WORLD ACCESS REALIZATION TRUST AGREEMENT
DATED AS OF_________________ ___, 2004
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 General....................................................................................... 2
1.2 Certain Definitions........................................................................... 2
ARTICLE II
CREATION OF THE TRUST
2.1 Creation and Name............................................................................. 3
2.2 Purpose....................................................................................... 3
2.3 Appointment and Acceptance of Realization Trustee............................................. 3
2.4 Transfer of Remaining Assets to the Trust..................................................... 3
2.5 Exemption from Registration................................................................... 4
2.6 Termination of The Realization Trust.......................................................... 5
ARTICLE III BENEFICIAL INTERESTS IN THE REALIZATION TRUST
3.1 Allocation of Beneficial Interests............................................................ 5
3.2 Register; Ownership of Beneficial Interests................................................... 5
3.3 Transfer of Beneficial Interests.............................................................. 5
3.4 Votes by Holders.............................................................................. 6
ARTICLE IV
RIGHTS, POWERS AND DUTIES OF TRUSTEE
4.1 Declaration Acknowledged in Beneficial Interest............................................... 6
4.2 Duties........................................................................................ 6
4.3 Powers........................................................................................ 6
4.4 Disputed Claims Reserve....................................................................... 7
4.5 Authority to Settle Claims.................................................................... 7
4.6 Distribution of Available Cash................................................................ 8
4.7 Disposition of Assets to Debtors and Other Interested Parties................................. 8
4.8 Selection of Agents........................................................................... 8
4.9 Records and Reporting......................................................................... 8
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ARTICLE V
THE REALIZATION TRUSTEE
5.1 The Realization Trustee....................................................................... 10
5.2 Removal....................................................................................... 11
5.3 Reliance by Realization Trustee............................................................... 12
5.4 Trustee's Standard of Care; Exculpation....................................................... 12
5.5 Indemnification............................................................................... 12
5.6 Insurance..................................................................................... 13
5.7 No Liability for Acts of Predecessors......................................................... 13
5.8 No Implied Obligations........................................................................ 13
5.9 Bond Requirement; Exercise of Powers ......................................................... 13
5.10 Effect of Trust on Third Parties.............................................................. 13
5.11 Instructions and Exculpatory Provisions....................................................... 13
ARTICLE VI
MISCELLANEOUS
6.1 Governing Law................................................................................. 14
6.2 Relationship Created.......................................................................... 15
6.3 Interpretation................................................................................ 15
6.4 Partial Invalidity............................................................................ 15
6.5 Entire Agreement.............................................................................. 15
6.6 Counterparts.................................................................................. 15
6.7 Notices....................................................................................... 16
6.8 Notice of Actions by Bankruptcy Court......................................................... 16
6.9 Realization Trust Monitoring Committee........................................................ 16
6.10 Effective Date................................................................................ 18
6.11 Conflicts..................................................................................... 18
6.12 Tax Provisions................................................................................ 19
6.13 Amendment of Realization Trust................................................................ 21
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WORLD ACCESS REALIZATION TRUST AGREEMENT
This World Access Realization Trust Agreement (the "Realization
Trust Agreement"), dated as of October __, 2004, by and among World Access,
Inc., a Delaware corporation ("World Access"), and WA Telcom Products Co., Inc.,
WorldxChange Communications, Inc., Facilicom International LLC and World Access
Telecommunications Group, Inc., (collectively with World Access, along with any
successors in interest, the "Debtors"), as settlors, and Morton P. Levine, as
Trustee, is executed to facilitate the implementation of the Revised Second
Amended Joint Plan of Liquidation of World Access Group under Chapter 11 of the
Bankruptcy Code proposed by the Official Committee of Unsecured Creditors (the
"Creditors' Committee") and the Debtors, dated August 5, 2004 (the "Plan") that
provides for the establishment of the Realization Trust created hereby.
WHEREAS, on February 24, 2001 each of the Debtors filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code;
WHEREAS, under Section 1121 of the Bankruptcy Code, World Access and
its subsidiaries filed the Plan that contemplates, among other things, the
transfer of the Debtors' assets, including the Debtors' Assigned Causes of
Action to the Realization Trust created hereby, and the distribution of funds
held by the Realization Trustee;
WHEREAS, on September 23, 2004, the United States Bankruptcy Court
for the Northern District of Illinois (Eastern Division) entered an order
confirming the Plan;
WHEREAS, the Creditors' Committee and the Debtors have determined to
create the Realization Trust to receive and liquidate (collectively, the
following are referred to as the "Remaining Assets") all assets and property
held by the members of the World Access Group and their consolidated Estates,
receive and litigate all of the Debtors' Assigned Causes of Action, resolve all
Disputed Unsecured Claims in accordance with the Plan, and make Distributions on
account of Allowed Claims contemplated by the Plan;
WHEREAS, pursuant to Sections VII and 8.5 of the Plan, the Debtors'
Assigned Causes of Action are to be transferred to the Realization Trust on the
Effective Date of the Plan;
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 General. All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned thereto in the Plan.
1.2 Certain Definitions.
"Debtors" shall have the meaning set forth in the preamble.
"World Access" shall have the meaning set forth in the preamble.
"Holder" means the record holder of a Beneficial Interest on the
register maintained under Section 3.2 hereof.
"IRS" means the Internal Revenue Service.
"Realization Trust" means the Realization Trust established pursuant
to Section 7.1 of the Plan.
"Permitted Investments" means (i) demand or time deposits, such as
short-term certificates of deposits, in banks or other financial institutions
with a minimum capital stock and surplus aggregating at least $100,000,000 and
whose short-term debt obligations are rated by at least two nationally
recognized rating agencies in one of the two highest categories therefor, or
(ii) other temporary, liquid investments that are insured or guaranteed by the
United States or by a department, agency or instrumentality of the United States
or backed by the full faith and credit of the United States such as Treasury
bills; provided, however, that the scope of any such Permissible Investments
shall be limited to include only those investments, or shall be expanded to
include any additional investments, as the case may be, that a liquidating trust
may be permitted to hold pursuant to Treasury Regulations Section 301.7701-4(d),
any amendment or addition to the Tax Code or to the Treasury Regulations, or any
modification in IRS guidelines whether set forth in IRS rulings, other IRS
pronouncements or otherwise.
"Remaining Assets" shall have the meaning set forth in the
recitations.
"Tax Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Treasury Regulations" shall mean the regulations promulgated under
the Tax Code by the Department of Treasury of the United States.
"Realization Trust Agreement" means this Realization Trust Agreement
as amended from time to time.
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"Trust Assets" means all assets of any kind or nature acquired or
received by the Realization Trust, including, without limitation, the Remaining
Assets, the Debtors' Assigned Causes of Action, the Realization Trustee Reserve,
the Realization Monitoring Committee Reserve, any proceeds of the Debtors'
Assigned Causes of Action, and all interest income earned on such proceeds, the
Realization Trustee Reserve, or the Realization Monitoring Committee Reserve.
"Trust Beneficiary" shall mean a beneficiary of the Realization
Trust.
ARTICLE II
CREATION OF THE TRUST
2.1 Creation and Name. The Debtors, the Trust Beneficiaries and the
Trustee, in compliance with the Plan, hereby constitute and create the
Realization Trust, which shall bear the name "World Access Realization Trust."
In connection with the exercise of his power as Realization Trustee hereunder,
the Realization Trustee may use this name or such variation thereon as the
Realization Trustee sees fit, or may use his own name, as Realization Trustee,
as applicable.
2.2 Purpose. The primary purpose of the Realization Trust is to
receive, liquidate and distribute the Remaining Assets on behalf of and for the
benefit of the Trust Beneficiaries, and litigate or otherwise dispose of the
Debtors' Assigned Causes of Action and distribute any litigation proceeds to the
Trust Beneficiaries, in accordance with Treasury Regulations Section
301.7701-4(d), with no objective to conduct a trade or business except to the
extent reasonably necessary to, and consistent with, the liquidating purpose of
the Realization Trust. In furtherance of this purpose, the Realization Trust
shall (i) liquidate and convert into Cash the Remaining Assets, (ii) resolve all
Disputed Unsecured Claims in accordance with the Plan, and (iii) make
Distributions on account of Allowed General Unsecured Claims contemplated by the
Plan.
2.3 Appointment and Acceptance of Realization Trustee. In accordance
with the provisions of the Plan, Morton P. Levine is hereby named, constituted,
and appointed as Realization Trustee, to act and serve as trustee of the
Realization Trust upon and subject to the terms and conditions set forth herein
and in the Plan. The Realization Trustee is willing, and does hereby accept the
appointment, to act and serve as trustee of the Realization Trust, and to hold
and administer the Trust Assets pursuant to the terms and conditions of this
Realization Trust Agreement and the Plan.
2.4 Transfer of Remaining Assets to the Trust. In accordance with
the provisions of the Plan, and subject to section 2.5 hereof, all right, title,
and interests of the Debtors and their Estates in and to the Remaining Assets
are hereby transferred, on behalf and for the benefit of the holders of the
Allowed General Unsecured Claims, to and vested in the Realization Trust. From
and after the Effective Date, all Debtors' Assigned Causes of Action shall be
administered and litigated by the Realization Trustee on behalf of the Trust
Beneficiaries. From and after the Effective Date, all Remaining Assets,
including the Available Cash and receivables shall be administered by the
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Realization Trustee on behalf of the Trust Beneficiaries. Prior to the creation
of the Realization Trust, the Debtors shall have executed or caused to be
executed, and simultaneously with the creation of the Realization Trust shall
deliver or cause to be delivered to, or upon the order of, the Trustee, any and
all documents and other instruments as may be necessary or useful to convey and
to confirm title to the Remaining Assets to the Realization Trust. The Debtors
(and any successor entity thereto) shall, upon the reasonable request of the
Realization Trustee, execute, acknowledge and deliver such further instruments
and do such further acts as may be necessary or proper to transfer to the
Realization Trustee any portion of the Remaining Assets intended to be conveyed
hereby in the form and manner provided for in the Plan and to vest in the
Realization Trustee the powers, instruments or funds in trust hereunder. The
Debtors, for themselves and any predecessor or successor entity, hereby disclaim
and waive any and all right to any reversionary interest in any of the Remaining
Assets.
2.5 Funding the Realization Trust. On the Effective Date, the
Realization Trust shall receive from the Debtors' estates the aggregate amount
of $500,000 for the establishment of a reserve to pay the fees, expenses and
costs of the Realization Trust and the Realization Trustee (such reserve, the
"Realization Trustee Reserve"). In addition, on the Effective Date, the
Realization Trust shall transfer to the Realization Trust the aggregate amount
of $100,000 for the establishment of a reserve to pay the fees, expenses and
costs of the Realization Monitoring Committee (such reserve, the "Realization
Monitoring Committee Reserve"). To the extent that the Realization Trustee and
the Realization Monitoring Committee reasonably agree that the amounts of the
Realization Trustee Reserve and/or the Realization Monitoring Committee Reserve
are in excess of the amounts reasonably anticipated to be incurred by the
Realization Trust and the Realization Trustee in the pursuit of their respective
duties and obligations hereunder, such excess amounts shall be returned to the
Realization Trust, and shall be treated as Available Cash for Distributions to
holders of Allowed General Unsecured Claims. In addition, further funding of the
Realization Trust may be made from Available Cash to the extent deemed necessary
by the Realization Trustee, and as consented unanimously by each of the members
of the Realization Monitoring Committee and the Realization Trust Monitoring
Committee or as authorized by the Bankruptcy Court. Except as specifically set
forth in the Plan and the Realization Trust Agreement, the Realization Trust
shall have no obligation to the Realization Trust or any holder of an interest
therein other than its obligations to reasonably cooperate as a party to the
Debtors' Assigned Causes of Action assigned to the Realization Trust. In
addition, the Realization Trustee may, with the written consent of the
Realization Monitoring Committee, borrow funds to finance the operations of the
Realization Trust.
2.6 Exemption from Registration. The parties hereto intend that the
rights of the Trust Beneficiaries arising under this Trust shall not be
"securities" under applicable laws, but none of the parties hereto represent or
warrant that such rights shall not be securities or shall be entitled to
exemption from registration under applicable securities laws. If such rights
constitute securities, the parties hereto intend for the exemption from
registration provided by Section 1145 of the Bankruptcy Code and under
applicable securities laws to apply to their issuance under the Plan.
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2.7 Termination of The Realization Trust. The Realization Trust
shall terminate upon the earlier to occur of: (A) the date on which both (i) all
Disputed Claims have been resolved and all of the Debtors' Assigned Causes of
Action have been litigated, settled, transferred, abandoned, or otherwise
disposed of, and (ii) all Distributions with respect to Allowed General
Unsecured Claims to be made pursuant to the Plan have been completed, or (B)
five (5) years after the Effective Date. Notwithstanding the foregoing, in the
event the Realization Trustee shall have been unable after continuing reasonable
efforts to sell or otherwise dispose of and realize upon the Trust Assets and to
litigate, settle, transfer, abandon, or otherwise dispose of the Debtors'
Assigned Causes of Action in the initial five (5) year term of the Realization
Trust or other circumstances require extension, the Realization Trustee shall
have the right to apply to the Bankruptcy Court to extend the term of the
Realization Trust for two (2) year periods (upon notice only to the members of
the Realization Trust Monitoring Committee and such other parties as the
Bankruptcy Court directs), provided that each such extension must be approved by
the Bankruptcy Court within six (6) months after the beginning of the extended
term, and provided further that the term of the Realization Trust shall not be
extended more than five times.
ARTICLE III
BENEFICIAL INTERESTS IN THE REALIZATION TRUST
3.1 Allocation of Beneficial Interests. Each holder of an Allowed
Claim shall be allocated a beneficial interest in the Realization Trust (a
"Beneficial Interest") based upon the Distributions provided under the terms of
the Plan. The Realization Trust will not issue to any Holder or Trust
Beneficiary any certificate or certificates to evidence its beneficial interest
in the Realization Trust.
3.2 Register; Ownership of Beneficial Interests. The Realization
Trustee shall keep at its principal office a register (the "Register") in which
the Realization Trustee shall record the ownership of beneficial interests and
register any transfer under Section 3.3 of this Realization Trust Agreement. The
Trustee may treat the person in whose name any Beneficial Interest is entered on
the Register as the owner thereof for the purposes of receiving distribution
from Trust Assets and for all other purposes.
3.3 Transfer of Beneficial Interests. Beneficial Interests shall not
be transferred or assigned, and no purported transfer or assignment of any
Beneficial Interest shall be registered on the Register other than (i) to any
relative, spouse or relative of the spouse of such Holder, (ii) to any trust or
estate in which such Holder has more than a 50% beneficial interest (excluding
contingent interests), (iii) to any corporation, Partnership or other
organization in which such Holder is the beneficial owner of more than 50% of
the equity securities or equity interests, (iv) to any person that owns,
directly or indirectly, more than 50% of the voting securities of such Holder or
(v) upon the death of such Holder or pursuant to the operation of law.
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3.4 Votes by Holders. In the event any vote of Holders is required
to be taken under this Realization Trust Agreement, the Realization Trustee
shall solicit consents by mail from registered Holders.
ARTICLE IV
RIGHTS, POWERS AND DUTIES OF TRUSTEE
4.1 Declaration Acknowledged in Beneficial Interest. The Trustee
hereby acknowledges that, on and after the Effective Date, the Trust
Beneficiaries, as their interests may appear, will have beneficial interests in
all Trust Assets.
4.2 Duties. The duties of the Realization Trustee under this
Realization Trust Agreement and the Plan shall include: (i) carrying out the
provisions of the Plan, which shall include taking or not taking any action
which the Realization Trustee deems to be in furtherance of the Plan; (ii)
managing property to be distributed in a manner designed to effectuate the Plan;
(iii) maintaining the Register; (iv) making semi-annual reports to the
Realization Trust Monitoring Committee regarding the Distributions to be made to
the Holders, which reports shall be filed with the Bankruptcy Court; (v)
providing quarterly reports to the Realization Monitoring Committee as to
budgets, cash receipts and disbursements, asset sales or other dispositions,
claims reconciliation's, and Distributions under the Plan; (vi) selling or
otherwise disposing of Trust Assets, winding up its affairs as expeditiously as
reasonably possible, and taking any other actions to liquidate and maximize the
value of the Trust Assets in accordance with this Realization Trust Agreement;
(vii) reconciling Claims and resolving Disputed Claims, and administering the
Claims allowance and disallowance processes as set forth in the Plan, including
objecting, prosecuting, litigating, reconciling, settling and resolving Claims
and Disputed Claims in accordance with the Plan; (viii) making decisions
regarding the retention, engagement, payment and replacement of professionals,
employees and consultants; (ix) administering the Distributions under the Plan,
including (a) making Distributions in accordance with the terms of the Plan, (b)
establishing and maintaining the various Disputed Claims Reserves, and (c)
filing with the Bankruptcy Court semi-annual reports regarding the Distributions
to be made to the Holders; (x) investing any Cash in any reserves pending
distribution in Permitted Investments in accordance with reasonable business
judgment; (xi) filing appropriate tax returns; (xii) performing, and causing the
Realization Trust to fulfill, all of the duties and responsibilities of the
Realization Trustee and the Realization Trust under this Realization Trust
Agreement and the Plan; and (xiii) exercising such other powers as necessary or
prudent to carry out the provisions of the Plan and this Realization Trust
Agreement.
4.3 Powers. Subject and pursuant to the terms and provisions of this
Realization Trust Agreement and the Plan, the Realization Trustee shall be
empowered and authorized to: (i) take all steps and execute all instruments and
documents necessary to effectuate this Realization Trust Agreement and the Plan,
including, but not limited to, the liquidation of the assets of the members of
the World Access Group and their respective Estates, (ii) object, prosecute
objections, litigate, settle and resolve issues with respect to Disputed
Unsecured Claims; (iii) make Distributions with respect to Allowed
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Unsecured Claims; (iv) employ, retain, or replace professionals to represent it
with respect to its responsibilities; (v) establish and maintain the various
Disputed Reserves as required by the Plan; (vi) invest any Cash held by the
Realization Trustee pending distribution in Permitted Investments in accordance
with the provisions of this Realization Trust Agreement and the Plan; (vii) to
pay all costs of the Realization Trust as contemplated herein, (vii) to waive or
enforce, to the fullest extent permitted by law, any existing attorney client
privilege of the Debtors relating to the disclosure of information or the giving
of evidence, (viii) to investigate any claims, rights, Debtors' Assigned Causes
of Action or other Causes of Action assigned to the Realization Trust, (ix) to
prosecute, litigate, settle, adjust, retain, enforce or abandon any claims,
rights, Debtors' Assigned Causes of Action or other Causes of Action assigned to
the Realization Trust, including any counterclaims to the extent such
counterclaims are setoff against the proceeds of any such Causes of Action, (x)
to perform, and cause the Realization Trust to fulfill, all of the duties and
responsibilities of the Realization Trustee and the Realization Trust under this
Realization Trust Agreement and the Plan, and (xi) exercise such other powers as
may be vested in the Realization Trustee pursuant to an order of the Bankruptcy
Court or pursuant to this Realization Trust Agreement and the Plan, or as the
Realization Trustee deems to be necessary and proper to carry out the provisions
of this Realization Trust Agreement and the Plan. Subject to the terms of
Section 7.9 of the Plan and Section 4.5 hereof, and to the requirement to
consult with the Realization Monitoring Committee, the Realization Trustee shall
have sole and absolute discretion to hold, pursue, prosecute, release, settle,
sell, transfer or abandon, as the case may be, any and all claims, rights,
Debtors' Assigned Causes of Action or other Causes of Action assigned to the
Realization Trust pursuant to the Plan, as it determines in the exercise of its
business judgment, and shall have no liability for the outcome of its decisions.
The Realization Trustee shall make vigorous and continuing efforts to discharge
its duties, to make prompt and timely distributions of the Debtors' litigation
proceeds, and to avoid undue prolongation of the duration of the Realization
Trust.
4.4 Disputed Claims Reserve. On the Effective Date or such later
date that Distributions are required to be made on account of Allowed Claims,
and after making all Distributions required to be made on any such date under
the Plan, the Realization Trustee shall establish a separate Disputed Claims
Reserve for each of the Classes. The Realization Trustee shall reserve the
Ratable Proportion of all Cash, Available Cash or other Distributions allocated
for each Disputed Claim, or such amount as may be agreed by the holder of such
Claim and the Realization Trustee, or as may otherwise be determined by order of
the Bankruptcy Court. Each Disputed Claims Reserve shall be closed and
extinguished by the Realization Trustee upon its determination that all
Distributions and other dispositions of Cash, Available Cash or other
Distributions required to be made under the Plan have been made in accordance
with the terms of the Plan. Upon closure of a Disputed Claims Reserve, all Cash
(including any Cash Investment Yield), Available Cash and other Distributions
held in such Disputed Claims Reserve shall be subject to redistribution, as
appropriate, in accordance with the provisions of Section V of the Plan.
4.5 Authority to Settle Claims and Causes of Action. Subject to
obtaining the written consent of the Realization Trust Monitoring Committee to a
proposed
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settlement or other disposition of a Claim, the Realization Trustee shall be
empowered and authorized, without approval of the Bankruptcy Court or notice to
any other Person or Holder, to settle or adjust any Disputed Claims asserted
against any of the Debtors' estates. If the Realization Trust Monitoring
Committee disputes the reasonableness of the proposed settlement or adjustment,
then on or prior to the conclusion of ten (10) Business Days after the
Realization Trust Monitoring Committee receives written notice of a proposed
settlement or other disposition, the Realization Trust can submit to the
Bankruptcy Court for resolution as to the reasonableness of the Realization
Trustee's proposed settlement or other adjustment.
4.6 Distribution of Available Cash. Pursuant to the terms of the
Plan and section 2.5 hereof, on the Quarterly Distribution Dates provided for in
the Plan the Realization Trustee shall make Distributions of Available Cash as
required pursuant to the Plan. The Realization Trustee shall make vigorous and
continuing efforts to dispose of the Trust Assets, to make prompt and timely
Distributions, and to avoid undue prolongation of the duration of the
Realization Trust.
4.7 Disposition of Assets to Debtors and Other Interested Parties.
The Trustee is specifically authorized and empowered to negotiate at arms length
and enter into agreements with the Debtors' affiliates (including any successors
in interest), the Trust Beneficiaries and other interested parties for the sale
of any portion of the Trust Assets.
4.8 Selection of Agents. Subject to obtaining the written consent of
the Realization Trust Monitoring Committee or authorization from the Bankruptcy
Court, the Realization Trustee may select and employ brokers, collection agents,
banks, custodians, investment advisors, attorneys, accountants, tax advisors,
auditors, and other agents on behalf of the Realization Trust. Except as
otherwise required to fulfill the terms hereof, such agents may be employed
without regard to prior employment of such agents by any Trust Beneficiary, the
Debtors or by the Creditors' Committee. The Realization Trustee may retain as a
consultant to the Realization Trust any person or persons having particular
knowledge of the Debtors' affairs (including, without limitation, any officer or
director or former officer or director of any Debtor or any entity owned by a
Debtor), and rely upon the advice of any such person. Subject to obtaining the
written consent of the Realization Trust Monitoring Committee or authorization
from the Bankruptcy Court upon a determination of reasonableness, the
Realization Trustee may pay the salaries, fees, and expenses of agents and
consultants engaged by the Realization Trustee out of the Trust Assets. The
Realization Trustee shall not be liable for any loss to the Realization Trust or
any person interested therein by reason of any mistake or default of any such
agent or consultant as shall be selected and employed or retained by the
Realization Trustee, except for such of the Trustee's acts or omissions as shall
constitute fraud, willful misconduct or gross negligence.
4.9 Records and Reporting.
4.9.1 Records. The Realization Trustee shall maintain good and
sufficient books and records of account relating to the Trust Assets, the
management
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thereof, all transactions undertaken by the Realization Trustee, all expenses
incurred by or on behalf of the Realization Trust, all distributions either
contemplated or effectuated under the Plan or this Realization Trust Agreement.
4.9.2 Periodic Reports. The Realization Trustee shall prepare the
following reports and shall distribute such reports to any Trust Beneficiary who
requests a copy:
(A) on a quarterly basis commencing with the first calendar
quarter ending after the Effective Date, within forty-five (45) days
after the end of such calendar quarter a report of the activities of
the Realization Trustee detailing for the preceding quarterly period
the Realization Trust activities including:
(i) an unaudited operating statement (prepared on a cash
basis) showing all revenues received by the Realization
Trustee and all expenses of operations of the Realization
Trustee (including all expenses associated with the sale of
any Trust Assets paid by the Realization Trustee);
(ii) an unaudited written report and accounting showing
(a) the assets and liabilities of the Realization Trust at the
end of such period, (b) any changes in the Trust Assets, (c)
the amount of any reserves or escrows of the Realization
Trust, and (d) any material action taken by the Realization
Trustee in the performance of his duties under the Plan and
this Realization Trust Agreement; and
(iii) an overall status report of the Realization Trust
for the next quarterly period;
and
(B) to the extent required by the Bankruptcy Court or by
applicable law (or to gain an exemption from applicable law), within
90 days after the end of each calendar year, beginning with the
first year end occurring after the Effective Date, the Realization
Trustee shall prepare reports for the prior year as described in
clause (i) and (ii) above, except that such reports shall be for a
full year (or portion thereof in which the Realization Trust has
been in existence); the financial statements included in such
reports need not be audited unless otherwise required by law.
4.9.3 Tax Information. The Realization Trustee shall timely furnish
to the Trust Beneficiaries and other recipients of distributions from the
Realization Trust such information and returns with respect to any federal or
state tax as shall be required by law.
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4.9.4 Additional Reports and Filings. The Realization Trustee shall
timely (i) prepare, file and distribute such additional statements, reports and
submissions as may be necessary to cause the Realization Trust and the
Realization Trustee to be in compliance with applicable law and (ii) prepare and
file with the Bankruptcy Court such reports and submissions as are required by
the Plan.
4.10 Application of Proceeds and Expenses. Upon receipt of the
proceeds of any Debtors' Assigned Causes of Action assigned to the Realization
Trust, the Realization Trustee shall determine whether to distribute the
proceeds to the Trust Beneficiaries or to hold the proceeds. Proceeds shall not
be held in excess of a reasonable amount to further the duties of the
Realization Trustee and the Realization Monitoring Committee. If the Realization
Trustee decides to distribute proceeds to the Trust Beneficiaries, or if there
are no more proceeds that can be realized by the Realization Trust, then the
Realization Trustee shall apply such proceeds, net of amounts paid or deductions
made by reason of set-off to defendants or by reason of reduction in judgment or
reimbursement obligations of the Realization Trust, as follows: (i) first, after
utilizing amounts in the Realization Trustee Reserve and the Realization
Monitoring Committee Reserve, to the payment of any associated taxes and unpaid
administrative expenses of the Realization Trust, the Realization Trustee and
the Realization Monitoring Committee, (ii) second, pro rata to the payment of
the reasonable unpaid fees and expenses incurred in employing professionals for
the Realization Trustee and the Realization Monitoring Committee, and the
compensation and expenses of the Realization Trustee, (iii) third, to either the
Realization Trustee Reserve or the Realization Monitoring Committee Reserve for
the reasonably anticipated amount of any future expenses and obligations to the
extent the amounts in such reserves are insufficient (the foregoing (i) through
(iii) the "Litigation Administrative Costs"), and (iv) fourth, the balance for
distribution to the Trust Beneficiaries in accordance with Section 4.6 hereof
and the terms of the Plan.
ARTICLE V
THE REALIZATION TRUSTEE
5.1 The Realization Trustee.
5.1.1 Independent Trustee. The Realization Trustee may not be a
Trust Beneficiary or related or subordinate to any Trust Beneficiary.
5.1.2 Trustee's Compensation and Reimbursement. In addition to
reimbursement for the actual out-of-pocket expenses incurred, the Realization
Trustee, and any employees or professionals engaged or retained by the
Realization Trustee, shall be entitled to reasonable compensation for services
rendered in connection with the preparation and implementation of the Plan. The
terms of the Realization Trustee's compensation shall be based upon the terms
set forth in Exhibit A unless modified in accordance with the terms hereof. With
respect to any employees engaged and professionals retained, such compensation
shall be in an amount and on such terms as may be agreed to by the Realization
Trustee and such employees or professionals with
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the consent of the Realization Trust Monitoring Committee. Any dispute with
respect to such compensation shall be resolved by agreement among the parties
or, if the parties are unable to agree, as determined by the Bankruptcy Court.
5.1.3 Resignation. The Realization Trustee may resign as Realization
Trustee hereunder by an instrument in writing signed by the Realization Trustee
and filed with the Bankruptcy Court. Such resignation shall become effective
ninety (90) days following the giving of such notice or upon the earlier
appointment of a successor Realization Trustee.
5.2 Removal. The Realization Trustee may be removed by a unanimous
determination by the members of the Realization Trust Monitoring Committee
without any showing of cause. In addition, the Realization Trust Monitoring
Committee and/or any beneficiary of the Realization Trust can seek to have the
Realization Trustee removed for cause. To the extent there is any dispute
regarding the removal of the Realization Trustee, the Bankruptcy Court shall
retain jurisdiction to consider and adjudicate any such dispute and may remove
the Realization Trustee for cause.
5.2.1 Appointment of Successor Trustee. In the event of the
resignation or removal of the Realization Trustee, the Realization Trust
Monitoring Committee shall designate a successor Realization Trustee and the
Bankruptcy Court, upon application of the Realization Trust Monitoring
Committee, shall appoint a successor Realization Trustee. Written notice of such
appointment shall be given to the Trust Beneficiaries as soon thereafter as is
practicable. Any successor Realization Trustee appointed hereunder shall
execute, acknowledge and deliver to the Bankruptcy Court and to the retiring
Realization Trustee an instrument duly accepting such appointment and agreeing
to be bound by the terms of this Realization Trust Agreement and thereupon such
successor Realization Trustee, without further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the Realization
Trustee under this Realization Trust Agreement.
5.2.2 Trust Continuance. The resignation or removal of the
Realization Trustee shall not operate to terminate the Realization Trust created
by this Realization Trust Agreement or to revoke any existing agency created
pursuant to the terms of this Realization Trust Agreement or invalidate any
action theretofore taken by the Realization Trustee or any prior Realization
Trustee. In the event of the resignation or removal of the Realization Trustee,
such Realization Trustee shall promptly execute and deliver such documents,
instruments and other writings as may be reasonably requested by the successor
Realization Trustee to effect the termination of the Realization Trustee's
capacity under this Realization Trust Agreement and the conveyance of the Trust
Assets then held by the Realization Trustee to such Realization Trustee's
successor; deliver to the successor Realization Trustee all documents,
instruments, records and other writings related to the Realization Trust as may
be in the possession of the Realization Trustee; and otherwise assist and
cooperate in effecting the assumption of its obligations and functions by such
successor Realization Trustee. In the event that there shall not have been
appointed a successor Realization Trustee pursuant to the terms of the
Realization Trust Agreement on or before the effective date of the resignation
or removal of the
11
Realization Trustee, the Bankruptcy Court shall appoint an interim Realization
Trustee hereunder until such successor Realization Trustee shall have been
appointed and shall have taken office.
5.3 Reliance by Realization Trustee. The Realization Trustee may
rely, and shall be fully protected personally in acting upon, any resolution,
statement, certificate, instrument, opinion, report, notice, request, consent,
order, or other instrument or document which the Realization Trustee has no
reason to believe to be other than genuine and to have been signed or presented
other than by the proper party or parties or, in the case of facsimile
transmissions, to have been sent other than by the proper party or parties, in
each case without obligation to satisfy himself or herself that the same was
given in good faith and without responsibility for errors in delivery,
transmission, or receipt. In the absence of fraud, willful misconduct or gross
negligence, the Realization Trustee may rely as to the truth of statements in
acting thereon. The Realization Trustee may consult with and rely on the advice
of legal counsel and such other experts, advisors, consultants or other
professionals as shall have been retained pursuant to this Realization Trust
Agreement and shall be fully protected in respect of any action taken or
suffered by them in accordance with the written opinion of legal counsel.
5.4 Trustee's Standard of Care; Exculpation. The Realization
Trustee, the members of the Realization Trust Monitoring Committee, and each of
their respective post-Effective Date directors, members, officers, employees and
agents, from and after the Effective Date, shall be exculpated by all Persons,
holders of Claims and Equity Interests, entities, and other parties in interest
receiving Distributions under the Plan, from any and all claims, causes of
action, and other assertions of liability arising out of the Realization
Trustee's and Realization Trust Monitoring Committee's discharge of the powers
and duties conferred upon it by this Realization Trust Agreement, the Plan or
any order of the Bankruptcy Court entered pursuant to or in furtherance of the
Plan, or applicable law, except solely for actions or omissions arising out of
gross negligence, willful misconduct or breach of their respective fiduciary
duties.
5.5 Indemnification. Except in those situations in which the
Realization Trustee is not exonerated of personal liability as aforesaid, the
Realization Trustee (including, each former Realization Trustee or estate of a
decedent Realization Trustee), the members of the Realization Trust Monitoring
Committee, and each of their respective post-Effective Date directors, members,
officers, employees and agents, shall be defended, held harmless and indemnified
from time to time from the Trust Assets against any and all losses, claims,
costs, expenses and liabilities (including legal fees and expenses) and any
costs of defending any action to which the Realization Trustee may be subject in
connection with any action, suit, proceeding or investigation brought or
threatened against such Realization Trustee in such Realization Trustee's
capacity as Realization Trustee, or such member of the Realization Trust
Monitoring Committee's in its capacity as such, or in any other capacity
contemplated by this Realization Trust Agreement, the Plan or in any matter
arising out of or related to this Realization Trust Agreement or the affairs of
the Realization Trust, as the case may be. The Realization Trust may indemnify
and hold harmless employees and agents of the Realization Trust to the same
extent as is provided in this Section 5.5 for the Realization Trustee.
12
5.6 Insurance. If the Realization Trustee so desires, and if
available on commercially reasonably terms, the Realization Trustee shall
endeavor to obtain insurance covering liabilities of the Realization Trustee
(and such insurance coverage may extend beyond the term of the Realization Trust
for a reasonable period), or employees or agents of the Realization Trust
incurred in connection with their services to the Realization Trust and with
such coverages and limits as the Realization Trustee deems desirable.
5.7 No Liability for Acts of Predecessors. No Realization Trustee or
any successor Realization Trustee shall be in any way responsible for the acts
or omissions of the Debtors, or officers, directors, agents, predecessors or
successors thereof; or the Realization Trustee in office prior to the date on
which such person becomes Realization Trustee, unless a successor Realization
Trustee expressly assumes such responsibility.
5.8 No Implied Obligations. No Realization Trustee shall be liable
except for the performance of such duties and obligations as are specifically
set forth herein, and no implied covenants or obligations shall be read into
this Realization Trust.
5.9 Bond Requirement: Exercise of Powers. At the request of the
Realization Trust Monitoring Committee, the Realization Trustee shall be
required to furnish a bond to secure the proper performance of his duties
hereunder. The premium for such bond and any renewal thereof shall be paid by
the Realization Trust. Except as otherwise expressly provided in this
Realization Trust Agreement, the Realization Trustee shall not be required to
procure authorization by any court in the exercise of any power conferred upon
the Realization Trustee by this Realization Trust Agreement.
5.10 Effect of Trust on Third Parties. There is no obligation on the
part of any purchaser or purchasers from the Realization Trustee or any agent of
the Realization Trustee, or on the part of any other persons dealing with the
Realization Trustee or any agent of the Realization Trustee, to see to the
application of the purchase money or other consideration passing to the
Realization Trustee or any agent of the Realization Trustee, or to inquire into
the validity, expediency, or propriety of any such transaction by the
Realization Trustee or any agent of the Realization Trustee.
5.11 Instructions and Exculpatory Provisions.
(A) If (i) performing the Realization Trustee's duties under
this Realization Trust Agreement the Realization Trustee is required
to decide between alternative courses of action, or (ii) the
Realization Trustee is unsure of the application of any provision of
this Realization Trust Agreement or the Plan, then the Realization
Trustee may, promptly deliver a notice to the Realization Trust
Monitoring Committee and/or the Bankruptcy Court, as the Realization
Trustee in its sole discretion shall determine, requesting written
instructions as to the course of action desired by the Realization
Trust Monitoring Committee and/or the Bankruptcy Court requesting
written instructions as to the course of action desired by the
Realization Trust Monitoring Committee and/or the
13
Bankruptcy Court. The Realization Trust Monitoring Committee and/or
the Bankruptcy Court shall make any determination required pursuant
to this section. If the Realization Trustee does not receive such
written directions within 10 business days after it has delivered
such notice, or such shorter period of time set forth in such
notice, the Realization Trustee may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this
Realization Trust Agreement as the Realization Trustee shall deem
advisable.
(B) The Realization Trustee shall not have any obligation,
responsibility or liability for:
(i) any representations as to the value or condition of
the Trust Assets or any part thereof or as to the title of the
Debtors thereto;
(ii) the validity, execution (except the Realization
Trustee's own execution), enforceability, legality, or
sufficiency of this Realization Trust Agreement.
(iii) taking any action under this Realization Trust
Agreement or the Plan if taking such action (x) would subject
the Realization Trustee to a tax in any jurisdiction where the
Realization Trustee is not then subject to a tax or (y) would
require the Realization Trustee to qualify to do business in
any jurisdiction where the Realization Trustee is not then so
qualified, unless the Realization Trustee receives an
indemnity satisfactory to the Realization Trustee against such
tax (or equivalent liability), or any liability resulting from
such qualification; and
(iv) expending the Realization Trustee's personal funds
or otherwise incurring any financial liability in the
performance of the Realization Trustee's rights or powers
hereunder if the Realization Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured or provided to the Realization Trustee.
ARTICLE VI
MISCELLANEOUS
6.1 Governing Law. THIS REALIZATION TRUST AGREEMENT, THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS REALIZATION TRUST AGREEMENT, AND ANY CLAIM
OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS
REALIZATION TRUST AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
14
REALIZATION TRUST AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER
THEORY), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL
IN ALL RESPECTS BE GOVERNED BY AND INTERPRETED, CONSTRUED AND DETERMINED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
ANY CONFLICTS OF LAW PROVISION THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF
ANY OTHER JURISDICTION).
6.2 Relationship Created. The only relationship created by this
Realization Trust is the trustee-beneficiary relationship between the
Realization Trustee and the Trust Beneficiaries. No other relationship or
liability is created. Nothing contained herein shall be construed so as to
constitute the Realization Trustee and the Trust Beneficiaries or their
successors in interest as creating any association, partnership, or joint
venture of any kind.
6.3 Interpretation. The enumeration and heading contained in this
Realization Trust are for convenience of reference only and are not intended to
have any substantive significance in interpreting the same.
6.4 Partial Invalidity. If any term or provision of this Realization
Trust Agreement is held to be illegal, invalid, or unenforceable under present
or future laws effective during the term of this Realization Trust Agreement,
such term or provision shall be fully severable and this Realization Trust
Agreement hall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a pat of this Realization Trust
Agreement; and the remaining terms and provisions of this Realization Trust
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid, or enforceable provision or by its severance from this
Realization Trust Agreement and this Realization Trust Agreement shall be
construed so as to limit any term or provision so as to make it legal, valid and
enforceable provision, provided that such construction, to the maximum extent
possible, shall give effect to the purposes of the Plan.
6.5 Entire Agreement. This Realization Trust Agreement (including
the recitals hereof) and the Plan constitute the entire agreement by and among
the parties, and there are no representations, warranties, covenants, or
obligations except as set forth herein and in the Plan. This Realization Trust
Agreement and the Plan supersede all prior and contemporaneous agreements,
understandings negotiations, and discussions, written or oral, if any, of the
parties hereto relating to any transaction contemplated hereunder. Except as
otherwise specifically provided herein or in the Plan, nothing in this
Realization Trust Agreement is intended or shall be construed to confer upon or
to give any person other than the parties hereto and the Realization Trust
Beneficiaries any rights or remedies under or by reason of this Realization
Trust Agreement.
6.6 Counterparts. This Realization Trust Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original
document, but all of which counterparts shall together constitute one and the
same instrument.
15
6.7 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be addressed (i) if to
the Realization Trustee, to Morton P. Levine, Realization Trustee, at Levine &
Block, 2270 Resurgens Plaza, 945 E. Paces Ferry Road, Atlanta, Georgia, 30326,
telephone number: (404) 231-4567 and facsimile number: (404) 231-4618, or such
other address as such Realization Trustee will have furnished, (ii) if to any
Trust Beneficiary, to such Trust Beneficiary at the address set forth in the
books and records of the Debtors as of the Effective Date, or such other address
as such Trust Beneficiary will have furnished to the Realization Trustee in
writing in accordance with this Section 6.7, or (iii) if to the members of the
Realization Trust Monitoring Committee, [__________________________________, as
counsel to the Realization Trust Monitoring Committee}][(A) DDJ Capital
Management, LLC, Suite S-4, 141 Linden Street, Wellesley, MA 02482-7910,
Attention: Wendy Schnipper Clayton, Esq., Tel. No.: (781) 283-8506; e-mail:
wsclayton@ddjcap.com; (B) R(2) Investments, LDC, c/o Q Funding L.P, Suite 2975,
301 Commerce Street, Forth Worth, TX 76102-4140. Attention: Mr, Michael Diament,
Tel. No.: (817) 332-4885, e-mail: mdiament@acmewidget.com; and (C) Wachovia
Bank, National Association, as indenture trustee under the Senior Notes, c/o
Smith, Gambrell & Russell LLP, Suite 3100, Promenade II, 1230 Peachtree Street,
N.E., Atlanta, GA 30309, Attention: John Vian, Esq., Tel. No.: (404) 815-3543,
e-mail: jvian@sgrlaw.com], or such other address as each member of the
Realization Trust Monitoring Committee, as applicable, will have furnished to
the Realization Trustee in writing in accordance with this Section 6.7. All such
notices, request, consents and other communications shall be given by facsimile,
hand delivery, overnight delivery or, to a Trust Beneficiary only, first class
mail, postage prepaid, and shall be deemed given when actually delivered or,
with respect to a Trust Beneficiary only, if mailed three (3) business days
after deposit in the U.S. Mail.
6.8 Notice of Actions by Bankruptcy Court. To the extent that this
Realization Trust Agreement provides that the Bankruptcy Court can adjudicate
proceedings or matters relating to the Realization Trust, unless specifically
provided otherwise herein, the party in interest seeking such relief is hereby
required to serve copies of its moving papers solely upon each of the following:
(a) the Realization Trustee at the address(es) set forth in Section 6.7 hereof,
(b) to the members of the Realization Trust Monitoring Committee at the
addresses set forth in Section 6.7 hereof, (c) to the ten (10) largest Trust
Beneficiaries, at the addresses provided under Section 6.7 hereof, and (d) to
any Holder or Trust Beneficiary who has requested service of any such pleadings
as set forth in a writing to the Realization Trustee (in accordance with Section
6.7 hereof). Unless otherwise ordered by the Bankruptcy Court, no other or
further notice need be given. At the request of any party in interest, the
Realization Trustee shall provide a list of the names and addresses of the
Persons set forth in subsections (c) and (d) above.
6.9 Realization Trust Monitoring Committee.
6.9.1 Appointment. As set forth in the Plan, on the Effective Date
of the Plan, the Realization Trust Monitoring Committee shall be appointed,
which shall be comprised of non-insider holders of General Unsecured Claims (or
their representatives). The following entities will serve as the members of the
Realization Trust Monitoring
16
Committee: (a) DDJ Capital Management, LLC, (b) R(2) Investments, LDC, and
(C)Wachovia Bank, National Association, as indenture trustee under the Senior
Notes.
6.9.2 Responsibilities. The Realization Trust Monitoring Committee
will (a) monitor and review the fairness of settlement and other disposition
proposals proposed to or agreed to by the Realization Trustee with respect to
the Disputed Claims, (b) consult with the Realization Trustee regarding the
settlement and/or prosecution of such Disputed Claims, (c) monitor and review
the fairness of settlement, abandonment and other disposition proposals proposed
to or agreed to by the Realization Trustee with respect to the Debtors' Assigned
Causes of Action, (d) consult with the Realization Trustee regarding the
settlement and prosecution of such Debtors' Assigned Causes of Action, (e)
monitor and oversee the administration of the Realization and the Realization
Trustee's performance of its responsibilities under this Realization Trust
Agreement and/or the Plan, and (f) perform such other tasks as set forth in this
Realization Trust Agreement and/or in the Plan.
6.9.3 Retention of Counsel for Realization Trust Monitoring
Committee. The Realization Trust Monitoring Committee will, to the extent it
deems necessary, retain counsel to assist it. To the extent of the Realization
Trust Monitoring Committee Reserve or such additional amounts as approved by the
Bankruptcy Court, the Realization Trust Monitoring Committee may commit the
Realization Trust to provide such professional Persons or Entities reasonable
compensation and reimbursement from the Trust Assets for services rendered and
expenses incurred. The Realization Trustee will make all reasonable and
customary arrangements for payment or reimbursement of such compensation and
expenses and will pay the same from the Realization Trust Monitoring Committee
Reserve.
6.9.4 Quorum; Meetings; Votes. A quorum for the Realization Trust
Monitoring Committee shall consist of a majority of the then existing members of
the Realization Trust Monitoring Committee. No meeting of the Realization Trust
Monitoring Committee shall be held unless a quorum is present at the beginning
of any meeting. The Realization Trustee or any member of the Realization Trust
Monitoring Committee may call for a meeting to be convened upon notice of such
meeting being given at least two (2) Business Days prior to the proposed date of
the meeting, which notice may be given by telephone, overnight mail, or
facsimile transmission, to each of the other members of the Realization Trust
Monitoring Committee. Meetings shall be held in person or by telephone
conference call. Except as otherwise expressly provided herein, any action by
the Realization Trust Monitoring Committee shall require the affirmative vote of
a majority of those voting provided that a quorum is present at the time of the
vote. Unless the Realization Trust Monitoring Committee decides otherwise (which
decision shall rest in the sole discretion of the Realization Trust Monitoring
Committee, whether or not such decision is reasonable), the Realization Trustee
and its designated advisors may attend meetings of the Realization Trust
Monitoring Committee.
6.9.5 Resignations; Successor Members. Any Person or Entity may
resign as a member of the Realization Trust Monitoring Committee at any time. In
the event that any Person or Entity resigns as a member of the Realization Trust
Monitoring
17
Committee, the remaining members of the Realization Trust Monitoring Committee
shall select a replacement for such Entity, provided, however, that any such
replacement must hold or represent Allowed General Unsecured Claims.
6.9.6 Review by Bankruptcy Court. In addition to the Realization
Trust Monitoring Committee, the Realization Trustee and each Holder may raise
any disputes with respect to the administration of the Realization Trust, the
allocation of proceeds under the Realization Trust, and the conduct of the
Realization Trustee before the Bankruptcy Court and the Bankruptcy Court shall
retain jurisdiction to adjudicate all such matters.
6.9.7 Discretion Afforded to Realization Trust Monitoring Committee
to Modify Terms of Compensation of Realization Trust Trustee. Notwithstanding
anything to the contrary in this Realization Trust Agreement or the Plan, the
Realization Trust Monitoring Committee may, with the unanimous consent of each
of the members of the Realization Trust Monitoring Committee, and without
application to or approval by the Bankruptcy Court, subject to the consent of
the Realization Trustee, modify the Realization Trustee's compensation and other
terms regarding the retention of the Realization Trustee.
6.9.8 Reimbursement of Expenses for Members of Realization Trust
Monitoring Committee. Each member of the Realization Trust Monitoring Committee
shall be entitled to be compensated and/or reimbursed by the Realization Trustee
for the reasonable time and/or out-of-pocket expenses incurred by such member in
performing its duties as a member of the Realization Trust Monitoring Committee,
which expenses shall not exceed the rate of $350 per hour (whether for
compensation for in-house time and/or for reimbursement of out-of-pocket
expenses to the extent out-of-house professionals are designated to serve on
such committee); all such costs and/or expenses shall be treated as
administrative expenses of the Realization Trust under Sections 1.5(ii) and 7.9
of the Plan and hereunder. The Realization Trust will reimburse the members of
the Realization Trust Monitoring Committee for such costs and expenses. Prior to
payment, all such costs and/or expenses must be approved by the Realization
Trustee and the other members of the Realization Trust Monitoring Committee. To
the extent there is any dispute regarding the reasonable amount of such costs
and/or expenses, the Bankruptcy Court shall retain jurisdiction to consider and
adjudicate any such dispute.
6.9.9 Consent of Realization Trust Monitoring Committee. Whenever
the Realization Trustee is required to obtain the consent of the Realization
Trust Monitoring Committee pursuant to the terms hereof, the Realization Trust
Monitoring Committee may not unreasonably withhold such consent.
6.10 Effective Date. This Realization Trust, and the transfer of
Trust Assets to the Realization Trustee, shall become effective on the Effective
Date of the Plan.
6.11 Conflicts, In the event of any conflict or inconsistency
between the terms of (a) the Plan (excluding the Plan Supplement) and (b) this
Realization Trust
18
Agreement, the terms of this Realization Trust Agreement shall control;
provided, however, that if the terms of the Plan or this Realization Trust
Agreement (i) do not expressly resolve the issue under consideration, or (ii)
are ambiguous with regard to such issue, the Realization Trustee or other
parties-in-interest, on such notice as may be appropriate, may seek such relief
from the Bankruptcy Court as may be necessary.
6.12 Tax Provisions.
6.12.1 Income Tax Status. For all purposes of the Tax Code, the
Debtors shall be deemed to have transferred the Trust Assets to the Trust
Beneficiaries and the other recipients of distributions hereunder pursuant to
the Plan and thereupon the Trust Beneficiaries shall be deemed to have
transferred their share of the Trust Assets to the Realization Trust. For all
federal income tax purposes consistent valuations shall be used by the
Realization Trust and the Trust Beneficiaries for the transferred Trust Assets.
The Realization Trust is intended to be treated as a liquidating trust pursuant
to Treasury Regulations Section 301.7701-4(d), and as a grantor trust subject to
the provisions of Subchapter J, Subpart E of the Tax Code, owned by the Trust
Beneficiaries as grantors. Any items of income, deduction, credit, or loss of
the Realization Trust shall be allocated for federal, state and local income tax
purposes among the Trust Beneficiaries pro rata on the basis of their beneficial
interests; provided, however, that to the extent that any item of income cannot
be allocated in the taxable year in which it arises, the Realization Trust shall
pay the federal, state and local taxes attributable to such income (net of
related deductions) and the amount of such taxes shall be treated as having been
received by, and paid on behalf of, the Trust Beneficiaries receiving such
allocations when such allocations are ultimately made. The Realization Trustee
is authorized to take any action that may be necessary or appropriate to
minimize any potential tax liability of the Trust Beneficiaries arising out of
the operations of the Realization Trust.
6.12.2 Tax Returns and Reports. In accordance with Treasury
Regulations Section 1.671-4(a), the Realization Trustee shall cause to be
prepared and filed, at the cost and expense of the Realization Trust, an annual
information tax return (Form 1041) with the Internal Revenue Service, with a
schedule attached showing the item of income, deduction, and credit attributable
to the Realization Trust and detailing the allocation of such items of income,
deduction, and credit among the Trust Beneficiaries as required pursuant to the
Form 1041 instructions for grantor trusts Copies of such Form 1041 and attached
schedules will be delivered promptly to each Trust Beneficiary. In addition, the
Realization Trustee shall cause to be prepared and filed in a timely manner,
such other state or local tax returns as are required by applicable law by
virtue of the existence and operation of the Realization Trust and shall pay any
taxes shown as due thereon. Within sixty (60) days after the end of each
calendar year, the Realization Trustee shall cause to be prepared and mailed to
a Trust Beneficiary such other information as may be requested by such Trust
Beneficiary in writing to enable such Trust Beneficiary to complete and file
his, her or its federal, state and local income and other tax returns.
6.12.3 Withholding. The Realization Trustee may withhold from the
amount distributable from the Realization Trust at any time such sum or sums as
may be
19
sufficient to pay any tax or taxes or other charge or charges which have been or
may be imposed on a distributee or upon the Realization Trust with respect to
the amount distributable or to be distributed under the income tax laws of the
United States or of any state or political subdivision or entity by reason of
any distribution provided for any law, regulation, rule, ruling, directive, or
other governmental requirement.
6.12.4 Tax Identification Number. The Realization Trustee may
require any Trust Beneficiary or other distributee to furnish to the Realization
Trustee its Employer or Taxpayer Identification Number as assigned by the
Internal Revenue Service and the Realization Trustee may condition any
distribution to any Trust Beneficiary or other distributee upon receipt of such
identification number. If any such Trust Beneficiary or other distributee fails
to supply a Taxpayer Identification Number to the Realization Trustee within
ninety (90) days of the initial request by the Realization Trustee, the
Realization Trustee shall have the authority to apply to the Bankruptcy Court to
have the claims of such Trust Beneficiary or other distributee disallowed and
expunged.
6.12.5 Tax Year. The taxable year of the Realization Trust shall,
unless otherwise required by the Tax Code, be the calendar year.
20
6.13 Amendment of Realization Trust. This Realization Trust
Agreement may be amended, modified or altered only on the recommendation of the
Realization Trustee and subject to Bankruptcy Court approval.
6.14 Plan Controls. Notwithstanding any term herein, the terms and
provisions of the Plan, including all duties and obligations imposed upon the
Realization Trust under the Plan, shall control and be binding upon the
Realization Trust.
IN WITNESS WHEREOF, the undersigned have executed this Litigation Trust
Agreement as of the date and year first above written.
WORLD ACCESS, INC., WA TELCOM
PRODUCTS CO., INC.,
WORLDXCHANGE
COMMUNICATIONS, INC.,
FACILICOM INTERNATIONAL LLC AND WORLD ACCESS
TELECOMMUNICATIONS GROUP,
INC., AS SETTLORS
By:_________________________________________
Name:
Title:
21
MORTON P. LEVINE, as the Realization Trustee
By: /s/ Morton P. Levine
----------------------------------------
solely as the Realization Trustee of the
World Access Realization Trust
By: /s/ Morton P. Levine
---------------------------------------
Name:
Title:
CONSENTED AND AGREED TO BY:
THE MEMBERS OF THE REALIZATION
TRUST MONITORING COMMITTEE
DDJ CAPITAL MANAGEMENT, LLC, solely in its capacity as a member of the
Realization Trust Monitoring Committee
By:_________________________________________________
Name:
Title:
R(2) INVESTMENTS, LDC, solely in its, capacity as a member of the Realization
Trust Monitoring Committee
By:_________________________________________________
Name:
Title:
WACHOVIA BANK, NATIONAL ASSOCIATION, as indenture trustee under the Senior
Notes, solely in its capacity as a member of the Realization Trust
Monitoring Committee
By:________________________________________________
Name:
Title:
22
EXHIBIT A
The Realization Trustee shall be compensated at the rate of $305 per hour for
the services of Mr. Levine (which represents Mr. Levine's current hourly rate)
for his actual and reasonable time, plus any reasonable and necessary
disbursements and out-of-pocket expenses related to the scope of the Realization
Trustee's services hereunder. In addition, where cost-efficient and reasonable,
Mr. Levine may utilize members of his staff at Levine and Block at the following
rates: other partners at a rate not to exceed $305 per hour, other senior
associates/associates at a rate between $240 and $265 per hour; paralegals/legal
assistants at a rate between $55 and $85 per hour; and case clerks at a rate not
to exceed $40 per hour