USP REAL ESTATE INVESTMENT TRUST
LIQUIDATING TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST by and among Samuel
L. Kaplan and Richard M. Osborne (the "Liquidating
Trustees"), and USP Real Estate Investment Trust, an Iowa
common law business trust (the "Trust").
WHEREAS, on June 13, 2000, the shareholders of the
Trust approved the sale of all of the Trust's real property
(the "Asset Sale") and the liquidation of the Trust
following the closing of the Asset Sale (the "Liquidation"),
pursuant to that certain Real Estate Sale and Purchase
Contract (the "Purchase Agreement"), dated as of January 20,
2000, by and between the Trust and AEGON USA Realty
Advisors, Inc., an Iowa corporation (together with its
assignees, "Purchaser");
WHEREAS, on June 15, 2000 the Trust and Purchaser
consummated the Asset Sale, with the result that all of the
Trust's assets have been reduced to cash or cash
equivalents;
WHEREAS, pursuant to the Purchase Agreement, the Trust
made certain representations, warranties and indemnities and
undertook certain other obligations (collectively, the
"Indemnity Obligations") in connection with the Asset Sale;
WHEREAS, following a $6.83 per share distribution to
the shareholders of the Trust of record as of the close of
business on June 15, 2000, the Trust holds certain
additional funds in cash (the "Funds");
WHEREAS, the Board of Trustees believes that there are
or may be outstanding liabilities (whether fixed or
contingent) of the Trust, creditors of the Trust with
contingent or unliquidated claims against the Trust, or
claims that are not feasible to settle at this time
(collectively, the "Existing Liabilities");
WHEREAS, the Board of Trustees of the Trust believes
that the Funds represent a reasonable estimate of the amount
required to pay (i) the maximum potential liability under
the Indemnity Obligations, (ii) the Existing Liabilities,
and (iii) administrative expenses of the liquidating trust
created hereby (collectively, the "Liabilities"); and
WHEREAS, the Board of Trustees of the Trust believes
that a transfer of the Funds into a liquidating trust with
the Liquidating Trustees as trustees is now appropriate to
provide for the payment of the Liabilities.
NOW THEREFORE, in consideration of the premises and
other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confessed, subject to the
terms and provisions set out below, the Trust hereby grants,
releases, assigns, transfers, conveys and delivers unto the
Liquidating Trustees all of its right, title and interest in
the Funds in trust for the uses and purposes stated herein.
The Liquidating Trustees hereby accept such assets and such
liquidating trust, subject to the same terms and provisions,
to wit:
ARTICLE I.
NAME AND DEFINITIONS
1.1 Name. This trust shall be known as the USP Real
Estate Investment Trust Liquidating Trust (the "Liquidating
Trust").
1.2 Certain Terms Defined. For all purposes of this
instrument, unless the context otherwise requires:
(a) "Agreement" or "Agreement of Trust" shall mean
this instrument as originally executed or as it may from
time to time be amended pursuant to the terms hereof.
(b) "Beneficiaries" shall mean Trust Interest Holders
(as defined herein), and their legal representatives, who in
accordance with the terms hereof, shall have surrendered
their Trust Interests for cancellation and have received in
exchange appropriate Beneficial Interests (as defined
herein) in the Liquidating Trust Estate (as defined herein).
The Beneficiaries will be treated as grantors and deemed
owners of the Liquidating Trust and they will be treated for
federal income tax purposes as owning undivided interests in
its assets.
(c) "Beneficial Interest" shall mean the share of each
Beneficiary in the Liquidating Trust Estate. On the
Transfer Date (as defined herein) each Trust Interest Holder
shall receive a Beneficial Interest in the Liquidating Trust
Estate determined by the ratio of the number of Trust
Interests (as defined herein) held by such Trust Interest
Holder on the Transfer Date to the aggregate number of
issued and outstanding Trust Interests held by all Trust
Interest Holders on the Transfer Date.
(d) "Liquidating Trust Estate" shall mean all the
property held from time to time by the Liquidating Trustees
under this Agreement of Trust including but not limited to
(i) proceeds from such property held, or from the sale
thereof, (ii) dividends and other cash distributions
received from any corporation, (iii) interest earned on any
monies or securities held by the Liquidating Trustees under
this Agreement of Trust, and (iv) any royalties or income of
any kind; provided, however, that the Liquidating Trust
shall not (A) acquire any listed stocks or securities, any
readily-marketable assets or any operating assets of a going
business, (B) retain cash in excess of a reasonable amount
to meet fixed, contingent or unliquidated claims and
contingent liabilities, (C) acquire any unlisted stock of a
single issuer that represents eighty percent or more of the
stock of such issuer, or (D) acquire any general or limited
partnership interests.
(e) "Liquidating Trustees" shall mean the original
Liquidating Trustees (i.e., Samuel L. Kaplan and Richard M.
Osborne) and their successors.
(f) "Trust" shall mean USP Real Estate Investment
Trust, an Iowa common law business trust, which is intended
to be liquidated and terminated after the execution of this
instrument.
(g) "Trust Interests" shall mean the beneficial
interests (and assignee interests therein) in the Trust
outstanding on the date hereof.
(h) "Trust Interest Holder" shall mean any holder of a
Trust Interest listed in the Trust Ownership List that is
held by the Trust's transfer agent, Boston EquiServe, L.P.
(i) "Transfer Date" shall mean the date on which all
the Funds are transferred into the Liquidating Trust.
1.3 Meaning of Other Terms. Except where the context
otherwise requires, words importing the masculine gender
include the feminine and the neuter, if appropriate, words
importing the singular number shall include the plural
number and vice versa, and words importing persons shall
include firms, associations, and corporations. All
references herein to Articles, Sections, and other
subdivisions refer to the corresponding Articles, Sections,
and other subdivisions of this Agreement; and the words
herein, hereof, hereby, hereunder, and words of similar
import, refer to this Agreement as a whole and not to any
particular Article, Section, or subdivision of the
Agreement.
ARTICLE II.
NATURE OF TRANSFER
2.1 Purpose of Liquidating Trust. The sole purpose of
this Liquidating Trust is to liquidate the Liquidating Trust
Estate in a manner calculated to conserve and protect the
Liquidating Trust Estate until such time as the proceeds can
be distributed, and to collect and distribute the income and
proceeds therefrom to the Beneficiaries in as prompt and
orderly a fashion as possible after the payment of expenses
and liabilities and the making of reasonable provision for
claims and contingent liabilities, including without
limitation any Indemnity Obligations. The Liquidating Trust
shall have no objective to continue or engage in the conduct
of a trade or business.
2.2 No Reversion to the Trust. In no event shall any
part of the Liquidating Trust Estate revert to or be
distributed to the Trust.
2.3 Instruments of Further Assurance. The Trust and
such persons as shall have the right and power after the
termination of the Trust (including the Board of Trustees)
will, upon reasonable request of the Liquidating Trustees,
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
transfer and vest in the Liquidating Trustees the Funds in
trust hereunder.
2.4 Payment of the Trust's Liabilities. The
Liquidating Trustees (in their capacity as trustees and not
personally) hereby assume all the liabilities and claims
(including unascertained or contingent liabilities and
expenses) of the Trust, subject to Section 7.2(c) below.
Should any liability be asserted against the Liquidating
Trustees as the transferees of the Liquidating Trust Estate
or as a result of the assumption made in this Section, the
Liquidating Trustees may use such part of the Liquidating
Trust Estate as they deem necessary or appropriate in
contesting any such liability or in payment thereof.
2.5 Assignment for Benefit of Beneficiaries. The
Liquidating Trustees hereby declare and agree that they are
holding the Liquidating Trust Estate solely for the benefit
of the Beneficiaries of the Liquidating Trust, and hereby
assign to each Trust Interest Holder a pro rata Beneficial
Interest in the Liquidating Trust Estate, and retain only
such incidents of ownership as are necessary to undertake
the actions and transactions authorized herein.
ARTICLE III.
BENEFICIARIES
3.1 Beneficial Interests.
(a) The Beneficial Interest of each Trust Interest
Holder shall be determined by the Liquidating Trustees in
accordance with Section 1.2(c) above. Such determination
shall be based upon a certified copy of the list of Trust
Interest Holders as of the Transfer Date (the "Trust
Ownership List"). To be able to determine the appropriate
Beneficial Interest of each Trust Interest Holder, on (or
promptly after) the Transfer Date, the Board of Trustees
will cause the transfer agent of the Trust, Boston
EquiServe, L.P., to deliver a certified copy of the Trust
Ownership List to the Liquidating Trustees.
(b) After execution of this Agreement, and upon the
transfer of the Funds into the Liquidating Trust,
outstanding Trust Interests shall be deemed canceled.
Concomitantly, a Beneficial Interest in the Liquidating
Trust shall be created for each Trust Interest Holder in an
amount determined by the ratio of the number of Trust
Interests held by such Trust Interest Holder to the
aggregate number of issued and outstanding Trust Interests
held by all Trust Interest Holders. Beneficial Interests in
the Liquidating Trust shall not be represented by
certificates, and no Beneficiary shall be entitled to such a
certificate.
3.2 Rights of Beneficiaries. Each Beneficiary shall
be entitled to participation in the rights and benefits due
to a Beneficiary hereunder according to his or her
Beneficial Interest. Each Beneficiary shall take and hold
the same subject to all the terms and provisions of this
Agreement of Trust. The Beneficial Interest of each
Beneficiary is hereby declared and shall be in all respects
personal property and upon the death of an individual
Beneficiary his or her Beneficial Interest shall pass to his
or her legal representative and such death shall not
terminate or affect the validity of this Agreement. A
Beneficiary shall have no title to, possession of,
management of, or control of, the Liquidating Trust Estate
except as herein expressly provided. No widower, widow,
heir, or devisee or any person who may be a Beneficiary
shall have any right of dower, homestead, or inheritance, or
of partition, or of any other right, statutory or otherwise,
in any property whatever forming a part of the Liquidating
Trust Estate, but the whole title to all the Liquidating
Trust Estate shall be vested in the Liquidating Trustees and
the sole interest of the Beneficiaries shall be the rights
and benefits given to such persons under this Agreement of
Trust. The Beneficiaries will be treated as the grantors
and deemed owners of the Liquidating Trust, and they will be
treated for federal income tax purposes as owning undivided
interests in its assets.
3.3 No Transfer of Interests of Beneficiaries. The
Beneficial Interest of a Beneficiary may not be transferred
either by the Beneficiary in person or by a duly authorized
agent or attorney, or by the properly appointed legal
representatives of the Beneficiary, nor may a Beneficiary
have authority or power to sell, assign, transfer, encumber,
or in any other manner anticipate or dispose of his
Beneficial Interest in the Liquidating Trust; provided,
however, that the Beneficial Interest of a Beneficiary shall
be assignable or transferable by will, intestate succession,
or operation of law.
3.4 Applicable Law. As to matters affecting the
title, ownership, transferability, or attachment of the
Beneficial Interest of a Beneficiary in the Liquidating
Trust, the laws from time to time in force in the State of
Minnesota shall govern except as otherwise herein
specifically provided.
ARTICLE IV.
DURATION AND TERMINATION OF LIQUIDATING TRUST
4.1 Duration. The existence of the Liquidating Trust
shall terminate on the earliest of (i) the expiration of one
year from the date hereof, (ii) the date on which
termination is required by the applicable laws of the State
of Minnesota, (iii) the date on which the Beneficiaries
terminate the Liquidating Trust as provided in Section 4.2,
or (iv) the date on which all of the Liquidating Trust
Estate is distributed as provided in Section 5.6. However,
notwithstanding the foregoing, if there remains any
contingent or unliquidated claims or any other outstanding
contingent liabilities for which the Liquidating Trust may
be responsible, the Liquidating Trust term may be extended,
solely with respect to such claims and liabilities, for a
period that is reasonably necessary to resolve such claims
and liabilities.
4.2 Termination by Beneficiaries. Subject to
Section 4.1, the Liquidating Trust may be terminated at any
time by the action of Beneficiaries having more than 50% of
the aggregate Beneficial Interests as evidenced in the
manner provided in Article XI.
4.3 Continuation of Liquidating Trustee's Authority
after Termination. After the termination of the Liquidating
Trust and for the purpose of winding up the affairs of the
Liquidating Trust, the Liquidating Trustees shall continue
to have the authority to act as such until their duties have
been fully performed. Except as otherwise specifically
provided herein, upon the termination of the Liquidating
Trust, the Liquidating Trustees shall have no further duties
or obligations hereunder.
ARTICLE V.
ADMINISTRATION OF LIQUIDATING TRUST ESTATE
5.1 Sale of Liquidating Trust Estate. The Liquidating
Trustees may, at such times and for such amounts as they may
deem appropriate, transfer, assign, or otherwise dispose of
all or any part of the Liquidating Trust Estate as they deem
appropriate at public auction or at private sale for cash or
securities, or upon credit (either secured or unsecured as
the Liquidating Trustees shall determine).
5.2 Continuing Efforts to Resolve Claims and
Liabilities. The Liquidating Trustees will make continuing
efforts to resolve any contingent or unliquidated claims and
outstanding contingent liabilities for which the Liquidating
Trust may be responsible, dispose of the Liquidating Trust
Estate, make timely distributions, and not unduly prolong
the duration of the Liquidating Trust.
5.3 Continued Collection of Property of Liquidating
Trust Estate. All property that is determined to be a part
of the Liquidating Trust Estate shall continue to be
collected by the Liquidating Trustees and held as a part of
the Liquidating Trust Estate. The Liquidating Trustees
shall hold the Liquidating Trust Estate without being
obligated to provide for or pay any interest thereon to any
Beneficiary, except to the extent of such Beneficiary's
share of interest actually earned by the Liquidating Trust
after payment of the Liquidating Trust's liabilities and
expenses as provided in Section 5.4.
5.4 Payment of Claims, Expenses and Liabilities. The
Liquidating Trustees shall pay from the Liquidating Trust
Estate all claims, expenses, charges, liabilities, and
obligations of the Liquidating Trust Estate and all
liabilities and obligations which the Liquidating Trustees
specifically assume and agree to pay pursuant to this
Agreement of Trust and such transferee liabilities which the
Liquidating Trustees may be obligated to pay as transferees
of the Liquidating Trust Estate, including among the
foregoing, and without limiting the generality of the
foregoing, accounts payable of the Trust and interest,
taxes, assessments, and public charges of every kind and
nature and the costs, charges, and expenses connected with
or growing out of the execution or administration of the
Liquidating 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 Liquidating Trust Estate
by the Liquidating Trustees. The Liquidating Trustees may,
in their discretion, make reasonable provision by reserve or
otherwise out of the Liquidating Trust Estate, for such
amount as the Liquidating Trustees in good faith may
reasonably determine to be necessary or desirable to meet
present or future claims and liabilities of the Liquidating
Trust, whether fixed or contingent.
5.5 Interim Distributions. At such time as may be
determined by them, but in any event no less often than
annually, the Liquidating Trustees may distribute, or cause
to be distributed, to the Beneficiaries of record on the
close of business on such record date as the Liquidating
Trustees may determine, in proportion to the respective
Beneficial Interests of the Beneficiaries in the Liquidating
Trust Estate, (i) an amount which represents the income from
investments, and (ii) cash or non-cash property comprising
the Liquidating Trust Estate; provided, however, that the
amount described in (i)and (ii) shall be reduced by the
retention of reasonable amounts of cash and property
determined in the sole discretion of the Liquidating
Trustees to be sufficient to meet claims and contingent
liabilities.
5.6 Final Distribution. If the Liquidating Trustees
determine that all claims, debts, liabilities, and
obligations of the Liquidating Trust have been paid or
discharged (except those of Beneficiaries with respect to
their interests herein), or if the existence of the
Liquidating Trust shall terminate pursuant to Sections 4.1
or 4.2, the Liquidating Trustees shall, as expeditiously as
is consistent with the conservation and protection of the
Liquidating Trust Estate, distribute the Liquidating Trust
Estate to each Beneficiary of record on the close of
business on such record date as the Liquidating Trustees may
determine, in proportion to each Beneficiary's Beneficial
Interest therein. In furtherance, and not in limitation, of
the foregoing, the Liquidating Trustees shall make a final
liquidating distribution to the Beneficiaries out of the
remaining Liquidating Trust Estate as soon as practicable
following the expiration of the Indemnity Obligations under
the Purchase Agreement or, if a claim has arisen thereunder,
as soon as practicable following resolution of such claim.
5.7 Fiscal Year. The fiscal year of the Liquidating
Trust shall end on December 31 of each year unless the
Liquidating Trustees deem it advisable to establish some
other date as the date on which the fiscal year of the
Liquidating Trust shall end.
5.8 Annual Reports to Beneficiaries, Federal Income
Tax Information. As soon as practicable after the close of
each fiscal year (including the year in which the
Liquidating Trust terminates as provided in Article IV or
this Article V), but in any event within 90 days thereafter,
the Liquidating Trustees shall prepare and mail to each
Beneficiary a report for such fiscal year showing the assets
and liabilities of the Liquidating Trust at the end of each
such fiscal year and the receipts and disbursements of the
Liquidating Trust for the period, including dates and
amounts of distributions made by the Liquidating Trustees
and information regarding interest income received by the
Liquidating Trustees on any obligations owing to the
Liquidating Trust or the Liquidating Trustees, and such
other information for such fiscal year as is reasonably
available to the Liquidating Trustees which may be necessary
or useful in determining the amount of taxable income from
the Liquidating Trust that such Beneficiary may be required
to include in his federal income tax return for such year.
Such report shall also describe the changes in the
Liquidating Trust's assets during the period and the actions
taken by the Liquidating Trustees during the period. The
financial statements contained in such report shall be
prepared in accordance with generally accepted accounting
principles, but need not be audited by an independent public
accountant. In addition, after receipt of a request in good
faith, or in their discretion without such request, the
Liquidating Trustees may furnish to any person who has been
a Beneficiary at any time during the preceding fiscal year a
statement containing such further information as is
reasonably available to the Liquidating Trustees which may
be helpful to such person for federal, state or local income
tax purposes. The Liquidating Trustees shall file returns
as a grantor trust pursuant to U.S. Treasury Regulation
Section 1.671-4(a).
5.9 Interim Reports to Beneficiaries. During the
course of a fiscal year, whenever a material event relating
to the Liquidating Trust's assets occurs, the Liquidating
Trustees shall, within a reasonable period of time after
such occurrence, prepare and mail to the Beneficiaries an
interim report describing such event. The occurrence of a
material event need not be reported on an interim report if
an annual report pursuant to Section 5.8 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 Liquidating Trustees.
ARTICLE VI.
POWERS AND LIMITATIONS OF THE LIQUIDATING TRUSTEES
6.1 Limitations on Liquidating Trustees. The
Liquidating Trustees shall not at any time, on behalf of the
Liquidating Trust or Beneficiaries, enter into or engage in
any business, except to the extent that both (1) the
business was engaged in by the Trust immediately prior to
its liquidation and (2) the continuing conduct of the
business activities is necessary to conserve or maintain the
Liquidating Trust Estate and to facilitate expeditious
liquidation of the Liquidating Trust Estate. The
Liquidating Trustees shall have no power to invest or
reinvest any of the funds held in the Liquidating Trust
Estate, except that the Liquidating Trustees may, on a
temporary basis or for purposes of retaining a reasonable
amount of property to meet expenses, obligations, claims and
contingent liabilities, invest any portion of the
Liquidating Trust Estate in demand and time deposits at
savings institutions, or short-term certificates of deposit
or Treasury bills, or securities with short-term original or
remaining maturities issued by state or local governments
(or agencies or instrumentalities thereof). The Liquidating
Trustees shall be restricted to the holding and collection
of the Liquidating Trust Estate and the payment and
distribution thereof for the purpose set forth in this
Agreement and to the conservation and protection of the
Liquidating Trust Estate and the administration thereof in
accordance with the provisions of this Agreement. In no
event shall the Liquidating Trustees receive any property,
make any distribution, satisfy or discharge any obligation,
claim, liability or expense or otherwise take any action
which is inconsistent with a complete liquidation of the
Liquidating Trust.
6.2 Specific Powers of Liquidating Trustees. Subject
to the provisions herein, the Liquidating Trustees shall
have the following specific powers in addition to any powers
conferred upon them by any other Section or provision of
this Agreement of Trust; provided, however, that enumeration
of the following powers shall not be considered in any way
to limit or control the power of the Liquidating Trustees to
act as specifically authorized by any other Section or
provision of this Agreement or to act in such a manner as
the Liquidating Trustees may deem necessary or appropriate
to carry out the purpose of the Liquidating Trust or to
confer on the Beneficiaries the benefits intended to be
conferred upon them by this Agreement:
(a) to determine the terms on which assets comprising
the Liquidating Trust Estate should be sold or otherwise
disposed of and to cause the sale of such assets;
(b) to collect and receive any and all money and other
property of whatsoever kind or nature due to or owing or
belonging to the Liquidating Trust and to give full
discharge and acquittance therefor;
(c) pending sale or other disposition or distribution,
to retain all or any assets constituting part of the
Liquidating Trust Estate. The Liquidating Trustees shall
not be under any duty to reinvest such part of the
Liquidating Trust Estate as may be in cash, or as may be
converted into cash, nor shall the Liquidating Trustees be
chargeable with interest thereon except to the extent that
interest may be paid to the Liquidating Trustees on such
cash amounts;
(d) to retain and set aside such funds of the
Liquidating Trust Estate as the Liquidating Trustees shall
deem necessary or expedient to pay or provide for the
payment of (i) unpaid claims, liabilities, debts or other
obligations of the Trust or the Liquidating Trust,
(ii) contingencies, and (iii) the expenses of administering
the Liquidating Trust Estate;
(e) to do and perform any acts or things necessary or
appropriate to carry out the purpose of the Liquidating
Trust, including acts or things necessary or appropriate to
maintain assets held by the Liquidating Trustees pending
sale or other disposition thereof or distribution thereof to
the Beneficiaries;
(f) to employ such agents and advisors (which may include
the Liquidating Trustees, one or more of the Beneficiaries,
or corporations or partnerships owned or controlled by the
Liquidating Trustees or Beneficiaries (including Purchaser
or any of its affiliates) and to confer upon them such
authority as the Liquidating Trustees may deem necessary,
appropriate or expedient, and to pay reasonable compensation
therefor from the Liquidating Trust Estate; provided that
any such agreements or arrangements with a person or entity
affiliated with any of the Liquidating Trustees shall be on
terms no less favorable to the Liquidating Trust than those
available to the Liquidating Trust in similar agreements or
arrangements with unaffiliated third parties, and such
agreements or arrangements shall be terminable, without
penalty, on 60 days' prior written notice by the Liquidating
Trust;
(g) to cause any investments of the Liquidating Trust
Estate to be registered and held in the names of the
Liquidating Trustees or in the names of a nominee or
nominees without increase or decrease of liability with
respect thereto;
(h) to institute or defend actions or declaratory judgments
or other actions and to take such other action, in the name
of the Liquidating Trust, or of the Trust if otherwise
required, as the Liquidating Trustees may deem necessary or
desirable to enforce any instruments, contracts, agreements,
or causes of action relating to or forming a part of the
Liquidating Trust Estate;
(i) to cancel, terminate, or amend any instruments,
contracts, or agreements relating to or forming a part of
the Liquidating Trust Estate, and to execute new
instruments, contracts or agreements, notwithstanding that
the terms of any such instruments, contracts, or agreements
may extend beyond the terms of the Liquidating Trust,
provided that no such new instrument, contract or agreement
shall permit the Liquidating Trustees to engage in any
activity prohibited hereunder;
(j) in the event any of the property which is or may become
a part of the Liquidating Trust Estate is situated in any
state or other jurisdiction in which the Liquidating
Trustees are not qualified to act as Liquidating Trustees,
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
Liquidating Trustees. The trustee so appointed shall have
all the rights, powers, privileges and duties and shall be
subject to the conditions and limitations of this
Liquidating Trust, except as limited by the Liquidating
Trustees and except where the same may be modified by the
laws of such state or other jurisdiction (in which case, the
laws of the state or other jurisdiction in which such
trustee is acting shall prevail to the extent necessary).
Such trustee shall be answerable to the Liquidating Trustees
herein appointed for all monies, assets and other property
which may be received by it in connection with the
administration of such property. The Liquidating Trustees
hereunder may remove such trustee, with or without cause,
and appoint a successor trustee at any time by the execution
by the Liquidating Trustees of a written instrument
declaring such trustee removed from office, and specifying
the effective date of removal;
(k) to perform any act authorized, permitted, or required
under any instrument, contract, agreement, or cause of
action relating to or forming a part of the Liquidating
Trust Estate, 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; and
(l) to settle any and all claims, suits or other actions
that are or may be brought by or against the Trust,
Liquidating Trust, Liquidating Trustees or Liquidating Trust
Estate.
6.3 Powers of Liquidating Trustees to Deal with
Liquidating Trust in Non-Fiduciary Capacity. The
Liquidating Trustees may, except as limited herein, deal
with the Liquidating Trust Estate, including, without
limitation, loan property to, borrow property from, purchase
property from or otherwise deal with the Liquidating Trust
Estate as if they were not Liquidating Trustees thereof.
ARTICLE VII.
RIGHTS AND OBLIGATIONS OF LIQUIDATING TRUSTEES
7.1 Generally. The Liquidating Trustees accept and
undertake to discharge the Liquidating Trust created by this
Agreement, upon the terms and conditions thereof. No
Liquidating Trustee shall be subject to any personal
liability whatsoever to any person in connection with the
Liquidating Trust Estate or the affairs of this Liquidating
Trust, except for his own misconduct knowingly and
intentionally committed in bad faith. No provision of this
Agreement shall be construed to relieve the Liquidating
Trustees from liability for their own misconduct knowingly
and intentionally committed in bad faith, except that:
(a) the Liquidating Trustees shall not be required to
perform any duties or obligations 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 Liquidating
Trustees;
(b) in the absence of bad faith on the part of the
Liquidating Trustees, the Liquidating Trustees may
conclusively rely, as to the truth, accuracy and
completeness thereof, on the statements and certificates or
opinions furnished to the Liquidating Trustees and
conforming to the requirements of this Agreement;
(c) the Liquidating Trustees shall not be liable for any
error of judgment made in good faith; and
(d) the Liquidating Trustees shall not be liable with
respect to any action taken or omitted to be taken by them
in accordance with the direction of Beneficiaries having
aggregate Beneficial Interests of more than 50% of all
Beneficial Interests relating to the time, method, and place
of conducting any proceeding for any remedy available to the
Liquidating Trustees, or exercising any trust or power
conferred upon the Liquidating Trustees under this
Agreement.
7.2 Reliance by Liquidating Trustees. Except as
otherwise provided in Section 7.1:
(a) the Liquidating Trustees may rely and shall be
protected in acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, or other paper or document believed by them
to be genuine and to have been signed or presented by the
proper party or parties;
(b) the Liquidating Trustees may consult with legal counsel
to be selected by them, and the Liquidating Trustees shall
not be liable for any action taken or suffered by them in
accordance with the advice of such counsel; and
(c) persons dealing with the Liquidating Trustees shall
look only to the Liquidating Trust Estate to satisfy any
liability incurred by the Liquidating Trustees in good faith
to any such person in carrying out the terms of this
Liquidating Trust, and the Liquidating Trustees shall have
no personal or individual obligation to satisfy any such
liability.
7.3 Indemnification of Liquidating Trustees. The
Liquidating Trustees shall be indemnified by and receive
reimbursement from the Liquidating Trust Estate against and
from any and all loss, liability or damage which such
Liquidating Trustees may incur or sustain, in good faith, in
the exercise and performance of any of the powers and duties
of such Liquidating Trustees under this Agreement; provided,
however, that no party other than the Liquidating Trustees
shall have the right to cause the Liquidating Trust to
indemnify the Liquidating Trustees. The Liquidating
Trustees may purchase, with assets of the Liquidating Trust
Estate, such insurance as they feel, in the exercise of
their discretion, adequately insures that they shall be
indemnified against any such loss, liability or damage
pursuant to this Section.
7.4 No Duty Not to Compete. The Liquidating Trustees,
in their individual capacity or through corporations,
partnerships or other entities which they control or in
which they have an interest, may engage in or possess any
interest in any business venture, including, but not limited
to, the ownership, financing, management of real property,
or the investment of securities, or the provision of any
services in connection with such activities. No Liquidating
Trustee has any duty to present any business opportunity to
the Liquidating Trust before taking advantage of such
opportunity either in his individual capacity or through
participation in any entity.
ARTICLE VIII.
PROTECTION OF PERSONS DEALING WITH
LIQUIDATING TRUSTEES
8.1 Action by Liquidating Trustees. Except as
otherwise provided by resolution adopted or approved by a
majority of the Liquidating Trustees, all action with
respect to the disposition and distribution of the
Liquidating Trust Estate required or permitted to be taken
by the Liquidating Trustees, in their capacity as
Liquidating Trustees, may be taken by approval, consent,
vote or resolution authorized by any of the Liquidating
Trustees then serving.
8.2 Reliance on Statement by Liquidating Trustees.
Any person dealing with the Liquidating Trustees shall be
fully protected in relying upon the Liquidating Trustees'
certificate signed by any Liquidating Trustee that they have
authority to take any action under this Liquidating Trust.
Any person dealing with the Liquidating Trustees shall be
fully protected in relying upon the Liquidating Trustees'
certificate setting forth the facts concerning the calling
of any meeting of the Beneficiaries, the giving of notice
thereof, and the action taken at such meeting, including the
aggregate Beneficial Interests of Beneficiaries taking such
action.
8.3 Application of Money Paid or Transferred to
Liquidating Trustees. No person dealing with the
Liquidating Trustees shall be required to follow the
application by the Liquidating Trustees of any money or
property which may be paid or transferred to the Liquidating
Trustees.
ARTICLE IX.
COMPENSATION OF LIQUIDATING TRUSTEES
9.1 Amount of Compensation. In lieu of commissions or
other compensation fixed by law for trustees, each
Liquidating Trustee shall receive as compensation for their
services as Liquidating Trustees hereunder and as additional
compensation from the cash proceeds of the sale of any part
of the Liquidating Trust Estate while he is serving as
Liquidating Trustee, the following: $750 per meeting of the
Liquidating Trustees (other than telephonic meetings of less
than 15 minutes, for which no fee shall be paid), and $400
per day for services required in connection with litigation
or other special circumstances involving the Liquidating
Trust, or such compensation as may subsequently be approved
by Beneficiaries having aggregate Beneficial Interests of
more than 50% of all Beneficial Interests.
9.2 Expenses. The Liquidating Trustees shall be
reimbursed from the Liquidating Trust Estate for all out-of-
pocket expenses reasonably incurred by them or any of their
affiliates in the performance of their duties in accordance
with this Agreement, including the payment of reasonable
fees and/or expenses to agents, advisors or legal counsel.
ARTICLE X.
LIQUIDATING TRUSTEES AND SUCCESSOR LIQUIDATING TRUSTEES
10.1 Number of Liquidating Trustees. Subject to the
provisions of Section 10.3 relating to the period pending
the appointment of a successor trustee, there shall be two
Liquidating Trustees of the Liquidating Trust.
10.2 Resignation and Removal. Any Liquidating Trustee
may resign and be discharged from the Liquidating Trust
hereby created by delivering such notice to the remaining
Liquidating Trustee(s). Such resignation shall become
effective on the day specified in such notice or upon the
appointment of such Liquidating Trustee's successor and such
successor's acceptance of such appointment, whichever is
earlier. Any Liquidating Trustee may be removed at any
time, with or without cause, by Beneficiaries having
aggregate Beneficial Interests of more than 50% of all
Beneficial Interests.
10.3 Appointment of Successor. Any time one or more
Liquidating Trustees shall resign or be removed, or die or
become incapable of action, or be adjudged bankrupt or
insolvent, a vacancy shall be deemed to exist and a
successor shall be appointed by the remaining Liquidating
Trustee(s). If such vacancy is not filled by the remaining
Liquidating Trustee(s) within 30 days, the Beneficiaries
may, pursuant to Article XII hereof, call a meeting to
appoint a successor trustee by majority in interest.
Pending the appointment of a successor trustee, the
remaining Liquidating Trustee(s) then serving may take any
action in the manner set forth in Section 8.1.
Beneficiaries holding in the aggregate more than 50% of all
Beneficial Interests shall be entitled to appoint one or
more additional Liquidating Trustees even if no vacancy
exists.
10.4 Acceptance of Appointment by Successor Liquidating
Trustee. Any successor trustee appointed hereunder shall
execute an instrument accepting such appointment hereunder
and shall deliver one counterpart thereof to the other
remaining Liquidating Trustees (notice of any such
appointment of a successor trustee shall be provided to the
Beneficiaries in the next report delivered to the
Beneficiaries pursuant to Article V hereof) and, in the case
of a resignation, to the retiring Liquidating Trustee.
Thereupon such successor trustee shall, without any further
act, become vested with all the estate, properties, rights,
powers, trusts, and duties of his predecessor in the
Liquidating Trust hereunder with like effect as if
originally named therein, but the retiring Liquidating
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 of the estates,
properties, rights, powers and trusts of such retiring
Liquidating Trustee, and shall duly assign, transfer, and
deliver to such successor trustee all property and money
held by him hereunder.
10.5 Bonds. No bond shall be required of any original
Liquidating Trustee hereunder. Unless required by the
remaining Liquidating Trustees or a vote of the
Beneficiaries holding in the aggregate more than 50% of all
Beneficial Interests prior to a successor trustee's
acceptance of an appointment as such pursuant to Section
10.4, or unless a bond is required by law, 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 or unless
required by the Beneficiaries (in the case of a successor
trustee). If a bond is required by a vote of the
Beneficiaries holding in the aggregate more than 50% of all
Beneficial Interests, the Beneficiaries shall determine
whether, and to what extent, a surety or security with
respect to such bond shall be required.
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 any vote, the making of any
demand or request, the giving of any notice, consent, or
waiver, the removal of a Liquidating 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 holders 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 a meeting of the 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
in this Agreement to institute any action or proceeding at
law or in equity against any party other than the
Liquidating Trustees, upon or under or with respect to the
Liquidating Trust Estate or any agreements relating to or
forming parts of the Liquidating Trust Estate, and the
Beneficiaries do hereby waive any such right.
11.3 Requirement of Undertaking. The Liquidating
Trustees 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 Liquidating Trustees for any action taken or
omitted by them as Liquidating Trustees, 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 shall not apply to any suit by
the Liquidating Trustees, and such undertaking shall not be
required from the Liquidating Trustees or otherwise required
in any suit by any Beneficiary or group of Beneficiaries
having aggregate Beneficial Interests of more than 50% of
all Beneficial Interests.
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 specified aggregate
Beneficial Interests to take either acting alone or with the
Liquidating Trustees.
12.2 Meeting Called by Liquidating Trustees. A
majority of the Liquidating Trustees then serving may at any
time call a meeting of the Beneficiaries to be held at such
time and at such place within or outside the State of
Minnesota as the Liquidating Trustees shall determine.
Written notice of every meeting of the Beneficiaries shall
be given by the Liquidating Trustees (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 Liquidating
Trustees.
12.3 Meeting Called on Request of Beneficiaries.
Within 30 days after written request to the Liquidating
Trustees by Beneficiaries having aggregate Beneficial
Interests of 10% or more of all Beneficial Interests to call
a meeting of all the Beneficiaries, which written request
shall specify in reasonable detail the action proposed to be
taken, the Liquidating Trustees shall proceed under the
provisions of Section 12.2 to call a meeting of the
Beneficiaries, and if the Liquidating Trustees fail to call
such meeting within such 30-day period then such meeting may
be called by the Beneficiaries having aggregate Beneficial
Interests of 10% or more of all Beneficial Interests or by
their designated representative.
12.4 Persons Entitled to Vote at Meeting of
Beneficiaries. Each Beneficiary retaining rights to
distributions from the Liquidating Trust Estate on the
record date 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.
12.5 Quorum. At any meeting of Beneficiaries, the
presence of Beneficiaries having aggregate Beneficial
Interests 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 Beneficial
Interests of more than 50% of the aggregate Beneficial
Interests of 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.
12.6 Adjournment of Meeting. Any meeting of
Beneficiaries at which a quorum is present 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 Liquidating Trustees
shall appoint the Chairman and the Secretary of the meeting.
The vote upon any resolution submitted to any meeting of
Beneficiaries shall be by written ballot. 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 his 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 Liquidating Trustees to be preserved by
them. Any record so signed and verified shall be conclusive
evidence of all the matters therein stated.
12.9 Action Without a Meeting. Any action may be taken
by the Beneficiaries without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by Beneficiaries having
aggregate Beneficial Interests not less than the percentage
that would be necessary to authorize or take such action at
a meeting.
12.10 Waiver of Notice. Whenever notice is
required to be given under this Article, a written waiver
thereof, signed by the person entitled to notice, whether
before or after the time stated in such Article for such
notice, shall be deemed equivalent to notice. Attendance of
a person at a meeting shall constitute a waiver of notice of
such meeting. Neither the business to be transacted at, nor
the purpose of, any meeting of Beneficiaries need be
specified in any written waiver of notice.
12.11 Required Vote. Unless specified elsewhere in
this Agreement, a vote of Beneficiaries holding aggregate
Beneficial Interests of more than 50% of all Beneficial
Interests is required to approve of any action or proposal
submitted to the Beneficiaries for a vote at a meeting.
ARTICLE XIII.
AMENDMENTS
13.1 Consent of Beneficiaries. At the direction or
with the consent (evidenced in the manner provided in
Section 11.1) of Beneficiaries having aggregate Beneficial
Interests of more than 50% of all Beneficial Interests, the
Liquidating Trustees 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 hereto, provided, however, that no such amendment
shall permit the Liquidating Trustees to engage in any
activity prohibited hereunder or affect the Beneficiaries'
rights to receive their pro rata shares of the Liquidating
Trust Estate at the time of distribution or otherwise
materially and adversely affect the rights of the
Beneficiaries. In addition to any amendments otherwise
authorized herein, this Agreement may be amended from time
to time by the Liquidating Trustees, without the consent of
any of the Beneficiaries, (i) to add to the representations,
duties or obligations of the Liquidating Trustees or
surrender any right or power granted to the Liquidating
Trustees herein; and (ii) to cure any ambiguity, to correct
or supplement any provision herein which may be inconsistent
with any other provision herein, or to make any other
provisions with respect to matters or questions arising
under this Agreement which will not be inconsistent with the
provisions of this Agreement; provided, however, that no
amendment shall be adopted pursuant to this Section 13.1
unless the adoption thereof (1) is for the benefit of or not
adverse to the interests of the Beneficiaries; and (2) does
not alter the interest of a Beneficiary in any way without
the consent of the Beneficiaries adversely affected thereby.
13.2 Notice and Effect of Amendment. Promptly after
the execution by the Liquidating Trustees of any declaration
of amendment, the Liquidating Trustees shall give notice of
the substance of such amendment to the Beneficiaries or, in
lieu thereof, the Liquidating Trustees may send a copy of
the amendment to each Beneficiary. Upon the execution of
any such declaration of amendment by the Liquidating
Trustees, 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 Liquidating Trustees and the Beneficiaries under this
Agreement shall thereafter be determined, exercised, and
enforced hereunder subject in all respects to such
modification and amendment, and all the terms and conditions
of any such amendment shall be thereby 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 the office of the Recorder of Deeds of Linn
County, Iowa, and in such other office or offices as the
Liquidating Trustees may determine to be necessary or
desirable. A copy of this Agreement and all amendments
thereof shall be available at all reasonable times for
inspection by any Beneficiary or his duly authorized
representative at 4333 Edgewood Road N.E., Cedar Rapids,
Iowa 52499-5441. The Liquidating Trustees shall file or
record any amendment of this Agreement in the same places
where the original Agreement is filed or recorded. The
Liquidating Trustees shall file or record any instrument
which relates to any change in the office of Liquidating
Trustees in the same places where the original Agreement is
filed or recorded.
14.2 Intention of Parties to Establish Liquidating
Trust; Federal Income Tax Intentions. This Agreement is not
intended to create and shall not be interpreted as creating
an association, partnership, corporation or joint venture of
any kind. It is intended as a trust to be governed and
construed in all respects as a trust. It is intended that
the Liquidating Trust be classified for federal income tax
purposes as a "liquidating trust" within the meaning of U.S.
Treasury Regulation 301.7701-4(d). The Beneficiaries are
intended to be treated for federal income tax purposes as
having received the Funds from the Trust in complete
liquidation of their Trust Interests and then as having
contributed the Funds to the Liquidating Trust. The
Beneficiaries will be treated as the grantors and deemed
owners of the Liquidating Trust and they will be treated for
federal income tax purposes as owning undivided interests in
its assets.
14.3 Laws as to Construction. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Minnesota, and the Trust, the Liquidating Trustees,
and the Trust Interest Holders consent and agree that this
Agreement shall be governed by and construed in accordance
with such laws.
14.4 Separability. 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.
14.5 Notices. Any notice or other communication by the
Liquidating Trustees to any Beneficiary shall be deemed to
have been sufficiently given, for all purposes, if given by
being deposited, postage prepaid, in a post office or letter
box addressed to such person at his address as shown in the
records of the Liquidating Trustees.
14.6 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed, sealed and acknowledged, effective
as of the 10th day of August, 2000.
LIQUIDATING TRUSTEES:
/s/ Samuel L. Kaplan
Samuel L. Kaplan
/s/ Richard M. Osborne
Richard M. Osborne
USP REAL ESTATE INVESTMENT TRUST
/s/ Patrick E. Falconio
By: Patrick E. Falconio
Its: Chairman of the Board
