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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT: (DATE OF EARLIEST EVENT REPORTED): JUNE 5, 1996
NAB ASSET CORPORATION
(Exact name of registrant as specified in its charter)
Texas 0-19391 76-0332956
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
5520 LBJ FREEWAY, SUITE 200
DALLAS, TEXAS 75240
(Address of Principal Executive Offices)
214/701-6956
(Registrant's telephone number, including area code)
5851 SAN FELIPE, SUITE 300
HOUSTON, TEXAS 77057
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 5, 1996, NAB Asset Corporation ("NAB" or the "Company") completed
the merger of a wholly owned subsidiary of Consumer Portfolio Services, Inc.
("CPS") with and into the Company. In the merger, the shareholders of NAB will
receive on a pro rata basis (i) an aggregate cash distribution of $15.3 million,
(ii) an undivided interest in a liquidating trust and (iii) 62% of the
outstanding shares of the new combined company, which have a net asset value of
approximately $7.5 million or ($1.10 per share of NAB common stock).
On June 5, 1996, the Company also completed the transactions contemplated
by the agreement with its management to sell the Company's partnerships to them
for approximately $1.5 million, which will result in a gain of approximately
$1.2 million. The proceeds from this sale will be included in the cash
distribution to shareholders of $3.64 per share for the 4.2 million shares of
common stock of NAB.
In connection with the completion of the merger, the liquidating trust
received $2.4 million in cash, subject to certain contingencies, and all of the
non-cash assets of NAB. The objective of the trust is to liquidate or otherwise
realize on the non-cash assets within one year. The cash transferred consists
of the settlement proceeds of a loan, the guarantor of which is currently in
bankruptcy. The assets transferred primarily consist of four pieces of
undeveloped real estate in Texas and Louisiana. These assets have a book value
of approximately $4.1 million which, together with the transferred cash, results
in book value of $1.56 per share of NAB common stock. The interests in the
liquidating trust are non-transferrable.
The new combined company will seek to establish or acquire new businesses.
It is currently contemplated that such business will be involved in the
financial services and financial products markets. The combined company will
initially be capitalized with $7.5 million in cash and will no longer be
subject to the various restrictions previously existing in NAB's articles of
incorporation that limited its operations. In an effort to protect the
Company's large net operating loss carryforwards, the new securities issued to
the shareholders of NAB in the merger generally restrict the acquisition of 5%
or more of the outstanding shares of common stock of the new company so as to
prevent the occurrence of an ownership change under the Federal income tax laws.
In connection with the merger, the board of directors of NAB was
reconstituted to consist of: Charles E. Bradley, Sr., Michael W. Caton, Charles
E. Bradley, Jr., Emil A. Nakfoor and Robert A. Bettigole. Michael W. Caton will
serve as President and Chief Operating Officer and Charles E. Bradley, Sr. will
serve as Chief Executive Officer.
The merger, including the transfer to the liquidating trust and the sale of
the general partner interests to management, was approved by the shareholders of
NAB at a special meeting of its shareholders held June 5, 1996.
A press release relating to the foregoing transactions, dated June 5, 1996,
is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired. Not applicable.
(b) Pro forma financial information. The required pro forma
financial information has previously been filed in the Company's
definative proxy materials dated April 25, 1996.
(c) Exhibits.
Exhibit No. Exhibit
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2.1 Plan and Agreement of Merger dated as of February 7,
1996 between NAB Asset Corporation, Consumer Portfolio
Services, Inc. and CPS Investing Corp. (Exhibit 2.1 to
the Company's Form 8-K dated February 28, 1996 (the
"February Form 8-K") is incorporated herein by
reference.)
2.2 Partnership Sale Agreement dated as of February 7, 1996
by and among NAB Asset Corporation, JNK-1, Inc., CLMN,
Inc., MAH I, Inc., Michael A. Hrebenar and Richard A.
Durham. (Exhibit 2.2 to the February Form 8-K is
incorporated herein by reference.)
2.3 Agreement and Declaration of Trust, dated June 5, 1996,
by and between NAB Asset Corporation, and Emil A.
Nakfoor and Andrew K. Golden. (Filed herewith.)
99.1 Press Release of NAB Asset Corporation dated
June 5, 1996. (Filed herewith.)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 20, 1996
NAB ASSET CORPORATION
By: /s/ Michael W. Caton
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Michael W. Caton, President and
Chief Operating Officer
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NAB ASSET CORPORATION
LIQUIDATING TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST, dated June 5, 1996, by and between NAB
Asset Corporation, a Texas corporation ("NAB"), and Emil A. Nakfoor and
Andrew K. Golden (collectively, the "Trustees").
WHEREAS, NAB, CPS Sub Corp., a Texas corporation ("CPS Sub"), and Consumer
Portfolio Services, Inc., a Delaware corporation, are parties to a Plan and
Agreement of Merger, dated February 7, 1996 (the "Merger Agreement"), pursuant
to which CPS Sub will merge with and into NAB (the "Merger"); and
WHEREAS, the Merger Agreement provides that immediately prior to the
effective time of the Merger (the "Effective Time"), all of the assets of NAB,
other than cash and cash equivalents in excess of $50,000, will be transferred
to a liquidating trust for the benefit of the NAB shareholders at the Effective
Time;
WHEREAS, the Merger Agreement further provides that, at the Effective Time,
the holders of CPS Sub's outstanding capital stock will receive an aggregate of
1,934,706 shares of NAB Common Stock, $.10 par value ("NAB Stock"), and the
holders of the Shares will receive (i) an aggregate of approximately 3,157,000
shares of NAB Stock, (ii) an aggregate distribution in cash equal to
$15,320,159.40, and (iii) all of the beneficial interests of the liquidating
trust;
NOW, THEREFORE, in consideration of the premises, NAB hereby grants,
releases, assigns, conveys and delivers unto the Trustees for the benefit to the
beneficiaries of the Trust (collectively, the "Beneficiaries", and individually
the "Beneficiary"), all of NAB's right, title and interest in and to the
Retained Assets (hereinafter defined) for the uses and purposes stated herein,
subject to the terms and provisions set out below, and the Trustees hereby
accept such assets and such Trust, subject to the following terms and
provisions:
ARTICLE I
Names and Definitions
1.1. NAME. This trust shall be known as the NAB Liquidating Trust.
1.2. CERTAIN TERMS DEFINED. For all purposes of this instrument, unless
the context otherwise requires:
(a) "Affiliated Trustee" shall mean a Trustee (i) who in his
individual capacity is a director, trustee, officer, partner or employee of
the Manager or of a Person who controls, is controlled by or is under
common control with the Manager or (ii) who controls, is controlled by or
is under common control with the Manager.
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(b) "Agreement" shall mean this instrument as originally executed or
as it may from time to time be amended pursuant to the terms hereof.
(c) "Beneficial Interest" shall mean each Beneficiary's proportionate
share of the Trust Assets initially determined by the ratio of the number
of Shares held by the Initial Beneficiary on the close of business on the
Effective Date over the total number of Shares issued and outstanding on
such Effective Date (excluding Shares that are held by Dissenting Holders
(as defined in the Merger Agreement)) and thereafter each Beneficiary's
proportional beneficial interest in the Trust.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
and in effect from time to time and the rules and regulations adopted
thereunder.
(e) "Effective Date" shall mean the date on which the Merger is
consummated.
(f) "Effective Time" shall have the meaning given such term in the
recitals of this Agreement.
(g) "General Indenture" shall mean the General Indenture of
Conveyance, Assignment and Transfer of Assets and Assumption of Liabilities
between NAB and the Trust.
(h) "Initial Beneficiary" shall mean each of the Shareholders.
(i) "Person" shall mean an individual, a corporation, a partnership,
an association, a joint stock company, a limited liability company, a
trust, a joint venture, any unincorporated organization, or a government or
political subdivision thereof.
(j) "Retained Assets" shall mean all of the assets of NAB immediately
prior to the Effective Time, excluding cash and cash equivalents in excess
of $50,000 cash.
(k) "Shares" shall mean the shares of common stock, par value $.01
per share, of NAB immediately prior to the Effective Time.
(l) "Shareholders" shall mean the holders of record of the
outstanding Shares of NAB at the Effective Time.
(m) "Trust" shall mean the Trust created by this Agreement.
(n) "Trust Assets" shall mean all the property held from time to time
by the Trustees under this Agreement, which initially shall consist of the
Retained Assets granted, assigned and conveyed to the Trustees by NAB
pursuant to the General Indenture and in addition, shall thereafter include
all interest, dividends, rents, royalties, income, proceeds and other
receipts of, from, or attributable to any assets held by the Trust.
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(o) "Trustees" shall mean the original Trustees and their successors.
ARTICLE II
Nature of Transfer
2.1. PURPOSE OF TRUST.
(a) The Trust is organized for the sole purpose of (i) converting to
cash the Trust Assets, (ii) enforcing the rights of the Trust Beneficiaries
in the Trust Assets, (iii) collecting the income thereon, (iv) liquidating
and distributing the Trust Assets to the Beneficiaries and (v) taking such
other action as is necessary to conserve and protect the Trust Assets.
(b) It is intended that the granting, assignment and conveyance of
the Retained Assets by NAB to the Trustees pursuant hereto shall be treated
for Federal and state income tax purposes as if NAB made such distributions
directly to the Shareholders. It is further intended that for federal,
state and local income tax purposes the Trust shall be treated as a
liquidating trust under Federal income tax regulation Section 301.7701-4(d)
and any analogous provision of state or local law, and the Beneficiaries
shall be treated as the owners of their respective share of the Trust
pursuant to Sections 671 through 679 of the Code and any analogous
provision of state or local law and shall be taxed on their respective
share of the Trust's taxable income (including both ordinary income and
capital gains) pursuant to Section 671 of the Code and any analogous
provision of state or local law. The Trustees shall file all tax returns
required to be filed with any governmental agency consistent with this
position, including, but not limited to, any returns required of grantor
trusts pursuant to Section 1.671-4(a) of the Federal income tax
regulations.
2.2. PROHIBITED ACTIVITIES. The Trust shall not continue or engage in the
conduct of any trade or business, and the Trustees are expressly prohibited
from, and shall have no power or authority to, continue or engage in the conduct
of any trade or business on behalf of the Trust or the Beneficiaries, and all of
the terms and conditions hereof shall be construed accordingly.
2.3. NO REVERSION TO NAB. In no event shall any part of the Trust Assets
revert to or be distributed to NAB.
2.4. INSTRUMENTS OF FURTHER ASSURANCE. Following the Effective Date, NAB
will, upon reasonable request of the 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 confirm or
effectuate the transfer to the Trustees of any property intended to be covered
hereby, and to vest in the Trustees, their successors and assigns, the estate,
powers, instruments or funds in trust hereunder.
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2.5. INCIDENTS OF OWNERSHIP. The Shareholders shall be the Initial
Beneficiaries of the Trust created by this Agreement and the Trustees shall
retain only such incidents of legal ownership as are necessary to undertake the
actions and transactions authorized herein.
2.6. NOTICE TO UNLOCATED SHAREHOLDERS. If the Trust holds Trust Assets for
unlocated Shareholders, due notice shall be given to such Shareholders in
accordance with local law.
ARTICLE III
Beneficiaries
3.1. BENEFICIAL INTERESTS.
(a) The initial Beneficial Interest for each former Shareholder as a
Beneficiary hereof shall be determined by the Trustees in accordance with a
certified copy of NAB's shareholder list as of the Effective Time. NAB
will deliver such a certified copy of its shareholder list to the Trustees
within a reasonable time after such date. For ease of administration, the
Trustees shall express the Beneficial Interest of each Beneficiary in terms
of units ("Units").
(b) The certificates representing Shares will be deemed to evidence
the number of Units in the Trust owned by each Beneficiary; provided,
however, that upon surrender of such certificates to the Exchange Agent (as
defined in the Merger Agreement) in connection with the Merger, a Trust
certificate in a form approved by the Trustees shall be issued and shall
evidence the number of Units owned.
(c) If any conflicting claims or demands are made or asserted with
respect to the ownership of any Units, or if there should be any
disagreement between the transferees, assignees, heirs, representatives or
legatees succeeding to all or part of the interest of any Beneficiary
resulting in adverse claims or demands being made in connection with such
Units, then, in any of such events, the Trustees shall be entitled, at
their sole election, to refuse to comply with any such conflicting claims
or demands. In so refusing, the Trustees may elect to make no payment or
distribution with respect to such Units, or to make such payment to a court
of competent jurisdiction or an escrow agent, and in so doing the Trustees
shall not be or become liable to any of such parties for their failure or
refusal to comply with any of such conflicting claims or demands, nor shall
the Trustees be liable for interest on any funds which it may so withhold.
The Trustees shall be entitled to refrain and refuse to act until either
(i) the rights of the adverse claimants have been adjudicated by a final
judgment of a court of competent jurisdiction, (ii) all differences have
been adjusted by valid written agreement between all of such parties, and
the Trustees shall have been furnished with an executed counterpart of such
agreement, or (iii) there is furnished to the Trustees a surety bond or
other security satisfactory to the Trustees, as they shall deem
appropriate, to fully indemnify them as between all conflicting claims or
demands.
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3.2. RIGHTS OF BENEFICIARIES. Each Beneficiary shall be entitled to
participate in the rights and benefits due to a Beneficiary hereunder according
to his Beneficial Interest. Each Beneficiary shall take and hold the same
subject to all the terms and provisions of this Agreement. The interest of the
Beneficiary hereby is declared and shall be in all respects personal property
and upon the death of an individual Beneficiary, his Beneficial Interest shall
pass as personal property to his legal representative and such death shall in no
way terminate or affect the validity of this Agreement. A Beneficiary shall
have no title to, right to, possession of, management of, or control of, the
Trust Assets except as herein expressly provided. No widower, widow, heir, or
devisee of any person who may be a Beneficiary shall have any right of dower,
homestead, or inheritance, or of partition, or of any other right, statutory or
otherwise, in any property forming a part of the Trust Assets but the whole
title to all the Trust Assets shall be vested in the Trustees and the sole
interest of the Beneficiaries shall be the rights and benefits given to such
Persons under the Agreement.
3.3. 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; provided, however, that the Beneficial
Interest shall be assignable or transferable by will, intestate succession, or
operation of law and, further provided, that the executor or administrator of
the estate of a Beneficiary may mortgage, pledge, grant a security interest in,
hypothecate or otherwise encumber, the Beneficial Interest held by the estate of
such Beneficiary if necessary in order to borrow money to pay estate, succession
or inheritance taxes or the expenses of administering the estate of the
Beneficiary, upon written notice to the Trustees. The Beneficial Interests of
the Beneficiaries hereunder shall not be subject to attachment, execution,
sequestration or any order of a court, nor shall such interests be subject to
the contracts, debts, obligations, engagements or liabilities of any
Beneficiary, but the interest of a Beneficiary shall be paid by the Trustees to
the Beneficiary free and clear of all assignments, attachments, anticipations,
levies, executions, decrees and sequestrations and shall become the property of
the Beneficiary only when actually received by such Beneficiary.
3.4. TRUSTEES AS BENEFICIARIES. Each Trustee, either individually or in a
representative or fiduciary capacity, may be a Beneficiary and have all the
rights of a Beneficiary, including, without limitation, the right to vote and to
receive distributions, to the same extent as if he were not a Trustee hereunder.
ARTICLE IV
Duration and Termination of Trust
4.1. TERMINATION OF TRUST. The existence of this Trust shall terminate
upon the earliest of (i) a termination required by the applicable laws of the
State of Texas, (ii) the termination due to the distribution of all the Trust
Assets as provided in Section 5.6, or (iii) the expiration of a period of two
years from the date of the creation of the Trust; provided, however, the
Trustees, in their discretion, may extend the existence of this Trust to such
later date as they
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may designate, if they determine that an extension is reasonably necessary to
pay or make provision for then known liabilities, actual or contingent.
4.2. OTHER OBLIGATIONS OF TRUSTEES UPON TERMINATION. Upon distribution of
all the Trust Assets, the Trustees shall provide for the retention of the books,
records, lists of holders of Units, certificates for Shares and Units and files
which shall have been delivered to or created by the Trustees. At the Trustees'
discretion, all of such records and documents may be destroyed at any time after
seven years from the distribution of all the Trust Assets. Except as otherwise
specifically provided herein, upon the distribution of all the Trust Assets, the
Trustees shall have no further duties or obligations hereunder.
ARTICLE V
Administration of Trust Assets
5.1. SALE OF TRUST ASSETS. The Trustees may, at such times as they may
deem appropriate, transfer, assign, or otherwise dispose of all or any part of
the Trust Assets as they deem appropriate at public auction or at private sale
for cash, securities or other property, or upon credit (either secured or
unsecured as the Trustees shall determine).
5.2. TRANSACTIONS WITH RELATED PERSONS. Notwithstanding any other
provisions of this Agreement, but only to the extent that such transactions have
not been previously approved by the Shareholders as part of the Merger
Agreement, the Trustees shall not knowingly, directly or indirectly, sell or
otherwise transfer all or any part of the Trust Assets to, or contract with, (i)
any Trustee, employee or agent (acting in their individual capacities) of this
Trust or (ii) any Person of which any Trustee, employee or agent of this Trust
is an affiliate by reason of being a trustee, director, officer, partner or
direct or indirect beneficial owner of 5% or more of the outstanding capital
stock, shares or other equity interest of such Persons; unless, in each such
case, after disclosure of such interest or affiliation, such transaction is
approved by a majority of the Trustees who are not interested in the transaction
and such Trustees determine that such transaction is on its terms fair and
reasonable to the Trust and is in the best interests of the Beneficiaries, and
in no event less favorable to this Trust than terms available for a comparable
transaction with unrelated Persons. The Trustees are entitled to rely in good
faith on certificates of the Trustees, employees and agents of the Trust with
respect to their interests in any transaction.
5.3. RESTRICTION ON TRUST ASSETS. The Trust shall not receive transfers of
any assets prohibited by Revenue Procedure 82-58, as the same may be amended,
supplemented or modified including, but not limited to, any listed stocks or
securities, any readily-marketable assets, any operating assets of a going
business, any unlisted stock of a single issuer that represents 80 percent or
more of the stock of such issuer or any general or limited partnership
interests, except any stock or securities received in a transaction contemplated
by Section 6.2(l) hereof.
5.4. PAYMENT OF CLAIMS, EXPENSES AND LIABILITIES. The Trustees shall pay
from the Trust Assets all claims, expenses, charges, liabilities, and
obligations of the Trust Assets and all
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liabilities and obligations which the Trustees specifically assume and agree
to pay pursuant to this Agreement and such transferee liabilities which the
Trustees may be obligated to pay as limiting the generality of the foregoing,
interest, penalties, 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 this Trust and such other payments and
disbursements as are provided in this Agreement or which may be determined to
be a proper charge against the Trust Assets by the Trustees.
5.5. INTERIM DISTRIBUTIONS. At such times as may be determined by them,
but at least annually, the Trustees shall distribute, or cause to be
distributed, to the Beneficiaries, in proportion to the number of Units held by
each Beneficiary, such cash or other property comprising a portion of the Trust
Assets as the Trustees may be their sole discretion determine may be distributed
without detriment to the conservation and protection of the Trust Assets.
5.6. FINAL DISTRIBUTION. If the Trustees determine that the liabilities
and all other claims, expenses, charges, liabilities and obligations of the
Trust have been paid or discharged, or if the existence of the Trust shall
terminate pursuant to Section 4.1, the Trustees shall, as expeditiously as is
consistent with the conservation and protection of the Trust Assets, distribute
the Trust Assets to the Beneficiaries in proportion to the number of Units held
by each Beneficiary. The Trustees shall hold in the Trust and thereafter make
disposition of all liquidating distributions and other payments due any
Beneficiaries who have not been located, in accordance with Texas law, subject
to applicable state laws regarding escheat and abandoned property.
5.7. REPORTS TO BENEFICIARIES AND OTHERS. As soon as practicable after the
end of each taxable year of the Trust and after termination of the Trust, the
Trustees shall submit a written report and account to the Beneficiaries showing
(i) the assets and liabilities of the Trust at the end of such taxable year or
upon termination and the receipts and disbursements of the Trustees for such
taxable year or period, certified by an independent certified public accountant,
(ii) any changes in the Trust Assets which they have not previously reported,
and (iii) any action taken by the Trustees in the performance of their duties
under this Agreement which they have not previously reported and which, in their
opinion, materially affects the Trust Assets. The Trustees may submit similar
reports for such interim periods during the taxable year as they deem advisable
or as may be required by the Securities and Exchange Commission. The taxable
year of the Trust shall end on December 31 of each year unless the Trustees deem
it advisable to establish some other date as the date on which the taxable year
of the Trust shall end.
5.8. FEDERAL INCOME TAX INFORMATION. As soon as practicable after the
close of each taxable year, the Trustees shall mail to each Person who was a
Beneficiary at the close of the year, a statement showing on a Unit basis the
dates and amounts of all distributions made by the Trustees, income earned on
assets held by the Trust, if any, and such other information as is reasonably
available to the Trustees which may be helpful in determining the amount of
gross income attributable to the Trust that such Beneficiary should include in
such Person's Federal income tax return for the preceding year. In addition,
after receipt of a request in good faith, or in their discretion without such
request or if required by applicable
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law, the Trustees shall furnish to any Person who has been a Beneficiary at
any time during the preceding year a statement containing such further
information as is reasonably available to the Trustees which shall be helpful
in determining the amount of taxable income which such Person should include
in such Person's Federal income tax return.
ARTICLE VI
Powers of and Limitations on the Trustees
6.1. LIMITATIONS ON TRUSTEES. The Trustees shall not at any time, on
behalf of the Trust or Beneficiaries, enter into or engage in any trade or
business, and no part of the Trust Assets shall be used or disposed of by the
Trustees in furtherance of any trade or business. The Trustees shall be
restricted to the holding and collection of the Trust Assets and the payment and
distribution thereof for the purposes set forth in this Agreement and to the
conservation and protection of the Trust Assets and the administration thereof
in accordance with the provisions of this Agreement. In no event shall the
Trustees receive any property, make any distribution, satisfy or discharge any
claims, expenses, charges, liabilities and obligations or otherwise take any
action which would jeopardize the status of the Trust as a "liquidating trust"
for federal income tax purposes within the meaning of Treasury Regulation
Section 301.7701-4(d). This limitation shall apply regardless of whether the
conduct of any such trade or business is deemed by the Trustees to be necessary
or proper for the conservation and protection of the Trust Assets. The Trustees
shall not invest any of the funds held as Trust Assets, except that the Trustees
may invest any portion of the Trust Assets in (i) direct obligations of the
United States of America or obligations of any agency or instrumentality thereof
which mature not later than one year from the date of acquisition thereof; (ii)
money market deposit accounts, checking accounts, savings accounts, or
certificates of deposit, or other time deposit accounts which mature not later
than one year from the date of acquisition thereof which are issued by a
commercial bank or savings institution organized under the laws of the United
States of America or any state thereof; or (iii) any other investments which may
be determined by the Trustees to be permissible under Revenue Procedure 82-58,
as the same may be amended, supplemented or modified.
6.2. SPECIFIC POWERS OF TRUSTEES. Subject to the provisions of Section
6.1, the Trustees shall have the following specific powers in addition to any
powers conferred upon them by any other Section or provision of this Agreement
or any statutory laws of the State of Texas; provided, however, that in any
instance in which the statutory laws of the State of Texas may conflict with the
express provisions of this Agreement, in which case the provisions of this
Agreement shall control; and provided, further, that the enumeration of the
following powers shall not be considered in any way to limit or control the
power of the Trustees to act as specifically authorized by any other Section or
provision of this Agreement and to act in such a manner as the Trustees may deem
necessary or appropriate to conserve and protect the Trust Assets or to confer
on the Beneficiaries the benefits intended to be conferred upon them by this
Agreement.
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(a) To determine the nature and amount of the consideration to be
received with respect to the sale or other disposition of, or the grant of
interests in, the Trust Assets.
(b) To collect, liquidate or otherwise convert into cash, or such
other property as they deem appropriate, all property, assets and rights in
the Trust Assets, and to pay, discharge and satisfy all other claims,
expenses, charges, liabilities, and obligations existing with respect to
the Trust Assets, the Trust or the Trustees.
(c) To elect, appoint, engage, retain or employ any Persons as
agents, representatives, employees, or independent contractors (including
without limitation real estate advisors, investment advisors, accountants,
transfer agents, attorneys-at-law, managers, appraisers, brokers, or
otherwise) in one or more capacities, and to pay compensation from the
Trust Assets for services in as many capacities as such Person may be so
elected, appointed, engaged, retained or employed, to prescribe the titles,
powers and duties, appointment, engagement, retention or employment of such
Persons and, except as prohibited by law, to delegate any of the powers and
duties of the Trustees to any one or more Trustees, agents,
representatives, employers, independent contractors or other Persons.
(d) To retain and set aside such funds out of the Trust Assets as the
Trustees shall deem necessary or expedient to pay, or provide for the
payment of (i) unpaid claims, expenses, charges, liabilities, and
obligations of the Trust or NAB, (ii) contingencies, and (iii) the expenses
of administering the Trust Assets.
(e) To do and perform any and all acts necessary or appropriate for
the conservation and protection of the Trust Assets, including acts or
things necessary or appropriate to maintain assets held by the Trustees
pending sale or other disposition thereof or distribution thereof to the
Beneficiaries.
(f) To hold legal title to property of the Trust in the name of the
Trust, or in the name of one or more of the Trustees, or of any other
Person, without disclosure of the interest of the Trust therein.
(g) To cause any investments of any part of the Trust Assets to be
registered held in the name of any one or more of their names 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 Trust or NAB or
as otherwise required, as the Trustees may deem necessary or desirable to
enforce any instruments, contracts, agreements, causes of action or rights
relating to or forming a part of the Trust Assets.
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(i) To determine conclusively from time to time the value of and to
revalue the securities and other property of the Trust, in accordance with
independent appraisals or other information as they deem satisfactory.
(j) To cancel, terminate, or amend any instruments, contracts,
agreements, obligations or causes of action relating to or forming a part
of the Trust Estate, and to execute new instruments, contracts, agreements,
obligations or causes of action notwithstanding that the terms of any such
instruments, contracts, agreements, obligations or causes of action may
extend beyond the terms of this Trust, provided that no such new
instrument, contract, agreement, obligation or cause of action shall permit
the Trustees to engage in any activity prohibited by Section 6.1.
(k) To vote by proxy or otherwise on behalf of the Beneficiaries and
with full power of substitution all shares of stock and all securities held
by the Trustees hereunder and to exercise every power, election,
discretion, option and subscription right and give every notice, make every
demand, and to do every act or thing in respect to any shares of stock or
any securities held by the Trustees which the Trustees might or could do if
they were the absolute owners thereof.
(l) To undertake to join in any merger, plan of reorganization,
consolidation, liquidation, dissolution, readjustment or other transaction
of any corporation, any of whose shares of stock or other securities,
obligations, or properties may at any time constitute a part of the Trust
Assets, and to accept the substituted shares of stock, bonds, securities,
obligations and properties and to hold the same in trust in accordance with
the provisions hereof.
(m) In connection with the sale or other disposition or distribution
of any securities held by the Trustees, to comply with the applicable
Federal and state securities laws, and to enter into agreements relating to
sale or other disposition or distribution thereof.
(n) To authorize transactions between corporations or other entities
whose securities, or other interests therein (either in the nature of debt
or equity) are held by the Trustees as part of the Trust Assets.
(o) To perform any act authorized, permitted, or required under any
instrument, contract, agreement, right, obligation or cause of action
relating to or forming a part of the Trust Assets whether in the nature of
an approval, consent, demand or notice thereunder or otherwise, unless such
act would require the consent of the Beneficiaries in accordance with the
express provisions of this Agreement.
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ARTICLE VII
Concerning the Trustees,
Beneficiaries, Employees and Agents
7.1. GENERALLY. The Trustees accept and undertake to discharge the Trust,
upon the terms and conditions thereof on behalf of the Beneficiaries. The
Trustees shall exercise such of the rights and powers vested in them by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. No provision of this Agreement shall be construed to relieve the
Trustees from liability for their own gross negligence or their own willful
misconduct, except that:
(a) No Trustee shall be responsible for the acts or omissions of any
other Trustee if done or omitted without his knowledge or consent unless it
shall be proved that such Trustee was grossly negligent in ascertaining the
pertinent facts, and no successor Trustee shall be in any way responsible
for the acts or omissions of any Trustees in office prior to the date on
which he becomes a Trustee.
(b) No Trustee shall be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this Agreement
against the Trustees.
(c) In the absence of bad faith on the part of the Trustees, the
Trustees may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustees and conforming to the requirements of
this Agreement; but in the case of any such certificates or opinions which
are specifically required to be furnished to the Trustees by any provision
hereof, the Trustees shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Agreement.
(d) No Trustee shall be liable for any error of judgment made in good
faith.
(e) No Trustee shall be liable with respect to any action taken or
omitted to be taken by him in good faith in accordance with the direction
of Beneficiaries having an aggregate Beneficial Interest of more than 50%
relating to the time, method, and place of conducting any proceeding for
any remedy available to the Trustees, or exercising any trust or power
conferred upon the Trustees under this Agreement.
7.2. RELIANCE BY TRUSTEES. Except as otherwise provided in Section 7.1:
(a) The 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.
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(b) The Trustees may consult with legal counsel, auditors or other
experts to be selected by them, including firms of which a Trustee may be a
member, and the advice or opinion of such counsel, auditors or other
experts shall be full and complete personal protection to all Trustees,
employees and agents of the Trust in respect of any action taken or
suffered by them in good faith and in reliance on, or in accordance with,
such advice or opinion.
(c) Persons dealing with Trustees shall look only to the Trust Assets
to satisfy any liability incurred by the Trustees to such Person in
carrying out the terms of this Trust, and the Trustees shall have no
personal or individual obligation to satisfy any such liability.
(d) As far as practicable, the Trustees shall cause any written
instrument creating an obligation of the Trust to include a reference to
this Agreement and to provide that neither the Beneficiaries, the Trustees
nor their agents shall be liable thereunder and that the other parties to
such instrument shall look solely to the Trust Assets for the payment of
any claim thereunder or the performance thereof; provided, however, that
the omission of such provision from any such instrument shall not render
the Beneficiaries, Trustees, or their agents liable nor shall the Trustees
be liable to anyone for such omission.
7.3. LIABILITY TO THIRD PERSONS. Neither any Beneficiary nor NAB shall be
subject to any personal liability whatsoever, in tort, contract or otherwise, to
any Person in connection with the Trust Assets or the affairs of this Trust; and
no Trustee, employee or agent of this Trust shall be subject to any personal
liability whatsoever, in tort, contract or otherwise, to any Person in
connection with the Trust Assets or the affairs of this Trust, except for his
own willful misconduct, knowingly and intentionally committed in bad faith; and
all such other Persons shall look solely to the Trust Assets for satisfaction of
claims of any nature arising in connection with the affairs of this Trust. The
Trustees shall, at all times, maintain insurance for the protection of the Trust
Assets, its Beneficiaries, Trustees, employees and agents in such amount as the
Trustees shall deem adequate to cover all foreseeable liability to the extent
available at reasonable rates.
7.4. RECITALS. Any written instrument creating an obligation of this Trust
shall be conclusively taken to have been executed or done by a Trustee, employee
or agent of this Trust only in his capacity as Trustee under this Agreement or
in his capacity as employee or agent of the Trust.
7.5. INDEMNIFICATION. Each Trustee and employee and agent of the Trust
(each an "Indemnified Person" and collectively, the "Indemnified Persons") shall
be indemnified out of the Trust Assets against all liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees, reasonably incurred by the Indemnified Persons
in connection with the defense or disposition of any action, suit or other
proceeding by the Trust or any other Person, whether civil or criminal, in which
the Indemnified Person may be involved or with which the Indemnified Person may
be threatened, while in office or thereafter, by reason of his being or having
been such a Trustee,
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employee or agent; provided, however, that the Indemnified Person shall not
be entitled to such indemnification in respect of any matter as to which the
Indemnified Person shall have been adjudicated to have acted in bad faith or
with willful misfeasance, gross negligence or in reckless disregard of the
Indemnified Person's duties; and, provided further, however, that, as to any
matter disposed of by a compromise payment by such Indemnified Person
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the Trustees shall
have received a written opinion from independent counsel approved by the
Trustees to the effect that if the foregoing matters had been adjudicated,
such Indemnified Person would not have been found to have acted in bad faith
or with willful misfeasance, gross negligence or in reckless disregard of the
Indemnified Person's duties. The rights accruing to any Indemnified Person
under these provisions shall not exclude any other right to which the
Indemnified Person may be lawfully entitled; provided, however, that no
Indemnified Person may satisfy any right of indemnity or reimbursement
granted herein or to which the Indemnified Person may be otherwise entitled
except out of the Trust Assets, and no Beneficiary shall be personally liable
to any person with respect to any claim for indemnity or reimbursement or
otherwise. The Trustees may make advance payments in connection with
indemnification under this Section, provided that the Indemnified Person
shall have given a written undertaking to repay any amount advanced to the
Indemnified Person and to reimburse the Trust in the event it is subsequently
determined that the Indemnified Person is not entitled to such
indemnification. The Trustees may purchase such insurance as they feel, in
the exercise of their discretion, adequately insures that each Indemnified
Person shall be indemnified against any such loss, liability or damage
pursuant to this Section. The rights accruing to any Indemnified Person by
reason of the foregoing shall not be deemed to exclude any other right to
which he may legally be entitled nor shall anything else contained herein
restrict the right of the Trustees to indemnify or reimburse such Indemnified
Person in any proper case even though not specifically provided for herein,
nor shall anything contained herein restrict the right of any such
indemnified Person to contribution under applicable law.
7.6. RIGHTS OF TRUSTEES, EMPLOYEES, INDEPENDENT CONTRACTORS AND AGENTS TO
OWN UNITS OR OTHER PROPERTY AND TO ENGAGE IN OTHER BUSINESS. Any Trustee,
employee, independent contractor or agent may acquire, own, hold and dispose of
Units for his individual account, and may exercise all rights thereof and
thereunder to the same extent and in the same manner as if he were not a
Trustee, employee, independent contractor or agent. Any Trustee, employee,
independent contractor or agent may, in his personal capacity or in a capacity
of trustee, officer, director, stockholder, partner, member, advisor, employee
of any Person or otherwise, have business interests and holdings similar to or
in addition to those relating to the Trust. Subject to the provisions of
Article V hereof, any Trustee, employee, independent contractor or agent of the
Trust may be a trustee, officer, director, stockholder, partner, member,
advisor, employee or independent contractor of, or otherwise have a direct or
indirect interest in, any Person who may be engaged to render advice or services
to the Trust, and may receive compensation from such Person as well as
compensation as Trustee, employee, independent contractor or agent or otherwise
hereunder. None of these activities shall be deemed to conflict with his duties
as Trustee, employee, independent contractor or agent.
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ARTICLE VIII
Protection of Persons Dealing with the Trustees
8.1. ACTION BY TRUSTEES. All action required or permitted to be taken by
the Trustees, in their capacity as Trustees, shall be taken (i) at a meeting at
which a quorum is present, having been duly called by one or more of the
Trustees on at least 24 hours prior written or telephonic notice to all of the
Trustees then serving, or (ii) without a meeting, by a written vote, resolution,
or other writing signed by all the Trustees then serving. Notice of a meeting
may be waived in writing by any Trustee either before or after such meeting and
the attendance of a Trustee shall constitute a waiver of notice of such meeting
except where a Trustee attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting has not been
lawfully called or convened. All or any one or more Trustees may participate in
the meeting of the Trustees by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting pursuant to which
such communications are used by a Trustee shall constitute presence in person at
such meeting. Except where this Agreement otherwise provides, all action taken
at such a meeting shall be by vote or resolution of a majority of such of the
Trustees as are present and shall have the same force and effect as if taken by
all the Trustees. A majority of the Trustees then serving shall constitute a
quorum. Any action taken by the Trustees pursuant to this Section 8.1 may be
implemented by any one Trustee unless otherwise specified by the Trustees
authorizing or approving such action. Such implementation may include, without
limitation, the execution and delivery of documents.
8.2. RELIANCE ON STATEMENT BY TRUSTEES. Any Person dealing with the
Trustees shall be fully protected in relying upon the Trustees' certificate
signed by any one or more of the Trustees that they have authority to take any
action under this Trust. Any Person dealing with the Trustees shall be fully
protected in relying upon the Trustees' certificate setting forth the facts
concerning the calling of any meeting of the Trustees or the Beneficiaries, the
giving of notice thereof, and the action taken at such meeting, including the
aggregate number of Units held by the Beneficiaries taking such action.
ARTICLE IX
Compensation of Trustees
9.1. AMOUNT OF COMPENSATION. In lieu of commissions or other compensation
fixed by law for trustees, each Trustee shall receive as compensation for
services as Trustee hereunder, such compensation as shall be determined by the
Board of Directors of NAB prior to the Effective Date, or as may subsequently be
approved by Beneficiaries having an aggregate Beneficial Interest of more than
50%.
9.2. DATES OF PAYMENT. The compensation payable to each Trustee pursuant
to the provisions of Section 9.1 shall be paid monthly or at such other times as
the Trustees may determine.
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9.3. EXPENSES. Each Trustee shall be reimbursed from the Trust Assets for
all expenses reasonably incurred by him in the performance of his duties in
accordance with this Agreement.
ARTICLE X
Trustees and Successor Trustees
10.1. NUMBER OF TRUSTEES. Subject to the provisions of Section 10.3
relating to the period pending the appointment of a successor Trustee, there
shall always be two Trustees of this Trust, each of whom shall be a citizen and
resident of or a corporation which is incorporated under the laws of a state of
the United States and, if a corporation, it shall be authorized to act as a
corporate fiduciary under the laws of the State of Texas. If any corporate
Trustee shall ever change its name, or shall reorganize or reincorporate, or
shall merge with or into or consolidate with any other bank or trust company,
such corporate Trustee shall be deemed to be a continuing entity and shall
continue to act as a Trustee hereunder with the same liabilities, duties,
powers, titles, discretion and privileges as are herein specified for a Trustee.
10.2. RESIGNATION AND REMOVAL. Any Trustee may resign and be
discharged from the Trust hereby created by giving written notice thereof to the
remaining trustee or Trustees and by mailing such notice to the Beneficiaries at
their respective addresses as they appear in the records of the Trustees. Such
resignation shall become effective on the day specified in such notice or upon
the appointment of such Trustee's successor and such successor's acceptance of
such appointment, whichever is earlier. Any Trustee may be removed at any time,
with or without cause, by Beneficiaries having an aggregate Beneficial Interest
of at least two-thirds of the total Beneficial Interest.
10.3. APPOINTMENT OF SUCCESSOR. Should at any time a Trustee resign or
be removed, die, become mentally incompetent or incapable of action (as
determined by a majority of the remaining Trustees in their sole discretion), or
be adjudged a bankrupt or insolvent, a vacancy shall be deemed to exist and a
successor shall be appointed by the remaining Trustees. If such a vacancy is
not filled by the remaining Trustees within 30 days, the Beneficiaries may,
pursuant to Article XII hereof, call a meeting to appoint a successor Trustee by
Beneficiaries owning a majority of the Beneficial Interest represented at the
meeting. Pending the appointment of a successor Trustee, the remaining Trustees
then serving may take any action in the manner set forth in Section 8.1.
10.4. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any successor
Trustee appointed hereunder shall execute an instrument accepting such
appointment hereunder and shall deliver one counterpart thereof to each of the
other Trustees and, in case of a resignation, to the resigning Trustee.
Thereupon such successor Trustee shall, without any further act, become vested
with all the estates, properties, rights, powers, trusts and duties of his or
its predecessor in the Trust hereunder with like effect as if originally named
therein; but the resigning Trustee shall nevertheless, when requested in writing
by the successor Trustee or by the remaining Trustees, execute and deliver an
instrument or instruments conveying and
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transferring to such successor Trustee upon the trust herein expressed, all
the estates, properties, rights, powers and trusts of such resigning Trustee,
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by him hereunder.
10.5. BONDS. Unless required by the Board of Directors of NAB prior to
the Effective Date, or unless a bond is required by law, no bond shall be
required of any original Trustee hereunder. Unless required by a majority vote
of the Trustees 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 and such
requirement cannot be waived by or with approval of the Beneficiaries, no bond
shall be required of any successor Trustee hereunder. If a bond is required by
law, no surety or security with respect to such bond shall be required unless
required by law and such requirement cannot be waived by or with approval of the
Beneficiaries or unless required by the Board of Directors of NAB. If a bond is
required by the Board of Directors of NAB or by a majority vote of the Trustees,
the Board of Directors of NAB or the Trustees, as the case may be, 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 the making
of any demand or request, the giving of any notice, consent, or waiver, the
removal of a Trustee, the appointment of a successor Trustee, or the taking of
any other action), the fact that at the time of taking any such action such
Beneficiaries have joined therein may be evidenced (i) by any instrument or any
number of instruments of similar tenor executed by Beneficiaries in person or by
agent or attorney appointed in writing, or (ii) by the record of the
Beneficiaries voting in favor thereof at any meeting of Beneficiaries duly
called and held in accordance with the provisions of Article XII.
11.2. REQUIREMENT OF UNDERTAKING. The 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 Trustees for any action taken or omitted by them as 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, however, that the provisions of this Section shall not apply
to any suit by the Trustees.
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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 a Beneficiary having a specified aggregate Beneficial Interest to take
either acting alone or with the Trustees.
12.2. MEETING CALLED BY TRUSTEES. The Trustees may at any time call a
meeting of the Beneficiaries to be held at such time and at such place within
the State of Texas (or elsewhere if so determined by a majority of the Trustees)
as the Trustees shall determine. Written notice of every meeting of the
Beneficiaries shall be given by the Trustees (except as provided in Section
12.3), which written notice will set forth the time and place of such meeting
and in general terms the action proposed to be taken at such meeting, and shall
be mailed not more than 60 nor less than 10 days before such meeting is to be
held to all of the Beneficiaries of record not more than 60 days before the date
of such meeting. The notice shall be directed to the Beneficiaries at their
respective addresses as they appear in the records of the Trust.
12.3. MEETING CALLED ON REQUEST OF BENEFICIARIES. Within 30 days after
written request to the Trustees by Beneficiaries having an aggregate Beneficial
Interest of at least 25% to call a meeting of all the Beneficiaries, which
written request shall specify in reasonable detail the action proposed to be
taken, the Trustees shall proceed under the provisions of Section 12.2 to call a
meeting of the Beneficiaries, and if the Trustees fail to call such meeting
within such 30-day period then such meeting may be called by Beneficiaries
having an aggregate Beneficial Interest of at least 25% or their designated
representative.
12.4. PERSONS ENTITLED TO VOTE AT MEETING OF BENEFICIARIES. Each
Beneficiary shall be entitled to vote at a meeting of the Beneficiaries either
in person or by his proxy duly authorized in writing. The vote of each
Beneficiary shall be weighted based on the number of Units held by each
Beneficiary in the Trust Estate. The signature of the Beneficiary on such
written authorization need to be witnessed or notarized.
12.5. QUORUM. At any meeting of Beneficiaries, the presence of
Beneficiaries having an aggregate Beneficial Interest 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 an aggregate Beneficial Interest of more than 50% of the
aggregate Beneficial Interest 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 may be
adjourned from time to time and a meeting may be held at such adjourned time and
place without further notice.
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12.7. CONDUCT OF MEETINGS. The 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. Two Inspectors of Votes,
appointed by the Chairman of the meeting, shall count all votes cast at the
meeting for or against any resolution and shall make and file with the Secretary
of the meeting their verified written report.
12.8. RECORD OF MEETING. A record of the proceedings of each meeting
of Beneficiaries shall be prepared by the Secretary of the meeting. The record
shall be signed and verified by the Secretary of the meeting and shall be
delivered to the Trustees to be preserved by them. Any record so signed and
verified shall be conclusive evidence of all the matters therein states.
ARTICLE XIII
Amendments
13.1. CONSENT OF BENEFICIARIES. At the direction or with the consent
of Beneficiaries having an aggregate Beneficial Interest of at least two-thirds,
or such greater percentage as shall be specified in this Agreement for the
taking of an action by the Beneficiaries under the affected provision of this
Agreement, of the total Beneficial Interest, the 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 thereto; provided, however, that no such amendment
shall permit the Trustees to engage in any activity prohibited by Section 6.1
hereof or affect the Beneficiaries' rights to receive their pro rate shares of
the Trust Assets at the time of distribution; provided further, however, that no
consent of the Beneficiaries shall be required with respect to any amendment
made solely for the purpose of facilitating the transferability by Beneficiaries
of Units so long as such amendment has been approved by all the Trustees.
13.2. NOTICE AND EFFECT OF AMENDMENT. Promptly after the execution by
the Trustees of any such declaration of amendment, the Trustees shall give
notice of the substance of such amendment to the Beneficiaries or, in lieu
thereof, the Trustees may send a copy of the amendment to each Beneficiary.
Upon the execution of any such declaration of amendment by the Trustees, this
Agreement shall be deemed to be modified and amended in accordance therewith and
the respective rights, limitations or rights, obligations, duties, and
immunities of the Trustees and the Beneficiaries under this Agreement shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modification and amendments, and all the terms and conditions
of any such amendment shall be thereby deemed to be part of the terms and
conditions of this Agreement for any and all purposes.
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ARTICLE XIV
Miscellaneous Provisions
14.1. FILING DOCUMENTS. This Agreement shall be filed or recorded in
such office or offices as the Trustees may determine to be necessary or
desirable. A copy of this Agreement and all amendments thereof shall be
maintained in the office of each Trustee and shall be available at all times
during regular business hours for inspection by any Beneficiary or his duly
authorized representative. The Trustees shall file or record any amendment of
this Agreement in the same places where the original Agreement is filed or
recorded. The Trustees shall file or record any instrument which relates to any
change in the office of Trustee in the same places where the original Agreement
is filed or recorded.
14.2. INTENTION OF PARTIES TO ESTABLISH TRUST. This Agreement is not
intended to create and shall not be interpreted as creating a corporation,
association, partnership, or joint venture or any other profit-making business
of any kind for purposes of Federal income taxation or for any other purpose.
14.3. BENEFICIARIES HAVE NO RIGHTS OR PRIVILEGES AS SHAREHOLDERS OF
NAB. Except as expressly provided in this Agreement or under applicable law,
the Beneficiaries shall have no rights or privileges attributable to their
former status as Shareholders of NAB.
14.4. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any Person other than the Beneficiaries and their
respective permitted successors and assigns.
14.5. LAWS AS TO CONSTRUCTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas. The Trustees, and
the Beneficiaries (by their vote with respect to the Merger Agreement and/or
their acceptance of any distributions made to them pursuant to this Agreement),
consent and agree that this Agreement shall be governed by and construed in
accordance with such laws.
14.6. SEVERABILITY. In the event any provision of this Agreement or
the application thereof to any Person or circumstances shall be finally
determined by a court of proper jurisdiction to be invalid or unenforceable to
any extent, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each provision of
this Agreement shall be valid and enforced to the fullest extent permitted by
law.
14.7. NOTICES. Any notice or other communication by the Trustees to
any Beneficiary shall be deemed to have been sufficiently given, for all
purposes, if deposited, postage prepaid, in a post office or letter box
addressed to such Person at this address as shown in the records of the Trust.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by telecopier or
telex to the Trustees at the following addresses or at such other addresses as
shall be specified by the Trustees by like notice:
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If to the Trustees:
Emil A. Nakfoor, Trustee, and
Andrew K. Golden, Trustee
2801 Post Oak Boulevard, Suite 400
Houston, Texas 77056
14.8. 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.
14.9. BINDING.
(a) The obligations of NAB hereunder are not personally binding
upon, nor shall resort be had to the private property of, any of the
directors, shareholders, officers, employees or agents or NAB, but only the
property of NAB shall be bound.
(b) The obligations of the Trust are not personally binding upon, nor
shall resort be had to the private property of, any of the Trustees,
Beneficiaries, employees or agents of the Trust, but only the Trust Estate
shall be bound.
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IN WITNESS WHEREOF, NAB Asset Corporation has caused this Agreement to be
signed and acknowledged by its President, and the same to be attested by its
Secretary, and the Trustees herein have executed this Agreement, as Trustees and
not as individuals, effective this 5th day of June, 1996.
NAB ASSET CORPORATION
ATTEST: By: /s/ Michael A. Hrebenar
-------------------------------
Michael A. Hrebenar
/s/ Richard A. Durham President
- --------------------------------
Secretary
WITNESSES
/s/ Carolyn Crawford
- -------------------------------- /s/ Emil A. Nakfoor
-------------------------------
Emil A. Nakfoor, Trustee
/s/ Scott Klein
- -------------------------------- /s/ Andrew K. Golden
-------------------------------
Andrew K. Golden, Trustee
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ACKNOWLEDGMENT
STATE OF TEXAS Section
Section
COUNTY OF HARRIS Section
This instrument was acknowledged before me on the 5th day of June, 1996, by
Michael A. Hrebenar, President of NAB Asset Corporation, a Texas corporation, on
behalf of said corporation.
/s/ Janet M. McMahan
---------------------------------------
Notary Public Signature
Janet M. McMahan
---------------------------------------
Notary Public Printed or Typed Name
My Commission Expires: March 20, 1999
-----------------
ACKNOWLEDGMENT
STATE OF TEXAS Section
Section
COUNTY OF HARRIS Section
This instrument was acknowledged before me on the 5th day of June, 1996, by
Emil A. Nakfoor, Trustee.
/s/ Janet M. McMahan
---------------------------------------
Notary Public Signature
Janet M. McMahan
---------------------------------------
Notary Public Printed or Typed Name
My Commission Expires: March 20, 1999
-----------------
ACKNOWLEDGMENT
STATE OF TEXAS Section
Section
COUNTY OF HARRIS Section
This instrument was acknowledged before me on the 5th day of June, 1996, by
Andrew K. Golden, Trustee.
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/s/ Janet M. McMahan
---------------------------------------
Notary Public Signature
Janet M. McMahan
---------------------------------------
Notary Public Printed or Typed Name
My Commission Expires: March 20, 1999
-----------------
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NAB ASSET CORPORATION
ANNOUNCES COMPLETION OF MERGER
AND ESTABLISHMENT OF LIQUIDATING TRUST
FOR IMMEDIATE RELEASE
Houston, Texas -- NAB Asset Corporation (NASDAQ:NABC) today announced that
it has completed the previously announced merger of a wholly owned subsidiary of
Consumer Portfolio Services, Inc. ("CPS") with and into NAB Asset. In the
merger, the shareholders of NAB will receive on a pro rata basis (i) an
aggregate cash distribution of $15.3 million, (ii) an undivided interest in a
liquidating trust and (iii) 62% of the outstanding shares of the new combined
company, which have a net asset value of approximately $7.5 million or ($1.10
per share of NAB common stock). A letter of transmittal for the exchange of the
old NAB Asset commons shares for the cash, liquidating trust interest and new
NAB Asset stock is expected to be mailed to shareholders within five days.
The Company also announced the completion of the transactions contemplated
by the agreement with its management to sell the Company's partnerships to them
for approximately $1.5 million, which will result in a gain of approximately
$1.2 million. The proceeds from this sale will be included in the cash
distribution to shareholders of $3.64 per share for the 4.2 million shares of
common stock of NAB.
In connection with the completion of the merger, the liquidating trust
received $2.4 million in cash, subject to certain contingencies, and all of the
non-cash assets of NAB. The objective of the trust is to liquidate or otherwise
realize on the non-cash assets within one year. The cash transferred consists
of the settlement proceeds of a loan, the guarantor of which is currently in
bankruptcy. The assets transferred primarily consist of four larger pieces of
undeveloped real estate in Texas and Louisiana. These assets have a book value
of approximately $4.1 million which, together with the transferred cash, results
in book value of $1.56 per share of NAB common stock. The interests in the
liquidating trust are non-transferrable.
The new combined company will seek to establish or acquire new businesses.
It is currently contemplated that such business will be involved in the
financial services and financial products markets. The combined company will
initially be capitalized with $7.5 million in cash and will no longer be
subject to the various restrictions previously existing in NAB's articles of
incorporation that limit its operations. In an effort to protect the Company's
large net operating loss carryforwards, the new securities issued to the
shareholders of NAB in the merger generally restrict the acquisition of 5% or
more of the outstanding shares of common stock of the new company so as to
prevent the occurrence of an ownership change under the Federal income tax laws.
In connection with the merger, the board of directors of NAB was
reconstituted to consist of: Charles E. Bradley, Sr., Michael W. Caton, Charles
E. Bradley, Jr., Emil A. Nakfoor and Robert
<PAGE>
A. Bettigole. Michael W. Caton will serve as President and Chief Operating
Officer and Charles E. Bradley, Sr. will serve as Chief Executive Officer.
The merger, including the transfer to the liquidating trust and the sale of
the general partner interests to management, was approved by the shareholders of
NAB at a special meeting of its shareholders held today.
The trading symbol for the new NAB Asset common stock will be "NABDV"
immediately following the merger. The Company expects that "when issued"
trading of the new stock will begin on the morning of Thursday, June 6, 1996.
For further information, contact Michael W. Caton, President and Chief
Operating Officer, of NAB at (706) 579-2777.
June 5, 1996
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