exv4w1



 



Exhibit 4.1



LIQUIDATION TRUST AGREEMENT




This LIQUIDATION TRUST
 AGREEMENT is made and entered into as of the
 23rd day of October, 2001, by and among Hechinger Investment Company of
 Delaware, Inc., a Delaware corporation (“Hechinger”), and
 each of the other Debtors (as such term is defined in the Plan (as hereinafter
 defined)) (such other Debtors, together with Hechinger, being referred to
 herein as the “Debtors”), the official committee of unsecured creditors
 appointed in the Debtors’ Chapter 11 Cases (the “Committee”) and
 Conrad F. Hocking (the “Liquidation Trustee”). Capitalized terms
 used herein and not otherwise defined herein shall have the meanings ascribed
 to them in the Plan (as hereinafter defined).




R E C I T A L S:




WHEREAS, on
 June 11, 1999, the Debtors filed voluntary petitions for
 reorganization under chapter 11 of title 11, United States Code
 (the “Bankruptcy Code”), in the United States Bankruptcy Court
 for the District of Delaware (the “Bankruptcy Court”); and




WHEREAS, on
 June 25, 2001, the Committee filed a consolidated plan of
 liquidation (as the same may be amended or modified from time to
 time, the “Plan”) pursuant to the Bankruptcy Code; and




WHEREAS, by
 order dated October 5, 2001, the Bankruptcy Court confirmed the Plan; and




WHEREAS, under
 the terms of the Plan, all cash and other property of the Debtors as of the
 Plan Effective Date will be transferred to and held by the Liquidation Trust
 created by this Agreement (the “Liquidation Trust”) so that, among
 other things: (i) the Trust Assets (defined below) can be disposed of in
 an orderly and expeditious manner, including prosecution of Litigation Claims; (ii) objections
 to claims can be pursued, and disputed claims can be resolved; and (iii) distributions
 can be made to the beneficiaries of the Liquidation Trust in accordance with the Plan; and




WHEREAS, the Plan
 also provides for the appointment of the Liquidation Trustee to administer the
 Liquidation Trust to and for the benefit of creditors of the Debtors as provided
 in the Plan, and to provide administrative services relating to the implementation of the Plan; and




WHEREAS, the
 Liquidation Trustee has agreed to serve as such upon the terms
 and subject to the conditions set forth in this Agreement;




NOW, THEREFORE, in
 accordance with the Plan and in consideration of the
 promises and of the mutual covenants and agreements contained herein, the parties hereto agree
 as follows:









 




DECLARATION OF TRUST




The Debtors hereby
 absolutely assign to the Liquidation Trust, and to its successors
 in trust and its successors and assigns, all right, title and interest of the Debtors in and
 to the Trust Assets (as defined below);




TO HAVE AND TO HOLD unto the
 Liquidation Trust and its successors in trust and its successors and assigns forever;




IN TRUST NEVERTHELESS
 upon the terms and subject to the conditions set forth herein and for
 the benefit of the holders of Allowed Claims, as and to the extent provided in
 the Plan, and for the performance of and compliance with the terms hereof and of the Plan;




PROVIDED,
 HOWEVER, that upon termination of the Liquidation Trust in accordance
 with Article V hereof, this Agreement shall cease, terminate and be of no further
 force and effect; and




IT IS HEREBY
 FURTHER COVENANTED AND DECLARED that the Trust Assets are
 to be held and applied by the Liquidation Trustee upon the further covenants and
 terms and subject to the conditions herein set forth.





I.             NAME; PURPOSE; TRUST
 ASSETS




1.1.    
     Name of Trust. The trust created by this Agreement shall be known as
 the “Hechinger Liquidation Trust” or sometimes herein
 as the “Liquidation Trust”. The Liquidation Trust is authorized
 to retain Otterbourg, Steindler, Houston & Rosen, P.C. and Pepper Hamilton LLP
 as co-counsel and such other professional persons retained by the Committee or by the
 Debtors as have previously been approved by the Bankruptcy Court, or as necessary and
 appropriate, who shall be compensated from the Trust Assets on a monthly basis.




1.2.     
    Purpose. The purpose of the Liquidation Trust is to hold and effectuate
 an orderly disposition of the Trust Assets and to distribute or pay over the
 Trust Assets or proceeds thereof in accordance with this Agreement and
 the Plan, with no objective or authority to engage in any trade or business.




1.3.     
    Transfer of Trust Assets. In accordance with the provisions of the Plan,
 on the Effective Date, the Debtors and their Chapter 11 estates shall be deemed to have
 transferred, assigned and conveyed to the Liquidation Trust any and all assets of the Debtors,
 including but not limited to the Litigation Claims (all such assets, together with the income,
 proceeds, rents, offspring, products and profit therefrom, being the “Trust
 Assets”), to be held by the Liquidation Trustee in trust for the
 holders, from time to time, of Allowed Claims as and to
 the extent provided in the Plan (such holders collectively the “Trust
 Beneficiaries”), on the terms and subject to the conditions set forth
 herein and in the Plan. In addition, and as also provided for in the Plan, the
 claims asserted by HSBC Bank USA on behalf of the holders of Senior Notes
 and Senior Debentures in the Bondholder Action shall also be assigned to the Liquidation Trust
 and be deemed Trust Assets.




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1.4.    
     Acceptance by the Liquidation Trustee. The Liquidation Trustee is
 willing and hereby accepts the appointment to serve as Liquidation Trustee pursuant to this
 Agreement and the Plan and agrees to observe and perform all duties and obligations imposed
 upon the Liquidation Trustee by this Agreement and under the Plan, including, without
 limitation, to accept and hold and administer the Trust Assets and otherwise to carry out the
 purpose of the Liquidation Trust in accordance with the terms and subject to the conditions set
 forth herein. The Liquidation Trustee shall have the fiduciary duties to the beneficiaries of the
 Liquidation Trust in the same manner that members of an official committee of creditors
 appointed pursuant to section 1102 of the Bankruptcy Code have fiduciary duties to the creditor
 constituents represented by such a committee.




1.5.    
     New Committee.




(a)    
      Pursuant to the Plan, prior to the Plan Effective Date, the Committee
 shall appoint up to six members of the Creditors Committee as of the Confirmation Date to remain and
 serve on the Committee after the Effective Date (the “New Committee”). The other members of
 the Committee shall be deemed to have resigned as of the Effective Date. Any member of the
 New Committee may resign upon reasonable notice to the Liquidation Trustee and other
 members of the New Committee and may be removed by the Bankruptcy Court for cause.
 Twenty (20) days prior written notice shall constitute reasonable notice under this section. In the
 event of a vacancy on the New Committee, the remaining members of the New Committee,
 without further order of the Court but upon 7 business days prior notice to the U.S. Trustee, the
 Liquidation Trustee and any party who serves the New Committee with written request for such
 notice, shall select a proposed member who, to the extent reasonably possible, shall be a holder
 of an Allowed General Unsecured Claim that has been classified in Class 4B under the Plan.
 The New Committee is authorized to retain Otterbourg, Steindler, Houston & Rosen, P.C. as
 counsel and such other professional persons as have previously been approved by the
 Bankruptcy Court, including counsel for the Debtors, or as it deems necessary and appropriate,
 who shall be compensated from the Trust Assets on a monthly basis. Members of the New
 Committee shall have fiduciary duties to the beneficiaries of the Liquidation Trust in the same
 manner that members of an official committee of creditors appointed pursuant to section 1102 of
 the Bankruptcy Code have fiduciary duties to the creditor constituents represented by such
 committee.




(b)    
      A majority of members of the New Committee must be present to
 constitute a quorum, and no business of the New Committee may be conducted absent a quorum.
 Meetings may be held in person, telephonically or electronically, as determined by the New
 Committee as appropriate. The New Committee shall elect a chairperson who shall be charged
 with the responsibility of scheduling, arranging for minutes to be kept and overseeing
 administration of all New Committee matters. Any member of the New Committee shall not
 participate in and shall abstain from any discussion of or vote with respect to any New
 Committee matter, claim objection or litigation involving such New Committee member. The
 New Committee shall meet at least quarterly during the first year after the Plan Effective Date,
 and at least semi-annually thereafter, unless the New Committee, in its discretion, elects to meet
 more or less frequently. The New Committee shall adopt the existing Committee By-Laws or
 adopt new By-Laws addressing its conduct.




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(c)     
      The Liquidation Trustee shall report to the New Committee on at least a
 monthly basis, or such other period as subsequently agreed to between the New Committee and
 the Liquidation Trustee, as to the status of all material litigations and claims objections, and all
 other material matters affecting the Liquidation Trust. The Liquidation Trustee shall obtain
 approval of the New Committee prior to taking any action regarding the following matters:




(i)  All
 settlements for which prior procedures approved by the Bankruptcy Court required
 approval by the Committee;




(ii)  All
 distributions to creditors made pursuant to the terms of the Plan;





(iii) Engaging and compensating consultants,
 agents, employees and all professional persons to assist the Liquidation Trustee
 with respect to the Liquidation Trustee’s responsibilities, other than those
 professionals and persons already approved by the Bankruptcy Court to be retained by the
 Debtors; and





(iv) All other material matters and decisions.




For purposes of this Section, the Liquidation
 Trustee’s failure to receive objections from a
 majority of the members of the New Committee within ten (10) days after written notice is
 provided to the New Committee of such proposed action (which notice may be in the form of the
 monthly report submitted to the Committee) shall be deemed approval of the New Committee for
 purposes of this Section.





II.           RIGHTS, POWERS AND DUTIES OF
 LIQUIDATION TRUSTEE




2.1.    
     General. As of the Effective Date, the Liquidation Trustee shall take
 charge of the Trust Assets and, subject to the provisions hereof and the Plan, shall have full right,
 power and discretion to manage the affairs of the Liquidation Trust, subject to Section 1.5.(c.)
 above. Except as otherwise provided herein and in the Plan, the Liquidation Trustee shall have
 the right and power to enter into any covenants or agreements binding the Liquidation Trust and
 in furtherance of the purpose hereof and to execute, acknowledge and deliver any and all
 instruments which are necessary or deemed by the Liquidation Trustee to be consistent with and
 advisable in connection with the performance of his duties hereunder. In addition, subject to
 Section 1.5.(c.) above, the Liquidation Trustee shall have the power and responsibility to do all
 acts contemplated by the Plan to be done by the Liquidation Trustee and all other acts that may
 be necessary or appropriate in connection with the disposition of the Trust Assets and the
 distribution of the proceeds thereof in consultation with the New Committee, as contemplated by
 the Plan, including, without limitation:





(a)         To exercise all
 power and authority that may be or could have been
 exercised, commence all proceedings that may be or could have been commenced
 and take all actions that may be or could have been taken by any officer, director
 or shareholder of the Debtors with like effect as if authorized, exercised and taken
 by unanimous action of such officers, directors and shareholders; including,
 without limitation, amendment of the certificates of incorporation and by-laws of
 the Debtors, merger of any Debtor into another Debtor and the dissolution of any
 Debtor;




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(b)         To maintain
 escrows and other accounts, make Distributions to holders
 of Allowed Claims and take other actions consistent with the Plan and the implementation
 hereof, including the establishment, re-evaluation, adjustment and maintenance of
 appropriate reserves, in the name of the Debtors or the Liquidation Trust, even in the event
 of the dissolution of the Debtors;





(c)         To make decisions in
 consultation with the New Committee, without further Court approval,
 regarding the retention or engagement of professionals, employees and consultants by the
 Liquidation Trust and to pay, from the Wind-down Reserve, the fees and charges incurred
 by the Liquidation Trust on or after the Effective Date for fees of
 professionals, disbursements, expenses or related support services relating to the winding
 down of the Debtors and implementation of the Plan and this Agreement without
 application to the Court;





(d)         To enter into
 any agreement or execute any document required
 by or consistent with the Plan and this Agreement and perform all of the obligations of
 the Debtors or the Liquidation Trustee thereunder;





(e)         To implement
 and/or enforce all provisions of the Plan;





(f)          To invest Cash
 in accordance with section 345 of the Bankruptcy
 Code or as otherwise permitted by a Final Order of the Court and as deemed appropriate by
 the Liquidation Trustee;





(g)          To collect
 and liquidate any accounts receivable or other claims or
 assets of the Debtors or the Estates pursuant to the Plan and this Agreement or not
 otherwise disposed of pursuant to the Plan;





(h)          To prosecute and/or settle
 Litigation Claims and exercise, participate
 in or initiate any proceeding before the Court or any other court of appropriate jurisdiction
 and participate as a party or otherwise in any administrative, arbitrative or
 other nonjudicial proceeding and litigate or settle such Litigation Claims on behalf
 of the Liquidation Trust, and pursue to settlement or judgment such actions;





(i)          To utilize Trust
 Assets to purchase or create and carry all
 appropriate insurance policies and pay all insurance premiums and costs he deems
 necessary or advisable to insure the acts and omissions
 of the Liquidation Trustee, and if appropriate, the Committee;





(j)          To object to
 any Claims (Disputed or otherwise), including, without
 limitation, as discussed in Section 10.1 of the Plan, in consultation
 with the New Committee and to defend, compromise and/or settle any Claims,
 and to seek Court approval if required by existing Order of the Court;





(k)          To pay fees
 incurred pursuant to 28 U.S.C. § 1930(a)(6) and to File with
 the Bankruptcy Court
 and serve on the United States Trustee monthly financial




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reports until
 such time as a final decree is entered closing these Cases or the Cases are converted or
 dismissed, or the Bankruptcy Court orders otherwise;





(1)          To maintain
 appropriate books and records;





(m)         To cause, on behalf
 of the Liquidation Trust, the Debtors and
 the Estates, all necessary tax returns and all other appropriate or necessary documents related
 to municipal, State, Federal or other tax law to be prepared or filed timely;





(n)          To provide the New
 Committee, as soon as reasonably
 practicable after the end of each month, with a monthly report setting forth (i) the receipt and
 disposition by the Liquidation Trustee of property of the Estates or the Debtors during the prior
 month, including the disposition of funds in the Liquidation Trust, the Wind-down Reserve and
 Distribution Fund; (ii) all Disputed Claims resolved by the Liquidation Trustee during such period
 and all remaining Disputed Claims; (iii) all known material non-Cash assets of the Debtors
 remaining to be disposed of; (iv) an itemization of all expenses the Liquidation Trustee
 anticipates will become due and payable within the subsequent three months; and (v) the Liquidation
 Trustee’s forecast of cash receipts and disbursements for the subsequent three months;





(o)          To abandon in any
 commercially reasonable manner, including
 abandonment or donation to a charitable organization of the Liquidation Trustee’s choice, any
 assets that the Liquidation Trustee concludes, in consultation with the New Committee, are of no
 benefit to creditors of the Estates or, at the conclusion of the Chapter 11 Cases, are determined
 to be too impractical to distribute;





(p)          To administer
 the winding-up of the affairs of the Debtors including, but
 not limited to, causing the dissolution of each Debtor and closing the Chapter 11
 Cases; and





(q)          To do all other
 acts or things not inconsistent with the provisions of the
 Plan and this Agreement that the Liquidation Trustee deems reasonably necessary
 or desirable with respect to implementing the Plan and this Agreement.


Other than the obligations of the Liquidation
 Trustee enumerated or referred
 to herein or under the Plan, the Liquidation Trustee shall have no duties or obligations of any
 kind or nature respecting the implementation of the Plan or this Agreement. The Liquidation Trust
 and the Liquidation Trustee, as applicable, shall have the same authority as the Debtors pursuant
 to those certain orders (a) pursuant to section 105(a) of the Bankruptcy Code and Bankruptcy Rule
 9019(b) authorizing the establishment of procedures to settle certain prepetition claims against
 the Debtors’ estates, dated July 12, 2000 and (b) authorizing and establishing procedures for
 certain future preference claim settlements in these cases, dated May 15, 2001.





2.2.         Costs. Upon the Effective Date, the
 Liquidation Trustee shall
 reserve from the Trust Assets an amount necessary in his discretion to be held in a Liquidation
 Trust wind-down fund (hereunder the “Wind-down Fund”). Amounts held in the Wind-down Fund shall be
 used to pay amounts payable to the Liquidation Trustee pursuant to Section 2.7 hereof


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and the fees and expenses
 of any counsel, consultant or other advisor or
 agent retained by the Liquidation Trustee pursuant to this Agreement as well as other expenses of
 the liquidation process. In the event that amounts held in the Wind-down Fund, together with
 proceeds of any disposition of Trust Assets available for such purpose, are insufficient to make
 payments as provided in this Section 2.2, the Liquidation Trustee shall, unless funds sufficient
 for such purpose have otherwise been made available from any other sources including other accounts
 held by the Liquidation Trustee, have no obligation to make such payments.





2.3.         Distributions. Pursuant to
 the Plan, the Liquidation Trustee shall
 record and account for all proceeds received upon any disposition of Trust Assets (after deduction
 therefrom of amounts payable or reasonably estimated to be payable as provided in Section 2.2 or
 2.7 hereof), for distribution in accordance with the provisions of the Plan.





2.4.         Limitations on Investment
 Powers of Liquidation Trustee. Funds in
 the Liquidation Trust shall be invested consistent with the liquidity needs of the Liquidation
 Trust in accordance with section 345 of the Bankruptcy Code or as otherwise provided in an order of
 the Bankruptcy Court.





2.5.         Liability of
 Liquidation Trustee.





(a)          Standard of Care. Except
 in the case of willful misconduct, gross
 negligence or fraud, the Liquidation Trustee shall not be liable for any loss or damage by reason
 of any action taken or omitted by it pursuant to the discretion, powers and authority conferred, or
 in good faith believed by the Liquidation Trustee to be conferred, on the Liquidation Trustee by
 this Agreement or the Plan.





(b)          No Liability for
 Acts of Predecessors. No successor Liquidation Trustee
 shall be in any way responsible for the acts or omissions of any Liquidation Trustee in office
 prior to the date on which such successor becomes the Liquidation Trustee, unless a successor
 Liquidation Trustee expressly assumes such responsibility.





(c)          No Implied
 Obligations. Subject to Section 1.4 hereof, the Liquidation
 Trustee shall not be liable except for the performance of such duties and obligations as are
 specifically set forth herein, and no implied covenants or obligations shall be read into this
 Agreement against the Liquidation Trustee.





(d)          No Liability
 for Good Faith Error of Judgment. The Liquidation Trustee
 shall not be liable for any error of judgment made in good faith, unless it shall be proved that the
 Liquidation Trustee was grossly negligent in ascertaining the pertinent facts.





(e)          Reliance by Liquidation
 Trustee on Documents or Advice of Counsel or
 Other Persons. Except as otherwise provided herein, the Liquidation Trustee 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 the Liquidation Trustee to
 be genuine and to have been signed or presented by the proper party or parties. The Liquidation
 Trustee also may engage and consult with legal counsel for the Liquidation Trust and other
 agents and advisors and shall not be liable for any action taken or suffered by the Liquidation
 Trustee in reliance upon the advice of such counsel, agents or advisors. The Liquidation Trustee


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shall have the right at any
 time to seek instructions from the
 Bankruptcy Court concerning the administration or disposition of the Trust Assets.





(f)          No Personal Obligation
 for Trust Liabilities. Persons dealing with the Liquidation Trustee, or seeking to assert claims
 against the Debtors, shall look only to the Trust Assets to satisfy any liability incurred by the
 Liquidation Trustee to any such Person in carrying out the terms of this Agreement, and the
 Liquidation Trustee shall have no personal, individual obligation to satisfy any such liability.





2.6.         Selection of Agents. Subject
 to Bankruptcy Court approval of the
 retention of bankruptcy professionals (to the extent that the Debtors or the Committee did not
 previously obtain approval by the Bankruptcy Court), the Liquidation Trustee may employ employees
 of the Debtors or other Persons, and also may employ or retain brokers, banks, custodians,
 investment and financial advisors, attorneys (including existing counsel to the Committee or the
 Debtors), accountants (including existing accountants for the Committee or the Debtors) and other
 advisors and agents. The Liquidation Trustee may pay the salaries, fees and expenses of such
 Persons from amounts in the Wind-down Fund, or, if such amounts are insufficient therefor, out of
 the Trust Assets or proceeds thereof. In addition, the parties acknowledge that Trust Assets may
 be advanced to satisfy such salaries, fees and expenses. The Liquidation Trustee shall not be
 liable for any loss to the Liquidation Trust or any Person interested therein by reason of any
 mistake or default of any such Person referred to in this Section 2.6 selected by the Liquidation
 Trustee in good faith and without gross negligence.





2.7.         Liquidation
 Trustee’s Compensation, Indemnification and Reimbursement.





(a)          As compensation for
 services in the administration of this
 Liquidation Trust, the Liquidation Trustee shall be compensated as specified on Schedule A hereto.
 The Liquidation Trustee shall also be reimbursed for all documented actual, reasonable and
 necessary out-of-pocket expenses incurred in the performance of its duties hereunder.





(b)          In addition, the
 Liquidation Trustee shall be indemnified by and
 receive reimbursement from the Trust Assets against and from any and all loss, liability, expense
 (including attorneys’ fees) or damage which the Liquidation Trustee incurs or sustains, in good
 faith and without gross negligence, acting as Liquidation Trustee under this Agreement.





(c)          It is anticipated and intended
 that the Liquidation Trustee devote
 his attention to the prompt and orderly administration of the Liquidation Trust and Plan.
 Accordingly, for a period of one year after the Plan Effective Date or as otherwise mutually agreed
 between the Liquidation Trustee and Committee as described herein (the “Initial Period”), it is
 intended that the Liquidation Trustee be retained full-time under this Agreement. After such
 Initial Period, it is anticipated and intended that the Liquidation Trustee may be able to fulfill
 his/her obligations under this Agreement and the Plan by devoting a portion of each work-day or
 work-week to performing the services set forth herein. Thus, subject to re-evaluation at such
 time, the Liquidation Trustee would be retained only on a part-time basis on terms to be agreed
 upon between the Liquidation Trustee and New Committee. The Liquidation Trustee may accept
 employment elsewhere during such period (other than the said Initial Period) in which the


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Liquidation Trustee is performing services
 pursuant to this Agreement, provided such additional employment does not result
 in a conflict of interest with his obligations hereunder. Either the New Committee
 or the Liquidation Trustee may provide twenty days prior written notice to the other
 party notifying such party that the New Committee or Liquidation Trustee as applicable,
 believes that the Liquidation Trustee’s full-time employment hereunder is no
 longer required, whereupon the parties agree to in good faith negotiate satisfactory
 part time employment terms. If within such twenty-day notice period the New Committee
 and Liquidation Trustee cannot agree upon mutually agreed upon part time employment
 terms, the New Committee or Liquidation Trustee may opt to have the Liquidation
 Trustee’s employment deemed terminated as of thirty days after the expiration
 of the twenty-day notice period, or when the appointment of a successor Liquidation
 Trustee becomes effective.





(d)          The Liquidation
 Trustee is hereby authorized to obtain all reasonable necessary insurance coverage
 for himself, his agents, representatives, employees or independent contractors,
 including, without limitation, coverage with respect to the liabilities, duties
 and obligations of the Liquidation Trustee and his agents, representatives, employees
 or independent contractors under the Plan and this Agreement.





(e)          It is
 agreed that as of the Effective Date of the Plan, Conrad F. Hocking shall have irrevocably
 earned his severance pursuant to that certain Retention Program approved by the
 Bankruptcy Court by order dated September 10, 1999 (the “Severance
 Payment”). Mr. Hocking has agreed to defer receipt of such payment until the earliest
 of (i) his resignation as Liquidation Trustee, (ii) termination of his appointment
 or removal as Liquidation Trustee, or (iii) reduction of his duties as Liquidation
 Trustee to a part-time basis of less than forty hours per week.





2.8.         Tax Treatment
 and Obligation to File Returns.





(a)          It is
 intended that the Liquidation Trust qualify as a grantor trust for federal income
 tax purposes, all of the interests which are owned by the Trust Beneficiaries, such
 that all items of income, gain, loss, deduction and credit will be included in the
 income of the Trust Beneficiaries as if such items had been recognized directly
 by the Trust Beneficiaries in the proportions in which they own beneficial interests
 in the Liquidation Trust.





(b)          The Liquidation
 Trustee shall comply with all tax reporting requirements and, in connection therewith,
 the Liquidation Trustee may require Trust Beneficiaries to provide certain tax information
 as a condition to receipt of distributions, including, without limitation, filing
 returns for the Liquidation Trust as a grantor trust pursuant to Treasury Regulation
 s1.671-4(a).





2.9.          Conflicting
 Claims. In the event that the Liquidation Trustee becomes aware of any disagreement
 or conflicting claims with respect to the Trust Assets, or if the Liquidation Trustee
 in good faith is in doubt as to any action that should be taken under this Agreement,
 the Liquidation Trustee shall have the absolute right to do any or all of the following:




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(i)            to the
 extent of such disagreement or conflict, or to the extent deemed by the Liquidation
 Trustee necessary or appropriate in light of such disagreement or conflict, withhold
 or stop all further performance under this Agreement with respect to the matter
 of such dispute (except, in all cases, the safekeeping of the Trust Assets) until
 the Liquidation Trustee is satisfied that such disagreement or conflicting claims
 have been fully and finally resolved; or





(ii)           file
 a suit in interpleader or in the nature of interpleader in the Bankruptcy Court
 and obtain an order requiring all Persons involved to litigate in the Bankruptcy
 Court their respective claims arising out of or in connection with this Agreement;
 or





(iii)          file
 any other appropriate motion for relief in the Bankruptcy Court.





2.10.        Records
 of Liquidation Trustee. The Liquidation Trustee shall maintain accurate records
 of receipts and disbursements and other activity of the Liquidation Trust, and duly
 authorized representatives of the New Committee shall have reasonable access to
 the records of the Liquidation Trust.





III.           RIGHTS,
 POWERS AND DUTIES OF BENEFICIARIES.





3.1.          Interests
 of Beneficiaries. The Trust Beneficiaries shall have beneficial interests in the
 Trust Assets as provided in the Plan. The Trust Beneficiaries’ proportionate
 interests in the Trust Assets as thus determined shall not be transferable except
 upon notice acceptable to the New Committee or Liquidation Trustee or pursuant to
 the laws of descent and distribution or otherwise by operation of law.





3.2.          Interests
 Beneficial Only. The ownership of a beneficial interest hereunder shall not entitle
 any Trust Beneficiary to any title in or to the Trust Assets as such (which title
 shall be vested in the Liquidation Trustee) or to any right to call for a partition
 or division of Trust Assets or to require an accounting.





IV.           AMENDMENT
 OF TRUST OR CHANGE IN TRUSTEE.





4.1.          Resignation
 of the Liquidation Trustee. The Liquidation Trustee may resign by an instrument
 in writing signed by the Liquidation Trustee and filed with the Bankruptcy Court
 with notice to the New Committee, provided that the Liquidation Trustee shall continue
 to serve as such after his resignation until the time when appointment of his successor
 shall become effective in accordance with Section 4.3 hereof.





4.2.          Removal
 of the Liquidation Trustee. Twenty days after a request of the majority of the
 New Committee, or immediately upon cause, the Liquidation Trustee shall be removed.
 Upon removal of the Liquidation Trustee by the New Committee in accordance with
 this Section 4.2 other than for cause, the Liquidation Trustee shall be entitled
 to a lump sum payment equal to $100,000 which payment shall be made from the Wind-down
 Fund within 10 days of the removal of the Liquidation Trustee. For purposes of
 this Agreement, “cause” shall mean (a) the willful and continued refusal
 by the Liquidation Trustee to perform his duties as set forth herein (other than
 due to physical illness or disability); or (b) gross negligence, gross misconduct,
 fraud, embezzlement or theft.




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4.3.          Appointment
 of Successor Liquidation Trustee. In the event of the death, resignation, termination,
 incompetence or removal of the Liquidation Trustee, the New Committee may appoint
 a successor Liquidation Trustee and shall obtain Bankruptcy Court approval of such
 appointment. Every successor Liquidation Trustee appointed hereunder shall execute,
 acknowledge and deliver to the Bankruptcy Court and to the predecessor Liquidation
 Trustee (if practicable) an instrument accepting such appointment and the terms
 and provisions of this Agreement, and thereupon such successor Liquidation Trustee,
 without any further act, deed or conveyance, shall become vested with all the rights,
 powers and duties of the retiring Liquidation Trustee.





4.4.          Continuity.
 Unless otherwise ordered by the Bankruptcy Court, the death, resignation, incompetence
 or removal of the Liquidation Trustee shall not operate to terminate or to remove
 any existing agency created pursuant to the terms of this Agreement or invalidate
 any action theretofore taken by the Liquidation Trustee. In the event of the resignation
 or removal of the Liquidation Trustee, the Liquidation Trustee shall promptly execute
 and deliver such documents, instruments and other writings as may be reasonably
 requested from time to time by the Bankruptcy Court, the New Committee or the successor
 Liquidation Trustee.





4.5.          Amendment
 of Agreement. This Agreement may be amended, modified, terminated, revoked or altered
 only upon (i) order of the Bankruptcy Court and (ii) agreement of the Liquidation
 Trustee and the New Committee.





V.            TERMINATION
 OF TRUST





5.1.          The Liquidation
 Trust shall terminate upon the earliest to occur of (a) the fulfillment of the Liquidation
 Trust’s purpose by the liquidation of all of the Trust Assets and the distribution
 of the proceeds of the liquidation thereof in accordance with the Plan; or (b) four
 (4) years after the Effective date (the “Termination Date”). Reasonable
 efforts shall be made to see to it that the Termination Date shall be no later than
 the time reasonably necessary to accomplish the Liquidation Trust’s purpose
 of liquidating assets and discharging liabilities. Notwithstanding the foregoing,
 however, if warranted by the facts and circumstances and subject to the approval
 of the Bankruptcy Court, upon proper notice to interested parties who have requested
 such notice, upon a finding that the extension is necessary to the purpose of the
 Liquidation Trust, the term of the Liquidation Trust may be extended for a finite
 term based on its particular facts and circumstances. Each extension must be approved
 by the Bankruptcy Court within six (6) months of the beginning of the extended term.





VI.           RETENTION
 OF JURISDICTION





6.1.          The Bankruptcy
 Court shall have exclusive jurisdiction over the Liquidation
 Trust, the Liquidation Trustee and the Trust Assets as provided in the Plan, including
 the determination of all controversies and disputes arising under or in connection
 with the Liquidation Trust or this Agreement.




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VII.          MISCELLANEOUS





7.1.          Applicable
 Law. The Liquidation Trust created by this Agreement shall
 be construed in accordance with and governed by the laws of the State of Delaware,
 subject to applicable provisions of the Bankruptcy Code.





7.2.          Waiver.
 No failure or delay of any party to exercise any right or remedy pursuant to this
 Agreement shall affect such right or remedy or constitute a waiver by such party
 of any right or remedy pursuant to this Agreement.





7.3.          Relationship
 Created. Nothing contained herein shall be construed to constitute any relationship
 created by this Agreement as an association, partnership or joint venture of any
 kind.





7.4.          Interpretation.
 Section and paragraph headings contained in this Agreement are for convenience
 of reference only and shall not affect the meaning or interpretation of any provision
 hereof.





7.5.          Savings
 Clause. If any clause or provision of this Agreement shall for any reason be held
 invalid or unenforceable by any court or governmental agency of competent jurisdiction,
 such invalidity or unenforceability shall not affect any other clause or provision
 hereof, but this Agreement shall be construed, to the extent consistent with the
 purpose hereof, as if such invalid or unenforceable provision had never been contained
 herein.





7.6.          Entire
 Agreement. This Agreement and the Plan constitute the entire agreement by and among
 the parties and there are no representations, warranties, covenants or obligations
 with respect to the subject matter hereof except as set forth herein or therein.
 This Agreement together with the Plan supersedes all prior and contemporaneous
 agreements, understandings, negotiations and discussions, written or oral, of the
 parties hereto, relating to such subject matter. Not withstanding the foregoing,
 this Agreement shall have no effect on that certain Retention Program approved by
 the Bankruptcy Court pursuant to an order dated September 10, 1999. Except as otherwise
 authorized by the Court or specifically provided in this Agreement or in the Plan,
 nothing in this Agreement is intended or shall be construed to confer upon or to
 give any Person other than the parties hereto, the Committee, and the Trust Beneficiaries
 any rights or remedies under or by reason of this Agreement.





7.7.          Counterparts.
 This Agreement may be executed in any number of counterparts, each of which when
 so executed and delivered shall be an original document, but all of which counterparts
 shall together constitute one and the same instrument.





7.8.          Notices.
 (a) All notices, requests or other communications required or permitted to be
 made in accordance with this Agreement shall be in writing and shall be mailed by
 first class mail or delivered by courier service or such other means that shall
 be reasonable and appropriate under the circumstances:





(i)            if to the
 Liquidation Trust or Liquidation Trustee:




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Conrad F. Hocking



Hechinger



1801 McCormick Drive



Largo, Maryland 20774





with a copy
 to:





Otterbourg, Steinder, Houston & Rosen, P.C.



230 Park Avenue, 30th Floor



New York, New York 10169



Attn: Scott L. Hazan, Esq.





and





Pepper Hamilton LLP



1201 Market Street



Suite 1600



Wilmington DE 19801



Attn: David B. Stratton, Esq.





and





Pepper Hamilton LLP



100 Renaissance Center



Suite 3600



Detroit, MI 48243



Attn: Kay
 Standridge Kress, Esq.





(ii)            if to
 the Debtors:





Hechinger



1801 McCormick Drive



 Largo, Maryland 20774



 Attn: Conrad F. Hocking





with a copy
 to:





Willkie Farr & Gallagher



 787 Seventh Avenue



 New York, New York 10019



 Attn: Tonny K. Ho, Esq.





(iii)           if to the
 New Committee:




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Otterbourg, Steinder, Houston & Rosen, P.C.



230 Park Avenue, 30th Floor



New York, New York 10169



Attn: Scott L. Hazan, Esq.





and





Pepper Hamilton LLP



1201 Market Street



Suite 1600



Wilmington DE 19801



Attn: David B. Stratton, Esq.





and





Pepper Hamilton LLP



100 Renaissance Center



Suite 3600



Detroit, MI 48243



Attn: Kay Standridge Kress, Esq.





(ii)           If to
 any Trust Beneficiary, to such address as such Trust Beneficiary shall have furnished
 to the Debtors in writing prior to the Effective Date.





(b)           Any Person
 may change the address at which it is to receive notices under this Agreement by
 furnishing written notice to the Liquidation Trustee.





7.9.          Effective
 Date. This Agreement shall become effective as of the Effective Date.





7.10.        Tax
 Identification Numbers. The Liquidation Trustee may require any Trust Beneficiary
 to furnish to the Liquidation Trustee its employer or taxpayer identification number
 as assigned by the Internal Revenue Service, and the Liquidation Trustee may condition
 any distribution to any Trust Beneficiary upon such receipt of such identification
 number and any other information required for the Liquidation Trustee to comply
 with Internal Revenue Service requirements.





7.11.        Successors
 and Assigns. This Agreement shall be binding upon each of the parties hereto and
 their respective successors and assigns and shall inure to the benefit of the parties,
 Committee, the Trust Beneficiaries and, subject to the provisions hereof, their
 respective successors and assigns.




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7.12.        Conflict
 with the Plan. In the event of any conflict between the terms of this Agreement
 and the Plan, the terms of the Plan shall govern.





IN WITNESS WHEREOF, the undersigned have caused this Agreement to be



executed as of the day and year first above written.



	 
	
HECHINGER INVESTMENT COMPANY OF
DELAWARE, INC., ET AL.

	 
	 
	
By: /s/ Conrad F. Hocking


	 
	



	 
	 
	
/s/ Conrad F. Hocking

	 
	



	 
	
CONRAD F. HOCKING, as Liquidation
Trustee

	 
	 
	
THE OFFICIAL COMMITTEE OF

	 
	
UNSECURED CREDTORS OF HECHINGER
INVESTMENT CO. OF DELAWARE, INC.,
ET AL.

	 
	 

	 
	
By: /s/ Brett H. Miller.

	 
	



	 
	
BRETT H. MILLER

Otterbourg, Steindler, Houston & Rosen, P.C.

Counsel to the Official Committee of

Unsecured Creditors




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SCHEDULE A





TERMS OF COMPENSATION
 AND REIMBURSEMENT OF EXPENSES OF THE
LIQUIDATION TRUSTEE






1.          COMPENSATION





(a)          Beginning
 at the Effective Date (as defined in the Plan), the Liquidation Trustee shall remain
 employed full-time and be compensated at his current salary, until the occurrence
 of (b) below.





(b)          After
 determination by the New Committee or the Liquidation Trustee that the Liquidation
 Trustee is required solely on a part-time basis, in accordance with the Liquidation
 Trust Agreement, the Liquidation Trustee shall be employed part-time and be compensated
 at the rate of $190.00 per hour.





2.          COMPUTATION
 OF HOURS; RECORDKEEPING





(a)          For the
 purpose of calculating the days and hours in respect of which the Liquidation Trustee
 may receive compensation under Section 1 above, travel times shall be included in
 the number of hours expended only if such travel is for the purpose of conducting
 Liquidation Trustee activities. Travel by the Liquidation Trustee for personal
 reasons, including travel to and from any residence of the Liquidation Trustee,
 shall not be included in the number of hours expended.





(b)          The Liquidation
 Trustee shall maintain a record of his time expended in his capacity as Liquidation
 Trustee, which shall include a brief description for such activities. The record
 shall be available for inspection and copying by the New Committee. Beginning with
 the first full calendar month ending after the Effective Date, the Liquidation Trustee
 shall report to the New Committee as to the amount of time so expended during the
 month and each month thereafter.





3.          REIMBURSEMENT OF EXPENSES




The Liquidation Trustee shall be entitled
 to reimbursement for documented actual and reasonable expenses incurred in performing
 his duties as the Liquidation Trustee, and shall submit a report of said expenses
 with each report under Section 2 above.