer on the Beneficiaries the benefits intended to be
conferred upon them by this Agreement:
(a) to determine the nature and amount of the consideration to be
received with respect to the sale or other disposition of, or the grant of
interest in, the Trust Assets;
(b) to collect, liquidate or otherwise convert into cash, or such
other property as it deems appropriate, all property, assets and rights in
the Trust Assets, and to pay, discharge, and satisfy all other claims,
expenses, charges, Liabilities and obligations existing with respect to
the Trust Assets, the Trust or the Trustee;
(c) to elect, appoint, engage or retain any Persons as agents,
representatives or independent contractors (including without limitation
real estate advisors, investment advisors, accountants, transfer agents,
attorneys-at-law, managers, appraisers, brokers, or otherwise) in one or
more capacities, and to pay reasonable compensation from the Trust Assets
for services in as many capacities as such Person may be so elected,
appointed, engaged or retained (provided that any such agreements or
arrangements with a person or entity affiliated with the Trustee shall be
on terms no less favorable to the Trust than those available to the Trust
in similar agreements or arrangements with unaffiliated third parties, and
such agreements or arrangements shall be terminable, without penalty, on
60 days prior written notice by the Trust), to prescribe the titles,
powers and duties, terms of service and other terms and conditions of the
election, appointment, engagement or retention of such Persons and, except
as prohibited by law, to delegate any of the powers and duties of the
Trustee to agents, representatives, independent contractors or other
Persons, including, without limitation, the retention of Kestrel
Management L.P. in accordance with paragraph 7 of the Plan;
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(d) to retain and set aside such funds out of the Trust Assets as
the Trustee shall deem necessary or expedient to pay, or provide for the
payment of (i) unpaid claims, expenses, charges, Liabilities and
obligations of the Trust, the Company or any Subsidiary; and (ii) the
expenses of administering the Trust Assets;
(e) to do and perform any and all acts necessary or appropriate for
the conservation and protection of the Trust Assets, including acts or
things necessary or appropriate to maintain the Trust Assets held by the
Trustee pending sale or disposition thereof or distribution thereof to the
Beneficiaries;
(f) to institute or defend actions or judgments for declaratory
relief or other actions or judgments and to take such other action, in the
name of the Trust or the Company or as otherwise required, as the Trustee
may deem necessary or desirable to enforce any instruments, contracts,
agreements, causes of action, or rights relating to or forming a part of
the Trust Assets;
(g) to determine conclusively from time to time the value of and to
revalue the securities and other property of the Trust, in accordance with
independent appraisals or other information as it deems necessary or
appropriate;
(h) to cancel, terminate, or amend any instruments, contracts,
agreements, obligations, or causes of action relating to or forming a part
of the Trust Assets, and to execute new instruments, contracts,
agreements, obligations or causes of action notwithstanding that the terms
of any such instruments, contracts, agreements, obligations, or causes of
action may extend beyond the terms of the Trust;
(i) 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 Trustee is not qualified to act as Trustee, 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 a trustee of such property and require from
such trustee such security, if any, as may be designated by the Trustee,
which, in the sole discretion of the Trustee may be paid out of the Trust
Assets. The trustee so appointed shall have all the rights, powers,
privileges and duties and shall be subject to the conditions and
limitations of the Trust, except as limited by the Trustee 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 Trustee herein appointed for all
monies, assets and other property which may be received by it in
connection with the administration of such property. The Trustee hereunder
may remove such trustee, with or without cause, and appoint a successor
trustee at any time by the execution by the Trustee of a written
instrument declaring such trustee removed from office, and specifying the
effective date of removal;
(j) to cause any investments of any part of the Trust Assets to be
registered and held in its name or in the names of a nominee or nominees
without increase or decrease of liability with respect thereto;
(k) to terminate and dissolve any entities owned by the Trust;
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(l) to perform any act authorized, permitted, or required under any
instrument, contract, agreement, right, obligation, or cause of action
relating to or forming a part of the Trust Assets whether in the nature of
an approval, consent, demand, or notice thereunder or otherwise, unless
such act would require the consent of the Beneficiaries in accordance with
the express provisions of this Agreement.
ARTICLE VII
CONCERNING THE TRUSTEE, BENEFICIARIES AND AGENTS
7.1 Generally. The Trustee accepts and undertakes to discharge the
Trust, upon the terms and conditions hereof, on behalf of the Beneficiaries. The
Trustee shall exercise such of the rights and powers vested in it by this
Agreement in good faith and in the best interests of the Beneficiaries. The
Trustee shall not be personally liable for any act or omission hereunder except
as determined by a final order of a court of competent jurisdiction for its own
grossly negligent action, its own grossly negligent failure to act, or its own
fraud or willful misconduct, in each case, as determined by a final order of a
court of competent jurisdiction from which no appeal can or is taken, except
that:
(a) no successor Trustee shall be responsible for the acts or
omissions of a Trustee in office prior to the date on which it becomes a
Trustee;
(b) the Trustee shall not be liable to the Beneficiaries for the
acts or omissions of an agent, advisor or manager of the Trust appointed
by the Trustee hereunder, except where the Trustee specifically directs
the act of such Person, delegates the authority to such Person to act
where such Trustee was under a duty not to delegate, does not use
reasonable prudence in the selection or retention of such Person, does not
periodically review such person's overall performance and compliance with
the terms of such delegation; conceals the act or omission of such Person;
or neglects to take reasonable steps to redress any wrong committed by
such Person when such Trustee is aware of such Person's act or omission;
provided, however, that this subsection (b) shall not apply to acts or
omissions of any Affiliate of Trustee, or any of their respective
employees;
(c) the Trustee shall not 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;
(d) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement; but in the case of any such certificates or opinions which
are specifically required to be furnished to the Trustee by any provision
hereof, the Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Agreement;
(e) the Trustee shall not be liable for any reasonable error of
judgment made in good faith; and
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(f) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by the Trustee in good faith in accordance with the
terms and conditions of this agreement and at the direction of
Beneficiaries having aggregate Units of at least one-third of the total
Units held by all Beneficiaries relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any right or power conferred upon the Trustee under this
Agreement.
7.2 Reliance by Trustee. Except as otherwise provided in Section
7.1:
(a) The Trustee may consult with legal counsel, auditors or other
experts to be selected by it, and the advice or opinion of such counsel,
auditors, or other experts shall be full and complete personal protection
to the Trustee and agents of the Trust in respect of any action taken or
suffered by the Trustee in good faith and in the reliance on, or in
accordance with, such advice or opinion.
(b) Persons dealing with the Trustee shall look only to the Trust
Assets to satisfy any liability incurred by the Trustee to such Person in
carrying out the terms of the Trust, and the Trustee shall have no
personal or individual obligation to satisfy any such liability.
(c) As far as reasonably practicable, the Trustee 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,
the Trustee nor their agents shall be liable thereunder, and that the
other parties to such instrument shall look solely to the Trust Assets for
the payment of any claim thereunder or the performance thereof; provided
that the omission of such provision from any such instrument shall not
render the Beneficiaries, the Trustee or their agents liable, nor shall
the Trustee be liable to anyone for such omission.
7.3 Limitation on Liability to Third Persons. No Beneficiary shall
be subject to any personal liability whatsoever, in tort, contract, or
otherwise, to any Person in connection with the Trust Assets or the affairs of
the Trust, and, to the fullest extent permitted by law, no Trustee or agent of
the Trust shall be subject to any personal liability whatsoever in tort,
contract, or otherwise, to any Beneficiary or any other Person in connection
with the Trust Assets or the affairs of the Trust, except to the extent
determined by a court of competent jurisdiction from which no appeal can be or
is taken, to have resulted from the gross negligence, fraud or willful
misconduct knowingly and intentionally committed in bad faith by such Trustee or
agent of the Trust. All such other Persons shall look solely to the Trust Assets
for satisfaction of claims of any nature arising in connection with the affairs
of the Trust. The Trustee shall, at all times, at the expense of the Trust,
maintain insurance for the protection of the Trust Assets, its Beneficiaries,
the Trustee and agents in such amount as the Trustee shall deem adequate to
cover all foreseeable liability to the extent available at reasonable rates.
7.4 Recitals. Any written instrument creating an obligation of the
Trust shall be conclusively taken to have been executed or done by a Trustee or
agent of the Trust only in its capacity as Trustee under this Agreement, or in
its capacity as an agent of the Trust.
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7.5 Indemnification. The Trustee and each Person appointed by the
Trustee pursuant to Section 5.11, and the directors, officers, employees and
agents of each such Person (each an "Indemnified Person" and collectively the
"Indemnified Persons"), shall, to the fullest extent permitted by law, be
indemnified out of the Trust Assets against all liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees, reasonably incurred by the Indemnified Persons
in connection with the defense or disposition of any action, suit or other
proceeding by the Trust or any other Person, whether civil or criminal, in which
the Indemnified Person may be involved or with which the Indemnified Person may
be threatened: (i) in the case of the Trustee or a Person appointed by the
Trustee pursuant to Section 5.11, while in office or thereafter, by reason of
his being or having been such a Trustee or agent including, without limitation,
in connection with or arising out of any action, suit or other proceeding based
on any alleged breach of duty, neglect, error, misstatement, misleading
statement, omission or act of the Trustee or any such Person in such capacity;
and (ii) in the case of any director, officer or agent of any such Person, by
reason of any such Person exercising or failing to exercise any right or power
hereunder; provided that the Indemnified Person shall not be entitled to such
indemnification with respect to any matter as to which the Indemnified Person
shall have been adjudicated by a final order of a court of competent
jurisdiction from which no appeal can be or is taken, to have acted with gross
negligence, fraud or willful misconduct knowingly and intentionally committed in
bad faith. The rights accruing to any Indemnified Person under these provisions
shall not exclude any other right to which the Indemnified Person may be
lawfully entitled; provided that no Indemnified Person may satisfy any right of
indemnity or reimbursement granted herein, or to which the Indemnified Person
may be otherwise entitled, except out of the Trust Assets, and no Beneficiary
shall be personally liable to any person with respect to any claim for indemnity
or reimbursement or otherwise. The Trustee may make advance payments in
connection with indemnification under this Section 7.5, provided that the
Indemnified Person shall have given a written undertaking to repay any amount
advanced to the Indemnified Person and to reimburse the Trust in the event that
it is subsequently determined that the Indemnified Person is not entitled to
such indemnification. The Trustee may purchase such insurance as it believes, in
the exercise of its discretion, adequately insures that each Indemnified Person
shall be indemnified against any such loss, liability, or damage pursuant to
this Section 7.5. Nothing contained herein shall restrict the right of the
Trustee to indemnify or reimburse such Indemnified Person in any proper case,
even though not specifically provided for herein, nor shall anything contained
herein restrict the right of any such Indemnified Person to contribution under
applicable law.
ARTICLE VIII
PROTECTION OF PERSONS DEALING WITH THE TRUSTEE
8.1 Action by Trustee. At any time there is more than one Trustee
all action with respect to the disposition and distribution of the Trust Assets
required or permitted to be taken by the Trustee, in its capacity as Trustee,
shall be taken by approval, consent, vote or resolution authorized by at least a
majority of the Trustees.
8.2 Reliance on Statements by Trustee. Any Person dealing with the
Trustee shall be fully protected in relying upon a certificate signed by the
Trustee, stating that it has authority take any action under the Trust. Any
Person dealing with the Trustee shall be fully protected in relying upon the
Trustee's certificate setting forth the facts concerning the action taken by the
Trustee pursuant to this Agreement, including the aggregate number of Units held
by the Beneficiaries causing such action to be taken.
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ARTICLE IX
COMPENSATION OF TRUSTEE
9.1 Amount of Compensation. In lieu of commissions or other
compensation fixed by law for the Trustee, the Trustee shall receive as
compensation for services as Trustee hereunder the amounts set forth in Schedule
B attached hereto, or as may subsequently be approved by Beneficiaries having a
majority of the total Units present in person or by proxy at any meeting validly
called for such purpose pursuant to Section 12 hereof.
9.2 Expenses. The Trustee shall be reimbursed from the Trust Assets
for all expenses reasonably incurred, and appropriately documented, by the
Trustee in the performance of the Trustee's duties in accordance with this
Agreement.
ARTICLE X
TRUSTEE AND SUCCESSOR TRUSTEE
10.1 Number and Qualification of Trustee.
(a) Subject to the provisions of Section 10.3 relating to the period
pending the appointment of a successor Trustee, there shall be one Trustee
of this Trust, which shall be a citizen and resident of or a corporation
or other entity which is incorporated or formed under the laws of a state
of the United States and, if a corporation, it shall be authorized to act
as a corporate fiduciary under the laws of the State of Delaware or such
other jurisdiction as shall be determined by the Trustee in its sole
discretion. The number of Trustees may be increased or decreased from time
to time by the Trustee.
(b) If a corporate Trustee shall ever change its name, or shall
reorganize or reincorporate, or shall merge with or into or consolidate
with any other bank or trust company, such corporate trustee shall be
deemed to be a continuing entity and shall continue to act as a trustee
hereunder with the same liabilities, duties, powers, titles, discretions,
and privileges as are herein specified for a Trustee.
10.2 Resignation and Removal. Any Trustee may resign and be
discharged from the Trust hereby created by giving written notice to the
Beneficiaries at their respective addresses as they appear on the records of the
Trustee. Such resignation shall become effective upon the appointment of such
Trustee's successor, and such successor's acceptance of such appointment,
whichever is earlier. Any Trustee may be removed at any time, with cause, by
Beneficiaries having aggregate Units of at least a majority of the total Units
held by all Beneficiaries. Any Trustee may be removed at any time, without
cause, by Beneficiaries having aggregate Units of at least two-thirds of the
total Units held by all Beneficiaries.
10.3 Appointment of Successor. Should at any time the Trustee resign
or be removed, die, become mentally incompetent or incapable of action (as
determined by the Beneficiaries holding Trust Units representing an aggregate of
at least a majority of the total Beneficial Interests in the Trust), or be
adjudged bankrupt or insolvent, unless any remaining Trustees shall decrease the
number of Trustees of the Trust pursuant to Section 10.1 hereof, or shall the
number of Trustees be increased in accordance with Section 10.3 hereof, a
16
vacancy shall be deemed to exist and a successor shall be appointed by any
remaining Trustees. If (i) such a vacancy is not filled by any remaining
Trustees within ninety (90) days, and the remaining Trustees, if any, have
notified the Beneficiaries of their inability to fill such vacancy or (ii) there
is no remaining Trustee then, the Beneficiaries may, pursuant to Article 12
hereof, call a meeting to appoint a successor Trustee by Beneficiaries holding
Units representing an aggregate of at least a majority of the total Beneficial
Interests in the Trust present at the meeting, in person or by proxy. Pending
the appointment of a successor Trustee, the remaining Trustee or Trustees then
serving may take any action in the manner set forth in Section 8.1.
10.4 Acceptance of Appointment by Successor Trustee. Any successor
Trustee appointed hereunder shall execute an instrument accepting such
appointment hereunder and shall deliver one counterpart, in 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 its predecessor in the Trust hereunder with like
effect as if originally named therein; but the retiring Trustee shall
nevertheless, when requested in writing by the successor Trustee, execute and
deliver an instrument or instruments conveying and transferring to such
successor Trustee upon the trust herein expressed, all the estates, properties,
rights, powers, and trusts of such retiring Trustee, and it shall duly assign,
transfer, and deliver to such successor Trustee all property and money held by
such Trustee hereunder.
10.5 Bonds. Unless required by the Board prior to the Transfer Date,
or unless a bond is required by law, no bond shall be required of any original
Trustee hereunder. Unless a bond is required by law and such requirement cannot
be waived by or with approval of the Beneficiaries holding aggregate Units of at
least a majority of the total Units held by all Beneficiaries, 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 and such requirement cannot be waived by or with approval of the
Beneficiaries or unless required by the Board. If a bond is required by the
Board or by law, the Board or the Trustee, as the case may be, shall determine
whether, and to what extent, a surety or security with respect to such bond
shall be required. The cost of any such bond shall be borne by the Trust.
ARTICLE XI
CONCERNING THE BENEFICIARIES
11.1 Evidence of Action by Beneficiaries. Whenever in this Agreement
it is provided that the Beneficiaries 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
Beneficiaries have joined therein may be evidenced: (i) by any instrument or any
number of instruments of similar tenor executed by the Beneficiaries in person
or by agent or attorney appointed in writing; or (ii) by the record of the
Beneficiaries voting in favor thereof at any meeting of Beneficiaries duly
called and held in accordance with the provisions of Article XII.
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11.2 Limitation on 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 Trustee upon
or under or with respect to the Trust Assets or the agreements relating to or
forming part of the Trust Assets, and the Beneficiaries (by their acceptance of
any distribution made to them pursuant to this Agreement) waive any such right.
11.3 Requirement of Undertaking. The Trustee 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 Trustee for any action taken or omitted to be taken by it as Trustee, 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 attorneys' 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 Trustee.
ARTICLE XII
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 for the purposes of taking any action which the terms of this Agreement
permit Beneficiaries to take either acting alone or with the Trustee.
12.2 Meeting Called by Trustee. The Trustee may at any time call a
meeting of the Beneficiaries to be held at such time and at such place as the
Trustee shall determine. Written notice of every meeting of the Beneficiaries
shall be given by the Trustee (except as provided in Section 12.3), 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 nor less than 10 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. 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 on Request of Beneficiaries. Within 30 days
after written request to the Trustee by Beneficiaries holding an aggregate of at
least 25% of the total Units held by all Beneficiaries to call a meeting of all
Beneficiaries, which written request shall specify in reasonable detail the
action proposed to be taken, the Trustee shall proceed under the provisions of
Section 12.2 to call a meeting of the Beneficiaries, and if the Trustee fails to
call such meeting within such 30 day period then such meeting may be called by
such Beneficiaries, or their designated representatives, requesting such
meeting.
12.4 Persons Entitled to Vote at Meeting of Beneficiaries. Each
Beneficiary shall be entitled to vote at a meeting of the Beneficiaries either
in person or by his proxy duly authorized in writing. The signature of the
Beneficiary on such written authorization need not be witnessed or notarized.
Each Beneficiary shall be entitled to a number of votes equal to the number of
Units held by such Beneficiary as of the applicable record date.
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12.5 Quorum. Except as otherwise required by this Agreement or law,
Beneficiaries holding at least one-third of the total Units held by all
Beneficiaries shall be necessary to constitute a quorum at any meeting of
Beneficiaries for the transaction of business. If less than a quorum be present,
Beneficiaries having aggregate Units of at least a majority of the total Units
held by all Beneficiaries represented at the meeting may adjourn such meeting
with the same effect and for all intents and purposes as though a quorum had
been present. Except to the extent a different percentage is specified in this
Agreement for a particular matter or is required by law, when a quorum is
present, the approval of Beneficiaries having aggregate Units of at least a
majority of the total Units present or represented by proxy at such meeting
shall be required for taking action on any matter voted on by the Beneficiaries.
12.6 Adjournment of Meeting. Subject to Section 12.5, any meeting of
Beneficiaries may be adjourned from time to time and a meeting may be held at
such adjourned time and place without further notice.
12.7 Conduct of Meetings. The Trustee 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. An Inspector of Votes,
appointed by the Chairman of the meeting, shall count all votes cast at the
meeting for or against any resolution and shall make and file with the Secretary
of the meeting their verified written report.
12.8 Record of Meeting. A record of the proceedings of each meeting
of Beneficiaries shall be prepared by the Secretary of the meeting. The record
shall be signed and verified by the Secretary of the meeting and shall be
delivered to the Trustee to be preserved by them. Any record so signed and
verified shall be conclusive evidence of all of the matters therein stated.
ARTICLE XIII
AMENDMENTS
13.1 Consent of Beneficiaries. At the written direction or with the
written consent of Beneficiaries holding at least a majority of the total Units
present, in person or by proxy, at any meeting validly called for such purpose
pursuant to Section 12 hereof, or such greater or lesser percentage as shall be
specified in this Agreement for the taking of an action by the Beneficiaries
under the affected provision of this Agreement, the Trustee 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 thereto; provided that no such amendment shall
increase the potential liability of the Trustee hereunder without the written
consent of the Trustee; provided, further, that no such amendment shall permit
the Trustee to engage in any activity prohibited by Section 6.1 hereof or affect
the Beneficiaries' rights to receive their pro rata shares of the Trust Assets
at the time of any distribution, and no such amendment shall cause the Trust to
be treated for Federal, state or local income tax purposes as other than a
liquidating trust under Treasury Regulation Section 301.7701-4(d), or cause the
Beneficiaries to be treated as other than the owners of their respective shares
of the Trust's taxable income pursuant to Section 671 through 679 of the Code
and any analogous provision of state or local law.
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13.2 Notice and Effect of Amendment. Promptly after the execution by
the Trustee of any such declaration of amendment, the Trustee shall give notice
of the substance of such amendment to the Beneficiaries or, in lieu thereof, the
Trustee may send a copy of the amendment to each Beneficiary. Upon the execution
of any such declaration of amendment by the Trustee, this Agreement shall be
deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties, and immunities of the
Trustee and the Beneficiaries under this Agreement shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modification and amendments, and all the terms and conditions of any such
amendment shall thereby be deemed to be part of the terms and conditions of this
Agreement for any and all purposes.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 Filing Documents. This Agreement shall be filed or recorded in
such office or offices as the Trustee may determine to be necessary or
desirable. A copy of this Agreement and all amendments thereof shall be
maintained in the office of the Trustee and shall be available at all times
during regular business hours for inspection by any Beneficiary or his duly
authorized representative. The Trustee shall file or record any amendment of
this Agreement in the same places where the original Agreement is filed or
recorded. The Trustee shall file or record any instrument which relates to any
change in the office of the Trustee in the same places where the original
Agreement is filed or recorded.
14.2 Intention of Parties to Establish Trust. This Agreement is not
intended to create, and shall not be interpreted as creating, a corporation,
association, partnership, or joint venture of any kind for purposes of Federal
income taxation or for any other purpose.
14.3 Beneficiaries Have No Rights or Privileges as Stockholders of
the Company. Except as expressly provided in this Agreement or under applicable
law, the Beneficiaries (by their vote with respect to the Plan and/or their
acceptance of any distributions made to them pursuant to this Agreement) shall
have no rights or privileges attributable to their former status as stockholders
of the Company.
14.4 Laws as to Construction. This Agreement and the trust created
hereby shall be governed by and construed in accordance with the laws of the
State of Delaware. The Trustee, the Company and the Beneficiaries (by their
acceptance of any distributions made to them pursuant to this Agreement) consent
and agree that this Agreement shall be governed by and construed in accordance
with such laws. The Trustee may amend this Agreement to provide for the creation
of a new trust governed by the laws of another jurisdiction to which the
Retained Assets and Liabilities shall be assigned. Sections 3540 and 3561 of
Title 12 of the Delaware Code shall not apply to the Trust.
14.5 Severability. In the event any provision of this Agreement or
the application thereof to any Person or circumstances shall be finally
determined by a court of proper 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.
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14.6 Notices. Any notice or other communication by the Trustee to
any Beneficiary shall be deemed to have been sufficiently given, for all
purposes, if deposited, postage prepaid, in the post office or letter box
addressed to such Person at his address as shown in the records of the Trust.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
cable, telegram, telecopier or telex to the parties at the following addresses
or at such other addresses as shall be specified by the parties by like notice:
(a) If to the Trustee:
Shelbourne II Liquidating Trust
c/o Winthrop Financial Associates
0 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Kestrel Management, L.P.
0 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
(b) If to the Company:
Shelbourne Properties II, Inc.
0 Xxxxxxxx Xxxxx - Xxxxx 000
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
14.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
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IN WITNESS WHEREOF, Shelbourne Properties II, Inc. has caused this
Agreement to be executed by an authorized officer, and the Trustee herein has
executed this Agreement, effective this 30th day of April, 2004.
SHELBOURNE PROPERTIES II, INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Trustee
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Schedule A
The owner(s) of Class B Units shall hold, from and after the date (the
"Hurdle Date") that the Net Proceeds (as defined below) exceed the Hurdle (as
defined below), an amount of Units equal to the product of (A) the aggregate
number of Units held by Beneficiaries immediately prior to the Hurdle Date
divided by .85, multiplied by (B) .15.
Definitions.
"Base Amount" shall mean $66.25.
"Hurdle" shall mean, as of any date, the product of (a) the sum of the
Base Amount plus the Hurdle Return, times (b) the aggregate number of Units then
held by all Beneficiaries.
"Hurdle Rate" shall mean (a) for the period commencing on the Starting
Date and ending February 19, 2004, an annual rate of 6%, compounded quarterly,
and (b) for each six-month period thereafter, commencing February 20, 2004, the
sum of the annual rate in effect immediately prior to the commencement of such
period plus 0.6%, up to a maximum annual rate of 8%.
"Hurdle Return" shall mean, as of any date, the product of (a) the Base
Amount, and (b) the Hurdle Rate, computed on the basis of a 365-day year.
"Net Proceeds" shall mean the aggregate cash and other proceeds
distributed from and after the Starting Date, from (a) operating the assets and
properties of the Company and its subsidiaries and the Trust , and (b) the
disposal of the assets and properties of the Company and its subsidiaries and
the Trust.
"Starting Date" shall mean August 20, 2002.
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Schedule B
For his services, the Trustee shall receive $2,000 per month payable on
the first day of each month, provided, however, that the aggregate amount paid
to the Trustee hereunder shall not be less than $40,000. Accordingly, if on the
termination of the Trust the Trustee has not received a total of $40,000, he
shall be entitled to receive an additional payment in the amount of the
deficiency.
24
Schedule C
SHELBOURNE RICHMOND COMPANY LLC (Commerce Plaza)
SHELBOURNE XXXXXXX COMPANY LLC (Xxxxxxx Festival)
SHELBOURNE II SEATTLE LANDMARK COMPANY LLC (Seattle Tower)
