Attached files
| file | filename |
|---|---|
| 8-K - Xcorporeal, Inc. | v178528_8k.htm |
| EX-10.3 - Xcorporeal, Inc. | v178528_ex10-3.htm |
| EX-2.1 - Xcorporeal, Inc. | v178528_ex2-1.htm |
| EX-10.1 - Xcorporeal, Inc. | v178528_ex10-1.htm |
Exhibit
10.2
LIQUIDATING TRUST
AGREEMENT
AGREEMENT
AND DECLARATION OF TRUST, dated as of March 25, 2010, by and among Xcorporeal,
Inc., a Delaware corporation (“Xcorporeal”), Xcorporeal Operations, Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company (“Operations”,
and together with Xcorporeal, the “Company”), and XCRLT, LLC a Delaware limited
liability company (the “Trustee”).
WHEREAS,
on March 15, 2010, each of Xcorporeal’s and Operations’ stockholders approved a
plan of complete liquidation and dissolution of the Company (the “Plan”),
including creation of the Trust (as defined below) pursuant to Section 275 of
the General Corporation Law of the State of Delaware (the “DGCL”).
WHEREAS,
the Company’s Board of Directors (the “Board”) has approved the dissolution of
the Company pursuant to the Plan;
WHEREAS,
pursuant to the Plan, each of Xcorporeal and Operations has filed a Certificate
of Dissolution, effective as of March 25, 2010 (the “Final Record Date”), with
the Delaware Secretary of State;
WHEREAS,
the Plan provides, among other things, that the Board will cause the Company to
dispose of all of its Retained Assets, wind up its affairs, pay or adequately
provide for the payment of all of its liabilities and distribute to or for the
benefit of Xcorporeal’s stockholders all of the Company’s assets, including
interests in any liquidating trust established in connection with the complete
liquidation of the Company;
WHEREAS,
the Board believes it to be in the best interest of the Company to complete the
liquidation of the Company by transferring all Retained Assets of the Company to
a liquidating trust (the “Trust”), to be held, administered and distributed by
the Trustee in accordance with the provisions of this Agreement for the benefit
of the stockholders of record of the Company as of the close of business on the
Final Record Date; and
WHEREAS,
the Trust is intended and shall be deemed to be a “successor entity” as defined
in Section 280(e) of the DGCL, and the assignment of the Retained Assets to the
Trust shall not be subject to the consent of any third party, unless otherwise
required by applicable law.
NOW,
THEREFORE, in consideration of these 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 Xcorporeal, Inc. Liquidating Trust.
1.2 Defined Terms. For
all purposes of this Agreement, unless the context otherwise requires, the
following defined terms shall have the meanings as follows:
(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 agreement as originally executed or as it may
from time to time be amended pursuant to the terms hereof.
(c) “Asset
Purchase Agreement” shall mean that certain Asset Purchase Agreement, dated as
of December 14, 2009, by and among Fresenius, the Company, Operations and NQCI,
as it may from time to time be amended pursuant to the terms
thereof.
(d) “Beneficial
Interest” shall mean each Beneficiary’s proportionate share of the Trust Assets
initially determined by the ratio of the number of Shares held of record by the
Initial Beneficiary as of the close of business on the Final Record Date over
the total number of Shares issued and outstanding on such Final Record Date and
thereafter shall be determined by the ratio of the number of Units held by such
Beneficiary to the total number of Units held by all Beneficiaries.
(e) “Beneficiary”
shall mean, initially, each Initial Beneficiary and, thereafter, each Initial
Beneficiary who holds Units and each transferee of Units initially held by an
Initial Beneficiary and subsequently transferred to such transferee pursuant to
and in accordance with the terms and conditions of this
Agreement.
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(f) “Initial
Beneficiary” shall mean each of the Stockholders.
(g) “Liabilities”
shall mean all of the Company’s unsatisfied debts, claims, liabilities,
commitments, suits and other obligations, whether contingent, fixed or
otherwise, known or unknown arising out of or in connection with the business or
affairs of the Company (including, without limitation, any costs and expenses
incurred or to be incurred in connection with the liquidation of the
Company).
(h) “NQCI”
shall mean National Quality Care, Inc., a Delaware corporation.
(i) “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.
(j) “Retained
Assets” shall mean all of the Company’s right, title and interest in, to and
under, all of the Company’s assets remaining after the sale of substantially all
of the Company’s assets to Fresenius USA, Inc. (“Fresenius”) pursuant to the
Asset Purchase Agreement, including, without limitation, its cash and cash
equivalents, marketable and other securities, the Company’s rights under the
Asset Purchase Agreement, claims, causes of action, contingent claims and
reserves distributed to the Trustee.
(k) “Shares”
shall mean the shares of common stock of Xcorporeal, $0.0001 par value per
share.
(l) “Stockholders”
shall mean the holders of record of the outstanding Shares of Xcorporeal at
the close of business on the Final Record Date.
(m) “Transfer
Date” shall mean March 25, 2010.
(n) “Trust”
shall mean the liquidating trust created by this Agreement.
(o) “Trust
Assets” shall mean all the property held from time to time by the Trust 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 TRUST AND NATURE OF TRANSFER
2.1 Grant. Effective on
and as of the Transfer Date, the Company grants, delivers, releases, assigns and
conveys to the Trust (as a “successor entity” as defined in Section 280(e) of
the DGCL), to be held in trust and administered and distributed by the Trustee
for the benefit of the Beneficiaries, 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 Trust hereby
accepts such Retained Assets, subject to the following terms and
provisions.
2.2 Purpose of
Trust.
(a) The
primary purpose of this Agreement and of the appointment of the Trustee
hereunder is to facilitate the dissolution and termination of the Company and
the disposition of the Retained Assets. Nothing contained herein shall be
construed as to constitute the Beneficiaries or their successors in interest as
members of an association. The purposes of the Trust are to hold, manage,
administer and liquidate the Trust Assets, and to collect and distribute to the
Beneficiaries the income and the proceeds of the disposition of the Trust
Assets, to collect amounts owed to the Company, and to pay any Liabilities of
the Company.
(b) The
Trust is established for the sole purpose of winding up the Company’s affairs
and the liquidation of the Retained Assets with no objective to continue the
business of the Company or engage in the conduct of a trade or business, except
as necessary for the orderly liquidation of the Trust Assets.
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(c) It
is expected that the Company shall liquidate and dissolve prior to fully winding
up its affairs, including, but not limited to, the collection of its receivables
and payments under the Asset Purchase Agreement and the payment of any
unsatisfied Liabilities of the Company.
(d) The
Retained Assets granted, assigned and conveyed to the Trust shall be held in the
Trust, and the Trustee will (i) further liquidate the Trust Assets 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 for the benefit of the Beneficiaries and (v) distribute the
Trust Assets in accordance with the terms and conditions hereof.
(e) It
is intended that the granting, assignment and conveyance of the Retained Assets
by the Company to the Trust pursuant to the terms hereof shall be treated for
all tax purposes as if the Company made such distributions directly to the
Stockholders who then transferred the Retained Assets to the Trust pursuant to
the terms herein. It is further 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 677 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(b) 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. Prior to the dissolution of the Company, such Person as shall
have the right and power to so act, 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 Trust of any
property intended to be held, administered and distributed in accordance with
the provisions of this Agreement, and to vest in the Trustee and its successors
and assigns, the estate, powers, instruments or funds in trust hereunder. Title
to Trust assets may be held in the name of the Trust.
2.5 Payment of
Liabilities. Effective on and as of the Transfer Date, the Trust assumes
all Liabilities and agrees hereafter to pay, discharge and perform when due all
of the Liabilities. Should any Liability be asserted against the Trust 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 employees, agents or representatives
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.
2.6 Notice to Unlocated
Stockholders. If the Trust holds Trust Assets for unlocated Stockholders,
due notice shall be given to such Stockholders in accordance with Delaware
law.
ARTICLE
III
BENEFICIARIES
3.1 Beneficial
Interests.
(a) The
Beneficial Interest of each Initial Beneficiary shall be determined in
accordance with a certified copy of the Company’s stockholder list as of the
Final Record Date, to be attached as Exhibit B hereto. 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. 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 Final Record Date shall receive one Unit for each
Share then held of record. Each record owner of Shares shall have the same pro
rata interest in the Trust Assets as such holder’s pro rata interest in the
aggregate outstanding Shares on the Final Record Date.
(b) All
outstanding Shares shall be deemed cancelled as of the close of business on the
Transfer Date. 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, or at the office of a transfer
agent retained for such purpose, a record of the name and address of each
Beneficiary and such Beneficiary’s aggregate Units in the Trust.
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(c) 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 their 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(c), 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 settled by a valid written agreement among 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 and the Trust from all such 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 individual who may be a
Beneficiary shall have any right of dower, homestead, or inheritance, or of
partition, marital property right or 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.
3.3 Limitations on Transfer of
Interests of Beneficiaries.
(a) THE
BENEFICIAL INTEREST OF A BENEFICIARY MAY NOT BE TRANSFERRED; PROVIDED THAT (i)
THE BENEFICIAL INTERESTS SHALL BE ASSIGNABLE OR TRANSFERABLE BY WILL, INTESTATE
SUCCESSION, OR OPERATION OF LAW AND (ii) THE EXECUTOR OR ADMINISTRATOR OF THE
ESTATE OF A BENEFICIARY MAY MORTGAGE, PLEDGE, GRANT A SECURITY INTEREST IN,
HYPOTHECATE OR OTHERWISE ENCUMBER, THE BENEFICIAL INTEREST HELD BY THE ESTATE OF
SUCH BENEFICIARY IF NECESSARY IN ORDER TO BORROW MONEY TO PAY ESTATE, SUCCESSION
OR INHERITANCE TAXES OR THE EXPENSES OF ADMINISTERING THE ESTATE OF THE
BENEFICIARY, UPON WRITTEN NOTICE TO, AND WRITTEN CONSENT OF, THE TRUSTEE, WHICH
CONSENT MAY NOT BE UNREASONABLY WITHHELD.
(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 distributed by the Trustee to, and received
by such Beneficiary.
3.4 Trustee as a
Beneficiary. The Trustee or successor Trustee may be a
Beneficiary or hold a Beneficial Interest.
ARTICLE
IV
DURATION
AND TERMINATION OF THE TRUST
4.1 Duration. The Trust
shall terminate upon the earliest of (i) such time as termination is required by
the applicable laws of the State of Delaware, (ii) the final distribution of all
the Trust Assets as provided in Section 5.9, and (iii) the expiration of a
period of three (3) years from the Transfer Date; provided that the Trustee, in
its discretion, may extend the termination of the Trust pursuant to this
subparagraph (iii) of this Section 4.1 to such later date as it may designate,
if it determines that an extension is reasonably necessary to fulfill the
purpose of the Trust, as specified in this Agreement, and, prior to such
extension, the Trustee shall have requested and received no-action assurance
from the Securities and Exchange Commission regarding the registration and
reporting requirements of the Trust under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any other
applicable Federal securities act. The Trust shall not in any event terminate
pursuant to subparagraph (iii) of this Section 4.1 prior to the date on which
the Trustee is permitted to make a final distribution in accordance with Section
5.8.
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 Beneficiaries,
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.
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ARTICLE
V
ADMINISTRATION
AND DISTRIBUTION OF TRUST ASSETS
5.1 Sale of Trust Assets.
Subject to the terms and conditions of this Agreement, the Trustee may, 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).
5.2 Efforts to Resolve Claims
and Liabilities. Subject to the terms and conditions of this Agreement,
the Trustee will 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 administration 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,
administered and distributed as a part of the Trust, without obligations 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
5.6.
5.4 Transactions with Related
Persons. Notwithstanding any other provision of this Agreement, other
than distributions to the Beneficiaries in accordance with the terms of this
Agreement, the Trustee shall not knowingly, directly or indirectly, sell or
otherwise transfer all or any part of the Trust Assets to, or contract with, (i)
any Trustee, agent or employee (acting in their individual capacities) of the
Trust or the Trustee; or (ii) any Person of which any Trustee, agent or employee
of the Trust or the Trustee is an Affiliate by reason of being a trustee,
director, officer, partner or direct or indirect beneficial owner of 5% or more
of the outstanding capital stock, shares or other equity interest of such Person
unless in each such case, after disclosure of such interest or affiliation such
transaction is approved by the Trustee, if any, who is not interested in the
transaction and the Trustee determines that such transaction is on its terms
fair and reasonable to, and in the best interests of the Beneficiaries, and in
no event less favorable to the Beneficiaries than terms available for a
comparable transaction with unrelated Persons.
5.5 Restriction on Trust
Assets. The Trust shall not receive transfers of any assets prohibited by
Revenue Procedure 82-58, as the same has been and may be amended, supplemented,
or modified (“Revenue Procedure 82-58”), 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. 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.
5.6 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 Trust specifically assumes and agrees to
pay pursuant to this Agreement and such transferee liabilities which the Trust
may be obligated to pay as transferee 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 related to 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.
5.7 Interim
Distributions. At such time as may be determined by it 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 in its sole discretion determines may be distributed without
detriment to the conservation and protection of the Trust Assets. Consistent
with Revenue Procedure 82-58, the Trustee shall distribute to the Beneficiaries
during each calendar year, in proportion to the number of Units held by each
Beneficiary on the record date(s) for such distribution(s), any proceeds from
the sale of assets and income from investments not needed to be retained to meet
claims and contingent liabilities.
5.8 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 or if the
Trust shall terminate pursuant to Section 4.1, 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. The Trustee shall
hold in the Trust and thereafter make disposition of all liquidating
distributions and other payments due any Beneficiaries who have not been
located, in accordance with Delaware law, subject to applicable state laws
regarding escheat and abandoned property.
5.9 Reports to Beneficiaries and
Others.
(a) As
soon as practicable after the Transfer Date, the Trustee shall mail to each
Beneficiary a notice indicating how many Units such Person beneficially owns and
the contact details of the Trustee. As soon as practicable after the end of each
calendar 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 calendar year or upon termination and the receipts and
disbursements of the Trustee for such calendar year or period, (ii) any changes
in the Trust Assets and Liabilities that it has not previously reported, and
(iii) 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.
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(b) The
fiscal year of the Trust shall end on December 31 of each year unless the
Trustee deems it advisable to establish some other date as the date on which the
fiscal year of the Trust shall end.
(c) 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; provided, that the
Trustee may alternatively use any other means reasonably calculated to
disseminate such interim report to the Beneficiaries, including, without
limitation, use of the Trust’s website. The occurrence of a material event need
not be reported on an interim report if an annual report pursuant to Section
5.9(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.
5.10 Federal Income Tax
Information. As soon as practicable after the close of each calendar
year, the Trustee shall mail to each Person who was a Beneficiary at the close
of the year, a statement showing, on a per Unit basis the dates and amount of
all distributions made by the Trustee, income earned on assets held by the
Trust, if any, such other information as is reasonably available to the Trustee
which may be helpful in determining the amount of gross income and expenses
attributable to the Trust that such Beneficiary should include in such Person’s
Federal income tax return, if any, for such year and any other information as
may be required to be furnished under applicable law. 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 current or preceding year, at the expense
of such Person and at no cost to the Trust, a statement containing such further
information as is reasonably available to the Trustee which shall be helpful in
determining the amount of taxable income which such Person should include in
such Person’s Federal income tax return.
5.11 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 5.9. Except as provided in Section 5.9, 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) for a reasonable length of time; provided that, if so
requested, such Beneficiaries shall have entered into a confidentiality
agreement satisfactory in form and substance to the Trustee. For the avoidance
of doubt, nothing in this Agreement shall be interpreted to require the Trustee
to mail or otherwise periodically provide audited financial statements of the
Trust to the Beneficiaries.
5.12 Employment of Agents,
etc.
(a)
The Trustee shall be responsible for the general
administration of the Trust and for the general supervision of the activities
conducted by all agents, representatives, employees, advisors or managers of the
Trust. The Trustee shall have the power to appoint, employ or contract with any
Person or Persons as the Trustee may deem necessary or proper for the
administration of the Trust.
(b)
The Trustee shall have the power to determine the terms and
compensation of any Person whom it may employ or with whom it may contract
pursuant to Section 5.12(a), subject to the provisions of Section
5.4.
(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 such Trustee’s obligations under this Agreement and applicable
law.
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 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 bill
trading.
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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 statutory 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 including paying the Trustee fees under
this Agreement;
(c)
to elect, appoint, engage, retain or employ any Persons as agents,
representatives, employees, or independent contractors (including without
limitation real estate advisors, investment advisors, accountants, transfer
agents, attorneys, 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, retained or employed (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 no more than 60 days prior
written notice by the Trustee), to prescribe the titles, powers and duties,
terms of service and other terms and conditions of the election, appointment,
engagement, retention or employment of such Persons and, except as prohibited by
law, to delegate any of the powers and duties of the Trustee to agents,
representatives, employers, independent contractors or other
Persons;
(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 or the Company; 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 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, enforce, perform under (provided
that such performance is consistent with the purpose of the Trust set forth in
Section 2.2(a) and Section 2.2(b) hereof), 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 term 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 as may be designated by the Trustee. The trustee so appointed shall
have all the rights, powers, privileges and duties and shall be subject to the
conditions and limitations of this Agreement, except as 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;
7
(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
vote by proxy or otherwise on behalf of the Beneficiaries and with full power of
substitution all shares of stock and all securities held as Trust Assets
hereunder and to exercise every power, election, discretion, option and
subscription right and give every notice, make every demand, and to do every act
or thing in respect of any shares of stock or any securities held as Trust
Assets which the Trustee might or could do if it were the absolute owner
thereof;
(l)
to undertake or join in any merger, plan of
reorganization, consolidation, liquidation, dissolution, readjustment or other
transaction of any corporation, any of whose shares of stock or other
securities, obligations, or properties may at any time constitute a part of the
Trust Assets and to accept the substituted shares of stock, bonds, securities,
obligations and properties and to hold the same in trust in accordance with the
provisions hereof;
(m) to
authorize transactions between corporations or other entities whose securities,
or other interests therein (either in the nature of debt or equity) are held as
part of the Trust Assets;
(n) in
connection with the sale or other disposition or distribution of any securities
held by the Trustee, to comply with applicable Federal and state securities
laws, and to enter into agreements relating to the sale or other disposition or
distribution thereof;
(o) to
do and perform any and all acts necessary or appropriate to comply with the
registration and reporting requirements of the Trust under Federal and state
securities laws, if any;
(p) to
terminate and dissolve any entities held as part of the Trust; and
(q) 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, EMPLOYEES AND AGENTS
7.1 Generally. The
Trustee accepts and undertakes to discharge the trust created by this Agreement,
upon the terms and conditions hereof, for the benefit of the Beneficiaries. The
Trustee shall exercise such of the rights and powers vested in it by this
Agreement in accordance with applicable law and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs. No provision of this Agreement
shall be construed to relieve the Trustee from liability for its own grossly
negligent action, its own grossly negligent failure to act, or its own fraud or
willful misconduct, except that:
(a) the
Trustee shall not be liable to the Beneficiaries for the acts or omissions of an
agent, representative, employee, advisor or manager 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 the 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 the Trustee is aware of such Person’s act or
omission;
(b) 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;
(c) 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;
(d) the
Trustee shall not be liable for any reasonable error of judgment made in good
faith; and
(e) the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by such Trustee in good faith in accordance with the terms and conditions
of this Agreement and at the direction of Beneficiaries having aggregate Units
constituting at least two-thirds 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.
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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 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
whatsoever to satisfy any such liability.
(c) As
far as reasonably practicable, the Trustee shall cause any written instrument
creating an obligation of the Trust Assets to include a reference to this
Agreement and to provide that neither the Beneficiaries, the Trustee nor its
agents, representative, advisors nor employees 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 its agents, representatives, advisors or
employees 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 neither the Trustee, nor any
employee, agent, representatives or advisor 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 for gross negligence, fraud or willful misconduct
knowingly and intentionally committed in bad faith by such Trustee, employee,
agent, representative or advisor of the Trust, and 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 its sole
discretion, at the expense of the Trust, maintain insurance for the protection
of the Trust Assets, the Beneficiaries, the Trustee, employees, agents,
representatives and advisors of the Trust in such amount as the Trustee shall
deem adequate to cover all foreseeable liability to the extent available at
reasonable rates.
7.4 Written Instruments of
Trustee. Any written instrument creating an obligation of the Trust
Assets shall be conclusively taken to have been executed or done by the Trustee,
employee or agent of the Trust only in its capacity as Trustee under this
Agreement, or in its capacity as an employee or agent of the Trust or
Trustee.
7.5 Indemnification. The
Trustee and each Person appointed or employed by the Trustee pursuant to Section
5.13 or Section 5.14 (including, without limitation, the directors, officers,
employees, agents, representatives and advisors of each such Person (each an
“Indemnified Person” and collectively the “Indemnified Persons”)), shall 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 Trustee 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 a Trustee or Person appointed or
employed by the Trustee pursuant to Section 5.13 or 5.14, while in office or
thereafter, by reason of his being or having been such a Trustee, employee,
agent, representative or advisor, 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 any such Trustee or Person in such capacity; and (ii) in the case of any
director, officer, employee, agent, representative or advisor 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 found pursuant to a final non-appealable judgment of a
court of competent jurisdiction to have acted with gross negligence, fraud or
willful misconduct. 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 and finally determined that the Indemnified Person is not
entitled to such indemnification. The Trustee shall 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.
7.6 No Duty Not to
Compete. Subject to applicable law, the Trustee, in its individual
capacity, or through Persons that it controls or in which it has an interest,
may directly or indirectly engage in or possess any interest in any business
venture, including, but not limited to, the ownership, financing, management of
or the investment in securities, or the provision of any services in connection
with such activities, whether or not such activities are similar to or in
competition with the business activities of the Company. The Trustee shall have
no duty to present any business opportunity to the Trust before taking advantage
of such opportunity either in such Trustee’s individual capacity or through
participation in any Person.
9
ARTICLE
VIII
PROTECTION
OF PERSONS DEALING WITH THE TRUSTEE
8.1 Reliance on Statements by
Trustee. Any Person dealing with the Trustee shall be fully protected in
relying upon the Trustee’s certificate, signed by the Trustee, with respect to
the authority that the Trustee has to take any action under this Agreement. 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.
8.2 Application of Money Paid or
Transferred to Trustee. No person dealing with the Trustee shall be
required to follow the application by the Trustee of any money or property which
may be paid or transferred to the Trustee.
ARTICLE
IX
COMPENSATION
OF TRUSTEE
9.1 Amount of
Compensation. In lieu of commissions or other compensation fixed by law
for trustees, the Trustee shall receive as reasonable compensation for services
as Trustee hereunder the amounts set forth in Exhibit A attached
hereto.
9.2 Dates of Payment. The
compensation payable to the Trustee pursuant to the provisions of Section 9.1
shall be paid for the time period set forth in on Exhibit A attached
hereto.
9.3 Expenses. The Trustee
shall be reimbursed from the Trust Assets for all expenses reasonably incurred,
and appropriately documented, by such Trustee in the performance of its duties
in accordance with this Agreement.
ARTICLE
X
TRUSTEES
AND SUCCESSOR TRUSTEES
10.1 Number and Qualification of
Trustees.
(a) Subject
to Section 10.3, there shall be one (1) Trustee of the Trust, who need not be a
citizen or resident of, or a corporation which is incorporated under, or a
limited liability company organized under the laws of the State of
Delaware.
(b) The
Trustee represents that it possesses every license, permit, charter and
authorization (collectively, “Authorizations”) necessary to execute and deliver
this Agreement and perform its obligations hereunder and has given every notice
and taken every action required by applicable law or governmental authorities
and regulatory bodies to perform its obligations hereunder; except where the
failure to possess such Authorizations or the failure to give such notice or
take such action would not have a material adverse effect on the ability of
Trustee to perform its obligations hereunder.
(c) If
a corporate (or its equivalent) Trustee shall ever change its name, or shall
reorganize or reincorporate or shall merge with or into or consolidate with any
other company, such corporate (or its equivalent) 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 on the date specified in such notice, which date shall be at
least 30 days after the date of such notice, or 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 two-thirds 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 die, resign or be removed, or
be adjudged bankrupt or insolvent, a vacancy shall be deemed to exist and the
Beneficiaries may, pursuant to Article XII hereof, call a meeting in order that
Beneficiaries holding at least a majority of the Units represented at the
meeting may appoint a successor Trustee. In the event that the Beneficiaries do
not elect a successor Trustee within 30 days of the resignation, removal,
bankruptcy or insolvency of such Trustee, the successor Trustee shall be
appointed by a court of competent jurisdiction upon application of any
Beneficiary or known creditor of the Trust.
10
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 resigning Trustee. Thereupon such
successor Trustee shall, without any further act, become vested with all the
rights, powers, and duties of its predecessor in the Trust hereunder with like
effect as if originally named therein; but the resigning 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 rights, powers, and
trusts of such resigning Trustee.
10.5 Bond. Unless required
by the Board prior to the Transfer Date or unless a bond is required by law, no
bond shall be required of the 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 constituting 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.
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 having a specified
aggregate Beneficial Interest 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 within or without the State of
Delaware 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 45 days after written request to the Trustee by
Beneficiaries holding an aggregate of at least a majority 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 45
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.
11
12.5 Quorum. At any
meeting of Beneficiaries, the presence of Beneficiaries having aggregate Units
sufficient to take action on any matter for the transaction of which such
meeting was called shall be necessary to constitute a quorum, but 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, the
approval of Beneficiaries having aggregate Units of at least a majority of the
total Units held by all Beneficiaries 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 (or may serve as 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 it. 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 held by all
Beneficiaries 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 duties
or potential liability of the Trustee hereunder without the written consent of
the Trustee nor reduce the compensation to the Trustee for services rendered;
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 that no such amendment shall cause the Trust, in the opinion
of counsel, to be treated for all 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 677 of the Code
and any analogous provision of state or local law.
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 a Trustee in the same places where
the original Agreement is filed or recorded.
14.2 Intention of Parties to
Establish Trust. This Agreement is intended to create a liquidating trust
and is not intended to create, 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.
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14.4 Laws as to
Construction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law principles thereof. The Trustee, the Company and the
Beneficiaries (by their vote with respect to the Plan and/or 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.
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.
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, facsimile to the parties at the following addresses, provided that
facsimile notices are confirmed telephonically or by depositing a copy of such
notice in the mail, or at such other addresses as shall be specified by the
parties by like notice:
(a) If
to the Trustee:
Xcorporeal,
Inc. Liquidating Trust
80 Empire
Drive
Lake
Forest, CA 92630
Attn: Kelly
J. McCrann
Facsimile
No. (949) 600-4626
(b) If
to the Company:
Xcorporeal,
Inc.
80 Empire
Drive
Lake
Forest, CA 92630
Attn: Kelly
J. McCrann
Facsimile
No. (949) 600-4626
with a copy to:
Kaye
Scholer LLP
425 Park
Avenue
New York,
NY 10022
Attn: Rory
A. Greiss
Facsimile
No. (212) 836-6461
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.
[Signatures
Follow]
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IN
WITNESS WHEREOF, Xcorporeal, Inc. and Xcorporeal Operations, Inc. has each
caused this Agreement to be executed by its President and Chief Executive
Officer, and the Trustee herein has executed this Agreement on this 25th day of
March 2010.
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By:
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/s/
Kelly J. McCrann
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Name:
Kelly J. McCrann
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Title:
Chief Executive Officer
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XCORPOREAL
OPERATIONS, INC.
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By:
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/s/
Kelly J. McCrann
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Name:
Kelly J. McCrann
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Title:
Chief Executive Officer
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XCRLT,
LLC, TRUSTEE
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/s/
Kelly J. McCrann
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Name:
Kelly J. McCrann
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EXHIBIT
A
Compensation
of Trustee
A1. The
Trustee shall receive the following compensation for its services as Trustee
hereunder (the “Services”):
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●
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ten
(10%) percent of the aggregate Royalty Payments (as defined in the Asset
Purchase Agreement) up to 10 million dollars ($10,000,000) received by the
Trust pursuant to the terms of the Asset Purchase Agreement;
and
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●
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five
(5%) percent of the aggregate distributions to Beneficiaries in excess of
10 million dollars ($10,000,000) received by the Trust pursuant to the
terms of the Asset Purchase
Agreement.
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A2. Subject
to Section A1 hereof, the Trustee shall invoice the Trust on a quarterly basis
for Services rendered during the prior month. Payment by the Trust for such
Services, if applicable, relating to such period shall be due as of the date of
receipt by the Trust of its share of the Royalty Payments pursuant the terms of
the Asset Purchase Agreement. Payment by the Trust for such applicable Expenses
(as defined below) relating to such period shall be due as of the date of such
invoice.
A3. In
addition to the compensation to the Trustee set forth above, the Trustee shall
be reimbursed for all reasonable out-of-pocket expenses (“Expenses”) incurred by
Trustee in connection with providing the Services. Expenses shall include,
without limitation:
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fees
and expenses of independent professionals and consultants (such as
attorneys, accountants, environmental experts, etc.) incurred by or on
behalf of the Trust;
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the
costs associated with obtaining the services of certain current directors
and executive and administrative personnel of the Company, as determined
by the Trustee;
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the
costs associated with obtaining the services of accounts receivable
collection personnel, as determined by the
Trustee;
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document
storage costs required to maintain Company and Trust records;
and
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reasonable
out-of-pocket, third party expenses incurred by the Trustee, including
copying, faxes, messenger, postage, costs of forwarding Company phone and
email lines and other direct out-of-pocket
costs.
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Any and
all Expenses incurred in any month by the Trustee shall be included and itemized
in the invoice prepared by the Trustee with respect to such month.
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EXHIBIT
B
The
Company’s Stockholder List as of the Final Record Date
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