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DISTRIBUTION TRUST AGREEMENT

Trust Distribution Agreement

DISTRIBUTION TRUST AGREEMENT | Document Parties: Atlantic Coast Academy, Inc | Atlantic Coast Airlines, Inc | Atlantic Coast Jet, LLC | ENA ADVISORS, LLC | FLYI, INC | IA Sub, Inc | Independence Air, Inc | WaKeeney, Inc You are currently viewing:
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Atlantic Coast Academy, Inc | Atlantic Coast Airlines, Inc | Atlantic Coast Jet, LLC | ENA ADVISORS, LLC | FLYI, INC | IA Sub, Inc | Independence Air, Inc | WaKeeney, Inc

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Title: DISTRIBUTION TRUST AGREEMENT
Date: 3/21/2007

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DISTRIBUTION TRUST AGREEMENT

 

BY AND AMONG

 

FLYI, INC. AND ITS DEBTOR AFFILIATES

 

AND

 

ENA ADVISORS, LLC

 

[DATE], 200__

 

 

CHI-1578198v2 


 

 

     1.1      Definitions

 

     1.2      Interpretation

 

ARTICLE 2      ESTABLISHMENT OF THE DISTRIBUTION TRUST

 

     2.1      Creation and Purposes of the Distribution Trust

 

     2.2      Identification of Beneficiaries

 

     2.3      Transfer of Initial Distribution Trust Assets

 

     2.4      Tax Treatment

 

     2.5      Distribution Trustee’s Acceptance

 

ARTICLE 3      TRUST ACCOUNTS

 

     3.1      Creation of the Trust Accounts

 

     3.2      Distribution Trust Expenses Account

 

     3.3      Priority Claims Trust Accounts

 

     3.4      Unsecured Claims Trust Accounts

 

     3.5      Undeliverable Cash Trust Accounts

 

     3.6      Tax Treatment

 

ARTICLE 4      ADMINISTRATION OF THE DISTRIBUTION TRUST

 

     4.1      Rights, Powers and Privileges

 

     4.2      Limitation on Investigations; Delivery of Documents and Related Matters

 

     4.3      No Personal Liability

 

     4.4      Dissolution of the Debtors

 

     4.5      Agents and Professionals

 

     4.6      Authentication of Documents

 

     4.7      Investment Guidelines

 

     4.8      Disputed Claims

 

     4.9      Trade or Business

 

     4.10      Court Approval of Distribution Trustee Actions

 

ARTICLE 5      DISTRIBUTIONS FROM THE DISTRIBUTION TRUST

 

     5.1      Method of Distributions to Holders of Allowed Claims

 

     5.2      Delivery of Distributions

 

     5.3      Means of Cash Payments

 

     5.4      Timing and Calculation of Amounts to Be Distributed

 

     5.5      Compensation and Reimbursement for Services Related to Distributions

 

     5.6      Payments Limited to Trust Accounts

 

     5.7      Insufficient Funds

 

ARTICLE 6      BENEFICIARIES

 

     6.1      Rights to Distributions

 

     6.2      Exemption From Registration

 

ARTICLE 7      CERTAIN RIGHTS OF THE DISTRIBUTION TRUSTEE

 

     7.1      Causes of Action

 

     7.2      Objections to Claims

 

     7.3      Establishment of Litigation Trusts

 

ARTICLE 8      THIRD PARTY RIGHTS AND LIMITATION OF LIABILITY

 

     8.1      Parties Dealing With the Distribution Trustee

 

     8.2      Limitation of Liability

 

     8.3      Indemnification

 

ARTICLE 9      SELECTION, REMOVAL AND COMPENSATION OF THE DISTRIBUTION TRUSTEE

 

     9.1      Initial Distribution Trustee

 

     9.2      Term of Service

 

     9.3      Removal of the Distribution Trustee

 

     9.4      Resignation of the Distribution Trustee

 

     9.5      Appointment of Successor Distribution Trustee

 

     9.6      Powers and Duties of Successor Distribution Trustee

 

     9.7      Trust Continuance

 

     9.8      Compensation and Costs of Administration

 

ARTICLE 10      MAINTENANCE OF RECORDS; REPORTING

 

     10.1      Books and Records

 

     10.2      Reports to be Filed with the Bankruptcy Court

 

     10.3      Compliance with Federal Securities Laws

 

     10.4      Tax Returns and Payments

 

ARTICLE 11      DURATION OF THE DISTRIBUTION TRUST

 

     11.1      Duration

 

     11.2      Termination Upon Distribution of All Distribution Trust Assets

 

     11.3      Termination After Five Years

 

     11.4      Other Termination Procedures

 

     11.5      No Reversions

 

ARTICLE 12      MISCELLANEOUS

 

     12.1      Limitation on Transferability

 

     12.2      Notices

 

     12.3      No Bond

 

     12.4      Governing Law; Submission to Jurisdiction; Service of Process

 

     12.5      Successors and Assigns

 

     12.6      No Execution

 

     12.7      Amendment

 

     12.8      Severability

 

 

 

CHI-1578198v2 

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DISTRIBUTION TRUST AGREEMENT

 

This DISTRIBUTION TRUST AGREEMENT, dated as of ___________, 200__ (this “ Agreement ”), is made by and among the debtors listed on the signature page hereto (collectively, the “ Debtors ”), and ENA Advisors, LLC, a Utah limited liability company (or any successor trustee, the “ Distribution Trustee ”), as Distribution Trustee under the First Amended Joint Plan of Liquidation for FLYi, Inc. and its Debtor Affiliates, dated November 21, 2006 (as the same may be amended or modified and as confirmed by the Confirmation Order, the “ Plan ”).

 

BACKGROUND

 

A.   The trust created hereby (the “ Distribution Trust ”) is created pursuant to, and to effectuate, Section IV.B.3 of the Plan and constitutes the “Distribution Trust” as contemplated by the Plan.

 

B.   The Distribution Trustee was jointly selected by the Debtors and the official committee of unsecured creditors of the Debtors appointed by the United States Trustee for the District of Delaware pursuant to section 1102 of the Bankruptcy Code (the “ Creditors’ Committee ”).

 

C.   Pursuant to the Plan, the Distribution Trust is established for the purpose of  (i) liquidating the Distribution Trust Assets, (ii) resolving certain Disputed Claims, (iii) making distributions to holders of certain Allowed Claims in accordance with the terms of the Plan, and (iv) otherwise implementing the Plan and administering the Debtors’ Estates, all as more specifically set forth in this Agreement and in accordance with the Plan.

 

D.   The Distribution Trust is intended to be treated, in part, as a liquidating trust within the meaning of Treasury Regulations section 301.7701-4(d), for the benefit of holders of Allowed Claims entitled to distributions of Pending Payments, and otherwise as one or more disputed ownership funds within the meaning of Treasury Regulations section 1.468B-9(b)(1).

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Debtors and the Distribution Trustee agree as follows:

 

ARTICLE 1   

DEFINITIONS AND INTERPRETATIONS

 

1.1    Definitions . Capitalized terms used but not defined in this Agreement have the meanings ascribed to them in the Plan. The following capitalized terms used in this Agreement have the meanings ascribed to them in this Section ‎1.1:

 

Agreement ” has the meaning set forth in the introductory paragraph above.

 

Annual Receipts/Disbursements Report ” means, with respect to each Estate, an unaudited report Filed with the Bankruptcy Court by the Distribution Trustee, on behalf of the Distribution Trust, within 90 days after the end of each calendar year reflecting: (a) all Distribution Trust Assets liquidated by the Distribution Trust during such calendar year; (b) all Distribution Trust Assets held by the Distribution Trust at the end of such calendar year; and (c) all Distribution Trust Assets disbursed during such calendar year, in each case itemized for the individual Trust Accounts and sub-accounts.

 

Bankruptcy Case ” means (a) when used with reference to a particular Debtor, the chapter 11 case pending for that Debtor in the Bankruptcy Court, and (b) when used with reference to all Debtors, the chapter 11 cases pending for the Debtors in the Bankruptcy Court.

 

Beneficiaries ” means creditors and holders of Claims against the Estates.

 

Claims Report ” means, with respect to each Estate, a report certified by the claims agent for such Estate setting forth: (a) a listing, as of the Effective Date, of: (i) all Allowed Administrative Claims against such Estate; (ii) all Allowed Priority Tax Claims against such Estate; (iii) all Allowed Claims against such Estate in each class of Claims under the Plan; and (iv) all Disputed Claims against such Estate; and (b) for each Claim so listed: (i) the name, address and federal taxpayer identification number or social security number (if known) of the holder thereof as of the Distribution Record Date and (ii) the Face Amount thereof, including the amount of unpaid principal and accrued interest (if known).

 

Class 3A Claims ” means the Claims to be satisfied solely from the FLYi Distribution Trust Assets in accordance with Section III.B.3 of the Plan.

 

Class 3B Claims ” means the Claims arising under the FLYi Indenture, all of which are to be satisfied solely from the FLYi Distribution Trust Assets in accordance with Section III.B.4 of the Plan.

 

Class 4 Claims ” means the Claims to be satisfied solely from the Independence Distribution Trust Assets in accordance with Section III.B.5 of the Plan.

 

Class 5 Claims ” means: (a) any Claim that would otherwise be classified as a General Unsecured Claim against FLYi (other than a Class 3B Claim) but for the fact that such Claim is Allowed in an amount equal to or less than $1,000 and (b) any Class 3A Claim with respect to which the holder has elected on its Ballot provided for voting on the Plan to reduce its Claim to $1,000 and accept treatment in Class 5.

 

Class 6 Claims ” means: (a) Customer Credit Claims that are not Priority Claims pursuant to the order of the Bankruptcy Court dated September 22, 2006 and the customer certification approved by such order and disseminated to the holders of Customer Credit Claims in connection with the Plan, (b) any Claim that would otherwise be classified as a General Unsecured Claim against any Debtor (other than FLYi) but for the fact that such Claim is Allowed in an amount equal to or less than $1,000 and (c) any Class 4 Claim with respect to which the holder has elected on its Ballot provided for voting on the Plan to reduce its Claim to $1,000 and accept treatment in Class 6.

 

Convertible Notes ” means the $125,000,000 of public convertible senior notes issued by FLYi under the FLYi Indenture, bearing an interest rate of six percent and convertible into FLYi common stock upon the occurrence of certain events.

 

Creditors’ Committee ” has the meaning set forth in Background Paragraph B of this Agreement.

 

Current Report ” means a report Filed with the Bankruptcy Court by the Distribution Trustee, on behalf of the Distribution Trust, describing developments affecting the Distribution Trust in any material respect (as determined by the Distribution Trustee in its Permitted Discretion) in reasonable detail.

 

Debtors ” has the meaning set forth in the introductory paragraph of this Agreement.

 

Disbursing Agent ” means the Distribution Trustee, in its capacity as a disbursing agent pursuant to the Plan, or any third party acting as disbursing agent at the direction of the Distribution Trustee.

 

Distribution Trust Assets ” means the FLYi Distribution Trust Assets and the Independence Distribution Trust Assets.

 

Distribution Trust Expenses Account ” means the segregated trust account to be established and maintained pursuant to Section IV.E.3 of the Plan to fund the payment of Distribution Trust Expenses.

 

Distribution Trust Expenses ” means any and all reasonable fees, costs and expenses incurred by the Distribution Trust, the Distribution Trustee (or any Disbursing Agent, person, Entity or professional engaged by the Distribution Trustee) or the Steering Committee on or after the Effective Date in connection with any of their duties under the Plan or this Agreement, including any administrative fees, attorneys’ fees and expenses, insurance fees, taxes and escrow expenses.

 

Distribution Trust ” has the meaning set forth in Background Paragraph A of this Agreement.

 

Distribution Trustee ” has the meaning set forth in the introductory paragraph of this Agreement.

 

Face Amount ” means:

 

(a)   when used in reference to the liquidated amount of any Claim for which a proof of Claim was Filed on or before the Bar Date (or was otherwise deemed timely Filed under applicable law), (i) the full stated amount of such Claim, or (ii) such lesser amount as determined by the Bankruptcy Court; or

 

(b)   when used in reference to any Claim for which a proof of Claim was not Filed on or before the Bar Date (or was not otherwise deemed timely Filed under applicable law) or in reference to the unliquidated amount of any Claim, the greatest of the following amounts: (i) the amount of the Claim acknowledged by the applicable Debtor(s) in any objection Filed to such Claim or in the Schedules as an undisputed, noncontingent and liquidated Claim; (ii) the amount estimated by the Bankruptcy Court pursuant to Section 502(c) of the Bankruptcy Code; and (iii) the amount established by the Distribution Trustee on behalf of the Distribution Trust following the Effective Date;

 

provided , however , if a Claim is an Insured Claim, then the Face Amount of such Claim shall equal the applicable deductible under the relevant insurance policy, minus any reimbursement obligations of the applicable Debtor(s) to the insurance carrier for sums expended by the insurance carrier on account of such Claim (including defense costs) if such amount is less than the amount specified in clause (b) above; and provided , further , that the Face Amount of any Claim shall not exceed the amount of such Claim, as determined by a Final Order or a Stipulation of Amount and Nature of Claim.

 

FLYi Disputed Claims Reserves ” means, with respect to each of the FLYi Trust Accounts, the reserve of Cash and other FLYi Distribution Trust Assets retained in such FLYi Trust Account to satisfy Disputed Claims against the Estate of FLYi, if, as and when they are Allowed, or, to the extent such Disputed Claims are not Allowed, to satisfy Claims against the Estate of FLYi that are Allowed in accordance with the terms of the Plan.

 

FLYi Distribution Trust Assets ” means all assets of the Estate of FLYi, which consist solely of any Causes of Action of FLYi, fifty percent (50%) of the United Claim Settlement Proceeds and any Cash on hand, government and corporate bonds and other instruments owned by FLYi.

 

FLYi Indenture ” means the Indenture, dated as of February 25, 2004, by and between Atlantic Coast Airlines Holdings, Inc., n/k/a FLYi, as issuer, and U.S. Bank National Association, as trustee, together with each of its supplemental indentures and amendments.

 

FLYi Priority Claims Trust Account ” means the segregated trust account to be established and maintained by the Distribution Trustee pursuant to Section IV.E.1 of the Plan for the purpose of satisfying Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Priority Claims and Allowed Secured Claims against the Estate of FLYi, in each case, solely from the FLYi Distribution Trust Assets.

 

FLYi Trust Accounts ” means the FLYi Priority Claims Trust Account, the FLYi Unsecured Claims Trust Account and the FLYi Undeliverable Cash Trust Account.

 

FLYi Undeliverable Cash Trust Account ” means the segregated trust account to be established and maintained by the Distribution Trustee pursuant to Sections IV.E.2 and VI.D.2 of the Plan to hold undeliverable Cash for the benefit of holders of Allowed Claims against the Estate of FLYi solely from the FLYi Distribution Trust Assets.

 

FLYi Unsecured Claims Trust Account ” means the segregated trust account to be established and maintained by the Distribution Trustee pursuant to Section IV.E.2 of the Plan for the purpose of satisfying (a) Allowed Class 3A Claims (and Class 5 Claims that would otherwise have been classified as Class 3A Claims) solely from the FLYi Distribution Trust Assets in accordance with Section III.B.3 of the Plan, and (b) Allowed Class 3B Claims solely from the FLYi Distribution Trust Assets in accordance with Section III.B.4 of the Plan.

 

General Unsecured Claim ” means any Claim that is not an Administrative Claim, Priority Tax Claim, Priority Claim, Secured Claim, Intercompany Claim, Penalty Claim or Class 3B Claim.

 

Indemnified Parties ” means, collectively, the Distribution Trustee and any directors, officers, employees, agents, professionals, principals and other representatives thereof and the members of the Steering Committee.

 

Independence Disputed Claims Reserves ” means, with respect to each of the Independence Trust Accounts, the reserve of Cash and other Independence Distribution Trust Assets retained in such Independence Trust Account to satisfy Disputed Claims against the Estates of the Debtors other than FLYi, if, as and when they are Allowed, or, to the extent such Disputed Claims are not Allowed, to satisfy Claims against such Estates that are Allowed in accordance with the terms of the Plan.

 

Independence Distribution Trust Assets ” means all assets of the Estates that are not FLYi Distribution Trust Assets.

 

Independence Priority Claims Trust Account ” means the segregated trust account to be established and maintained by the Distribution Trustee pursuant to Section IV.E.1 of the Plan for the purpose of satisfying Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Priority Claims and Allowed Secured Claims against the Estates of the Debtors other than FLYi, in each case, solely from the Independence Distribution Trust Assets.

 

Independence Trust Accounts ” means the Independence Priority Claims Trust Account, the Independence Unsecured Claims Trust Account and the Independence Undeliverable Cash Trust Account.

 

Independence Undeliverable Cash Trust Account ” means the segregated trust account to be established and maintained by the Distribution Trustee pursuant to Sections IV.E.2 and VI.D.2 of the Plan to hold undeliverable Cash for the benefit of holders of Allowed Claims against the Estates of the Debtors other than FLYi solely from the Independence Distribution Trust Assets.

 

Independence Unsecured Claims Trust Account ” means the segregated trust account to be established and maintained by the Distribution Trustee pursuant to Section IV.E.2 of the Plan for the purpose of satisfying (a) Allowed Class 4 Claims solely from the Independence Distribution Trust Assets in accordance with Section III.B.5 of the Plan, and (b) Allowed Class 6 Claims solely from the Independence Distribution Trust Assets in accordance with Section III.B.7 of the Plan.

 

Pending Payments ” means identified amounts of Cash and other Distribution Trust Assets (excluding undeliverable Cash) held by the Distribution Trust for distribution or collection and distribution to holders of Allowed Claims in specific amounts as of the date the Distribution Trust receives the applicable Distribution Trust Assets.

 

Permitted Discretion ” means a determination made in good faith and in the exercise of reasonable business judgment.

 

Permitted Investments ” means the following investments so long as they have maturities of 90 days or less: (a) obligations issued or guaranteed by the United States or by any person controlled or supervised by or acting as an instrumentality of the United States pursuant to authority granted by the United States Congress; (b) obligations issued or guaranteed by any state or political subdivision thereof rated either AA or higher, or MIG 1 or higher, by Moody’s Investors Service, Inc. or its successor or AA or higher, or an equivalent, by Standard & Poor’s Ratings Services or its successor; (c) commercial or finance paper which is rated either P-1 or higher or an equivalent by Moody’s Investors Service, Inc. or its successor or A-1 or higher or an equivalent by Standard & Poor’s Ratings Services or its successor; (d) certificates of deposit or time deposits of banks or trust companies, organized under the laws of the United States, having a minimum equity of $500,000,000; and (e) money market funds registered under the Investment Company Act of 1940, as amended, whose shares are registered under the Securities Act of 1933, as amended, which invests in securities of the type described in clause (a) above.

 

Plan ” has the meaning set forth in the introductory paragraph of this Agreement.

 

Quarterly Receipts/Disbursements Report ” means an unaudited report Filed with the Bankruptcy Court by the Distribution Trustee, on behalf of the Distribution Trust, within 45 days after the end of each of the first three calendar quarters of each calendar year reflecting: (a) all Distribution Trust Assets received by the Distribution Trust during such calendar quarter; (b) all Distribution Trust Assets held by the Distribution Trust at the end of such quarter; and (c) all Distribution Trust Assets disbursed during such calendar quarter, in each case itemized for the individual Trust Accounts and sub-accounts.

 

Schedules ” means the schedules of assets and liabilities and the statements of financial affairs Filed by the Debtors, as required by section 521 of the Bankruptcy Code, as the same may have been or may be amended, modified or supplemented.

 

Stipulation of Amount and Nature of Claim ” means a stipulation or other agreement between the applicable Debtor or the Distribution Trustee and a holder of a Claim, or an agreed order of the Bankruptcy Court, establishing the amount and nature of a Claim or Interest.

 

Trust Accounts ” means the Distribution Trust Expenses Account, the FLYi Trust Accounts, the Independence Trust Accounts and any other trust account established by the Debtors or the Distribution Trustee.

 

United States ” or “ U.S. ” means the United States of America.

 

1.2    Interpretation .

 

1.2.1    Certain References . Unless the context otherwise requires: (a) all references in this Agreement to Sections or Articles are to Sections or Articles of or to this Agreement; (b) words in the singular include the plural and vice versa ; and (c) the verb “will” will have a mandatory connotation, indicating the parties’ respective obligations hereunder. Whenever the words “include,”“includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” All references to “$” or dollar amounts are to lawful currency of the United States.

 

1.2.2    Titles and Headings . Titles and headings to Sections and Articles in this Agreement are inserted for convenience of reference only, and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

1.2.3    Inconsistencies with the Plan . In the event of any inconsistency between any provision of this Agreement, on the one hand, and any provision of the Plan, on the other hand, the provisions of the Plan will govern and control.

 

ARTICLE 2   

ESTABLISHMENT OF THE DISTRIBUTION TRUST

 

2.1    Creation and Purposes of the Distribution Trust . The Debtors and the Distribution Trustee, pursuant to the Plan and in accordance with the Bankruptcy Code, hereby create a trust, which is the “Distribution Trust” contemplated by the Plan. The Distribution Trust is established for the following purposes: (a) collecting, maintaining and administering any Distribution Trust Assets for the benefit of the Beneficiaries; (b) liquidating and distributing (including objecting to Claims and determining the proper recipients and amounts of distributions to be made from the Distribution Trust) the Distribution Trust Assets for the benefit of the Beneficiaries who are determined to hold Allowed Claims as expeditiously as reasonably possible; (c) pursuing any available Causes of Action; (d) closing the Bankruptcy Cases; and (e) otherwise implementing the Plan, all in accordance with the Plan and this Agreement, and in furtherance thereof, the Distribution Trustee will have the rights, power, privileges and obligations set forth in ‎ARTICLE 4 and elsewhere in this Agreement and the Plan. The Distribution Trust has no objective to, and will not, engage in the conduct of a trade or business and, subject to Section ‎11.3, will terminate upon the completion of its liquidation and distribution duties.

 

2.2    Identification of Beneficiaries . On the Effective Date, (a) FLYi will deliver to the Distribution Trustee the Claims Report with respect to FLYi’s Estate, and (b) Independence will deliver to the Distribution Trustee the Claims Report with respect to Estates of the Debtors other than FLYi.

 

2.3    Transfer of Initial Distribution Trust Assets . On the Effective Date, the Debtors will transfer to the Distribution Trust the Distribution Trust Assets, whereupon title to such Distribution Trust Assets will irrevocably vest in the Distribution Trust, free and clear of Claims, Liens and Interests.

 

2.4    Tax Treatment . For all U.S. federal income Tax purposes, the Debtors, the Distribution Trustee and the Beneficiaries will treat the transfer of Distribution Trust Assets to the Distribution Trust pursuant to Section ‎2.3 as: (a) to the extent of Pending Payments, a transfer of the Pending Payments directly from the Debtors to the holders of such Allowed Claims followed by the transfer of such Pending Payments by the holders of such Allowed Claims to the Distribution Trust in exchange for the rights to distributions from the Distribution Trust; and (b) to the extent of amounts that are not Pending Payments, as a transfer to one or more disputed ownership funds, as described in Section ‎3.6. Accordingly, the holders of Allowed Claims entitled to distribution of Pending Payments will be treated for federal income Tax purposes as the grantors and deemed owners of their respective shares of the Distribution Trust Assets in the amounts of the Pending Payments and any earnings thereon.

 

2.5    Distribution Trustee’s Acceptance . The Distribution Trustee hereby accepts the duties as trustee imposed on it by this Agreement and agrees to observe and perform such duties, on and subject to the terms and conditions set forth in this Agreement. In connection with and in furtherance of the purposes of the Distribution Trust, the Distribution Trustee hereby expressly accepts the transfer of Distribution Trust Assets to the Distribution Trust pursuant to Section ‎2.3, subject to the provisions of the Plan, and the Distribution Trustee hereby further expressly agrees to establish and maintain the Trust Accounts and to distribute the Distribution Trust Assets in accordance with the Plan and this Agreement.

 

ARTICLE 3   

TRUST ACCOUNTS

 

3.1    Creation of the Trust Accounts . On or prior to the Effective Date, the Distribution Trustee will establish in its own name with federally insured United States banks each of the Trust Accounts.

 

3.2    Distribution Trust Expenses Account .

 

3.2.1    Initial Funding . On the Effective Date, following the transfer of Distribution Trust Assets to the Distribution Trust pursuant to Section ‎2.3, the Distribution Trustee will fund the Distribution Trust Expenses Account with $7,000,000 in Cash, which will consist of amounts taken ratably from each of the FLYi Trust Accounts and each of the Independence Trust Accounts.

 

3.2.2    Use of Funds . Except as otherwise ordered by the Bankruptcy Court, the Distribution Trustee, in its capacity as Disbursing Agent, will, in its Permitted Discretion, pay Distribution Trust Expenses from the Distribution Trust Expenses Account, without the need for further Bankruptcy Court approval. Cash in the Distribution Trust Expenses Account will also be used to pay Taxes owing in respect of any amounts included in the Distribution Trust Expenses Account in accordance with Section ‎10.4.

 

3.2.3    Subsequent Funding . If, at any time after the initial funding of the Distribution Trust Expenses Account as contemplated by Section ‎3.2.1, the Distribution Trustee determines, in its Permitted Discretion, that the Cash balance of the Distribution Trust Expenses Account will be insufficient to make all payments payable therefrom in accordance with the terms of the Plan and this Agreement (including any payments for indemnification pursuant to, and in accordance with, Section ‎8.3), the Distribution Trustee may transfer amounts ratably from each of the FLYi Unsecured Claims Trust Account and the Independence Unsecured Claims Account (to the extent Cash remains available in either such account) to the Distribution Trust Expenses Account Cash in an aggregate amount determined by the Distribution Trustee, in its Permitted Discretion, to be necessary to ensure that the Cash balance of the Distribution Trust Expenses Account will be sufficient to make all such payments. To the fullest extent possible, any transfer pursuant to this Section ‎3.2.3 will be accomplished in a manner intended to avoid or minimize any adverse impact on the ability to make full distributions of the Allowed amounts of General Unsecured Claims and the Allowed amounts of Class 3B Claims, each in accordance with the terms of the Plan.

 

3.2.4    Excess Funds . If, at any time after the initial funding of the Distribution Trust Expenses Account pursuant to Section ‎3.2.1, the Distribution Trustee determines that the Cash balance of the Distribution Trust Expenses Account is in excess of the amount that will be sufficient to make all payments payable therefrom in accordance with the terms of the Plan and this Agreement, the Distribution Trustee, in its Permitted Discretion, may transfer such excess Cash ratably to the FLYi Priority Claims Trust Account, the FLYi Unsecured Claims Trust Account, the Independence Priority Claims Trust Account and the Independence Unsecured Trust Claims Account.

 

3.3    Priority Claims Trust Accounts .

 

3.3.1    Initial Funding . On the Effective Date, after the initial funding of the Distribution Trust Expenses Account in accordance with Section ‎3.2.1, the Distribution Trustee will (a) fund the FLYi Priority Claims Trust Account with $2,695,686 in Cash from the FLYi Distribution Trust Assets, and (b) fund the Independence Priority Claims Trust Account with $50,797,586 in Cash from the Independence Distribution Trust Assets.

 

3.3.2    Use of Funds .

 

(a)    FLYi Priority Claims Trust Account . Cash in the FLYi Priority Claims Trust Account will be used by the Distribution Trustee only to (i) satisfy the Allowed amounts of Administrative Claims, Priority Tax Claims, Priority Claims and Secured Claims against the Estate of FLYi in accordance with the terms of the Plan, and (ii) pay Taxes owing in respect of any amounts included in the FLYi Priority Claims Trust Account in accordance with Section ‎10.4.

 

(b)    Independence Priority Claims Trust Account . Cash in the Independence Priority Claims Trust Account will be used by the Distribution Trustee only to (i) satisfy the Allowed amounts of Administrative Claims, Priority Tax Claims, Priority Claims and Secured Claims against the Estates of the Debtors other than FLYi in accordance with the terms of the Plan, and (ii) pay Taxes owing in respect of any amounts included in the Independence Priority Claims Trust Account in accordance with Section ‎10.4.

 

3.3.3    Subsequent Funding .

 

(a)    FLYi Priority Claims Trust Account . If, at any time after the initial funding of the FLYi Priority Claims Trust Account pursuant to Section ‎3.3.1, the Distribution Trustee determines, in its Permitted Discretion, that the Cash balance of the FLYi Priority Claims Trust Account is insufficient to make all payments payable therefrom in accordance with the terms of the Plan and this Agreement, the Distribution Trustee will transfer from the FLYi Unsecured Claims Trust Account (to the extent Cash remains available therein) to the FLYi Priority Claims Trust Account Cash in an amount determined by the Distribution Trustee, in its Permitted Discretion, to be necessary to ensure that the Cash balance of the FLYi Priority Claims Trust Account will be sufficient to make all such payments. To the fullest extent possible, any transfer pursuant to this Section ‎3.3.3 will be accomplished in a manner intended to avoid or minimize any adverse impact on the ability to make distributions of the Allowed amounts of General Unsecured Claims against the Estate of FLYi and the Allowed amounts of Class 3B Claims, each in accordance with the terms of the Plan.

 

(b)    Independence Priority Claims Trust Account . If, at any time after the initial funding of the Independence Priority Claims Trust Account pursuant to Section ‎3.3.1, the Distribution Trustee determines, in its Permitted Discretion, that the Cash balance of the Independence Priority Claims Trust Account is insufficient to make all payments payable therefrom in accordance with the terms of the Plan and this Agreement, the Distribution Trustee will transfer from the Independence Unsecured Claims Trust Account (to the extent Cash remains available therein) to the Independence Priority Claims Trust Account Cash in an amount determined by the Distribution Trustee, in its Permitted Discretion, to be necessary to ensure that the Cash balance of the Independence Priority Claims Trust Account will be sufficient to make all such payments. To the fullest extent possible, any transfer pursuant to this Section ‎3.3.3 will be accomplished in a manner intended to avoid or minimize any adverse impact on the ability to make distributions of the Allowed amounts of General Unsecured Claims against the Estates of the Debtors other than FLYi in accordance with the terms of the Plan.

 

3.3.4    Excess Funds

 

(a)    FLYi Priority Claims Trust Account . If, at any time after the initial funding of the FLYi Priority Claims Trust Account pursuant to Section ‎3.3.1, the Distribution Trustee determines that the Cash balance of the FLYi Priority Claims Trust Account is in excess of the amount that will be sufficient to make all payments payable therefrom in accordance with the terms of the Plan and this Agreement, the Distribution Trustee, in its Permitted Discretion, may transfer such excess Cash to the FLYi Unsecured Claims Trust Account.

 

(b)    Independence Priority Claims Trust Account . If, at any time after the initial funding of the Independence Priority Claims Trust Account pursuant to Section ‎3.3.1, the Distribution Trustee determines that the Cash balance of the Independence Priority Claims Trust Account is in excess of the amount that will be sufficient to make all payments payable therefrom in accordance with the terms of the Plan and this Agreement, the Distribution Trustee, in its Permitted Discretion, may transfer such excess Cash to the Independence Unsecured Claims Trust Account.

 

3.3.5    Disputed Claims Reserves .

 

(a)    FLYi Priority Claims Trust Account . On the Effective Date, in connection with the initial funding of the FLYi Priority Claims Trust Account pursuant to Section ‎3.3.1, the Distribution Trustee will designate a portion of such initial funding as FLYi Disputed Claims Reserves in an amount sufficient to pay each holder of a Disputed Administrative Claim, Disputed Priority Tax Claim, Disputed Priority Claim and Disputed Secured Claim against the Estate of FLYi the amount such holder would be entitled to receive if such Disputed Claim were an Allowed Claim in its Face Amount. To the extent any such Disputed Claims are not subsequently Allowed, the Distribution Trustee may transfer excess Cash from the FLYi Disputed Claims Reserve to the FLYi Unsecured Claims Trust Account to satisfy Claims against the Estate of FLYi that are Allowed in accordance with the terms of the Plan. In connection with any subsequent transfers of Cash to the FLYi Priority Claims Trust Account pursuant to Section ‎3.3.3 or ‎5.2.2(b), the Distribution Trustee will, in its Permitted Discretion, designate amounts so transferred, to the extent they are not identified as Pending Payments, as FLYi Disputed Claims Reserves to be retained in such Trust Account to satisfy any Disputed Administrative Claims, Disputed Priority Tax Claims, Disputed Priority Claims or Disputed Secured Claims in accordance with the Plan, if, as and when they are Allowed or, to the extent such Disputed Claims are not Allowed, the Distribution Trustee may transfer excess Cash from the FLYi Disputed Claims Reserves to the FLYi Unsecured Claims Trust Account to satisfy Claims against the Estate of FLYi that are Allowed in accordance with the terms of the Plan.

 

(b)    Independence Priority Claims Trust Account . On the Effective Date, in connection with the initial funding of the Independence Priority Claims Trust Account pursuant to Section ‎3.3.1, the Distribution Trustee will designate a portion of such initial funding as Independence Disputed Claims Reserves in an amount sufficient to pay each holder of a Disputed Administrative Claim, Disputed Priority Tax Claim, Disputed Priority Claim and Disputed Secured Claim against the Estates of the Debtors other than FLYi the amount such holder would be entitled to receive if such Disputed Claim were an Allowed Claim in its Face Amount. To the extent any such Disputed Claims are not subsequently Allowed, the Distribution Trustee may transfer excess Cash from the Independence Disputed Claims Reserves to the Independence Unsecured Claims Trust Account to satisfy Claims against the Estates of the Debtors other than FLYi that are Allowed in accordance with the terms of the Plan. In connection with any subsequent transfers of Cash to the Independence Priority Claims Trust Account pursuant to Section ‎3.3.3 or ‎5.2.2(b), the Distribution Trustee will, in its Permitted Discretion, designate amounts so transferred, to the extent they are not identified as Pending Payments, as Independence Disputed Claims Reserves to be retained in such Trust Account to satisfy any Disputed Administrative Claims, Disputed Priority Tax Claims, Disputed Priority Claims or Disputed Secured Claims in accordance with the Plan, if, as and when they are Allowed or, to the extent such Disputed Claims are not Allowed, the Distribution Trustee may transfer excess Cash from the Independence Disputed Claims Reserves to the Independence Unsecured Claims Trust Account to satisfy Claims against the Estates of the Debtors other than FLYi that are Allowed in accordance with the terms of the Plan.

 

3.4    Unsecured Claims Trust Accounts .

 

3.4.1    Funding .

 

(a)    On the Effective Date, after the initial funding of the Distribution Trust Expenses Account in accordance with Section ‎3.2.1 and the initial funding of the FLYi Priority Claims Trust Account and the Independence Priority Claims Trust Account in accordance with Section ‎3.3.1, the Distribution Trustee will (i) fund the FLYi Unsecured Claims Trust Account with the remainder of the Cash portion of the FLYi Distribution Trust Assets, and (ii) fund the Independence Unsecured Claims Trust Account with the remainder of the Cash portion of the Independence Distribution Trust Assets.

 

(b)    From and after the Effective Date, and in addition to any funding that may result from the application of Section ‎3.2.4 or ‎3.3.4, the Distribution Trustee will

 

(i) fund the FLYi Unsecured Claims Trust Account with the net Cash proceeds from the liquidation of any FLYi Distribution Trust Assets, and (ii) fund the Independence Unsecured Claims Trust Account with the net Cash proceeds from the liquidation of any Independence Distribution Trust Assets.

 

3.4.2    Use of Funds .

 

(a)    FLYi Unsecured Claims Trust Account . Cash in the FLYi Unsecured Claims Trust Account will be used by the Distribution Trustee only to (i) fund the Distribution Trust Expense Account and the FLYi Priority Claims Trust Account, as contemplated by Sections ‎3.2.3 and ‎3.3.3, respectively, (ii) satisfy Allowed General Unsecured Claims against the Estate of FLYi and all Allowed Class 3B Claims, each in accordance with the terms of the Plan, and (iii) pay Taxes owing in respect of any amounts included in the FLYi Unsecured Claims Trust Account in accordance with Section ‎10.4.

 

(b)    Independence Unsecured Claims Trust Account . Cash in the Independence Unsecured Claims Trust Account will be used by the Distribution Trustee only to (i) fund the Distribution Trust Expense Account and the Independence Priority Claims Trust Account, as contemplated by Sections ‎3.2.3 and ‎3.3.3, respectively, (ii) satisfy Allowed General Unsecured Claims against the Estates of the Debtors other than FLYi in accordance with the terms of the Plan, and (iii) pay Taxes owing in respect of any amounts included in the Independence Unsecured Claims Trust Account in accordance with Section ‎10.4.

 

3.4.3    Disputed Claims Reserves .

 

(a)    Initial Funding; Subsequent Funding From Other Trust Accounts .

 

(i)    In connection with the initial funding of the FLYi Unsecured Claims Trust Account pursuant to Section ‎3.4.1, the Distribution Trustee will designate a portion of such initial funding as FLYi Disputed Claims Reserves in an amount sufficient to pay each holder of a Disputed General Unsecured Claim against the Estate of FLYi and each holder of a Disputed Class 3B Claim the amount such holder would be entitled to receive if such Disputed Claim were an Allowed Claim in its Face Amount. To the extent any such Disputed Claims are not subsequently Allowed, the amount of such Disputed Claims will be retained in such Trust Account to satisfy Claims against the Estate of FLYi that are Allowed in accordance with the terms of the Plan. In connection with any subsequent transfers of Cash to the FLYi Unsecured Claims Trust Account pursuant to Section ‎3.2.4, ‎3.3.4, ‎3.4.3 or ‎5.2.2(b), the Distribution Trustee will, in its Permitted Discretion, designate amounts so transferred, to the extent they are not identified as Pending Payments, as FLYi Disputed Claims Reserves to satisfy the Disputed General Unsecured Claims against the Estate of FLYi and the Disputed Class 3B Claims, each in accordance with the terms of the Plan, if, as and when they are Allowed or, to the extent such Disputed Claims are not Allowed, to satisfy Claims against the Estate of FLYi that are Allowed in accordance with the terms of the Plan.

 

(ii)    In connection with the initial funding of the Independence Unsecured Claims Trust Account pursuant to Section ‎3.4.1, the Distribution Trustee will designate a portion of such initial funding as Independence Disputed Claims Reserves in an amount sufficient to pay each holder of a Disputed General Unsecured Claim against the Estates of the Debtors other than FLYi the amount such holder would be entitled to receive if such Disputed Claim were an Allowed Claim in its Face Amount. To the extent any such Disputed Claims are not subsequently Allowed, the amount of such Disputed Claims will be retained in such Trust Account to satisfy Claims against the Estates of the Debtors other than FLYi that are Allowed in accordance with the terms of the Plan. In connection with any subsequent transfers of Cash to the Independence Unsecured Claims Trust Account pursuant to Section ‎3.2.4, ‎3.3.4, ‎3.4.3 or ‎5.2.2(b), the Distribution Trustee will, in its Permitted Discretion, designate amounts so transferred, to the extent they are not identified as Pending Payments, as Independence Disputed Claims Reserves to satisfy the Disputed General Unsecured Claims against the Estates of the Debtors other than FLYi in accordance with the terms of the Plan, if, as and when they are Allowed or, to the extent such Disputed Claims are not Allowed, to satisfy Claims against the Estates of the Debtors other than FLYi that are Allowed in accordance with the terms of the Plan.

 

(b)    Deposit of New Cash Following the Effective Date . Any Cash that becomes available to the Distribution Trust following the Effective Date, including as a result of the receipt of any income or interest generated by the investment of Cash held in the FLYi Unsecured Claims Trust Account or the Independence Claims Trust Account, will be deposited in the FLYi Unsecured Claims Trust Account or the Independence Claims Trust Account, as applicable.

 

3.5    Undeliverable Cash Trust Accounts .

 

3.5.1    FLYi Undeliverable Cash Trust Account . After the Effective Date, if any distribution to a holder of an Allowed Claim against the Estate of FLYi is returned to the Distribution Trustee as undeliverable, the Distribution Trustee will deposit the undeliverable Cash in the FLYi Undeliverable Cash Trust Account. The Distribution Trustee will hold such funds, in a book-entry sub-account in the FLYi Undeliverable Cash Trust Account, for the benefit of such holder. Until such holder notifies the Distribution Trustee in writing of its then-current address, as contemplated by Section ‎5.2.2, no attempt will be made to deliver subsequent distributions to such holder and any such distributions that such holder would otherwise be entitled to receive will instead be transferred from the appropriate FLYi Trust Account to the FLYi Undeliverable Cash Trust Account and credited to such book-entry sub-account. All Cash held in such book-entry sub-account for the benefit of such holder will be invested by the Distribution Trustee in a manner consistent with the investment and deposit guidelines set forth in this Agreement. Any income or interest generated from such investment activities will be held in such book-entry sub-account for the benefit of such holder until such holder notifies the Distribution Trustee in writing of its then-current address as contemplated by Section ‎5.2.2. Subject to Section ‎5.2.2(b), when such holder notifies the Distribution Trustee in writing of its then-current address as contemplated by Section ‎5.2.2, the Distribution Trustee will deliver to such holder all Cash contained in such book-entry


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