WM1A #957520 v1 Formatted Litigation Trust Agreement

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LITIGATION TRUST AGREEMENT PREAMBLE This Litigation Trust Agreement dated as of July ____, 2010 (the Agreement ), which pertains to the request for the formation of a Committee of Equity Shareholders (the Litigation Trust ), in the bankruptcy proceeding for AbitibiBowater Inc., et al. (collectively, the Debtors ), and L. Jason Cornell, not individually, but solely in his capacity as trustee (the Litigation Trustee ) and together with the equity shareholders of the Debtors who signed this Agr
  WM1A957520v107/06/10 LITIGATION TRUST AGREEMENTPREAMBLE This Litigation Trust Agreement dated as of July ____, 2010 (the Agreement ), which pertains to the request for the formation of a Committee of Equity Shareholders (the Litigation Trust ), in the bankruptcy proceeding for AbitibiBowater Inc., et al.(collectively, the Debtors ), and L. Jason Cornell , not individually, but solely in hiscapacity as trustee (the Litigation Trustee ) and together with the equity shareholders of the Debtors who signed this Agreement (the Beneficiaries ) . RECITALS: (A) OnApril 16, 2009(the Petition Date ), each of the Debtorsfiled voluntary petitions for relief under Chapter 11 of the United States BankruptcyCode (the Bankruptcy Code ) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court ) and commencing their Chapter 11 cases (the Chapter11 Cases ). (B) The Beneficiaries are establishing the Litigation Trust for the limited purpose of pursuing the formation of an Official Committee of EquitySecurity Holders in Debtors’ Chapter 11 Cases. This Agreement is executed to establishthe Litigation Trust. (C) The Litigation Trust is created on behalf of, and for the benefitof, the Beneficiaries. (D) The powers, authority, responsibilities and duties of theLitigation Trustee shall be governed by this Agreement and under Delaware law. NOW, THEREFORE, in consideration of the promises and the mutualcovenants and agreements contained herein, the Parties agree as follows:DEFINITIONS Affiliates means parents, subsidiaries, members, managers, limited partnersand general partners. Agreement has the meaning specified in the Preamble to this Agreement. Bankruptcy Court means the United States Bankruptcy Court for theDistrict of Delaware. Beneficiaries means the Shareholders identified as signatories to this Agreement. Certificate of Trust means the certificate of trust with respect to the Litigation Trust,filed with the Delaware Secretary of State pursuant to Section 3810 of the DelawareStatutory Trust Act, in substantially the form attached hereto as Exhibit A.  WM1A957520v107/06/10 Debtors has the meaning specified in the Preamble to this Agreement. Litigation Trust has the meaning specified in the Preamble to this Agreement. Litigation Trust Assets means the causes of action identified herein. Litigation Trustee has the meaning specified in the Preamble to this Agreement or anysuccessor thereto. ARTICLE INAME OF TRUST AND LITIGATION TRUSTEE The name of the Litigation Trust is the Certain Shareholders of AbitibiBowater Litigation Trust. L. Jason Cornell is hereby appointed to serve as the initial LitigationTrustee under this Agreement, and hereby accepts this appointment and agrees toserve in such capacity effective upon the date hereof and pursuant to the terms of this Agreement. A successor Litigation Trustee shall be appointed in the event theLitigation Trustee is removed or resigns pursuant to this Agreement or if the LitigationTrustee otherwise vacates the position. ARTICLE IIDUTIES AND POWERS OF THE LITIGATION TRUSTEE 2.1GenerallyThe Litigation Trustee shall be responsible for taking actions on behalf of, andrepresenting, the Litigation Trust. The Litigation Trustee shall have the authority to bind the Litigation Trust within the limitations set forth herein, but shall for all purposes hereunder be acting in the capacity of Litigation Trustee and not individually.2.2Scope of Authority of Litigation TrusteeWithin the limitations set forth herein, the responsibilities and authority of theLitigation Trustee shall include, without limitation: (i) evaluating and determining strategywith respect to the Causes of Action, and litigating, settling, transferring, releasing or abandoning any and all Causes of Action on behalf of the Litigation Trust, in each case, onany terms and conditions as he may determine in good faith based on the best interestsof the Beneficiaries, (ii) receiving reasonable compensation for performing services asLitigation Trustee and (vii) providing periodic reports and updates to the Beneficiaries,and (viii) carrying out such other responsibilities not specifically set forth herein as may be vested in the Litigation Trustee by this Agreement or as may be necessary and proper to carry out the provisions of the this Agreement.2.3Obligations to Litigation Trust and BeneficiariesThe Litigation Trustee's actions as Litigation Trustee will be held to standardsrequired under Delaware law.  WM1A957520v107/06/10 2.4Additional Powers of Litigation TrusteeIn connection with the administration of the Litigation Trust, subject toand except as otherwise set forth in this Agreement, the Litigation Trustee is herebyauthorized to perform those acts necessary to accomplish the purposes of the LitigationTrust. Without limiting, but subject to, the foregoing, the Litigation Trustee, as applicable,shall be authorized, in his sole discretion, unless otherwise provided in this Agreement or Bankruptcy Court order and subject to the limitations contained herein to: (1) hold legal title (on behalf of the Litigation Trust as LitigationTrustee, but not individually) to the Litigation Trust Assets, including, but not limited to,the Causes of Action; (2)  protect and enforce the rights to the Litigation Trust Assets by anymethod deemed appropriate in his sole discretion, including, without limitation, by judicial proceedings or pursuant to any applicable bankruptcy, insolvency, moratorium or similar law and general principles of equity; (3)  prosecute, defend, compromise, adjust, arbitrate, abandon,estimate, or otherwise deal with and settle, in accordance with the terms set forth herein,the Litigation Trust Assets; (4)  pay expenses and make disbursements necessary to preserve,liquidate, and enhance the Litigation Trust Assets, if any; (5) assume such other powers as may be vested in or assumed by theLitigation Trust as may be necessary and proper to carry out the provisions of this Agreement.2.5Limitation of Litigation Trustee's Authority; No On-Going Business(a)The Litigation Trustee shall have no power or authority except as setforth in this Agreement.2.6Other ActivitiesThe Litigation Trustee shall be entitled to be employed by third partieswhile performing the duties required under this Agreement, so long as such other employmentdoes not involve holding or representing any interest adverse to the interests of theLitigation Trust, or otherwise preclude or impair the Litigation Trustee from performing hisrespective duties under this Agreement. The Beneficiaries acknowledge and consent to theLitigation Trustee’s representation of Alan Gilbertson, a shareholder of the Debtors, in hisindividual capacity in Debtors’ bankruptcy proceeding. ARTICLE IIITERM AND COMPENSATION FOR LITIGATION TRUSTEE 3.1Compensation  WM1A957520v107/06/10 The Litigation Trustee shall be entitled to receive (i) compensation at the hourlyrate of $390 per hour and (ii) reimbursement of out-of-pocket costs and expenses incurred inconnection with the duties of the Litigation Trustee. The compensation structure of theLitigation Trustee is more fully set forth in the retainer agreement attached hereto as Exhibit B.3.2 BondThe Litigation Trustee shall serve without bond.3.3RemovalThe Litigation Trustee may be removed only by receiving signed writtennotice by a majority of the Beneficiaries identified herein.3.4ResignationThe Litigation Trustee may resign by giving not less than ten (10) days prior written notice thereof to the Beneficiaries. ARTICLE IVTRUST FUNDING 4.1Trust FundingThe costs and expenses of the Litigation Trust, including, without limitation, thecompensation to and reimbursement of expense to the Litigation Trustee and the fees, costs andexpenses of all professionals retained by the Litigation Trustee in connection withthe performance of the Litigation Trustee's duties in connection with this Agreement,shall be initially paid from funds as provided by the Beneficiaries (the LitigationTrust Funds ).ARTICLE VLIABILITY AND EXCULPATION PROVISIONS 5.1Standard of Liability(a) In no event shall the Litigation Trustee, or Professionals, NonProfessionals, Affiliates, or representatives be held personally liable for any claim,expense, liability or other obligation asserted against the Litigation Trust. The LitigationTrustee, and all of his Non-Professionals, Professionals, Affiliates and representatives shall not be liable for any negligence or any error of judgment made in good faith with respect toany action taken or omitted to be taken in good faith, except to the extent that the actiontaken or omitted to be taken by each of the same or their respective Professionals, Non-Professionals, Affiliates or representatives is determined to be solely due to their own respective gross negligence, willful misconduct, fraud or, solely in the case of theLitigation Trustee, breach of fiduciary duty other than negligence.
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