Document:

Supply Agreement Dated August 1, 2003

 Exhibit 10.15 
  
 FN: 0671.8044 
 SN:
01 
 A/P Ref: 57423 
  
 SUPPLY AGREEMENT 
  
 This Agreement is effective as of the 1st day of August 2003 (“Effective Date”), between: 
  
 Medtronic A/S. 
 Tonsbakken 16-18 
 DK-2740 Skovlund / Denmark 
 (“Medtronic”) 
  
 and 
  
 HYTEK Microsystems, Inc. 
 400 Hot Springs Road 
 Carson City, Nevada 89706 / USA 
 (“HYTEK”) 
  
 BACKGROUND 
  

	A.	HYTEK manufactures and/or supplies products for use in medical devices, and 

  

	B.	Medtronic is a manufacturer of medical devices and wishes to purchase certain products for use in its devices. 

  
 TERMS OF AGREEMENT 
  
 For good, valuable and sufficient consideration, Medtronic and HYTEK have entered into this
Agreement as of the above Effective Date, subject to the following terms and conditions: 
  

	1.	DEFINITIONS 

  
 Capitalized terms used in this Agreement will have the following meanings: 
  

	A.	“Affiliate” of a specified person (natural or juridical) means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the person specified. “Control” shall mean ownership of more than 50% of the shares of stock entitled to vote for the election of directors in the case of a corporation, and more than 50% of the voting power
in the case of a business entity other than a corporation. 

  

	B.	“Agreement” means this Agreement and all its attachments and amendments. 

  

	C.	“Confidential Information” is defined in Section 4, below. 

  

	D.	“Effective Date” is as specified at the beginning of this Agreement. 

  

	E.	“Product” means the Medtronic BravoTM hybrid that is manufactured by HYTEK for Medtronic specifically for Medtronic’s use in accordance with the Specifications as defined below.

  

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	F.	“Specifications” means all applicable specifications, including those attached as Exhibit A, and protocols relative to the design, physical characteristics, function,
performance, manufacture, packaging and quality of the Products. Specifications will include those, which have been specifically agreed by the parties, and all applicable published specifications and protocols. 

  

	2.	SALE AND PURCHASE OF PRODUCT 

  

	A.	Sale of Products. During the term of this Agreement, HYTEK will sell and supply the Products listed in Exhibit A to Medtronic at the prices listed in Exhibit A. Additional
Products may be added to Exhibit A by mutual agreement of the parties in writing. To the extent a Product includes embedded software, the term “sell” will be understood to refer to a non-exclusive license to use (and to allow customers and
end-users to use) such software in connection with the Product. 

  

	B.	Forecasting. 

  

	 	(1)	Medtronic will submit to HYTEK monthly rolling forecasts covering its anticipated purchases of Products for a period of 12 months. The first three months will be binding, the
following three months are firm for material purchases, and the remaining six months of the forecast is non-binding. Medtronic may reschedule forecasts for the first three months of Product or following three months of material purchases by ±
10% without penalty. 

  

	 	(2)	HYTEK will use all reasonable efforts to satisfy all orders submitted by Medtronic, and will use its best efforts to provide Medtronic one hundred percent (100%) of the quantities
of Products ordered. 

  

	C.	Orders. 

  

	 	(1)	Products will be ordered via standard Medtronic purchase orders, which may be submitted via mail, fax or, if mutually agreed by the parties, electronic data interchange (EDI). HYTEK
will promptly acknowledge receipt of orders. Orders will be deemed accepted upon Medtronic’s receipt of HYTEK’s acknowledgement. 

  

	 	(2)	In order of priority, the terms of any order will be defined by the terms of (a) this Agreement and (b) the typed portions of Medtronic’s purchase order, (c) the typed portions
of HYTEK’s acceptance, (d) the printed terms of Medtronic’s order, and (e) the printed terms of HYTEK’s acknowledgement. The current form of Medtronic’s purchase order is attached as Exhibit C. Except as otherwise agreed in
writing by the parties, the resulting agreement will supersede and control any conflicting representation, agreements, or documentation. 

  

	D.	Prices. 

  

	 	(1)	 The price stated in Exhibit B will be the maximum price for an initial period from August 1, 2003, through July 31, 2004 subject to HYTEK’s obligations set
forth in Section D (2) below. After the initial period, the price is subject to review and good faith negotiation at the request of either party, but not more than once a 

  

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year. The right to revise the prices will be based on (a) material variations in manufacturing cost, burden rates, including any such variations resulting
from shortages; (b) significant change in forecasted volumes; or (c) Specifications. 

  

	 	(2)	Cost reductions. HYTEK’s understands that price is a material term of this Agreement and therefore it commits on an ongoing basis, that it will use its best efforts to
reduce the cost of Products and will in good faith negotiate price reductions to equitably share the resulting cost savings with Medtronic. HYTEK’s obligation includes, but is not limited to, the plans for price reduction set forth on Exhibit D
including the reduced prices if the redesign work and efficiencies are successful as anticipated between the parties. HYTEK’s failure to reduce prices will be considered a breach of a material term of this Agreement and Medtronic may terminate
in accordance with Section 8 B (1). 

  

	E.	Payment Terms. Except as otherwise specified in a purchase order, payment terms will be net thirty (30) after the date of invoice. Invoicing requirements, if any, will be as
specified in the applicable purchase order. 

  

	F.	Delivery. Products must be delivered to Medtronic in accordance with the mutually agreed upon delivery requirements which shall be stated on Medtronic’s individual
purchase orders. Unless otherwise specified in an applicable purchase order, delivery of Products will be f.o.b. HYTEK’s facility, and title and risk of loss will pass at that point. 

  

	G.	Allocation. Should HYTEK, despite such best efforts, be unable to supply the specified quantities or to meet the specified delivery date, Medtronic will be a preferred
customer for delivery of what Product is available and in no case will receive less than a pro rata share based on volume purchased over the past year. 

  

	H.	Alternative Supply. It is understood that nothing in this Agreement (other than the confidentiality obligations specified in Section 4, below) will prevent Medtronic from
developing products similar to the Products covered by this Agreement or from sourcing such products from another vendor. 

  

	I.	Third Party Fabricators. If requested by Medtronic, HYTEK will drop ship Product to third party fabricators identified by Medtronic. HYTEK will invoice the cost of Product
(at the prices specified herein) to Medtronic. Medtronic will be responsible for payment for any orders of Product that Medtronic has requested be drop shipped to such fabricator. 

  

	J.	Exclusivity. HYTEK will not, during the term of this Agreement and for one year thereafter, provide any Product (or any product substantially similar in form, fit and
function to a Product) to any third party without the prior written approval of Medtronic. If a Product is produced using or embodies any Medtronic intellectual property, this obligation will survive termination of this Agreement indefinitely.

  

	K.	 Quarterly Review. Quarterly management reviews will be held via telephone conference by Medtronic and HYTEK to provide regular performance feedback. Upon
such review, Medtronic and the HYTEK shall review quality, delivery, lead-time, incremental sales opportunities, an action plan for cost improvements, and the performance of both parties to the conditions of this Agreement. The parties anticipate
that the review will be used jointly to address any problems, to discuss cost improvement opportunities, to initiate 

  

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corrective actions plans (where necessary) and to agree upon any necessary adjustments for the following quarter. Failure to hold a quarterly review will not
relieve HYTEK from its obligations under this Agreement. 

  

	3.	PRODUCTION 

  

	A.	Compliance with Specifications. HYTEK will cause the Product to be manufactured in strict accordance with the applicable Specifications . 

  

	B.	Changes. 

  

	 	(1)	If HYTEK finds it necessary or desirable to change the Specifications for any Product, or to change the design or production processes affecting the form, fit, function, performance
or chemical composition of any Product, HYTEK will give Medtronic notice and not implement any such change without Medtronic’s prior written consent. 

  

	 	(2)	If Medtronic similarly finds it necessary or desirable to change the applicable Specifications for any Product, then it will so notify HYTEK. HYTEK will make any such changes at
such an adjusted purchase price as Medtronic and HYTEK may agree to in writing pursuant to good faith negotiations. 

  

	 	(3)	Any agreed changes to the Specifications will be reduced to writing and become effective when signed by both parties. 

  

	C.	Packaging and Labeling. All Products will be packaged and labeled in accordance with any applicable Specifications. 

  

	D.	Quality. Unless otherwise specifically agreed in writing by Medtronic, all Products supplied under this Agreement will be manufactured in accordance with: (1) all applicable
standards of the International Standards Organization (ISO) and applicable ISO-certified processes and (2) all other quality standards and quality assurance plans referenced in the Specifications. 

  

	E.	Compliance. HYTEK represents and warrants that the Product delivered to Medtronic will not: (1) be adulterated or misbranded within the meaning of the United States Food,
Drug, and Cosmetic Act, (2) be in violation of any governmental statutes, orders, ordinances or regulations referenced in the Specifications, or (3) knowingly be in violation of any other governmental statutes, orders, ordinances or regulations.

  

	F.	Non-conforming Product. 

  

	 	(1)	Medtronic will have the right to reject any Product, which does not meet the applicable Specifications, within 90 days after actual delivery for all parameters that can be tested at
the time of receipt. For parameters that cannot be tested at that time, such as shelf life, HYTEK’s warranty will extend for the stated shelf life of 180 days. 

  

	 	(2)	 In the event that any Product does not meet applicable Specifications and Medtronic has notified HYTEK, HYTEK will repair or replace such Product free of 

  

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charge and HYTEK shall cover expenses (including freight and customs clearance, if any) incurred by Medtronic in connection with (a) shipment of repaired or
replacement Product to the same location and (b) shipment of the nonconforming Product back to HYTEK (if so requested by HYTEK). In the event of a rejection of defective Product, HYTEK will ship repaired or replacement Product within thirty (30)
days of its receipt of a proper rejection notice from Medtronic. 

  

	G.	Approvals. Medtronic will be responsible for obtaining any regulatory and agency approvals. HYTEK will provide reasonably necessary assistance to Medtronic in obtaining those
approvals. 

  

	H.	Excused Performance. A party’s obligations hereunder, including any delays in deliveries hereunder, will be excused by strikes, riots, war, invasion, acts of God, fire
explosion, floods, delay of common carrier, acts of government agencies or instrumentalities, judicial action, and other contingencies beyond the reasonable control of the party. Medtronic may terminate a purchase order for any affected Product if
HYTEK remains unable to provide such Product more than sixty (60) days. 

  

	I.	Subcontracting. HYTEK may not subcontract the manufacture of the end product under this Agreement without the prior written consent of Medtronic, and any subcontracting will
be subject to the following terms: 

  

	 	(1)	The subcontracting must be under a written agreement which (a) obligates the subcontractor to comply with all relevant terms and condition of this Agreement as though it were HYTEK,
and (b) names Medtronic as a third party beneficiary, and 

  

	 	(2)	HYTEK will remain primarily responsible for all acts and omissions of the subcontractor and will guarantee the performance of the subcontractor. 

  

	4.	CONFIDENTIALITY AND PUBLICITY 

  

	A.	Confidential Information. “Confidential Information” will mean all data, information and know-how disclosed by one party (“Discloser”) to the other party
(“Recipient”) during the term of this Agreement (or in contemplation of it) regarding technology, designs, know-how, computer programs, products, markets and business plans relating to the subject matter of this Agreement (but will not
include information excluded by subsection 4.C, below). Disclosures may be made in any manner, including through written documents, magnetic media, electronic transmissions, verbal disclosures, visual presentations, and facility tours. The
obligations of this Agreement will apply to all information which the Recipient knows or has reason to know or believe that the Discloser considers to be Confidential Information. 

  

	B.	Obligations. Each party agrees it shall make no use of Confidential Information of the other party except for the purpose of this Agreement. Such Confidential Information
will not be disclosed to third parties without written permission of the owner. 

  

	C.	 Exclusions. These obligations will not apply to a party’s information to the extent that it (1) was already legally in the possession and control of the
Recipient prior to its receipt 

  

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from the Discloser; (2) is independently derived by the Recipient without use of the Discloser’s Confidential Information; (3) is or becomes a matter of
public knowledge through no fault of Recipient, (4) is disclosed to a third party by Discloser without a duty of confidentiality on the third party; (5) is disclosed under operation of law; (6) is disclosed by Recipient with Discloser’s prior
written approval or (7) is lawfully obtained from a third party under no obligation of confidentiality to the Discloser. 

  

	D.	Publicity. Neither party may make any public announcement about or advertise the existence of this Agreement or divulge its terms and conditions other than with the prior
written agreement of the other party. 

  

	5.	WARRANTY 

  

	A.	Product Warranty. HYTEK warrants that each Product provided to Medtronic under this Agreement will comply with all applicable Specifications and will be free from defects in
materials and workmanship for a period of 180 days from date of receipt by Medtronic or its designated vendor. HYTEK warrants that any HYTEK provided software provided with or embedded in a Product will be free of viruses, worms, and other component
designed to erase, disable, or otherwise cause harm to computer systems. 

  

	B.	Exclusive Warranty. THIS IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY HYTEK MICROSYSTEMS WITH RESPECT TO THE PRODUCT. HYTEK MICROSYSTEMS MAKES NO OTHER WARRANTY AND HEREBY
EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED. NO IMPLIED WARRANTY OF MERCHANTABILITY, NO IMPLIED WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE, AND NO IMPLIED WARRANTY ARISING BY USAGE OF TRADE, COURSE
OR DEALING OR COURSE OF PERFORMANCE IS MADE BY HYTEK MICROSYSTEMS. NO REPRESENTATIVE OF HYTEK MICROSYSTEMS IS AUTHORIZED TO GIVE OR MAKE ANY OTHER REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING WARRANTY IN ANY WAY. 

 

	C.	Compliance with Law. Medtronic will not be liable for, and HYTEK assumes responsibility for and will defend, indemnify and save harmless Medtronic and its Affiliates from,
all personal injury and property damages that occur during production (i.e. the formulation, fabrication, or manufacturing) of a Product or for claims based on violations of federal, state or local laws (including those applicable to employee or
environmental protection) in connection with such production (e.g., a claim based on HYTEK’s violations of environmental standards or standards dealing with providing a safe place to work or the maintenance of hazardous materials).

  

	D.	Conflicts. HYTEK represents and warrants to Medtronic that it has not entered into any agreement, which conflicts with the terms of this Agreement, and that it will not do so
during the term of this Agreement. 

  

	E.	Infringements. HYTEK warrants and represents to the best of its knowledge and belief that the sale or use of Product infringes no patent or other intellectual property right
of any third party. This does not apply to the extent the design for a Product is specified by Medtronic or its Affiliate, or to the extent the infringement arises out of the combination of the Product with other products not supplied by HYTEK.

  

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	F.	Medtronic Responsibility for Products Liability. Medtronic agrees to indemnify and hold harmless HYTEK, its officers, agents, employees and authorized representatives from
and against any and all costs or damages arising out of or related to any claim or lawsuit alleging personal injury or death to any person as a result of the use of any Medtronic device in which Product is used. Medtronic will defend, manage and
assume all costs of any lawsuit or claim related to this indemnification. HYTEK will notify Medtronic promptly after HYTEK becomes aware of any claim by any third party with respect to which HYTEK would be entitled to indemnification hereunder.
HYTEK will not settle or offer to settle any such claim or lawsuit without Medtronic’s prior written approval. 

  

	G.	Limitation of Remedies. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, EXEMPLARY OR SPECIAL DAMAGES OF ANY KIND.

  

	6.	INTELLECTUAL PROPERTY RIGHTS 

  

	A.	Medtronic Intellectual Property. 

  

	 	(1)	Relating to Products. If Medtronic makes any know-how or trade secret available to HYTEK relative to the design or production of a Product, HYTEK will have a non-exclusive,
non-transferable, revocable license under such intellectual property, such license expressly limited to the right to produce and have produced the Products for supply to Medtronic. Any such intellectual property will remain the property of Medtronic
and will be subject to the confidentiality provision of this Agreement. In no case will HYTEK use any such intellectual property for the benefit of any third party. 

  

	 	(2)	No other license. No other license under any patents, know-how, trade secrets or other intellectual property of Medtronic is granted, and none is to be implied.

  

	B.	HYTEK Intellectual Property. HYTEK agrees that any creations, discoveries, inventions, designs, improvements or other ideas (collectively, “Creations”) that are or
were generated solely as a result of Medtronic’s disclosure of Confidential Information to HYTEK or to create the Product specifically for Medtronic shall be solely owned by Medtronic. HYTEK hereby assigns such Creations to Medtronic. HYTEK
will promptly disclose any such Creations to Medtronic and will execute and deliver documents appropriate to evidence Medtronic’s ownership of the Creations. All documentation, drawings, prototypes and the like shall also constitute the
property of Medtronic. Medtronic grants no license to HYTEK to use any property of Medtronic for any purpose other than as may be necessary for HYTEK to manufacture the Product for Medtronic under this Agreement. 

  
 HYTEK agrees that within thirty (30) days of the signing of this Agreement,
and from time to time thereafter, it shall submit to Medtronic, all written know-how and manufacturing standard operating procedures relating to the Products that will be kept in a secure location. Such know-how and manufacturing standard operating
procedures shall be used by Medtronic in the event Medtronic undertakes to manufacture or have manufactured for it a Product made as a result of HYTEK’s discontinuation as set forth in Section 7 below. Upon Medtronic’s exercise of such
right, HYTEK agrees to provide 

  

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training reasonably necessary for the manufacture of the Product and access to and use of Supplier’s facility to the extent possible for the production
of the Product. This manufacturing right may be exercised for a period as is reasonably necessary to transfer and start-up alternative production with another supplier or a Medtronic facility. HYTEK will also pursuant to this section provide
Medtronic with a full and enabling technology transfer (including any tooling, mask works, foundry access, or other critical items necessary for production) relative to such Product. All above technology transfer from Hytek Microsystems to Medtronic
will be at a mutually agreed cost. 
  

	7.	DISCONTINUATION 

  
 If HYTEK elects to exit the business of making the Product (whether by discontinuation of Product or Supplier’s entire business, sale, assignment, merger or a change
of control beneficially equivalent to a sale), HYTEK will give Medtronic notice at least one (1) year before such exit and give Medtronic the opportunity for a last time buy of such Product in quantities consistent with previous annual purchases by
Medtronic. Upon receipt of such notice, Medtronic will have an option, exercisable within 3 months thereafter, to invoke the license and technology transfer specified under paragraph 6.B., above, for such Product. 
  

	8.	TERM AND TERMINATION 

  

	A.	Term. This Agreement will become effective on the Effective Date and unless earlier terminated, will continue in effect for an initial period of one (1) year, and will
thereafter be subject to automatic renewal periods of one (1) year unless either party provides the other with notice of non-renewal. In the event of a non-renewal by HYTEK with less than three (3) months notice, Medtronic will have the rights
accorded to it under Section 6.B. above, as though HYTEK had elected to exit the business. 

  

	B.	Termination. This Agreement may be terminated as follows: 

  

	 	(1)	By either party for a material breach. Notice of default must be given, including specific charges of default and reasonable requirements to cure. The party in default will have 90
days after notice to cure. If the defaulting party fails to cure within that time, or if it cannot reasonably be expected that the defaulting party will achieve a cure within 30 days after the 90 day period, despite taking substantial steps to do
so, the party giving notice may terminate this Agreement immediately. 

  

	 	(2)	The bankruptcy, liquidation, dissolution of either party will entitle the other party to terminate this Agreement by notice, such termination to take effect immediately.

  

	 	(3)	By either party without having to state cause, upon notice of no less than six (6) months, provided that if termination is by HYTEK, Medtronic will have the rights accorded to it
under Section 6, above, as though HYTEK had elected to exit the business. 

  

	C.	 Termination of Purchase Orders. Either party will have the right to terminate a purchase order in the event the other party fails to cure a material breach
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purchase order within 30 days after notice. Medtronic will have the right to terminate any purchase order for safety or regulatory reasons.

  

	D.	Survival. All provisions, which are continuing in nature, including but not limited to those involving confidential information, will survive termination of this Agreement.

  

	9.	MISCELLANEOUS 

  

	A.	Assignment. This Agreement may not be assigned by either party, without the prior written consent of the other party, except to (1) a direct or indirect wholly-owned
subsidiary, (2) any third party who will acquire, by sale of assets or otherwise (including merger), all or substantially all of the assets of such party or (3) any majority-owned or majority-controlled entity of the party. No such assignment will
relieve the assigning party of its obligations hereunder. 

  

	B.	Notices. All notices, requests or other communication required or permitted to be given under this Agreement will be in writing and will be delivered in person (including
express courier, such as Federal Express) or sent by certified or registered mail, postage and certification prepaid, to HYTEK, at the address first above written. Notice to Medtronic must be as follows: 

  
 Medtronic A/S 
 MS: IR-15 
 Tonsbakken 16-18 
 DK-2740 
 Skovlunde 
 DENMARK 
 Attention: Michael Palsson

 Telephone: (+45) 44 57 90 00 
 Facsimile: (+45) 44 57 90 10 
  
 with copies to :

  
 Medtronic, Inc. 
 710 Medtronic Parkway NE, MS LN220 
 Minneapolis, Minnesota 55432 
 Attention: Vice President and Senior Legal Counsel, Neuro 
 Telephone: (763) 505-0570 
 Facsimile: (763)
505-0411 
  
 and 
  
 Medtronic, Inc. 
 4000 Lexington Avenue North 
 Shoreview,
Minnesota 55126 
 Attention: Vice President and General Manager, Gastroenterology 
 Telephone: (763) 514-9699 
 Facsimile: (763)
514-9697 
  

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 Any notice given as aforesaid will be deemed given and effective upon actual delivery. Any party may
change its address for notice by notice given in accordance herewith. 
  

	C.	Dispute Resolution. Any dispute arising out of or relating to this Agreement, including the formation, interpretation or alleged breach hereof, shall be resolved in
accordance with this Section. The parties agree that any dispute will be submitted to binding arbitration in the City of Minneapolis, Minnesota, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Any party
may initiate arbitration by giving written notice to the other party. The written notice shall set forth the nature of the dispute and the damages sought. The other party may, within ten days of the receipt of the notice, agree with the initiating
party on the identity of a single arbitrator. If the parties are unable to agree on a single arbitrator, each party shall name an arbitrator and the arbitrators so named shall choose a third arbitrator. The arbitrator(s) shall arbitrate the matter
and, within 30 days of hearing and submission, render a decision and award. The costs of the arbitration shall be shared equally by the parties, except that each party shall be responsible for its own attorneys’ fees. The results of such
arbitration proceedings shall be binding upon the parties hereto, and judgment may be entered upon the arbitration award in any court having jurisdiction thereof. Notwithstanding the foregoing, either party may seek interim injunctive relief or
specific performance from any court of competent jurisdiction and the parties irrevocably consent to personal jurisdiction and venue for any action allegedly arising out of or related to this Agreement, or the relationship of the parties, within the
federal and state courts of Minnesota. 

  

	D.	Consents. Any approval, authorization or consent required by this Agreement must be in writing, duly signed by an authorized representative of the granting party. The
withholding of an approval, authorization or consent for regulatory, quality, or competitive reasons shall not be deemed unreasonable. 

  

	E.	No Joint Venture. Nothing contained in this Agreement will be deemed to create a joint venture, partnership, agency or similar endeavor between the parties hereto. Each party
will act solely as an independent contractor and neither part will have any power or authority to direct or indirectly bind or act on behalf of the other. 

  

	F.	Governing Law and Venue. This Agreement will be construed in accordance with and governed by the laws of the State of Minnesota, USA. Any actions brought under this Agreement
will be subject to the jurisdiction of the federal and state courts for Minnesota. 

  

	G.	Dispute Escalation. The parties will in good faith endeavor to resolve any disputes or differences of interpretation of this Agreement amicably, through dialog and
cooperation. In the event a dispute or difference is not promptly resolved at operational levels of the two organizations, the parties will escalate it for a good faith effort to achieve an amicable resolution at a senior business management level.

  

	H.	Merger. This Agreement (including accompanying purchase orders) represents the complete agreement of the parties relative to the covered subjects and supersedes and controls
any prior representations or agreements relative to those subjects. 

  

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	I.	Waiver. No waiver by either party of any default of the other party will be held to be a waiver of any other or subsequent default. 

  

	J.	Severability. If any provision contained or referred to in the Agreement shall be determined to be legally invalid or unenforceable, such provision shall be ineffective to
the extent of such invalidity or unenforceability without affecting the remaining provisions of the Agreement which shall continue to be valid and enforceable to the fullest extent permitted by law. 

  

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 The parties have caused this Agreement to be executed as of the Effective Date. 
  

									
	MEDTRONIC A/S.	 	 	 	HYTEK MICROSYSTEMS, INC.
					
	By	 	 /s/ Peter M. Eriksen
	 	 	 	By	 	 /s/ Scott G. Martin

	 	 	 Peter M. Eriksen
	 	 	 	 	 	 Scott G. Martin

	 	 	 Director
	 	 	 	 	 	 (print name)

					
	 Date
	 	 8/03/03
	 	 	 	 Title
	 	 Vice President & General Manager

					
	 	 	 	 	 	 	 Date
	 	 08/11/03

  

 Page 12 

 EXHIBIT A 
  

Specifications 
  

 Page A-1 

 EXHIBIT B 
  

General Description of Products 
  
 Price List: 
  

						
	 Part No.

	  	 Product Description

	  	Price

	 	  	BravoTM hybrid	  	$	41.54 per hybrid

  
 Additional Products may be added to
this Exhibit A by written addendum signed by an authorized representative of each party. 
  

 Page B-1 

 EXHIBIT D 
  

Current Form of Medtronic’s Purchase Order 
  

 Page C-1 

 EXHIBIT D 
  

Bravo Hybrid Cost Reduction Plan 
 Revision Date: 07-24-2003PA 
 Prepared by: Paul Alpers 
  
 Applicable Notes: 
  

	1.	This cost reduction plan was derived from best estimations based on historical performance and reasonable expectations from product design and manufacturing efficiency improvements.

  

	2.	Cost reductions will be based on actual production performance. 

  

	3.	Data will be collected in order to determine if the estimated cost reduction improvements are actually effective. 

  

	4.	Once the cost reductions are validated through data, Hytek will convey the information to Medtronic to revise Exhibit A of the Supplier Agreement. 

  

									
	 Implementation Date

	  	 Proposed Action

	  	 Estimated Yield
Improvement

	  	 Estimated Labor
Improvement

	  	Cost & Price

	 	  	Current Cost and Price of Hybrid	  	 	  	 	  	Cost:
$34.62
Price:
$41.54
					
	 09-26-2003
	  	 Manufacturing Efficiencies on Current Circuit Board Design
 Completion Dates:
 Identify “Constraints”: 08-15-2003
 Balance Production Line: 08-29-2003
 Production & Data Collection: 09-26-2003
	  	 	  	 First Pass:
 From:
0.283
 To:     0.241 Rework:
 From: 0.137
 To:     0.117
 Hours per part
	  	Cost:
$32.56
Price:
$39.07
					
	 10-25-2003
	  	 Circuit Board Redesign Effort
 Completion
Dates:
 Prototypes: 08-18-2003
 Qualification/Validation:
09-29-2003
 Production & Data Collection: 10-25-2003
	  	 From: 63%
 To:
    80%
 First Pass Yield
	  	 	  	Cost:
$28.61
Price:
$34.33
					
	 10-25-2003
	  	 Manufacturing Efficiencies on New Circuit Board Design
 Completion Dates:
 Identify “Constraints”: 09-22-2003
Balance Production Line: 09-29-2003
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 Page C-2Liquidation Trust Agreement, dated as of December 8, 2004, by and among Consolid

 Exhibit 4.1 
  

LIQUIDATION TRUST AGREEMENT 
  
 Entered into as of December 8, 2004 
  
 by and among 
  
 CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, 
  
 CONSOLIDATED FREIGHTWAYS CORPORATION, 
  
 REDWOOD SYSTEMS, INC., LELAND JAMES SERVICE CORPORATION, 
  
 CF AIRFREIGHT CORPORATION AND CF MOVESU.COM INCORPORATED 
  

(COLLECTIVELY, THE “DEBTORS”), 
  
 THE OFFICIAL COMMITTEE OF CREDITORS HOLDING UNSECURED CLAIMS, 
  
 IN ITS CAPACITY AS REPRESENTATIVE OF THE HOLDERS OF ALLOWED 
  
 CLASS 4 CLAIMS AGAINST THE DEBTORS (THE “COMMITTEE”),

  
 THE OVERSIGHT COMMITTEE (AS DEFINED HEREIN),

  
 K. MORGAN ENTERPRISES, INC. (THE “TRUSTEE”)

  
 AND KERRY K. MORGAN 

 TABLE OF CONTENTS 
  

											
	 	  	 	  	 	  	 	  	 	  	Page

	I.	  	RECITALS	  	1
			
	II.    	  	AGREEMENT	  	2
	 	  	 	  	    1.  	  	DEFINITIONS.	  	2
	 	  	 	  	 	  	a.    	  	Terms Defined in the Plan.	  	2
	 	  	 	  	 	  	b.	  	Terms Defined in the Trust Agreement	  	2
	 	  	 	  	    2.  	  	CREATION OF THE TRUST.	  	3
	 	  	 	  	 	  	a.	  	Creation of Trust.	  	3
	 	  	 	  	 	  	b.	  	Purposes of Trust.	  	3
	 	  	 	  	 	  	c.	  	Transfer of Assets to the Trust Free and Clear.	  	4
	 	  	 	  	    3.  	  	APPOINTMENT, DUTIES, AND POWERS OF THE TRUSTEE.	  	4
	 	  	 	  	 	  	a.	  	Appointment; General Powers and Authority of the Trustee.	  	4
	 	  	 	  	 	  	b.	  	Duties of the Trustee.	  	7
	 	  	 	  	 	  	c.	  	Approval of Oversight Committee for Prior-Approval Actions.	  	12
	 	  	 	  	 	  	d.	  	Limitations on Trustee’s Powers.	  	14
	 	  	 	  	 	  	e.	  	Other Limitations on Powers.	  	15
	 	  	 	  	 	  	f.	  	Prior-Approval Actions by a Disbursing Agent.	  	15
	 	  	 	  	 	  	g.	  	Representative of the Estate.	  	16
	 	  	 	  	 	  	h.	  	Surrender of Instruments.	  	16
	 	  	 	  	 	  	i.	  	Term of the Trustee’s Employment.	  	16
	 	  	 	  	 	  	j.	  	Compensation for Trustee.	  	16
	 	  	 	  	 	  	k.	  	Resignation of Trustee.	  	16
	 	  	 	  	 	  	l.	  	Removal and Replacement of Trustee.	  	17
	 	  	 	  	 	  	m.	  	No Court Approval Required for Actions.	  	17
	 	  	 	  	 	  	n.	  	Discretionary Acts.	  	18
	 	  	 	  	 	  	o.	  	Reliance on Advice of Legal Counsel and Other Advisors.	  	18
	 	  	 	  	 	  	p.	  	Limitations on Personal Liability.	  	18
	 	  	 	  	 	  	q.	  	Indemnity of Trustee.	  	18
	 	  	 	  	 	  	r.	  	No Bond.	  	19
	 	  	 	  	 	  	s.	  	Method of Payment.	  	19
	 	  	 	  	 	  	t.	  	Indemnity of Oversight Committee and Members.	  	19
	 	  	 	  	    4.  	  	DISBURSING AGENT AND SUCCESSOR DISBURSING AGENT.	  	19
	 	  	 	  	 	  	a.	  	Duties of Disbursing Agent.	  	19
	 	  	 	  	 	  	b.	  	Protection of Trust Property.	  	19
	 	  	 	  	 	  	c.	  	Investment of Cash.	  	19
	 	  	 	  	 	  	d.	  	Records.	  	19

  

 i 

											
	 	 	 	 	 	  	 
	 	 	 	 	 	 	e.    	 	Compliance with Tax Laws.	  	20
	 	 	 	 	 	 	f.	 	No Court Approval Required for Actions.	  	20
	 	 	 	 	        5.	 	THE OVERSIGHT COMMITTEE.	  	20
	 	 	 	 	 	 	a.	 	Oversight Committee Procedures.	  	20
	 	 	 	 	 	 	b.	 	Oversight Committee as Representative of Creditors.	  	20
	 	 	 	 	 	 	c.	 	Retention of Professionals by the Oversight Committee.	  	21
	 	 	 	 	 	 	d.	 	Oversight Committee Compensation and Liability.	  	21
	 	 	 	 	 	 	e.	 	Oversight Committee Reliance on Professionals.	  	21
	 	 	 	 	 	 	f.	 	Removal of Members of the Oversight Committee for Cause.	  	21
	 	 	 	 	 	 	g.	 	Appointment of Successor Members of the Oversight Committee.	  	21
	 	 	 	 	 	 	h.	 	Oversight Committee Members and their Institutions.	  	21
	 	 	 	 	 	 	i.	 	Duty of Oversight Committee.	  	22
	 	 	 	 	 	 	j.	 	Dissolution of Oversight Committee.	  	22
	 	 	 	 	 	 	k.	 	Oversight Committee Bylaws.	  	22
	 	 	 	 	        6.	 	PROTECTIONS AFFORDED TO THE TRUSTEE AND OVERSIGHT COMMITTEE.	  	22
	 	 	 	 	 	 	a.	 	Limitation on Liability.	  	22
	 	 	 	 	 	 	b.	 	Reliance.	  	23
	 	 	 	 	        7.	 	LIMITATIONS ON TRANSFER OF TRUST BENEFICIAL INTERESTS.	  	23
	 	 	 	 	        8.	 	CERTAIN TAX MATTERS	  	23
	 	 	 	 	 	 	a.	 	Liquidating Trust.	  	23
	 	 	 	 	 	 	b.	 	Trust Earnings.	  	23
	 	 	 	 	 	 	c.	 	Tax Returns.	  	24
	 	 	 	 	 	 	d.	 	Valuation of Trust Property.	  	24
	 	 	 	 	        9.	 	MISCELLANEOUS.	  	24
	 	 	 	 	 	 	a.	 	Court Jurisdiction.	  	24
	 	 	 	 	 	 	b.	 	Final Distribution Date and Termination.	  	24
	 	 	 	 	 	 	c.	 	Successors and Assigns.	  	25
	 	 	 	 	 	 	d.	 	No Third Party Beneficiaries.	  	25
	 	 	 	 	 	 	e.	 	Modification.	  	25
	 	 	 	 	 	 	f.	 	Other Documents and Actions.	  	25
	 	 	 	 	 	 	g.	 	Principal Office of the Trust.	  	25
	 	 	 	 	 	 	h.	 	Address for Notices.	  	26
	 	 	 	 	 	 	i.	 	Severability.	  	28
	 	 	 	 	 	 	j.	 	Waiver.	  	28
	 	 	 	 	 	 	k.	 	Conflict with the Plan or Confirmation Order.	  	28
	 	 	 	 	 	 	l.	 	Entire Agreement.	  	28
	 	 	 	 	 	 	m.	 	Governing Law.	  	28

  

 ii 

 LIQUIDATION TRUST AGREEMENT 
  
 This Liquidation Trust Agreement (this “Trust Agreement”) is made and entered into as of December 8, 2004,
by and among Consolidated Freightways Corporation of Delaware (“CFCD”), Consolidated Freightways Corporation (“CFC”), Redwood Systems, Inc., Leland James Service Corporation, CF Airfreight Corporation and CF MovesU.com
Incorporated (collectively, the “Debtors”), the Official Committee of Creditors Holding Unsecured Claims, in its capacity as representative of the holders of Allowed Class 4 Claims against the Debtors, (the “Committee”), the
Oversight Committee (as defined herein), K. Morgan Enterprises, Inc., an Oregon corporation, (the ”Trustee”), and Kerry K. Morgan. 
  
 I. RECITALS 
  
 A. Each of the Debtors was one of the debtors in the Cases. On November 22, 2004, the Court entered its Order confirming the Debtors’ Consolidated
Plan of Liquidation Dated July 1, 2004 (as Amended) (including, without limitation, the Appendix and all exhibits, supplements, appendices, and schedules thereto, either in its present form or as the same may be altered, amended or modified from
time to time in accordance with its terms, the “Plan”). A copy of this Trust Agreement, in substantially final form, was attached as an exhibit to the Disclosure Statement accompanying the Plan. 
  
 B. The Plan provides for the creation of the Trust pursuant to the Plan and
this Trust Agreement. 
  
 C. Concurrently with the effectiveness
of this Trust Agreement, the Effective Date under the Plan has occurred, the Plan has become effective, and the Debtors have been conclusively deemed to have conveyed the Trust Property to the Trust. The Trustee will cause the Debtors to be
dissolved pursuant to Plan section 6.111. For all United States federal income tax purposes, the transfer of the
Trust Property by the Debtors to the Trust shall be treated by the Debtors, the Trust and the Trust Beneficiaries as a transfer of the Trust Property by the Debtors to the Trust Beneficiaries, followed by a transfer of the Trust Property by such
Trust Beneficiaries to the Trust, as provided in Plan section 7.13. The Trust Beneficiaries shall be treated as the grantors and deemed owners of the Trust for United States federal income tax purposes 
  
 D. Pursuant to the Plan and the Confirmation Order, the Court has approved
K. Morgan Enterprises, Inc. to serve as the Trustee of the Trust. 
  
 E. Also pursuant to the Plan and the Confirmation Order, the Oversight Committee has been designated, and consists of: Central States, Southeast and Southwest Areas Pension Fund; New York State Teamsters Conference Pension and Retirement
Fund & New York State Teamsters Council Health & Hospital Fund; Chicago Truck Drivers, Helpers and Warehouse Workers Union (Ind.) Pension Fund; International Brotherhood of Teamsters; and CNA Surety Corporation. 
  
 F. As set forth in Plan section 1.2.105, Trust Beneficial Interests may not
be transferred, sold, assigned, hypothecated or pledged, except that they may be assigned or transferred by will, intestate succession, or operation of law. 
  

	1	In this Trust Agreement, the term “section” refers to a provision of this Trust Agreement. The term “Plan section” refers to a provision of the
Plan. 

  

 1 

 NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows: 
  
 II.
AGREEMENT 
  
 1. DEFINITIONS. 
  
 a. Terms Defined in the Plan. 
  
 Unless otherwise specified herein, all capitalized terms used in this Trust
Agreement without definition shall have the meanings assigned to them in the Plan, including, without limitation, the following: 
  
 Administrative Claim, Allowed, Allowed Class 4 Claims, Appendix, Assumed Executory Contracts, Avoidance Actions, Bankruptcy Code, Bankruptcy Rules,
Canada Affiliates, Cases, Cash, Causes of Action, CF Bermuda, Claim, Class, Collateral, Confirmation Order, Consolidated Estate, Convenience Claim, Court, Disallowed, Disbursing Agent, Disclosure Statement, Disputed, Disputed Claim, Disputed Lien,
Distribution, Effective Date, Face Amounts, File or Filed, Holder, Lien, Mexico Affiliates, Non-Debtor Affiliates, Order, Other Priority Claims, Person, Petition Date, Plan, Priority Claim, Priority Non-Tax Claim, Priority Tax Claim, Pro Rata,
Professional Claim, Reserve for Disputed Claims, Secured Claim, Trust, Trust Beneficial Interests, Trust Beneficiaries, and Trust Property. 
  
 b. Terms Defined in the Trust Agreement 
  
 (1) The terms “CFC,” “CFCD,” the “Debtors,” the “Committee,” “Trust
Agreement” and “Trustee” the meanings given to such terms in the preamble to this Trust Agreement. 
  
 (2) The following terms have the meanings set forth below. 
  
 “Appraised Value” means the appraised value of the relevant asset as of the Effective Date, as determined by the most recent appraisal
of the asset obtained by the Debtors prior to the Effective Date. 
  
 “Consolidation Stipulation and Order” means the “Stipulation to Settle Consolidation Motion and Related Claims” and the Order approving said stipulation which was entered on April 27, 2004. 
  
 “Internal Revenue Code” means the Internal Revenue Code of
1986, as amended, or any corresponding provisions of any succeeding law. 
  
 “Order re Trustee Agreement” means the “Order Authorizing Debtors to Enter into Pre-Confirmation Agreement with Prospective Trustee” as entered by the Court on March 12, 2004. 
  
 “Oversight Committee” means the committee consisting of the
members identified in Recital E, or the successors to any such members who may be appointed pursuant to this Trust Agreement, to fulfill the obligations of the Oversight Committee under the Plan and this Trust Agreement. 
  

 2 

 “Oversight Committee Member Institution” means the institution of which any Oversight
Committee member is an officer, employee or agent. 
  
 “Plan” shall have the meaning given to such term in Recital A above. 
  
 “Prior-Approval Actions” has the meaning given to such term in section 3.c of this Trust Agreement. 
  
 “Quarterly Budget” shall have the meaning given to such
term in section 3.b(4), below. 
  
 “Term Sheet for
Trustee Services” means the Term Sheet for Trustee Services attached hereto as Exhibit A. 
  
 “Treasury Regulations” means the regulations promulgated under the Internal Revenue Code. 
  
 “Trust Expenses” means all costs, expenses, and obligations
incurred in connection with the administration of the Trust or in any manner incidental or related thereto, including, without limitation, those incurred by the Oversight Committee or the Disbursing Agent, if any, in the performance of their duties
hereunder, provided such costs, expenses, or obligations are permitted pursuant to the terms hereof. Trust Expenses shall include, without limitation, (i) the costs, expenses and obligations related to the preservation and liquidation of any of the
Trust Property, (ii) taxes, fees, levies, assessments, and other governmental charges incurred and payable by the Trustee with respect to the Trust or the Trust Property, (iii) fees, expenses, and other compensation of the Trustee, any Disbursing
Agent, and professionals employed by the Trustee or the Oversight Committee pursuant to this Trust Agreement, and (iv) reimbursement of expenses incurred by members of the Oversight Committee, as provided in this Trust Agreement. 
  
 “Trust Notice Parties” means the Trustee, the Oversight
Committee, the Office of the United States Trustee, and all Persons who serve requests for special notice on the Trust after the Effective Date. 
  
 2. CREATION OF THE TRUST. 
  
 a. Creation of Trust. 
  
 The Trust is hereby created. The name of the Trust shall be “The Trust for Certain Creditors of Consolidated Freightways Corporation and certain
Affiliates,” provided the Trust may be referred to as “The CFC Trust”. 
  
 b. Purposes of Trust. 
  
 The purposes of the Trust created hereunder are to (i) liquidate, sell or otherwise dispose of the Trust Property, (ii) cause all proceeds of Trust Property to be deposited into the Trust in accordance with the Plan and this Trust
Agreement, (iii) control, defend, prosecute, settle, and/or pursue the resolution or litigation of all claims, rights, Avoidance Actions and other Causes of Action included in the Trust Property, in each such case, in accordance with the Plan and
this Trust Agreement, (iv) oversee and, where appropriate, directly initiate actions to resolve any 
  

 3 

 remaining issues regarding the allowance and payment of Claims, including, as necessary, initiation and/or participation
in proceedings before the Court, (v) make Distributions of Trust Property or Cash to Trust Beneficiaries, and (vi) take such actions permitted hereunder that are necessary or useful to maximize the value of the Trust including, without limitation,
the borrowing of funds and the retention of employees. The parties to this Trust Agreement hereby agree that the Trust is being established for the sole purpose of liquidating the Trust Property as promptly as reasonably possible in accordance with
Treasury Regulation § 301.7701-4(d) with no objective to continue or engage in the conduct of a trade or business. In furtherance of this objective, the Trustee, and any Disbursing Agent, will make timely Distributions and not unnecessarily
prolong the term of the Trust, in accordance with the terms and conditions set forth herein. 
  
 c. Transfer of Assets to the Trust Free and Clear. 
  
 The transfer of the Trust Property to the Trust, shall be free and clear of all Liens and Disputed Liens of any kind in favor of any party, except for the Liens, if any, which are expressly preserved by the Plan or
the Confirmation Order with respect to the Collateral subject to such Liens. 
  
 3. APPOINTMENT, DUTIES, AND POWERS OF THE TRUSTEE. 
  
 a. Appointment; General Powers and Authority of the Trustee. 
  
 K. Morgan Enterprises, Inc. hereby acknowledges its acceptance of its appointment as the Trustee, to serve pursuant to the terms of the Plan and this
Trust Agreement, until such time as it resigns, is removed or discharged, or this Trust Agreement and the Trust terminate as hereinafter set forth. Kerry Morgan shall be personally responsible and legally obligated for the performance of all duties,
obligations and responsibilities of K. Morgan Enterprises, Inc. hereunder. 
  
 The Trustee shall have power and authority to do and perform the following acts on behalf of the Trust, provided that all actions which the Trustee shall take or not take in accordance with his power and
authority hereunder shall (i) comply with the terms of the Plan, the Confirmation Order and this Trust Agreement, (ii) be subject to the supervision and advice of the Oversight Committee, and (iii) require approval or disapproval of the Oversight
Committee to the extent provided in this Trust Agreement. No action or failure to act by the Trustee shall require approval from the Court, the Oversight Committee or any other Person except as expressly set forth in section 3.c, which requires
Oversight Committee approval of the actions defined therein as Prior-Approval Actions, or in other provisions of this Trust Agreement, including, without limitation, provisions pertaining to the Quarterly Budget, the Plan or the Confirmation Order.

  
 The Trustee shall have the power and authority to:

  
 (1) Use, acquire and dispose of Trust Property, and take any
of the actions set forth in this Trust Agreement without the approval of the Court and free of the restrictions of the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules or the prior Orders of the Court, other than restrictions
expressly imposed by the Plan, the Confirmation Order or this Trust Agreement. 
  
 (2) Operate the Trust Property to the extent consistent with the Trust’s purpose which is to be classified for U.S. federal income tax purposes as a “liquidating trust,” with the primary objective of
liquidating the Trust Property and distributing the net proceeds thereof; the Trust shall not continue or engage in the conduct of a trade or business inconsistent with Treasury Regulation § 301.7701-4(d). 
  

 4 

 (3) Perfect and secure the Trust’s right, title and interest to the properties comprising the Trust
Property. 
  
 (4) Reduce the Trust Property to its possession and
hold the same. 
  
 (5) Manage and protect the Trust Property.

  
 (6) Conduct the operations of the Trust in accordance with
the terms of this Trust Agreement and the Plan in an efficient and effective manner, with the objective of minimizing Trust Expenses and maximizing recoveries for the Trust Beneficiaries. 
  
 (7) Negotiate, renegotiate, and enter into contracts and execute negotiable and non-negotiable obligations on behalf of the
Trust in the ordinary course of the Trust’s financial affairs. 
  
 (8) (a) Determine when to sell Trust Property and on what terms, and sell or otherwise dispose of the Trust Property and all interests therein, convert such Trust Property and interests to Cash, and distribute the net proceeds in accordance
with the Plan and this Trust Agreement, and, in connection with any sale of real estate, execute and deliver, without limitation, asset purchase or sale agreements, escrow instructions, grant deeds or quitclaim deeds, easements or conveyances of
other rights or interests, and other documents, agreements or notices, and take all other actions necessary or desirable to consummate the sale, (b) Grant options to purchase all or any portion of the Trust Property, or any interest therein, for
such consideration and on such terms as the Trustee deems appropriate, (c) Exchange and re-exchange all or any portion of the Trust Property for other property, and (d) Release, convey or assign any right, title or interest in or about the Trust
Property, provided that the Trustee’s powers under this section 3.a.8 are subject to the Oversight’s Committee’s approval to the extent required in section 3.c.5. 
  
 (9) Establish demand, deposit and other bank or investment accounts in the name of the Trust, and deposit funds of the
Trust into one or more of such accounts in the name of the Trust, draw checks on such accounts or otherwise withdraw such funds and disburse such funds to third parties entitled thereto. 
  
 (10) Pay, contest, compromise and discharge any Trust Expenses, provided, that expenditures by the Trustee are at
all times subject to the limitations in the then-applicable Quarterly Budget and to the provisions of this Trust Agreement which supplement the provisions of the Quarterly Budget. 
  
 (11) Borrow, repay and reborrow funds, and grant any security interest, lien or encumbrance to secure the payment of any
Trust Expenses or other obligation of the Trust provided that the Trustee’s powers under this section 3.a.11 are subject to the Oversight’s Committee’s approval under section 3.c.12. 
  
 (12) Purchase insurance to protect the Trust Property against such risks and
in such amounts as the Trustee determines to be appropriate, and to protect the Trustee, the Oversight Committee and its members, from personal liability for any actions taken in the course of its and their activities on behalf of, or in connection
with the administration of, the Trust and the Oversight Committee; provided however, that if the Trustee and the Oversight Committee disagree on the acquisition of insurance coverage for the protection of the Oversight Committee and its members, the
Trustee shall purchase such insurance as is requested by the Oversight Committee and maintain such insurance in force pending resolution of such dispute. 
  

 5 

 (13) Appoint, remove, replace and act through agents, managers, and employees and confer upon them such
power and authority, subject to all limitations and restrictions contained in this Trust Agreement, as the Trustee deems necessary or advisable; provided, however, K. Morgan Enterprises, Inc. and Kerry Morgan shall remain responsible for all duties
and obligations of the Trustee hereunder. 
  
 (14) Employ and
have such professionals, including, without limitation, attorneys and accountants, and such other agents, consultants and employees on behalf of the Trust as the Trustee shall deem necessary, provided, that the Trustee shall not incur professional
fees in excess of the amount provided for in the Quarterly Budget, including permitted overruns, without the approval of the Oversight Committee. 
  
 (15) Except as expressly required by the Plan or the Confirmation Order, determine when Distributions should be made to the Trust Beneficiaries.

  
 (16) Exercise any and all powers granted to the Trustee by
any agreements or by common law or any statute which serves to increase the extent of the powers granted to the Trustee hereunder, subject, in each case, to approval of the Oversight Committee, to the extent required by this Trust Agreement.

  
 (17) Take any action required or permitted to be taken by the
Plan, the Confirmation Order or this Trust Agreement. 
  
 (18)
Sue on behalf of the Trust and be sued in its capacity as Trustee, provided that all parties dealing with the Trust or the Trustee shall be conclusively deemed by this Trust Agreement to agree that the Court shall have the exclusive jurisdiction to
hear any suit commenced after the Effective Date against the Trust, or against the Trustee acting in its capacity as trustee of the Trust, and such parties may only commence any such suit in the Court, provided, however, that the Court may abstain
from hearing any such suit. 
  
 (19) Manage all litigation
instituted by or against the Trust or the Trustee, and administer the Trust Expenses related thereto. 
  
 (20) Pursue claims and Causes of Action assigned to the Trust or the control of which is assumed by the Trust pursuant to the Plan, as the designated
representative of the Consolidated Estate within the meaning of section 1123(b)(3)(B) of the Bankruptcy Code. 
  
 (21) Institute on behalf of the Trust all claims and Causes of Actions which could be brought by a trustee or debtor-in-possession under the Bankruptcy
Code, and prosecute or defend all appeals on behalf of any of the Debtors, as representative of the Consolidated Estate. 
  
 (22) Make and File objections to any Claims or Administrative Claims Filed or asserted in the Cases. 
  
 (23) Except as expressly provided to the contrary in the Plan, the
Disclosure Statement, or the Confirmation Order, contest the validity or enforceability of any Disputed Lien purporting to encumber any of the Trust Property. 
  

(24) Settle, compromise or adjust, by arbitration or otherwise, any Claims or any disputes or controversies in favor of or against the Trust.

  
 (25) Waive or release rights of any kind on behalf of the
Trust, subject, in each case, to the approval of the Oversight Committee. 
  

 6 

 (26) Cause the Debtors, CF Bermuda and the Non-Debtor Affiliates to be dissolved for all purposes under
applicable non-bankruptcy law, and, in connection therewith, take any necessary or appropriate actions on behalf of any of the Debtors, CF Bermuda, or any of the Non-Debtor Affiliates, including the filing or recording of any documents, the making
of any applicable tax filings, the execution and filing or recording of such a certificate of dissolution for the dissolution of any of such entities, the payment of any fees, charges or other amounts necessary or appropriate, in the reasonable
opinion of the Trustee, to dissolve all of the Debtors, CF Bermuda and the Non-Debtor Affiliates, provided, however, that each of the Debtors, CF Bermuda and the Non-Debtor Affiliates shall file, or the Trustee may file on behalf of such entities,
with the official public office for keeping corporate records in its state, district or place of organization, a certificate of dissolution or equivalent document. 
  
 (27) Prepare Quarterly Budgets and provide other financial information to the Oversight Committee, as required by this
Trust Agreement. 
  
 (28) Receive from the Trust compensation and
reimbursement of all reasonable expenses incurred by the Trustee in discharging its duties hereunder, as set forth in this Trust Agreement and the Order re Trustee Agreement, provided that, (a) for the initial Trustee, to the extent such
compensation is not authorized by the Order re Trustee Agreement, and (b) for any subsequent Trustee, the compensation, reimbursement of expenses and payment of other amounts to the Trustee shall be in such amounts as are agreed to between the
Trustee and the Oversight Committee in connection with the approval of the applicable Quarterly Budget or otherwise. Compensation and reimbursement of reasonable expenses incurred by the Trustee as approved by the Order re Trustee Agreement shall be
payable without further approval by the Oversight Committee. 
  
 (29) File all income, withholding and informational tax returns and forms for the Trust and for the Reserve for Disputed Claims as required by law, and pay all taxes required to be paid by the Trust or the Reserve for Disputed Claims.

  
 (30) Serve as an officer and/or director of any of the
Non-Debtor Affiliates and/or LLC Entities and cause such entities to undertake any actions necessary or desirable to further the objectives of this Agreement or the Plan, including, without limitation, realizing value for the Trust. 
  
 (31) In general, without in any manner limiting any of the foregoing, deal
with the Trust Property, and all or any portion thereof, and the affairs of the Trust, in all ways as would be lawful for any person owning the same to deal therewith, whether similar to or different from the ways above specified, at any time or
times hereafter, subject, in each case, to all restrictions and limitations contained in this Trust Agreement, including the approval of the Oversight Committee, to the extent required by section 3.c. 
  
 b. Duties of the Trustee. 
  
 Subject to the section 3.c, which requires Oversight Committee approval of
any of the following actions which constitute Prior-Approval Actions, and the other provisions of this Trust Agreement and the Plan, the Trustee shall have the duty to perform the following acts on behalf of the Trust: 
  
 (1) Liquidation of Trust Property. 
  
 The Trustee shall sell or dispose of, and convert to Cash, the Trust
Property, and distribute, or cause the Disbursing Agent, if any, to distribute, the Trust Beneficial Interests to the Trust Beneficiaries and to distribute all funds realized by the Trust strictly in accordance with the terms of the Plan, the
Confirmation Order, and this Trust Agreement. 
  

 7 

 (2) Protection of Trust Property. 
  
 The Trustee shall manage and protect the Trust Property. 
  
 (3) Receipt and Distributions of Cash. 
  
 Cash received by the Trust shall be held in the Trust, or distributed to the Disbursing Agent, if any, by the Trustee
strictly in compliance with the terms of the Plan, the Confirmation Order, and this Trust Agreement. After the satisfaction of, or creation of reserves reasonably determined by the Trustee to be adequate for, Secured Claims, Administrative Claims,
Professional Claims, Priority Claims and Trust Expenses, as required by Plan section 9.2, the Trustee shall be obligated to make (a) a Distribution to the holders of Trust Beneficial Interests, as required by Plan sections 9.5, 9.6, 9.7 and 9.16, of
all Cash held by the Trust in excess of amounts paid to or reserved for such Claim Holders and expenses, provided that the amount of Cash held by the Trust at any time and available for such Distribution is equal to one million dollars ($1,000,000)
or more, and (b) an annual Distribution at any time required by Plan section 9.5. 
  
 (4) Approval of Quarterly Budgets. 
  
 (a) The Trustee shall present to the Oversight Committee a proposed quarterly budget at least thirty (30) days in advance of the beginning of each calendar quarter during the term of the Trust (each, a “Quarterly Budget”);
provided, however, the initial Quarterly Budget shall cover the period from the Effective Date through and including March 31, 2005. Each Quarterly Budget shall estimate income and inflows to the Trust and Trust Expenses to be incurred for the
succeeding calendar quarter and allocate such estimated Trust Expenses to categories which the Trustee shall reasonably create, including without limitation (i) Operating Expenses (including salaries, expenses, other overhead for employees
and consultants employed by the Trust, rent, supplies, utilities, security and insurance), (ii) Trust Professional Expenses (legal and other professional fees and expenses to be incurred by the Trust), (iii) Oversight Committee
Expenses (including legal and other professional fees and expenses to be incurred by the Oversight Committee and reimbursement of Oversight Committee member expenses), (iv) Taxes (taxes owed or to be owed by the Trust with respect to the
activities of the Trust, including taxes on income), and (v) Other; and the total of all budgeted Trust Expenses for such calendar quarter. 
  
 (b) The Oversight Committee, within ten (10) business days of receipt of a proposed Quarterly Budget, may approve the proposed Quarterly Budget, or, in
writing, object to, or request additional information with respect to, any individual categories of expenses set forth in such budget. If the Oversight Committee requests additional information or objects to any categories in the Quarterly Budget,
the Trustee shall provide supplementary information to the Oversight Committee in support of the objected categories within ten (10) business days of the receipt of such request or objections. The Oversight Committee shall have ten (10) business
days to respond to such additional information, by approving the Quarterly Budget as so supplemented, or to object further to the proposed budget. The Oversight Committee shall not unreasonably or arbitrarily withhold approval of any Quarterly
Budget or any category of expenses set forth therein. The Quarterly Budget shall be deemed approved by the Oversight Committee if the Oversight Committee does not disapprove or deliver questions with respect to the budget during the ten-day period
therefor as required in this section. 
  

 8 

 (c) In the event the Oversight Committee has not approved (or been deemed to approve) a Quarterly Budget
in its entirety by the commencement of the calendar quarter to which the budget pertains, all categories of Trust Expense in the proposed budget which the Oversight Committee has not objected to or disapproved, shall become the approved Quarterly
Budget for such items for the term of the budget, and the Trustee and Oversight Committee shall negotiate in good faith to resolve all remaining questions and objections, subject to the rights of the parties to seek Court review, pursuant to section
9.a hereof, for the non-approved categories of Trust Expense for which agreement has not been reached. In the event of a dispute with respect to any categories in the Quarterly Budget proposed for the period commencing on the Effective Date, the
Trustee shall be authorized to expend funds in the ordinary course of the Trust’s affairs (i) in accordance with the proposed budget for the term of the budget for any categories which the Oversight Committee has approved or been deemed to
approve, or (ii) which are essential to avoid damage to or destruction of trust property, or (iii) do not exceed 50% of the amount in the proposed Quarterly Budget for any non-approved category of expense pending resolution of the dispute with
respect to such disputed categories by negotiation among the parties or by the Court. In the event of a dispute with respect to any proposed Quarterly Budget after the initial Quarterly Budget, the Trustee shall be authorized to expend funds in the
ordinary course of the Trust’s affairs (iv) in accordance with the proposed budget for the term of the budget for any categories which the Oversight Committee has approved or been deemed to approve, or (v) which are essential to avoid damage to
or destruction of trust property, or (vi) do not exceed 50% of the amount in the proposed Quarterly Budget for any non-approved category of expense pending resolution of the dispute with respect to such disputed categories by negotiation among the
parties or by the Court. While a dispute is pending with respect to any categories of expenditures, the Trustee may carry over to subsequent calendar quarters any amounts of permitted expenditures in the applicable budget for a prior calendar
quarter which are not expended in such prior quarter. 
  
 (5)
Compliance with Quarterly Budgets. 
  
 The Trustee may not spend
funds of the Trust nor incur debts or Trust Expenses for more than one hundred ten percent (110%) of the aggregate amount of Trust Expenses contained in such budget for any calendar quarter, without obtaining the prior written consent of the
Oversight Committee to an amended Quarterly Budget for such period, except as otherwise provided in this section and section 3.b.(4), provided that the expenditure limitations in this section shall not apply to the Trust Expenses included in
clause (iii) of section 3.b(4)(a) (Oversight Committee Expenses) to the extent such expenses exceed the amount budgeted for that category. The statement of income and inflows in any Quarterly Budget shall be the Trustee’s reasonable
estimate and it shall not be a default under this Trust Agreement or otherwise constitute a breach by the Trustee if such estimate is not achieved during the period of the Quarterly Budget. Promptly after the Trustee determines in good faith that
expenditures may exceed the amounts permitted under this Trust Agreement for any quarter, the Trustee shall notify the Oversight Committee and shall promptly deliver to the Oversight Committee a proposed amendment to the then applicable Quarterly
Budget. Following receipt of such proposed amendment, the provisions of section 3.b(4)(b) and (c) shall apply with respect to such proposed amended Quarterly Budget, except that, the phrase “the commencement of the initial calendar quarter to
which the budget pertains” shall mean “the date as of which the expenditures for such calendar quarter exceed the maximum amount of expenditures permitted for such quarter based upon the then-approved Quarterly Budget.” 

  

 9 

 (6) Trust Expenses. 
  
 The Trustee shall pay, in the ordinary course of the Trust’s affairs pursuant to the Quarterly Budget (plus permitted
overruns), any Trust Expenses incurred in the ordinary course of the Trust’s affairs, including, without limitation, the reasonable fees and expenses of professional persons incurred by the Trust or the Oversight Committee, and any fees and
expenses incurred in connection with the implementation of the Plan, subject to the limitations on expenditures contained in the Quarterly Budget and this Trust Agreement. 
  
 (7) Reserves. 
  
 (a) The Trustee shall create on the books of the Trust (or cause the Disbursing Agent, if any, to create) adequate reserves for the payment of Trust
Expenses prior to making, or causing the Disbursing Agent to make any Distribution to the Trust Beneficiaries subject to the approval of the Oversight Committee pursuant to section 3.c.6. Subject to the provisions of the Plan and the Confirmation
Order, the Trust shall pay Allowed Administrative Claims and Allowed Priority Claims in full in Cash as soon as practicable after the Effective Date, unless the party entitled to such payment agrees or shall have agreed to a different treatment of
its Claims, provided that payment of an Allowed Administrative Claim or Allowed Priority Claim shall not be required to be made until such payment would have become due in the ordinary course of the Debtors’ businesses or under the terms
governing such Claim in the absence of the Cases. 
  
 (b) The
Trustee shall create or cause the Disbursing Agent, if any, to create, the Reserve for Disputed Claims in accordance with Plan section 9.8. The applicable Quarterly Budget shall include the establishment of the Reserve for Disputed Claims as
required by Plan section 9.8 in connection with any proposed Distribution by the Trust for the benefit of the Trust Beneficiaries. The Trustee shall establish the Reserve for Disputed Claims and other reserves, as required by Plan section 9.2.
Amounts necessary to satisfy the amount of any Distribution with respect to all Disputed Class 4 Claims shall be allocated by the Trustee (or the Disbursing Agent, if one is appointed) to the Reserve for Disputed Claims for the benefit of the
Holders of such Disputed Claims, provided that the Trustee (and the Disbursing Agent) shall not be required to place Cash into a separate account or otherwise segregate funds from the assets of the Trust. 
  
 (8) Reports to Oversight Committee. 
  
 (a) Within thirty (30) days following the end of each calendar quarter, the
Trustee shall provide each member of the Oversight Committee with a reconciliation of actual Trust Expenses paid or incurred during the preceding calendar quarter to the estimated Trust Expenses set forth in the Quarterly Budget for the previous
quarter and, from time to time, such other financial information the Oversight Committee may reasonably request. 
  
 (b) The Trustee shall be available from time to time on reasonable notice to report to the Oversight Committee regarding the status of (i) the
administration of this Trust, (ii) the collection and Distribution of the Trust Property, and (iii) the status of all Litigation. Upon reasonable request by the Oversight Committee, the Trustee shall promptly prepare, or cause to be prepared, such
statistical data and written and oral reports as are reasonably necessary to keep the Oversight Committee or the Trust Beneficiaries, as the case may be, fully apprised of the condition and status of the Trust Property and any other activities of
the Trust hereunder. 
  
 (9) Annual Reports to Trust
Beneficiaries. 
  
 The Trustee shall provide to the Trust
Beneficiaries, with a copy to the Oversight Committee, (a) within ninety (90) days of the end of each calendar year, an annual report containing (i) reasonable information regarding material transactions taken by the Trust and the 
  

 10 

 results of the activities of the Trust for such calendar year, (ii) a statement of receipts and disbursements of the
Trust during the year, (iii) unaudited financial statements for the Trust, (iv) the status of adjudication of objections to Claims, (v) a description of pending, settled and resolved litigation matters, and (vi) a description of the Distributions to
Trust Beneficiaries, and (b) as and when due, such other information and reports as are required by law. 
  
 (10) Reports to Court. 
  
 The Trustee, on behalf of the Trust, shall File with the Court and serve on the Trust Notice Parties such reports as are required by the Plan, the
Confirmation Order, or the Guidelines of the Office of the United States Trustee for the Central District of California to the extent such Guidelines are applicable to the Trust. 
  
 (11) Transfers of Trust Beneficial Interests. 
  
 The Trustee shall record transfers of Trust Beneficial Interests in the records of the Trust, provided that each such
transfer shall be in strict compliance with the restrictions on transfer of Trust Beneficial Interests set forth in the definition of that term in Plan section 1.2.96, and the assignee of such Trust Beneficial Interest shall certify in writing the
compliance with such restrictions on transfer to the Trustee’s satisfaction, in its sole discretion. The Trustee shall notify any holder of such a Trust Beneficial Interest if the Trustee determines that any requested transfer does not comply
with the Trust Beneficial Interest Transfer Restrictions and such requested transfer may be rejected by the Trustee. In the case of a rejected transfer, the registered holder of the Trust Beneficial Interest shall remain the Holder of such interest
for all purposes of the Trust, and the Trust and the Trustee shall have no duty to the purported transferee of such interest. The Court shall have the exclusive jurisdiction to review any decision of the Trustee with respect to the transfer of any
Trust Beneficial Interest, unless the Court abstains from hearing any such dispute. 
  
 (12) Supervision of Disbursing Agent. 
  
 If a Disbursing Agent is employed on behalf of the Trust, the Trustee shall direct and supervise all activities of the Disbursing Agent with respect to the Plan and the Trust Property, and shall cause the Disbursing Agent to make the
Distributions to the Trust Beneficiaries entitled thereto as and when the Plan requires. In the event that the Disbursing Agent resigns, is unable to continue to serve, or is removed, the Trustee shall appoint a successor Disbursing Agent with the
consent of the Oversight Committee. The Trustee may change the terms of the employment of the Disbursing Agent, including compensation, with the consent of the Oversight Committee. 
  
 (13) Performance Under Assumed Executory Contracts. 
  
 The Trustee shall perform, or cause the Trust to perform, the Debtors’ obligations under Assumed Executory Contracts
which have been assigned to the Trust. 
  
 (14) Investment of
Cash. 
  
 The Trustee shall invest all Cash held by the Trust in
demand, time deposit and depositary accounts (including certificates of deposit) held by banks, other savings institutions or securities institutions, and other liquid investments such as United States Treasury instruments. 
  
 (15) Register of Disputed Claims. 
  
 (16) The Trustee shall create and maintain a register of Disputed Claims.
Such register shall include the Face Amounts for such Disputed Claims upon which to calculate the funds of the Trust to be allocated to the Reserve for Disputed Claims, and a record of all Distributions which have been withheld from the Holders of
such Disputed Claims. 
  

 11 

 (17) No Duty to Provide Information re Reorganized Debtors. 
  
 The Trust and the Trustee shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Person with any credit or other information with respect to the Debtors other than to the Oversight Committee. 
  
 (18) Payment of U.S. Trustee Quarterly Fee. 
  
 The Trustee shall cause to be paid any and all fees due and payable pursuant to section 1930 of title 28 of the United
States Code, including, without limitation, any U.S. Trustee quarterly fees incurred pursuant to section 1930(a)(6) of title 28 of the United States Code. As provided in Plan section 7.9, the Trust shall not be required to pay any fees to the United
States Trustee based on any transfers of assets to or from the Trust. 
  
 (19) Records. 
  
 The Trustee
shall maintain appropriate books and records of the activities and operations of the Trust, including records of receipts and Distributions from the Trust and to the Disbursing Agent and Trust Beneficiaries. The Oversight Committee shall be
permitted access to and to copy such books and records upon reasonable request. In addition, the Trustee shall maintain all original documents concerning the Trust Property, including all documents received from the Debtors for use by the Trustee
and the Oversight Committee. 
  
 (20) Compliance with Tax Laws.

  
 The Trust shall comply with all withholding and reporting
requirements imposed by any federal, state, local, or foreign taxing authority and shall comply with all such requirements to the extent any Distributions under the Plan are subject to any such withholding and reporting requirements. The Trustee
shall be responsible for filing all of the tax returns and other tax filings, as may be required by applicable law, for the Trust. 
  
 (21) Compliance with the Consolidation Stipulation and Order. 
  

The Trustee shall comply with the Consolidation Stipulation and Order. 
  
 (22) Trust Beneficial Interests. 
  

The Trustee shall, on an annual basis, certify to the Oversight Committee that the Trustee will not take any action to encourage any trading in the
Trust Beneficial Interests or in any instruments tied to the value of the Trust Beneficial Interests. 
  
 c. Approval of Oversight Committee for Prior-Approval Actions. 
  
 The Trustee shall manage the Trust and the Trust Property in the Trustee’s reasonable business judgment, except as
otherwise provided in the Plan, the Confirmation Order or this Trust Agreement, provided, the Trustee shall consult with the Oversight Committee in the ordinary course of the administration of the Trust regarding all actions which the Trustee
or the Oversight Committee believes are material to the Trust and which the Trustee intends to take and not to take. 
  

 12 

 The Trustee is not authorized to take any of the following actions (“Prior-Approval
Actions”) without the approval of the Oversight Committee: 
  
 (1) Appoint a Disbursing Agent, or appoint any successor Disbursing Agent following the death, disability or termination of a previously-appointed Disbursing Agent, provided it shall not be a Prior-Approval Action for the Trustee to
terminate any Disbursing Agent if the Trustee certifies to the Oversight Committee that the Trustee is not satisfied, in the Trustee’s sole discretion, with the performance by the Disbursing Agent of its duties under this Trust Agreement.

  
 (2) Adopt or amend a Quarterly Budget. 
  
 (3) Employ any professional, obtain particular services from any such
professional or pay compensation or expense reimbursement to such professionals, to the extent the Oversight Committee has the right to object to such matters in section 3.a.14. 
  
 (4) Pay Trustee Expenses, including, without limitation, compensation or fees for professionals employed by the Trust,
other than Trust Expenses which have been authorized pursuant to a Quarterly Budget under section 3.b(4) or are authorized pursuant to this Trust Agreement, including, without limitation, section 3.b(5) and this section 3.c(4); provided,
however, it shall not be a Prior-Approval Action for the Trustee to incur or pay Trust Expenses in any calendar month in an amount not in excess of $10,000, whether or not they are included in an approved Quarterly Budget, or are in excess of the
amounts otherwise approved pursuant to this Trust Agreement. 
  
 (5) Sell any Trust Property consisting of a parcel of real property for an aggregate sale price of less than eighty percent (80%) of its Appraised Value for parcels with an Appraised Value of $1,000,000 or less, and ninety
percent (90%) of its Appraised Value for parcels with an Appraised Value in excess of $1,000,000, provided, that the Trustee may enter into a contract to sell any such Trust Property so long as the approval of the Oversight Committee is a
condition to the obligation of the Trust to sell the property. 
  
 (6) Create reserves on the books of the Trust (or cause the Disbursing Agent, if any, to create reserves) for the payment of Trust Expenses, Allowed Administrative Claims or Allowed Priority Claims, provided that the Trustee shall be
under no obligation to make any Distribution to Trust Beneficiaries until the reserves required by the Plan, the Confirmation Order or this Trust Agreement, as finally determined by the Oversight Committee, have been established. In the event of a
dispute between the Oversight Committee on the one hand and the Trustee on the other concerning the amount of reserves: (a) the Trustee shall file a motion with the Bankruptcy Court to resolve such dispute within ten (10) business days of the
Oversight Committee’s giving the Trustee written notice that it disagrees with any reserve amount and requesting that the Trustee file a motion to resolve such dispute; and (b) on the condition that the Trustee files the motion within the time
period provided for herein, the Trustee shall be under no obligation to make any distribution from the disputed reserve amount until such time as the Bankruptcy Court has entered an order on said motion. 
  
 (7) Initiate litigation to recover on account of any claim or cause of
action held by the Trust not pending on the Effective Date in which the Trustee reasonably estimates that the legal and other costs and expenses incurred in connection with such litigation will exceed $50,000, provided that the Trustee shall
give notice to the Oversight Committee before it commences any litigation whether or not the Trustee believes such litigation requires Oversight Committee approval pursuant to this section, and provided further, this section shall not apply
to the Filing of objections to Claims or Administrative Claims. 
  

 13 

 (8) Fail to initiate, or to prosecute in good faith, litigation to recover on account of any claim or
cause of action held by the Trust which the Oversight Committee requests the Trustee to initiate, provided, that, if the Oversight Committee requests the Trustee to commence and prosecute litigation and the Trustee refuses to commence or
prosecute such litigation, the Oversight Committee shall have the authority to initiate and prosecute such litigation without the necessity of obtaining Court approval. 
  
 (9) Settle any objection to any Disputed Claim where the portion of the Disputed Claim which is in dispute exceeds $50,000.

  
 (10) Settle any litigation seeking to recover from any Person
where the discount from the amount sought by the Trust exceeds $50,000, or any determination to defend or prosecute any litigation in lieu of settlement where the portion of the claim compromised exceeds $50,000. 
  
 (11) Fail to purchase insurance against such risks and in such amounts as
the Oversight Committee determines to be appropriate, to protect the Trustee, the Oversight Committee and its members, from personal liability for any actions taken in the course of its and their activities on behalf of or in connection with the
administration of the Trust and the Oversight Committee, provided that such insurance is available for a premium in a reasonable amount, and provided further, that in the event of a dispute between the Trustee and the Oversight
Committee as to whether such insurance is available for a reasonable premium, the Court shall have jurisdiction to resolve the dispute as provided in section 9.a. and the Trustee shall purchase such insurance and maintain such insurance in effect
pending resolution of such dispute. 
  
 (12) (a) Borrow, or repay
and thereafter reborrow, funds or (b) grant any security interest, lien or encumbrance to secure any obligation of the Trust to pay or repay any obligation for borrowed funds; provided, however, that the Trustee shall be under no restriction to
provide reasonable security deposits, not in excess of $20,000 in any single transaction, in the ordinary course of business operations. 
  
 (13) Spend funds of the Trust to pay any material expenses in connection with the dissolution of CF Bermuda or the Non-Debtor Affiliates in excess of (a)
with respect to CF Bermuda, amounts approved by the Oversight Committee, or by the Court, and (b) with respect to the Mexico Affiliates, amounts approved by the Committee prior to the Effective Date, without the approval of the Oversight Committee,
provided, that this prohibition shall not apply to indirect Trust Expenses incurred by the Trust or the Trustee in the administration of the dissolution of CF Bermuda and the Non-Debtor Affiliates. 
  
 (14) Retain or hire employees or consultants other than within the aggregate
cost for such Persons which is set forth in an approved Quarterly Budget or is otherwise permitted pursuant to this Trust Agreement. 
  
 (15) Cancel, terminate, or modify or change in any material respect any insurance obtained in accordance with section 3.c.11 or settle any claim or
dispute with any carrier of such insurance or agree to any settlement or resolution of any claim asserted against any person or entity covered by such insurance. 
  
 d. Limitations on Trustee’s Powers. 
  
 The Trust and the Trustee are not authorized to act with respect to any Prior-Approval Action or take or omit to take any
other required action which, pursuant to the Plan, the 
  

 14 

 Confirmation Order or this Trust Agreement, requires the approval of the Oversight Committee, without such approval,
unless the Court authorizes the Trustee to take, or omit to take, any action which constitutes a Prior-Approval Action on notice and opportunity for hearing to the Oversight Committee. 
  
 e. Other Limitations on Powers. 
  
 (1) All powers of the Trustee shall be exercised in accordance with the provisions of the Plan, the Confirmation Order, and
this Trust Agreement, are subject to the approval of the Oversight Committee to the extent provided in the Plan, the Confirmation Order, and this Trust Agreement. 
  
 (2) The Trustee shall not at any time, on behalf of the Trust or the Trust Beneficiaries, enter into or engage in any trade
or business, and no portion of the Trust Property or the Trust Property shall be used or disposed of by the Trustee in furtherance of any trade or business. The Trustee shall be restricted to the holding and collection of the Trust Property and the
payment and distribution thereof for the purposes set forth in this Trust Agreement and to the conservation and protection of the Trust Property and the administration thereof in accordance with the provisions of this Trust Agreement. The
prohibitions in this section shall not apply to the Trustee seeking governmental or other approvals to change the zoning or permitted use of any real property parcels included in the Trust Property, or to the entry into leases of such parcels of
real property pending the Trustee’s decision to sell, or sale, of such parcels, provided, however, that the Trustee shall not be authorized to construct any improvements or infrastructure on any such parcel, including, by way of example,
sewers, roads or utilities, but provided further, that repairs and maintenance of any improvements which were on such real property parcels at the time such parcels were conveyed to the Trust by the Debtors shall not constitute engaging in any trade
or business in violation of the prohibitions in this section. 
  
 (3) Except as provided in the Plan, the Confirmation Order, or this Trust Agreement, in no event shall the Trustee cause or permit the Trust to receive transfers of (i) any publicly-traded equity securities, (ii) any readily-marketable
assets, (iii) the operating assets of a going business, (iv) fifty percent (50%) or more of the unlisted equity securities of any single corporation or of any single entity which is treated as a corporation for federal income tax purposes, which
holds operating assets, or (v) interests in any general or limited partnership, or any entity which is treated as a partnership for federal income tax purposes, which holds operating assets and conducts a business with such assets, provided that the
Trust may receive (x) any such assets described in clauses (i) to (v) if the Trustee causes such assets to be disposed of as soon a reasonably practicable after receipt, and (y) any assets described in clauses (i) or (ii), to the extent this Trust
Agreement permits Cash held by the Trustee to be invested in such assets. Except as otherwise provided in the Plan, the Confirmation Order, and this Trust Agreement, the Trustee shall not receive any other property, make any distribution, satisfy or
discharge any Claims or Trust Expenses, or otherwise take any action which is inconsistent with a complete liquidation (as that term is used and interpreted by sections 336 and 331 of the Internal Revenue Code, Treasury Regulations promulgated
thereunder, and rulings, decisions, and determinations of the Internal Revenue Service and courts of competent jurisdiction) of the Trust Property or any action which would jeopardize the status of the Trust as a “liquidating trust” for
federal income tax purposes within the meaning of Treasury Regulation § 301.7701-4(d). 
  
 f. Prior-Approval Actions by a Disbursing Agent. 
  
 In the event a Disbursing Agent is employed by the Trust, the Trustee shall not permit or suffer the Disbursing Agent to take any Prior-Approval Action without the approval of the Oversight Committee with respect to
such action as required by section 3.a hereof. 
  

 15 

 g. Representative of the Estate. 
  
 The Trustee shall be the “representative of the estate appointed for such purpose,” within the meaning of section
1123(b)(3)(B) of the Bankruptcy Code, as set forth in Plan section 7.4 (17). In connection with the settlement of any litigation within the scope of the Trustee’s authority under this Trust Agreement, the Trustee shall be empowered to
waive all rights and benefits under section 1542 of the Civil Code of the State of California and any common law principles of similar effect. 
  
 h. Surrender of Instruments. 
  
 In connection with all Distributions, the Trustee may, or may direct the Disbursing Agent to, enforce the requirement in Plan section 9.13 that the
holder of any Instrument surrender such Instrument to the Trustee as a condition to receiving any Distribution. Pursuant to Plan section 9.13, the Trustee may, in its reasonable discretion, waive the requirements of that section, with or without
requiring a bond or an affidavit of lost Instrument and indemnity from the Holder. 
  
 i. Term of the Trustee’s Employment. 
  
 The initial term of the initial Trustee’s employment as trustee shall be the period beginning on the Effective Date and continuing until the last day of the twelfth calendar month beginning on or after the
Effective Date. The Oversight Committee shall have the options to (a) extend the initial term for three (3) calendar month renewal periods and (b) employ the Trustee for an Hourly Term as set forth in the Term Sheet for Trustee’s Services. The
term of employment for any subsequent Trustee shall be as agreed to between the subsequent Trustee and the Oversight Committee. 
  
 j. Compensation for Trustee. 
  
 The initial Trustee’s compensation and reimbursement of expenses shall be as set forth in the Term Sheet for Trustee Services, or such other amounts
as may be agreed to by the Trustee and the Oversight Committee from time to time. The compensation, reimbursement of expenses and payment of other amounts for any subsequent Trustee shall be as agreed to between the subsequent Trustee and the
Oversight Committee in connection with the approval of the applicable Quarterly Budget or otherwise. In either case, Court approval of such amounts shall not be required. 
  
 k. Resignation of Trustee. 
  

The initial Trustee may resign at any time by giving not less than three (3) months prior written notice to the Oversight Committee and such
resignation shall be effective upon the later of the date provided in such notice and three (3) months after the date such written notice is received by the Oversight Committee, whether or not a successor Trustee has, as of such date, accepted his,
her or its appointment as successor Trustee, unless the Trustee agrees in its sole discretion to remain as Trustee beyond the expiration of such three month period. In the case of the resignation of the Trustee, a successor Trustee may be appointed
by the Oversight Committee without the approval of the Court, and shall be appointed by the Oversight Committee as promptly as possible, by an instrument in writing, signed and acknowledged on behalf of the Oversight Committee and delivered to the
resigning Trustee, whereupon such resigning Trustee shall convey, transfer, and set over to such successor Trustee by appropriate instrument or instruments all of the 
  

 16 

 Trust Property then not yet conveyed or otherwise undisposed of and all other assets then in the resigning Trustee’s
possession and held in the Trust. Court approval shall not be required for the appointment of such a successor Trustee. The successor Trustee shall thereupon be vested with all the rights, privileges, powers, and duties of the Trustee. Each
subsequent Trustee may resign and another may be appointed in its place in accordance with the terms of employment of any subsequent Trustee. Such subsequent Trustee shall be bound by this Trust Agreement to the same extent as the former Trustee
except as otherwise expressly agreed between such subsequent Trustee and the Oversight Committee. 
  
 l. Removal and Replacement of Trustee. 
  
 (1) The Oversight Committee may remove the Trustee then acting under this Trust, with or without cause, and appoint a new Trustee in his, her or its
stead, by providing written notice of such termination to the Trustee. The subsequent Trustee shall be vested with all the rights, privileges, powers, and duties of the Trustee herein named. In like manner, a new Trustee may be appointed from time
to time in writing, addressed to the Trustee then acting. 
  
 (2)
In the event of the death or disability (as defined in the Term Sheet for Trustee Services) of the initial Trustee, or removal of the initial Trustee with or without cause, a successor Trustee shall be selected by the Oversight Committee without the
need for approval of the Court, and such successor Trustee shall be vested with all the rights, privileges, powers, and duties of its, his or her predecessor. The initial Trustee shall be entitled to the compensation provided in section 5.1 of the
Term Sheet for Trust Services upon any such death, disability or removal. Any subsequent Trustee shall be entitled to such compensation upon removal without cause as has been agreed to between such subsequent Trustee and the Oversight Committee.

  
 (3) The provisions of the Term Sheet for Trustee Services
pertaining to the payment to the Trustee of a Retention Bonus, as provided for in section 5 thereof, and pertaining to Termination for Cause, as provided for in section 6 thereof, shall apply to and be incorporated herein concerning the Initial
Trustee, except as follows: “Cause” shall include, in addition to the items enumerated in section 6.1 of the Term Sheet for Trustee Services, the following: 
  
 (a) Breach of fiduciary duty; 
  
 (b) The Trustee’s willful failure to comply with any Quarterly Budget, including permitted overruns, approved by the Oversight Committee or by the
Court. 
  
 m. No Court Approval Required for
Actions. 
  
 The Trust and the Trustee shall not be
required to seek or obtain any approval from the Court for any actions the Trustee takes or does not take following the Effective Date except to the extent expressly required by the Plan, the Confirmation Order or this Trust Agreement, provided the
actions taken or the omission to take such actions are in compliance with the provisions of the Plan, the Confirmation Order, and this Trust Agreement. The Trustee shall not be required to give any notice of any proposed actions or actions taken by
the Trustee to any party, including the Oversight Committee or the Trust Notice Parties, except as provided in the Plan, the Confirmation Order, or this Trust Agreement. The Trustee’s conduct of the Trust and its receipt and disposition of the
Trust Property shall not be subject to the restrictions created under the Bankruptcy Code or any Bankruptcy Rules, other than restrictions expressly imposed by the Plan, the Confirmation Order or this Trust Agreement. 
  

 17 

 n. Discretionary Acts. 
  
 With respect to any actions which the Trustee may take in accordance with the Plan or this Trust Agreement which are not
Prior-Approval Actions, the Trustee may, at all times, act or refrain from acting with the approval of the Oversight Committee. With the approval of the Oversight Committee, the Trustee shall be absolutely entitled to take. or refrain from taking,
any discretionary action or to withhold any discretionary approval, and shall have no liability whatsoever to any Person based on such conduct. Notwithstanding any other provision of this Trust Agreement, the Trustee has no authority to alter, amend
or modify this Trust Agreement, except as is provided in paragraph 9.e, below. 
  
 o. Reliance on Advice of Legal Counsel and Other Advisors. 
  
 The Trustee shall be entitled to rely upon the advice of legal counsel, independent accountants, and other experts selected by the Trustee for that
purpose, and shall have no liability in connection with the taking or refraining to take any action in reliance upon such advice. 
  
 p. Limitations on Personal Liability. 
  
 The Trustee acting in its capacity as trustee of the Trust, and Kerry K. Morgan acting on behalf of the initial Trustee, shall not have any personal
liability to the Trust or the Trust Beneficiaries for any act it or he may do or fail to do as Trustee hereunder or on behalf of the initial Trustee, unless such action or failure to act constituted fraud, willful misconduct, or gross negligence;
provided however, the Trustee shall not have personal liability if the Trustee incurs or pays Trust Expenses in excess of the Quarterly Budget, including permitted overruns, approved by the Oversight Committee or by the Court. The Trustee, and Kerry
K. Morgan acting on behalf of the initial Trustee, shall not be liable in any event for any claims, liabilities or damages based upon or arising out of any conduct of the Trustee or Kerry K. Morgan, in the course of its or his activities as trustee,
unless such claims, liabilities or damages arise from its or his personal fraud willful misconduct, or gross negligence. 
  
 The Trustee, the Oversight Committee, and the members of the Oversight Committee shall not be liable for any indebtedness, liability or obligation
incurred or entered into on behalf of the Trust, including, without limitation, indebtedness, liabilities or obligations under agreements, undertakings or commitments entered into executed on behalf of the Trust by the Trustee or by any person
employed by the Trustee or the Trust, it being expressly understood that all such indebtedness, liabilities and obligations of, and claims against the Trust, shall be the sole responsibility of the Trust and shall be satisfied only from the Trust
Property, or such portion thereof as shall, under the terms of any agreement, be stated to be liable therefor. No claim or cause of action may be asserted against the Trustee, the Oversight Committee, or any member of the Oversight Committee on
account of any indebtedness, liability or obligation entered into on behalf of the Trust, whether by legal or equitable proceedings, or by virtue of any bankruptcy or non-bankruptcy statute, rule or regulation. 
  
 Any undertaking, contract or agreement entered into in writing by the Trust
may, except as otherwise provided by the Plan or the Trust Agreement, expressly disclaim the personal liability of the Trustee and the members of the Oversight Committee. 
  
 q. Indemnity of Trustee. 
  

The initial Trustee and Kerry K. Morgan shall be indemnified by the Trust to the extent set forth in section 10.2 of the Term Sheet for Trustee
Services. 
  

 18 

 r. No Bond. 
  
 The Trustee and any successor Trustee shall not be required to post a fidelity bond to serve hereunder. 
  
 s. Method of Payment. 
  
 Any payment of Cash to be made pursuant to the Plan or this Trust Agreement
shall be made in U.S. dollars, by a check drawn on a domestic bank or by wire transfer from a domestic bank, at the option of the Trustee, as provided in Plan section 9.10. 
  
 t. Indemnity of Oversight Committee and Members. 
  
 The Oversight Committee and each Member thereof shall be indemnified by the Trust, to the maximum extent permitted by law,
and shall be defended and held harmless with respect to any claims, liabilities, obligations, demands or causes of action of any kind asserted against the Oversight Committee or any member thereof arising from, related to or in any way connected
with the Trust, Trust Agreement, or any services performed by the Oversight Committee or individual Members in connection with the Trust Agreement, Plan or any decision made by them in connection therewith. Such indemnity shall include but not be
limited to payment of all costs and expenses, including reasonable attorneys’ fees, incurred in defending any claim or cause of action (whether or not the subject of any court proceeding) and the payment of any settlement or judgment.

  
 4. DISBURSING AGENT AND SUCCESSOR DISBURSING AGENT.

  
 a. Duties of Disbursing Agent. 
  
 The Disbursing Agent, if one is appointed to serve under this Trust
Agreement, may perform the obligations of the Trust under the Plan, the Confirmation Order, and this Trust Agreement with respect to all Distributions to Trust Beneficiaries, which include, without limitation, the Distribution of Trust Beneficial
Interests and Distributions of Cash payments, and the creation and funding of the Reserve for Disputed Claims. The Disbursing Agent shall not be permitted to retain from funds received for Distributions or payment of Claims, funds to satisfy Trust
Expenses the Disbursing Agent may incur in making any Distribution, including the compensation payable to the Disbursing Agent. The Trust shall pay to the Disbursing Agent amounts necessary to pay the compensation to which the Disbursing Agent is
entitled and to reimburse, or make advances to, the Disbursing Agent for Trust Expenses incurred by the Disbursing Agent, which compensation and reimbursement or advances shall be payable by the Trustee to the Disbursing Agent pursuant to Quarterly
Budgets. 
  
 b. Protection of Trust Property. 

 
 The Disbursing Agent shall manage and protect, at all times, the Cash
and any other Trust Property which are in the Disbursing Agent’s possession. 
  
 c. Investment of Cash. 
  
 The Disbursing Agent shall invest all Cash held by the Disbursing Agent in a manner consistent with the investment guidelines applicable to the Trustee, as set forth in section 3.b(14). 
  
 d. Records. 
  
 The Disbursing Agent shall maintain appropriate books and records of its
activities, including records of receipts and Distributions to the Disbursing Agent and Trust Beneficiaries. The Oversight Committee shall be permitted access to and to copy such books and records upon reasonable request. In addition, the Disbursing
Agent shall maintain all original documents coming into its possession concerning the Trust Property. 
  

 19 

 e. Compliance with Tax Laws. 
  
 To the extent the Disbursing Agent has any duty with respect to taxes separately from the duties of the Trustee, the
Disbursing Agent shall comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority. To the extent the Trustee does not satisfy any such requirements, the Disbursing Agent shall (i) comply
with all requirements to the extent any Distributions under the Plan are subject to any such withholding and reporting requirements, and (ii) file all of the tax returns required with respect to its Distributions and other tax filings as may be
required by applicable law with respect to the Distributions and payments made by the Disbursing Agent. 
  
 f. No Court Approval Required for Actions. 
  
 The Disbursing Agent shall not be required to seek or obtain any approval from the Court for any actions taken by the Disbursing Agent following the
Effective Date to the extent such actions are in compliance with the provisions of the Plan, the Confirmation Order, and this Trust Agreement, except to the extent expressly required by the Plan, the Confirmation Order, or this Trust Agreement. The
Disbursing Agent shall not be required to give any notice of any proposed actions or actions taken by the Disbursing Agent to any party, including the Oversight Committee and the Trust Notice Parties, except as provided in the Plan, the Confirmation
Order, or this Trust Agreement. The Disbursing Agent’s receipt and disposition of Trust Property shall not be subject to the restrictions created under the Bankruptcy Code, or any Bankruptcy Rules, other than restrictions expressly imposed by
the Plan, the Confirmation Order, or this Trust Agreement. 
  
 5. THE OVERSIGHT COMMITTEE. 
  
 a. Oversight
Committee Procedures. 
  
 A majority of the members of the
Oversight Committee shall constitute a quorum for purposes of action by the Oversight Committee. Any regular or special meetings of the Oversight Committee shall be called by its Chair or counsel upon such notice and in such manner as they may deem
advisable, provided that the Oversight Committee may adopt bylaws for the conduct of the affairs of the Oversight Committee. The Oversight Committee shall act by a decision made by a majority of its members in attendance at any meeting at which a
quorum of the Oversight Committee is present or is represented at the meeting, except as to matters which are required, pursuant to this Trust Agreement or any bylaws adopted by the Oversight Committee, to be approved by a super-majority or the
unanimous consent of the Oversight Committee. 
  
 b. Oversight
Committee as Representative of Creditors. 
  
 The Oversight
Committee shall consist of five members. The initial members of the Oversight Committee are identified in Recital E, above. The Oversight Committee shall constitute a representative of the Trust Beneficiaries for the purposes of, inter alia,
monitoring the implementation of the Plan and this Trust Agreement and the Distributions to the Trust Beneficiaries, in accordance with the terms of the Plan, the Confirmation Order and this Trust Agreement. 
  

 20 

 c. Retention of Professionals by the Oversight Committee. 
  
 In accordance with Plan section 8.4, the Oversight Committee shall be
entitled to employ legal counsel and such other professionals as may be necessary, in its reasonable discretion, at the expense of the Trust, to assist the Oversight Committee in the performance of its duties under this Trust Agreement. The
Oversight Committee shall not be required to obtain approval of the Court as a condition to the employment of such professionals or the approval of the Trustee. The Oversight Committee shall provide notice of its proposed employment of professionals
to the Trustee and the scope of services to be rendered and the Trustee shall have the right to object to any such employment or to the payment of compensation for services prior to such employment or upon the delivery of invoices to the Trust to
pay such compensation only to the extent that the Trustee asserts that such employment or payment constitutes a material waste of Trust Property, provided that the Oversight Committee shall be authorized to employ such professional for the
challenged services and the Trust shall pay the fees and expenses of such professional, as approved by the Oversight Committee, until the Trustee’s objections to such employment or compensation are resolved. 
  
 d. Oversight Committee Compensation and Liability. 
  
 In accordance with Plan section 8.3, the members of the Oversight Committee
shall serve without any compensation. The Trust shall reimburse the members of the Oversight Committee for their reasonable expenses, including travel and lodging expenses, incurred in connection with the performance of their duties as members of
the Oversight Committee. As set forth in Plan section 7.4(9), the Trust shall procure liability insurance on behalf of the Trustee and the Oversight Committee members as provided in sections 3.a(15) and 3.c(8) of this Trust Agreement. 
  
 e. Oversight Committee Reliance on Professionals. 
  
 The members of the Oversight Committee shall be entitled to rely upon the
advice of legal counsel, independent accountants, and other experts selected by the Oversight Committee, and shall have no personal liability for any actions taken in reliance upon such advice. 
  
 f. Removal of Members of the Oversight Committee for Cause.

  
 A member of the Oversight Committee may be removed for
cause, as determined by the unanimous vote of the other members of the Oversight Committee. 
  
 g. Appointment of Successor Members of the Oversight Committee. 
  
 In the event any member of the Oversight Committee resigns, is unable to continue to serve, or is removed by the Oversight Committee for cause as set
forth in the preceding section, or is removed at the discretion of the applicable Oversight Committee Member Institution, the Oversight Committee Member Institution for such member may appoint a successor to the discontinuing member reasonably
satisfactory to a majority of the remaining members of the Oversight Committee. In the event that the Oversight Committee Member Institution fails or refuses to appoint a successor member within a reasonable period after the resignation, incapacity,
or removal of a member, then the remaining members of the Oversight Committee may unanimously appoint a successor member. Any disputes with respect to the appointment of a successor member of the Oversight Committee shall be resolved by the Court as
set forth in section 9.a. 
  
 h. Oversight Committee Members
and their Institutions. 
  
 Except to the extent expressly
provided for herein, if any, this Trust Agreement 
  

 21 

 shall not govern or otherwise dictate the terms of the agency relationship between the members of the Oversight Committee
and their respective Oversight Committee Member Institutions, including, without limitation, under what circumstances, an Oversight Committee Member Institution can remove and replace its designated member and appoint a new one; provided, however,
nothing in this section precludes the Oversight Committee from removing a member for cause, pursuant to section 5.f of this Trust Agreement. 
  
 i. Duty of Oversight Committee. 
  
 The Oversight Committee shall have no duty or responsibility to any party Person other than the holders of Trust Beneficial Interests. 
  
 j. Dissolution of Oversight Committee. 
  
 The Oversight Committee shall dissolve upon the later of completion of all
Distributions required to be made to holders of Trust Beneficial Interests, and payment in full by the Trust of all Trust Expenses incurred by the Oversight Committee and all expense reimbursements owed by the Trust to any member of the Oversight
Committee, to the extent such Trust Expenses and expense reimbursements are payable pursuant to the terms of this Trust Agreement. 
  
 k. Oversight Committee Bylaws. 
  
 The Oversight Committee shall have the power to make bylaws concerning its governance, Oversight Committee proceedings and any other matters relating to
the operation of the Oversight Committee. To the extent that provisions of the Oversight Committee’s bylaws are inconsistent with the provisions of Section 5. hereof, the bylaws shall take priority so long as the bylaws are not inconsistent
with the Plan, any Court Order or any substantive provisions of the Trust Agreement that do not involve the governance or operation of the Oversight Committee. 
  

6. PROTECTIONS AFFORDED TO THE TRUSTEE AND OVERSIGHT COMMITTEE. 
  
 a. Limitation on Liability. 
  
 The Trustee and the Oversight Committee shall have no duties or responsibilities except those expressly set forth in this
Trust Agreement, the Plan, or the Confirmation Order. Except as provided herein, by law, in the Plan, or by the Confirmation Order, no recourse shall be had, directly or indirectly, against the Trustee or Kerry K. Morgan personally, on behalf of the
initial Trustee, or against the Oversight Committee or any member thereof, or any agent, attorney, or other advisor to the Trustee or Oversight Committee, by legal or equitable proceedings or by virtue of any statute or otherwise, or any deed of
trust, mortgage, pledge, note, nor upon any promise, contract, instrument, undertaking, obligation, covenant, or agreement whatsoever executed by the Trustee under the Plan or by the Oversight Committee or by any person employed by the Trustee or
the Oversight Committee, or by reason of the creation of any indebtedness by the Trustee under this Trust for any purpose authorized by this Trust Agreement, it being expressly understood and agreed that all such liabilities, covenants, and
agreements of the Trustee or the Oversight Committee or any such employee, whether in writing or otherwise, under this Trust Agreement shall be enforceable only against and be satisfied only out of the Trust Property or such part thereof as shall
under the terms of any such agreement be liable therefor or shall be evidence only of a right of payment out of the income and proceeds of the Trust Property, as the case may be; and every undertaking, contract, covenant, or agreement entered into
in writing by the Trust shall, except as otherwise modified by the Plan or the Confirmation Order, expressly disclaim the personal liability of 
  

 22 

 the Trustee and the members of the Oversight Committee, provided that nothing contained in this section shall
excuse or release the Trustee, Kerry K. Morgan, or any member of the Oversight Committee from any liability they may have arising from its, his or her own fraud, willful misconduct or gross negligence. The Trustee, Kerry K. Morgan, and the members
of the Oversight Committee shall not, however, be jointly liable for any liability of any one of them hereunder. 
  
 b. Reliance. 
  
 The Trustee and Oversight Committee members, respectively, shall be entitled to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype, or facsimile message, cablegram, order, or other document or telephone message signed, sent, or made by the proper Person, and, upon advice of counsel with respect to all legal matters
pertaining to this Trust Agreement and its or their duties hereunder. At any time, upon presentation by a Trust Beneficiary of identification which satisfies the Trustee in its sole and absolute discretion that the Trust is holding funds for the
Trust Beneficiary’s benefit, the Trustee shall release such funds to the Trust Beneficiary, without penalty and without interest. 
  
 7. LIMITATIONS ON TRANSFER OF TRUST BENEFICIAL INTERESTS. 
  

As set forth in the definition of the term “Trust Beneficial Interests” in the Plan, Trust Beneficial Interests may not be transferred, sold,
assigned, hypothecated or pledged by any holder except that they may be assigned or transferred by will, intestate succession or operation of law. The Trust and the Trustee shall not be required to recognize, and shall not recognize, any transfer of
a Trust Beneficial Interest which is not established to the reasonable satisfaction of the Trustee as being in accordance with the restrictions on transfer set forth in this section. 
  
 8. CERTAIN TAX MATTERS 
  
 a. Liquidating Trust. 
  
 The Trustee acknowledges that it intends to administer the Trust so that it qualifies as a liquidating trust under Treasury Regulation §
301.7701-4(d) that will be a “grantor trust” under the United States federal income tax laws. The provisions of this Trust Agreement shall be interpreted in a manner which is consistent with such characterization as a liquidating trust.
The Trust Beneficiaries will be treated for federal income tax purposes as the grantors of the Trust and the deemed owners of the Trust. 
  
 b. Trust Earnings. 
  
 (1) All interest or other earnings on Cash held in the Trust, including interest or earnings on Cash allocated by the Trustee to any reserve accounts,
will be allocated to the Trust Beneficiaries on an annual basis as of the end of the Trust’s tax year, and each Trust Beneficiary shall be responsible to report and pay the taxes due on its share of such income or earnings, whether or not
amounts are actually distributed by the Trustee or the Disbursing Agent to the Trust Beneficiaries to pay such taxes. No interest or earnings on Cash held in the Trust shall be allocated to Persons who, as of the end of the Trust’s tax year,
are Holders of Disputed Claims. 
  
 (2) All gains on the sale or
other disposition of any Trust Property shall be allocated by the Trustee to all of the Holders of Class 4 Claims who ultimately hold Allowed Class 4 Claims. Therefore, any Distribution consisting of proceeds of any such gains shall be allocated
between the Trust Beneficiaries and the Reserve for Disputed Claims in accordance with section 3.b(7)(b). 
  

 23 

 c. Tax Returns. 
  
 The Trustee shall file tax returns for the Trust as a grantor trust pursuant to Treasury Regulation Section 1.671-4(a) or
(b), as appropriate. The Trustee shall also file tax returns for the Reserve for Disputed Claims to the extent required pursuant to Internal Revenue Code § 641. 
  
 d. Valuation of Trust Property. 
  
 On or before a date which is thirty (30) days after the Effective Date, the Trustee will determine the fair market value of
the assets that were considered to have been transferred by the Debtors to the Trust Beneficiaries for United States federal income tax purposes as described in Plan section 7.13, and within twenty (20) days thereafter, the Trustee shall send
a written report containing such determinations to the Trust Beneficiaries. Such assets shall be valued consistent with such determinations by the Trustee by all parties including, but not limited to, the Trustee and the Trust Beneficiaries (or all
applicable successors or permitted transferees) for all federal income tax purposes. 
  
 9. MISCELLANEOUS. 
  
 a.
Court Jurisdiction. 
  
 The Court shall have exclusive
jurisdiction of all matters arising out of, or related to this Trust Agreement, the Trust, the Trustee in such capacity, and the Oversight Committee, including, without limitation, any dispute or controversy with respect to the performance or
interpretation of this Trust Agreement and any Distributions to be made hereunder to the fullest extent set forth in the Plan. To the extent the Court does not have jurisdiction with respect to any such matter, the federal and state courts presiding
in Los Angeles County, California shall have exclusive jurisdiction over any such matters, and the parties hereto consent to the jurisdiction of such courts. 
  
 In the event of any dispute between the Trustee and the Oversight Committee with respect to any matter under this Trust Agreement, including, without
limitation, any decision by the Trustee or the Oversight Committee to take or not take any action for which either has authority hereunder, any party may seek review by the Court on notice and opportunity for hearing to the Trustee, the Oversight
Committee and the Trust Notice Parties, provided that nothing in this Trust Agreement prevents the Court from abstaining from exercising its jurisdiction hereunder. 
  
 b. Final Distribution Date and Termination. 
  
 In accordance with Plan section 7.14, the Trust shall remain and continue in full force and effect until the earlier of:
(a) all of the Trust Property has been liquidated, all Trust Expenses and obligations incurred in administering the Trust have been fully paid and discharged, all remaining income and proceeds of the Trust Property have been distributed to the Trust
Beneficiaries in compliance with the Plan, the Confirmation Order, and this Trust Agreement, and the Cases have been closed in accordance with Plan section 6.12, and (b) the expiration of five (5) years from the Effective Date, provided, that the
Trustee may request the Court to extend the permitted life of the Trust for such additional period as is reasonably necessary to conclude the liquidation and distributions, not to exceed a total of ten (10) years from the Effective Date, which
request shall be Filed so the Court may consider the request within six (6) months prior to the expiration of the initial five-year term, and provided further, that the Trustee will make continuing efforts to liquidate the Trust Property, make
timely Distributions, and not unduly delay the termination of the Trust and this Trust Agreement. 
  

 24 

 c. Successors and Assigns. 
  
 This Trust Agreement shall be binding upon, and shall inure to the benefit of, the Trust Beneficiaries, each of the parties
hereto and their respective successors and permitted assigns. 
  
 d. No Third Party Beneficiaries. 
  
 This Trust
Agreement is entered into for the sole and exclusive benefit of the Oversight Committee, the Trustee, Kerry K. Morgan on behalf of the initial Trustee, the Disbursing Agent, if any, the Trust Beneficiaries, and their permitted successors, designees
and assigns, and no other person shall have any rights hereunder. 
  
 e. Modification. 
  
 This Trust Agreement shall
not be amended or modified in any respect and at any time except by a writing signed by the Trustee with the consent of the Oversight Committee, or by Order of Court, provided, however, that, if such modification materially adversely affects
any Trust Beneficiaries, such modification shall be approved by the Court following a hearing on notice and opportunity for hearing to the Trust Beneficiaries who may be adversely affected by the proposed amendment or modification and to the Trust
Notice Parties. No amendment or modification shall be made to this Trust Agreement that would be inconsistent with the terms of the Plan or the Confirmation Order, or with the requirements of a “liquidating trust” as set forth by the
Internal Revenue Service in Revenue Procedure 94-45, 1994-2 C.B. 684, or any additions or amendments thereto. 
  
 f. Other Documents and Actions. 
  
 Each of the Oversight Committee, the Trustee, and the Disbursing Agent, if any, will execute such documents and take such action as is necessary to
effectuate and implement the transactions provided for herein and in the Plan. 
  
 g. Principal Office of the Trust. 
  
 The initial principal office of the Trust shall be: 
  
 The CFC Trust 
  
 805 Broadway,
Suite 205 
  
 Vancouver, WA 98660 
  
 The Trustee may relocate the principal office of the Trust from time to time to another
location within the continental United States selected by Trustee after written notice to the Oversight Committee at least 30 days in advance of any relocation of Trustee’s offices. The Trustee shall File with the Court and serve on the Trust
Notice Parties written notice of any such relocation of the principal office of the Trust. 
  

 25 

 h. Address for Notices. 
  
 All notices, requests, and demands hereunder to be effective shall be in writing and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when actually delivered, or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows: 
  

			
	 If to the TRUST or the TRUSTEE:
	  	Care of the principal office of the Trust
	 	  	as set forth in the preceding section
	 	  	Telephone: (360) 448-4000
	 	  	Facsimile: (360) 448-4344
		
	 with a copy to:
	  	Latham & Watkins
	 	  	633 West Fifth Street
	 	  	Los Angeles, California 90067
		
	 	  	Attention: Michael S. Lurey
	 	  	and Gregory O. Lunt
	 	  	Telephone: (213) 485-1234
	 	  	Facsimile: (213) 891-8763
		
	 If to the OVERSIGHT COMMITTEE
	  	 
	 MEMBERS:
  
	  	 
	 	  	 Central States Southeast & Southwest Areas Health,
 Welfare & Pension Fund

	 	  	Robert Coco
	 	  	9377 West Higgins Road
	 	  	Rosemont, IL 60018
	 	  	Tel: (847) 518-9800, Ext. 3322
	 	  	Fax: (847) 518-9797
	 	  	Email: rcoco@centralstatesfunds.org

  

 26 

			
	 	  	 Chicago Truck Drivers, Helpers & Warehouse Workers
 Union Pension Fund

	 	  	Thomas J. Angell
	 	  	Jacobs, Burns, Orlove, Stanton & Hernandez
	 	  	122 So. Michigan Avenue, Suite 1720
	 	  	Chicago, IL 60603-6145
	 	  	Tel: (312) 272-372-1646
	 	  	Fax: (312) 580-7175
	 	  	Email: tangell@jbosh.com
		
	 	  	CNA Surety Corporation
	 	  	Elissa D. Miller, Esq.
	 	  	SulmeyerKupetz A Professional Corporation
	 	  	333 South Hope Street, 35th Floor
	 	  	Los Angeles, CA 90071
	 	  	Tel: (213) 626-2311
	 	  	Fax: (213) 629-4520
	 	  	Email: emiller@sulmeyerlaw.com
		
	 	  	International Brotherhood of Teamsters
	 	  	Fred Perillo, Esq.
	 	  	 Previant, Goldberg, Uelmen, Gratz, Miller &
 Brueggeman, SPC

	 	  	1555 North River Center Drive, #202, P.O. Box 12993
	 	  	Milwaukee, WI 53212
	 	  	Tel: (414) 223-0434
	 	  	Fax: (414) 271-6308
	 	  	Email: fp@previant.com
		
	 	  	 N. Y. States Teamsters Conference Pension &
 Retirement Fund and New York States Teamsters
 Council Health and Hospital Fund

	 	  	Vince DeBella
	 	  	Paravati, Karl, Green & DeBella
	 	  	12 Steuben Park
	 	  	Utica, NY 13501-2992
	 	  	Tel: (315) 735-6481
	 	  	Fax: (315) 735-6406
	 	  	Email: PKGD6481@verizon.net
		
	 with a copy to:
	  	Stutman, Treister & Glatt Professional Corporation
	 	  	1901 Avenue of the Stars
	 	  	12th Floor
	 	  	Los Angeles, CA 90067
		
	 	  	Attn: Gary E. Klausner
	 	  	and Richard M. Neiter
	 	  	Telephone: (310) 228-5600
	 	  	Facsimile: (310) 228-5788

  

 27 

	

			
	 If to the DISBURSING AGENT:
	  	 Address to be provided if a Disbursing Agent is employed pursuant to the terms of this Trust Agreement
  

	 If to the TRUST BENEFICIARIES:
	  	Addresses set forth in the records maintained by the Trust

  
 Any party hereto may change his, her
or its address from time to time by serving a notice of such change on the parties hereto and the Trust Notice Parties and, so long as any of the Cases remain open, Filing a copy of such notice with the Court. 
  
 i. Severability. 
  
 In the event any clause, provision, or provisions hereof prove to be or are
judged to be invalid for any reason, such invalid or void clause, provision or provisions shall not affect the whole of this Trust Agreement, but the balance of the provisions hereof shall remain operative and shall be carried into effect insofar as
legally possible. 
  
 j. Waiver. 
  
 No waiver of any of the terms or provisions of this Trust Agreement shall
be effective unless in writing and signed by the party against which such waiver is to be enforced. No specific waiver shall be construed as a general waiver or as a waiver or any provision or right not expressly set forth in such waiver.

  
 k. Conflict with the Plan or Confirmation Order.

  
 In the event of any conflict between the terms of this Trust
Agreement and the Plan or Confirmation Order, the provisions of the Plan and Confirmation Order shall prevail and govern. 
  
 l. Entire Agreement. 
  
 This Trust Agreement (together with the Plan and the Confirmation Order) shall constitute the entire understanding of the parties as to the subject
matter hereof and shall supersede all prior oral and written agreements and understandings among the parties with respect to such subject matter. 
  
 m. Execution and Counterparts. 
  
 This Trust Agreement may be executed by hand or facsimile, and in one or more counterparts, each of which counterparts shall be deemed to be an original
copy of the Trust Agreement and all of which, when taken together, shall constitute a single agreement. 
  

 28 

 n. Governing Law. 
  
 This Trust Agreement shall be construed in accordance with and governed by the internal laws of the State of California,
without regard to the conflict of laws rules thereof. 
  
 IN
WITNESS WHEREOF, The undersigned have caused this instrument to be executed as of the day and year first above written to evidence their consent and agreement with the terms and provisions of this Trust Agreement. 
  

			
	 Consolidated Freightways Corporation of Delaware:

		
	 By:
	 	 /s/ Kerry K. Morgan

	 Name:
	 	Kerry K. Morgan
	 Title:
	 	Vice President
	
	 Consolidated Freightways Corporation

		
	 By:
	 	 /s/ Kerry K. Morgan

	 Name:
	 	Kerry K. Morgan
	 Title:
	 	Vice President
	
	 Redwood Systems, Inc:

		
	 By:
	 	 /s/ Kerry K. Morgan

	 Name:
	 	Kerry K. Morgan
	 Title:
	 	Vice President
	
	 CF Airfreight Corporation:

		
	 By:
	 	 /s/ Kerry K. Morgan

	 Name:
	 	Kerry K. Morgan
	 Title:
	 	Vice President
	
	 Leland James Service Corporation:

		
	 By:
	 	 /s/ Kerry K. Morgan

	 Name:
	 	Kerry K. Morgan
	 Title:
	 	Vice President

  

 29 

			
	 Trustee:

	 K. Morgan Enterprises, Inc.

		
	 By:
	 	 /s/ Kerry K. Morgan

	 Name:
	 	Kerry K. Morgan
	
	 Kerry K. Morgan

	
	 /s/ Kerry K. Morgan

	 Kerry K. Morgan, an individual

	
	 Official Committee of Creditors Holding Unsecured
 Claims:

		
	 By:
	 	 /s/ Robert Coco

	 Name:
	 	Robert Coco
	 Title:
	 	Co-Chair
		
	 By:
	 	 /s/ Donna J. Parisi

	 Name:
	 	Donna J. Parisi
	 Title:
	 	Co-Chair
	
	 OVERSIGHT COMMITTEE:

		
	 By:
	 	 /s/ Robert Coco

	 Name:
	 	Robert Coco
	 Title:
	 	Chair

  

 30 

 TERM SHEET FOR TRUSTEE SERVICES 
  
 CONSOLIDATED FREIGHTWAYS CORPORATION LIQUIDATING TRUSTEE 
  

			
	 “Committee”:
	  	The oversight committee or similar committee designated in the Plan with responsibility to oversee or supervise the activities of the Trust and the Trustee
		
	 “Debtor”:
	  	Consolidated Freightways Corporation, a debtor in possession under a Chapter 11 case in the United States Bankruptcy Court for the Central District of California, Riverside Division, Case
No.: RS-02-24284-MG
	 “Effective Date”:
	  	The date the Plan is effective and the Trust is established pursuant to the terms of the Plan
		
	 “First Renewal Term”:
	  	The 3 calendar month period immediately following the expiration of the Initial Term
		
	 “Initial Term”:
	  	The period beginning on the Effective Date and continuing until the last day of the twelfth calendar month beginning on or after the Effective Date
		
	 “Hourly Term”:
	  	The period described in Section 3 following expiration or other termination of the Scheduled Terms during which Trustee is performing services for the Trust on an hourly basis as described in
that section
		
	 “Liquidating Trust Agreement”
	  	The Liquidating Trust Agreement approved by the Court to create the liquidating trust under the Plan
		
	 “Member”:
	  	Kerry Morgan, the sole member and manager of Trustee
		
	 “Plan”:
	  	Debtor’s Plan of Liquidation as confirmed by the Bankruptcy Court
		
	 “Renewal Terms”:
	  	The First, Second, and Third Renewal Terms
		
	 “Scheduled Terms”:
	  	The Initial Term and all or any portion of the Renewal Terms during which this Agreement is in effect
		
	 “Second Renewal Term”:
	  	The 3 calendar month period immediately following the expiration of the First Renewal Term
		
	 “Term”:
	  	The aggregate of Initial Term, the Renewal Terms, and the Hourly Term, to the extent this Agreement is in effect during such Terms

  
 EXHIBIT “A”

			
	 “Third Renewal Term”:
	  	The 3 calendar month period immediately following the expiration of the Second Renewal Term
		
	 “Trust”:
	  	The Liquidating Trust established pursuant to the Plan
		
	 “Trust Agreement”:
	  	The Liquidating Trust Agreement for the Trust
		
	 “Trustee”:
	  	K. Morgan Enterprises, Inc., an Oregon corporation of which Kerry Morgan is the principal shareholder, the person to be proposed by Debtor in the Plan as Trustee of the Trust

  
 1. Term; Extension
of Term. 
  
 1.1 Service as Trustee During the Term.
Trustee will serve as trustee of the Trust during the Term unless such services are terminated in accordance with this Term Sheet. Kerry Morgan will personally perform the duties of Trustee hereunder and shall be responsible for the performance of
such duties. Trustee may voluntarily resign as trustee at any time during the Scheduled Terms by giving Committee three months prior written notice. 
  
 1.2 Extension of Term. The Committee may, by written notice to Trustee (an “Extension Notice”) not later than the date specified in this
Section, elect to extend the Initial Term into one or more (but not more than three) Renewal Terms and/or an Hourly Term. An Extension Notice to extend the Initial Term into the First Renewal Term must be given not later than the last day of the
tenth calendar month of the Initial Term. An Extension Notice to extend the Term into a Second Renewal Term or a Third Renewal Term must be given to Trustee not later than the end of the second calendar month of the First Renewal Term or the Second
Renewal Term, as applicable. If no Extension Notice is given by the date specified in this Section during the Initial Term, unless the Committee exercises its option under Section 3 hereof to retain Trustee under an Hourly Term, the Term will
automatically terminate as of the last day of the Initial Term. If a Renewal Term is commenced by reason of an Extension Notice pursuant to this Section, and if no additional Extension Notice is given by the date specified in this Section during
such Renewal Term, unless the Committee exercises its option under Section 3 hereof to retain Trustee under an Hourly Term, the Term will automatically terminate as of the last day of the commenced Renewal Term. The Committee may elect not to extend
the Term with or without cause. 
  
 1.3 Duties. Trustee
will fully and competently and in a timely manner oversee and administer the assets of the Trust for the benefit of the Trust beneficiaries. Trustee will have the powers and duties set forth in the Plan and the Liquidating Trust Agreement.

  
 2. Compensation During Scheduled Terms. 
  
 2.1 General. Subject to the Retention Bonus provisions of Section 5,
during the Scheduled Terms Trustee will be paid as trustee fees monthly installments in advance of $27,083.34. Such payments will be due within the first five days of each calendar month in the Scheduled Terms. 
  

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 2.2 Effect of Non-Extension of Term. In the event the Committee elects not to extend the Term
beyond the Initial Term or beyond any commenced Renewal Term, Trustee will receive compensation as described in Section 2.1 through the end of the Initial Term or commenced Renewal Term, as the case may be. 
  
 2.3 Effect of Resignation or Termination for Cause. In the event
Trustee voluntarily resigns as trustee of the Trust or is terminated for Cause pursuant to Section 6 prior to the expiration of the Scheduled Terms, Trustee will be paid its compensation as described in Sections 2.1 and 5 through the effective date
of resignation or termination and will not be entitled to receive such compensation for the remaining portion of the Scheduled Term in which the resignation occurs. 
  
 2.4 Effect of Death or Disability of Member. In the event of the death or disability of Member, this Agreement will
terminate and Trustee may be replaced by a successor Trustee as provided in the Plan or the Liquidating Trust Agreement. For purposes of this Agreement, disability of Member means his inability to perform, on behalf of Trustee, the duties of Trustee
with or without reasonable accommodation due to a medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be reasonably expected to last for a continuous period of at least six months.
In the event of such a termination during any Schedule Term, Trustee will be paid its compensation as described in Section 2.1 through the effective date of such termination. 
  
 3. Hourly Term. Upon expiration of the Initial Term or any Renewal Term the Committee will have the option, in its
discretion, to retain Trustee during an Hourly Term under the terms of this Section in the event the Committee determines that the remaining services to be performed by Trustee are not sufficient to justify a full time position. 
  
 3.1 Hourly Term Notice. The Committee may give Trustee a written
notice (an “Hourly Term Notice”) not later than the last day of the tenth calendar month (with respect to the Initial Term) or the last day of the second calendar month (with respect to any Renewal Term) that an Hourly Term will commence
immediately following the expiration of the current Scheduled Term. 
  
 3.2 Extent of Hourly Term. The Hourly Term will commence as provided in Section 3.1 and will continue for 3 calendar months and then on a month to month basis subject to termination by either the Committee or Trustee by giving one
calendar month’s prior written notice of termination. 
  
 3.3
Services During Hourly Term. During the Hourly Term, Member may undertake other employment or business activities so long as Trustee determines that the duties as Trustee will not interfere with any other employment or business activities
undertaken by Member during the Hourly Term. Unless agreed to by Trustee in advance on a month by month basis, Trustee will not be required to provide services in excess of 25 hours per calendar month during the Hourly Term. 
  
 3.4 Compensation During the Hourly Term. During the Hourly Term
Trustee will be paid $200 per hour of services performed for the Trust. Payment will be payable not later than the fifth business day following delivery by Trustee of the schedule of services described in Section 3.5. 
  

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 3.5 Records. During the Hourly Term, Trustee will maintain detailed records showing the dates he
provides services as trustee, the nature of the services provided, and the amount of time spent (rounded to the nearest quarter hours). Trustee will provide the Committee a schedule of services performed for each calendar month not later than the
fifth business day of the following calendar month. 
  
 4.
Consulting Arrangement. At any time after expiration or termination of the Scheduled Terms or Hourly Term, the Trust or any successor trustee of the Trust may engage Trustee or Member on any hourly basis as a consultant to the Trust or such
successor trustee on such terms as are mutually agreed upon in writing in advance by the successor trustee and Trustee or Member. 
  
 5. Retention Bonuses. 
  
 5.1 Amount and Timing of Retention Bonuses. In addition to the compensation described in Section 2.1, Trustee will be paid Retention Bonuses with
respect to services during the Scheduled Terms in the following amounts and at the following times: 
  
 (a) At the expiration of the Initial Term, provided Trustee has continued to serve as Trustee through the end of the Initial Term, Trustee
will be paid a Retention Bonus of (i) $35,000 if the Committee has elected pursuant to Section 1.2 to extend the Term into a First Renewal Term, or (ii) $50,000 if the Committee has not elected a First Renewal Term; 
  
 (b) In the event that during the Initial Term Trustee is
terminated by reason of the death or disability of Member pursuant to Section 2.4 or Trustee is terminated without Cause, Trustee will be paid a Retention Bonus of $50,000 (or $62,500 in the event of a termination without Cause after the Committee
has elected pursuant to Section 1.2 to extend the Term into a First Renewal Term) as of the date of such termination; 
  
 (c) At the expiration of the First Renewal Term, provided Trustee has continued to serve as Trustee through the end of the First Renewal
Term, Trustee will be paid an additional Retention Bonus of (i) $12,500 if the Committee has elected pursuant to Section 1.2 to extend the Term into a Second Renewal Term, or (ii) $27,500 if the Committee has not elected a Second Renewal Term;

  
 (d) In the event that during the First
Renewal Term Trustee is terminated by reason of the death or disability of Member pursuant to Section 2.4 or Trustee is terminated without Cause, Trustee will be paid an additional Retention Bonus of $27,500 (or $40,000 in the event of a termination
without Cause after the Committee has elected pursuant to Section 1.2 to extend the Term into a Second Renewal Term) as of the date of such termination; 
  

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 (e) At the expiration of the Second Renewal Term, provided Trustee has continued to serve
as trustee through the end of the Second Renewal Term, Trustee will be paid an additional Retention Bonus of (i) $12,500 if the Committee has elected pursuant to Section 1.2 to extend the Term into a Third Renewal Term, or (ii) $27,500 if the
Committee has not elected a Third Renewal Term; 
  
 (f) In the event that during the Second Renewal Term Trustee is terminated by reason of the death or disability of Member pursuant to Section 2.4 or Trustee is terminated without Cause, Trustee will be paid an additional Retention Bonus of
$27,500 (or $40,000 in the event of a termination without Cause after the Committee has elected pursuant to Section 1.2 to extend the Term into a Third Renewal Term) as of the date of such termination; 
  
 (g) At the expiration of the Third Renewal Term, or in the
event that during the Third Renewal Term Trustee is terminated by reason of the death or disability of Member pursuant to Section 2.4 or Trustee is terminated without Cause, Trustee will be paid an additional Retention Bonus of $27,500 as of the
date of such expiration or termination. 
  
 5.2 Effect of
Resignation or Termination for Cause. In the event Trustee voluntarily resigns as trustee of the Trust, in accordance with the terms of the Plan or the Liquidating Trust Agreement, or is terminated for Cause pursuant to Section 6 prior to
expiration of the Scheduled Terms, all amounts of Retention Bonuses that have not yet become payable pursuant to Section 5.1 will be forfeited and Trustee will have no further claim for such amounts. Such resignation or termination for Cause will
not affect Trustee’s entitlement to receive or retain previously paid Retention Bonuses. 
  
 6. Termination for Cause. 
  
 6.1 Cause. For purposes of this Term Sheet, Cause means: 
  
 (a) Conviction of Trustee or Member of a felony involving dishonesty, fraud, theft, or embezzlement; 
  
 (b) A material act of dishonesty, fraud, theft, or embezzlement by Trustee or Member involving the Trust that is established to the
satisfaction of the Committee or the Court; 
  
 (c) Willful and continued failure by Trustee to substantially perform its duties as provided in the Trust Agreement after written demand for substantial performance is delivered to Trustee on behalf of the Committee, which demand identifies
with reasonable specificity the manner in which Trustee has not substantially performed its duties, and Trustee has failed to cure such failure (if cure is possible) within 10 business days after delivery of such demand; 
  
 (d) Gross negligence or willful misconduct in the
performance by Trustee of its duties under the Trust Agreement after written notice is delivered to Trustee on behalf 
  

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 of the Committee that identifies with reasonable specificity the manner in which Trustee has been grossly
negligent or reckless, and Trustee has failed to cure such gross negligence or recklessness (if cure is possible) within 10 business days after delivery of such notice. 
  
 Notwithstanding the foregoing, Trustee will not be deemed to have been terminated for Cause as defined in Sections 6.1 (b), (c) and (d)
unless and until there have been delivered to Trustee a copy of a resolution duly adopted by the Committee at a meeting of the Committee called and held for that purpose finding that, in the good faith opinion of the Committee, Trustee was guilty of
conduct constituting Cause as defined above and specifying the particulars of such finding in detail, and such finding shall have been approved by the Court following notice and hearing. Trustee must have been given reasonable notice of such meeting
and Trustee, together with its counsel, must have been given an opportunity to be heard by the Committee at the meeting. 
  
 6.2 Termination for Cause. Upon a determination by the Committee that there is Cause to terminate Trustee, and approval by the Court if such
approval is required under Section 6.1, Committee may, terminate Trustee. 
  
 6.3 Effect of Termination for Cause. Upon termination of Trustee for Cause, Trustee will be entitled to receive all compensation accrued pursuant to Sections 2.1, 3.4, and 5.1 through the date of termination.
Trustee will not be obligated to repay any previously received Retention Bonus payments. 
  
 7. Status of Trustee. Trustee will be treated as an independent contractor for the Trust. 
  
 8. Policies and Procedures. Trustee and Member and any employees of Trustee will be bound by the policies and procedures set forth in the
currently-effective Consolidated Freightways Employee Guidebook to the extent such policies and procedures are incorporated pursuant to the Plan or the Liquidating Trust Agreement. 
  
 9. Confidentiality. In the performance of services for the Trust, Trustee and Member will have access to proprietary
or private information of Debtor and its assets and operations. At all times during and after expiration of the Term, Trustee agrees that it and Member will keep such information confidential and will not disclose any such information to third
parties without the prior written consent of the Committee or the Court. Trustee and Member agree to comply with and be bound by the confidentiality policies set forth in the Consolidated Freightways Employee Handbook issues July 1, 2003.

  
 10. Indemnification and Exculpation. 
  
 10.1 Limitation of Liability. Subject to the limitations set forth in
Section 10.3, neither Trustee, acting in its capacity as trustee of the Trust, nor Member, acting on behalf of Trustee, will have any personal liability to the Trust or its beneficiaries in connection with the affairs of the Trust, and Trustee will
not have any personal liability to the Trust or its beneficiaries for the acts or omissions of Member (in his capacity as manager of Trustee) or any employee or agent of the Trust or of Trustee. 
  

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 10.2 Indemnification. Subject to the limitations set forth in Section 10.3, Trustee and Member
will be indemnified and held harmless by the Trust against any losses, claims, damages, liabilities, or expenses (including, without limitation, attorneys’ fees, disbursements, and related expenses) to which Trustee or Member may become subject
in connection with any action, suit, proceeding, or investigation brought or threatened against Trustee in its capacity as trustee of the Trust and Member in connection with any matter arising out of or in connection with the Plan or the Trust (a
“Covered Matter”). In the event Trustee or Member becomes involved in any action, suit, proceeding, or investigation in connection with any Covered Matter, the Trust will periodically advance to or otherwise reimburse Trustee or Member on
demand for Trustee’s or Member’s reasonable legal and other expenses (including without limitation, the cost of any investigation and preparation and attorneys’ fees, disbursements, and related expenses) incurred in connection with
such Covered Matter; provided however that Trustee and Member will be required to promptly repay to the Trust the amount of any such advanced or reimbursed expenses to the extent it is ultimately determined by a final order of the Court that Trustee
or Member was not entitled to indemnification pursuant to the restrictions of Section 10.3. In situations where legal counsel for the Trust determines that there is no conflict of interest, counsel for the Trust may also serve as counsel for Trustee
and/or Member with respect to any such Covered Matter. 
  
 10.3
Limitations. Neither Trustee nor Member will be relieved of liability pursuant to Section 10.1 and neither will be entitled to indemnification pursuant to Section 10.2 for acts or omissions by Trustee or Member that constitute fraud, willful
misconduct, or gross negligence. Neither Trustee nor Member will be relieved of liability pursuant to Section 10.1 with respect to acts or omissions of an employee or agent of the Trust if Trustee or Member has acted with gross negligence or willful
misconduct in the selection, retention, or supervision of such employee or agent. 
  
 11. Expenses. Trustee will be entitled to reimbursement from the Trust, upon presentation of appropriate documentation, for reasonable out of pocket travel, lodging, (outside of the greater Portland, OR area)
communication, and other ordinary and necessary business expenditures actually incurred on behalf of or in connection with the affairs of the Trust. The Committee may establish reasonable procedures for prior approval of specific types of expenses
or expenses in excess of a threshold amount as set forth in the Liquidating Trust Agreement. 
  
 12. Location of Trustee. Trustee will maintain an office in Vancouver, Washington, or at another location within the continental United States selected by Trustee after written notice to the Committee at least
30 days in advance of any relocation of Trustee’s offices. Trust will provide the Trustee with reasonable office space, equipment and administrative support during Term. 
  

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