Liquidating Trust Agreement

LIQUIDATING TRUST AGREEMENT

Dated as of December 31, 2004

by and among


AFG Investment Trust D , a trust formed under the laws of the State of Delaware ("Investment Trust D")
as Grantor
by
AFG ASIT Corporation , not in its individual capacity but solely as the Managing Trustee of Grantor
and
Wilmington Trust Company , not in its individual capacity but solely as the Liquidating Trustee


_________________________________________________________________________________


TABLE OF CONTENTS ARTICLE I: NAME AND DEFINITIONS 2 1.1 Name2 1.2 Certain Terms Defined 2 ARTICLE II: NATURE OF TRANSFER 4 2.1 Purpose of Liquidating Trust 4 2.2 Prohibited Activities 5 2.3 No Reversion to Investment Trust D 5 2.4 Payment of Liabilities & nbsp; 5 2.5 Bill of Sale, Assignment, Acceptance and Assumption Agreement; Instruments of Further Assurance 5 2.6 Incidents of Ownership & nbsp; 6 2.7 Notice to Unlocated Holders of Investment Trust D Units 6 ARTICLE III: BENEFICIARIES 6 3.1 Beneficial Interests 6 3.2 Rights of Beneficiaries 7 3.3 No Transfer of Interests of Beneficiaries 7 3.4 Trustee as Beneficiary & nbsp; 8 ARTICLE IV: DURATION AND TERMINATION OF LIQUIDATING TRUST 8 4.1 Duration 8 4.2 Other Obligations of the Liquidating Trustee upon Termination 8 ARTICLE V: ADMINISTRATION OF LIQUIDATING TRUST ASSETS 8 5.1 Sale of Liquidating Trust Assets 8 5.2 Transactions with Related Persons 9 5.3 Payment of Claims, Expenses and Liabilities 9 5.4 Interim Distributions 9 5.5 Final Distribution ; 9 5.6 Reports to Beneficiaries and Others 10 5.7 Federal Income Tax Information 10
5.8 Employment of Manager 11 ARTICLE VI: POWERS OF AND LIMITATIONS ON THE LIQUIDATING TRUSTEE 11 6.1 Limitations on Liquidating Trustee 11 6.2 Specific Powers of the Liquidating Trustee ; 12 ARTICLE VII: CONCERNING THE LIQUIDATING TRUSTEE, BENEFICIARIES, EMPLOYEES AND AGENTS 15 7.1 Generally 15 7.2 Reliance by Liquidating Trustee 15 7.3 Limitation on Liability to Third Persons & nbsp; 16 7.4 Recitals 17 7.5 Indemnification 17 7.6 Rights of Liquidating Trustee, Employees, Independent Contractors and Agents to Own Liquidating Trust Units or Other Property and to Engage in Other Business 18 7.7 Contribution Back 18 ARTICLE VIII: PROTECTION OF PERSONS DEALING WITH THE LIQUIDATING TRUSTEE 19 8.1 Action by Liquidating Trustee 19 8.2 Reliance on Statements by the Liquidating Trustee 19 ARTICLE IX: COMPENSATION OF LIQUIDATING TRUSTEE 19 9.1 Amount of Compensation & nbsp; 19 9.2 Dates of Payment & nbsp; 19 9.3 Expenses 19 ARTICLE X: THE LIQUIDATING TRUSTEE AND SUCCESSOR LIQUIDATING TRUSTEE 19 10.1 Number and Qualification of Liquidating Trustees 19 10.2 Resignation and Removal 20 10.3 Appointment of Successor 20 10.4 Acceptance of Appointment by Successor Liquidating Trustee 21 10.5 Bonds ; 21 ARTICLE XI: CONCERNING THE BENEFICIARIES 21 11.1 Evidence of Action by Beneficiaries 21 11.2 Limitation on Suits by Beneficiaries 22 11.3 Requirement of Undertaking 22 ARTICLE XII: MEETING OF BENEFICIARIES 22 DIV> 12.1 Purpose of Meetings 22 12.2 Meeting Called by Liquidating Trustee 22 12.3 Meeting Called on Request of Beneficiaries 22 12.4 Persons Entitled to Vote at Meeting of Beneficiaries 23 12.5 Quorum 23 12.6 Adjournment of Meeting 23 12.7 Conduct of Meetings 23 12.8 Record of Meeting ; 23 ARTICLE XIII: AMENDMENTS ; 23 13.1 Consent of Beneficiaries 23 13.2 Notice and Effect of Amendment 24 13.3 Liquidating Trustee' s Declining to Execute Documents 24 ARTICLE XIV: MISCELLANEOUS PROVISIONS 24 14.1 Filing Documents 24 14.2 Intention of Parties to Establish Liquidating Trust 24 14.3 Beneficiaries Have No Rights or Privileges as Holders of Investment Trust D Units 24 14.4 Laws as to Construction 25 14.5 Severability 25 14.6 Notices 25 14.7 Counterparts 26


LIQUIDATING TRUST AGREEMENT

This LIQUIDATING TRUST AGREEMENT (this "Agreement"), dated as of December 31, 2004 (the "Effective Date"), by and among AFG ASIT Corporation, not in its individual capacity but solely as Managing Trustee (the "Managing Trustee") of AFG Investment Trust D, a trust formed under the laws of the State of Delaware ("Investment Trust D"), pursuant to a certain Third Amended and Restated Declaration of Trust dated as of October 1, 2003, as the same has been amended thereafter from time to time (the "Trust Agreement") and WILMINGTON TRUST COMPANY, a Delaware banking corporation as Liquidating Trustee (the "Liquidating Trustee").
WHEREAS, pursuant to Section 1.6 thereof, the Trust Agreement shall continue in full force and effect until December 31, 2006, except that Investment Trust D shall be dissolved, its affairs wound up and its assets liquidated prior to such date upon the sale or other disposition of all or substantially all of the Assets of Investment Trust D, unless the Managing Trustee elects to continue Investment Trust D' s business for the purpose of the receipt and collection of any consideration to be received in exchange for Assets (which activities shall be deemed to be a part of such sale or other disposition and the winding up of the affairs of Investment Trust D); and WHEREAS, the Trust Agreement provides that the Managing Trustee shall use its best efforts to sell all of the Assets of Investment Trust D not later than the end of the tenth year following Investment Trust D' s Final Closing, provided that market conditions existing at the time permit sale of the Assets on terms deemed reasonable by the Managing Trustee; and WHEREAS, pursuant to the Trust Agreement, the Managing Trustee shall have full power and authority on behalf on Investment Trust D to sell, exchange or otherwise dispose of the Assets on terms the Managing Trustee deems to be in the best interests of Investment Trust D; and WHEREAS, the Managing Trustee has determined that it is necessary and advisable and in the best interest of Investment Trust D to (i) sell or otherwise dispose of all or substantially all of its Assets, (ii) dissolve Investment Trust D, and (iii) wind up the business of Investment Trust D in accordance with the Trust Agreement, pursuant to the Plan of Complete Dissolution and Liquidation (the " Plan" ), entered into as of December 31, 2004 by AFG ASIT Corporation, not in its individual capacity but solely as Managing Trustee and Wilmington Trust Company, not in its individual capacity but solely as Delaware Trustee of Investment Trust D and in conformity with the laws of the State of Delaware; and WHEREAS, all cash including the Cash Reserves and all right, title and interest in and to all other assets of Investment Trust D that could not be sold for cash prior to its dissolution (the "Retained Assets") shall be placed in a separate liquidating trust, identified individually as " AFG Investment Trust D Liquidating Trust," for the benefit of the Beneficiaries (as hereinafter defined), with Wilmington Trust Company an independent, nationally-recognized financial institution as its trustee; and
WHEREAS, the Managing Trustee, on behalf of Investment Trust D, wishes to engage Wilmington Trust Company as the trustee of the AFG Investment Trust D Liquidating Trust (referred to hereafter as the " Liquidating Trust" ), and Wilmington Trust Company wishes to accept such engagement, each on the terms set forth in and in accordance with this Agreement; and
WHEREAS, capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Trust Agreement.
NOW, THEREFORE, for good and valuable consideration, Investment Trust D hereby agrees to grant, release, assign, convey and deliver unto the Liquidating Trustee for the benefit of the Beneficiaries (as hereinafter defined), all of the right, title and interest of Investment Trust D in and to the Retained Assets for the uses and purposes stated herein on the Effective Date, subject to the terms and provisions set out below, and the Liquidating Trustee hereby agrees to accept such Retained Assets and such Liquidating Trust, subject to the following terms and provisions:
ARTICLE I NAME AND DEFINITIONS
1.1 Name . This Liquidating Trust shall be known as the " AFG Investment Trust D Liquidating Trust" .
1.2 Certain Terms Defined . For all purposes of this instrument, unless the context otherwise requires:
(a) "Affiliated Person" shall mean a Person (i) who in his individual capacity is a director, trustee, officer, partner or employee of the Manager or of a Person who controls, is controlled by or is under common control with the Manager or (ii) who controls, is controlled by or is under common control with the Manager.
(b) "Agreement" shall mean this instrument as originally executed or as it may from time to time be amended pursuant to the terms hereof.
(c) "Beneficial Interest" shall mean each Beneficiary's proportionate share of the Liquidating Trust Assets in the Liquidating Trust determined by the ratio of the number of Investment Trust D Units held by the Initial Beneficiary on the close of business on the Record Date in Investment Trust D over the total number of Investment Trust D Units existing on such Record Date in Investment Trust D and thereafter each Beneficiary's proportional ben eficial interest in Investment Trust D' s Liquidating Trust represented by Liquidating Trust Units.
(d) "Beneficiaries" shall mean the holders from time to time on or after the Record Date, including the Initial Beneficiaries and the Subsequent Beneficiaries.
(e) "Initial Beneficiaries" shall mean the initial holders of Liquidating Trust Units.
(f) "Investment Trust D" shall mean the trust formed under the laws of the State of Delaware, under a certain Third Amended and Restated Declaration of Trust dated as of October 1, 2003, as the same has been amended thereafter from time to time, maintained by the Managing Trustee, identified as " AFG Investment Trust D;" also referred to herein as the " Trust."
(g) "Investment Trust D Units" shall mean the units in Investment Trust D held by each of the Beneficiaries as of the Record Date.
(h) "Liquidating Trust" shall mean the liquidating trust created by this Agreement maintained by the Liquidating Trustee holding Liquidating Trust Assets, identified as the " AFG Investment Trust D Liquidating Trust" ;
(i) "Liquidating Trust Assets" shall mean all the property held from time to time by the Liquidating Trustee under this Agreement, which initially shall consist of the Retained Assets granted, assigned and conveyed to the Liquidating Trustee by Investment Trust D, the Cash Reserves, and, in addition, shall thereafter include all proceeds and other receipts of, from, or attributable to any assets, causes of actions or claims held by the Liquidat ing Trust.
(j) "Liquidating Trust Units" shall mean those equal, undivided portions into which the Beneficial Interests in the Liquidating Trust Assets are divided, as evidenced on the books and records of the Liquidating Trust.
(k) "Liquidating Trustee" shall mean the original Liquidating Trustee under this Agreement and its successor(s), if any.
(l) "Manager" shall mean such Person or Persons who have been employed by, or who have contracted with, the Liquidating Trustee to assist in the management of the Liquidating Trust.
(m) "Person" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a limited liability company, a trust, a joint venture, any unincorporated organization, or a government or political subdivision thereof.
(n) "Record Date" shall mean the date selected by the Grantors for determination of the holders of Investment Trust D Units entitled to become Beneficiaries. (o) Subsequent Beneficiaries" shall mean Beneficiaries as reflected on the books and records of the Liquidating Trust from time to time after the Effective Date, other than the Initial Beneficiaries.
ARTICLE II NATURE OF TRANSFER
2.1 Purpose of Liquidating Trust .
(a) It is expected that Investment Trust D shall liquidate and dissolve prior to fully winding up its affairs, including, but not limited to, the sale of its remaining assets, the collection of any receivables and the payment of any unsatisfied debts, claims, liabilities, commitments, suits and other obligations, whether contingent or fixed or otherwise (the "Liabilities"), except for such Liabilities for which Investment Trust D has previously reserved by the retention of the Cash Reserves as described in the recitals hereto. The Liquidating Trust hereby is organized for the sole purpose of winding up the a ffairs of Investment Trust D as promptly as reasonably possible and with no objective to continue or engage in the conduct of a trade or business.
(b) Investment Trust D' s Cash Reserves and Retained Assets to be granted, assigned and conveyed to the Liquidating Trustee as of the Effective Date will be held in the Liquidating Trust, and the Liquidating Trustee will: (i) further liquidate the Liquidating Trust Assets as it deems to be necessary to carry out the purpose of the Liquidating Trust and facilitate distribution of the Liquidating Trust Assets; (ii) protect, conserve and manage the Liquidating Trust Assets in accordance with the terms and conditions hereof; (iii) take such actions as may be necessary to carry out the intent of the proposals approved by the written consent of the unit holders of Investment Trust D solicited pursuant to a Solicitation Statement dated as of February 17, 2004 (the " Solicitation Statement" ); and (iv) distribute the Liquidating Trust Assets in accordance with the terms and conditions hereof.
(c) It is intended that the granting, assignment and conveyance of the Cash Reserves and the Retained Assets by Investment Trust D to the Liquidating Trustee pursuant hereto shall be treated for federal and state income tax purposes as if Investment Trust D made such distributions directly to the holders of Investment Trust D Units. It is further intended that for federal, state and local income tax purposes the Liquidating Trust shall be treated as a liquidating trust under Treasury Regulation Section 301.7701-4(d) and any analogous provision of state or local law, and the Beneficiaries shall be treated as the owners of their respective s hare of the Liquidating Trust pursuant to Sections 671 through 679 of the Code and any analogous provision of state or local law and shall be taxed on their respective share of the Liquidating Trust's taxable income (including both ordinary income and capital gains) pursuant to Section 671 of the Code and any analogous provision of state or local law. The Liquidating Trustee shall file all tax returns required to be filed with any governmental agency consistent with this position, including, but not limited to, any returns required of grantor trusts pursuant to Section 1.671-4(a) of the Income Tax Regulations. Investment Trust D agrees that the Transfer Agent acting on its behalf may prepare and file applicable K-1' s respecting the Beneficiaries' Investment Trust D income. To the extent that the Liquidating Trustee becomes liable for the payment of taxes, including withholding taxes, in respect of income derived from the investment of funds held hereunder or any payment made hereunder (collectively , the "Taxes"), the Liquidating Trustee may pay such Taxes. The Liquidating Trustee may withhold from any payment of the Liquidating Trust Assets such amount as the Liquidating Trustee estimates to be sufficient to provide for the payment of such Taxes not yet paid, and may use the sum withheld for that purpose. The Liquidating Trustee shall be indemnified and held harmless against any liability for Taxes and for any penalties or interest in respect of Taxes on such investment income or payments in the manner provided herein.
2.2 Prohibited Activities . The Liquidating Trust shall not continue or engage in the conduct of any trade or business, and the Liquidating Trustee is expressly prohibited from, and shall have no power or authority to, continue or engage in the conduct of any trade or business on behalf of the Liquidating Trust or the Beneficiaries, and all of the terms and conditions hereof shall be construed accordingly.
2.3 No Reversion to Investment Trust D . In no event shall any part of the Liquidating Trust Assets revert to or be distributed to Investment Trust D.
2.4 Payment of Liabilities . To the extent that there are available Liquidating Trust Assets in the Liquidating Trust, the Liquidating Trust hereby agrees to assume all Liabilities of Investment Trust D on the Effective Date. Should any Liability be asserted against the Liquidating Trust by the transferee of the Liquidating Trust Assets or as a result of the assumption made in this paragraph, the Liquidating Trustee may use such part of Liquidating Trust Assets as may be necessary in contesting any such Liability or in payment thereof. In no ev ent shall the Liquidating Trustee, Beneficiaries or employees or agents of the Liquidating Trust be personally liable, nor shall resort be had to the private property of such Persons or to any other Liquidating Trust Assets, in the event the Liquidating Trust Assets are not sufficient to satisfy the Liabilities asserted against or payable out of such available Liquidating Trust Assets in the Liquidating Trust.
2.5 Bill of Sale, Assignment, Acceptance and Assumption Agreement; Instruments of Further Assurance . On the Effective Date, Investment Trust D and the Liquidating Trust shall execute a Bill of Sale, Assignment, Acceptance and Assumption Agreement conveying the Retained Assets, Cash Reserves and Liabilities to the Liquidating Trust, a form of which is attached as Exhibit A hereto. After the dissolution of Investment Trust D, such Persons as shall have the right and power to so act, will, upon reasonable request of the Liquidating Trustee, execute, acknowledge, and deliver such further instruments and do such further acts as may be necessary or proper to carry out effectively the purposes of this Agreement, to confirm or effectuate the transfer to the Liquidating Trustee of any property intended to be covered hereby, and to vest in the Liquidating Trustee, their successors and assigns, the estate, powers, instruments or funds in trust hereunder.
2.6 Incidents of Ownership . The holders of Investment Trust D Units as of the Record Date shall be the Initial Beneficiaries of the Liquidating Trust as holders of Liquidating Trust Units in Investment Trust D' s Liquidating Trust, and the Liquidating Trustee shall retain only such incidents of legal ownership as are necessary to undertake the actions and transactions authorized herein.
2.7 Notice to Unlocated Holders of Investment Trust D Units . If the Liquidating Trust holds Liquidating Trust Assets for unlocated holders of any Investment Trust D Units, due notice shall be given to such holders of Investment Trust D Units in accordance with Delaware law.
ARTICLE III BENEFICIARIES
3.1 Beneficial Interests .
(a) The Beneficial Interest of each Initial Beneficiary hereof shall be determined by Investment Trust D in accordance with a certified copy of Investment Trust D' s list of Investment Trust D Unit holders as of the Record Date (the " List" ). The Managing Trustee of Investment Trust D will deliver the certified copy of the List to the Liquidating Trustee within a reasonable time after the Record Date specifying the Beneficial Interests of each Initial Beneficiary in Investment Trust D. For ease of administration, the List shall express the Beneficial Interest of each Initial Beneficiary in terms of units and it is intended tha t each unit shall represent one Liquidating Trust Unit in Investment Trust D' s Liquidating Trust.
(b) In the case of Investment Trust D Unit holders, customary institutional book-entry or other records or any other evidence of ownership satisfactory to the Liquidating Trustee will be deemed to evidence the Beneficial Interest in the Liquidating Trust of each such Investment Trust D Unit holder, expressed in Liquidating Trust Units.
(c) If any conflicting claims or demands are made or asserted with respect to the ownership of any Liquidating Trust Units, or if there should be any disagreement between the transferees, assignees, heirs, representatives or legatees succeeding to all or part of the interest of any Beneficiary resulting in adverse claims or demands being made in connection with such Liquidating Trust Units, then, in any of such events, the Liquidating Trustee shall be entitled, at its sole election, to refuse to comply with any such conflicting claims or demands. In so refusing, the Liquidating Trustee may elect to make no payment or distribution with resp ect to such Liquidating Trust Units, or to make such payment to a court of competent jurisdiction or an escrow agent, and in so doing the Liquidating Trustee shall not be or become liable to any of such parties for their failure or refusal to comply with any of such conflicting claims or demands, nor shall the Liquidating Trustee be liable for interest on any funds which it may so withhold. The Liquidating Trustee shall be entitled to refrain and refuse to act until either (i) the rights of the adverse claimants have been adjudicated by a final judgment of a court of competent jurisdiction, (ii) all differences have been adjusted by valid written agreement between all of such parties, and the Liquidating Trustee shall have been furnished with an executed counterpart of such agreement, or (iii) there is furnished to the Liquidating Trustee a surety bond or other security satisfactory to the Liquidating Trustee, as it shall deem appropriate, to fully indemnify it as between all conflicting claim s or demands.
3.2 Rights of Beneficiaries . Each Beneficiary shall be entitled to participate in the rights and benefits due to a Beneficiary hereunder according to his Beneficial Interest. Each Beneficiary shall take and hold the same subject to all the terms and provisions of this Agreement. The interest of the Beneficiary hereby is declared and shall be in all respects personal property and upon the death of an individual Beneficiary, his Beneficial Interest shall pass as personal property to his legal representative and such death shall in no way termina te or affect the validity of this Agreement, provided that the Liquidating Trustee shall not be required to evidence a book entry transfer of a deceased Beneficiary' s Beneficial Interest to his legal representative until the Liquidating Trustee shall have received Letters Testamentary or Letters of Administration and written notice of the death of the deceased Beneficiary. A Beneficiary shall have no title to, right to, possession of, management of, or control of, Investment Trust D' s Liquidating Trust Assets except as herein expressly provided. No widower, widow, heir, or devisee of any person who may be a Beneficiary shall have any right of dower, homestead, or inheritance, or of partition, or of any other right, statutory or otherwise, in any property forming a part of Liquidating Trust Assets but the whole title to Investment Trust D' s Liquidating Trust Assets shall be vested in the Liquidating Trustee and the sole interest of the applicable Beneficiaries shall be the rights and benefits g iven to such Persons under this Agreement.
3.3 No Transfer of Interests of Beneficiaries . The Beneficial Interest of a Beneficiary may not be transferred by any Beneficiary in person or by a duly authorized agent or attorney, or by the properly appointed legal representatives of the Beneficiary, nor may a Beneficiary have authority or power to sell, assign, transfer, encumber, or in any other manner dispose of his Beneficial Interest; provided, however, that the Beneficial Interest shall be assignable or transferable by will, intestate succession, or operation of law.
Except as may be otherwise required by law, the Beneficial Interests of the Beneficiaries hereunder shall not be subject to attachment, execution, sequestration or any order of a court, nor shall such interests be subject to the contracts, debts, obligations, engagements or liabilities of any Beneficiary, but the interest of a Beneficiary shall be paid by the Liquidating Trustee to the Beneficiary free and clear of all assignments, attachments, anticipations, levies, executions, decrees and sequestrations and shall become the property of the Beneficiary only when actually received by such Beneficiary.
3.4 Trustee as Beneficiary . The Liquidating Trustee, either individually or in a representative or fiduciary capacity, may be a Beneficiary to the same extent as if it were not a Liquidating Trustee hereunder and shall have all the rights of a Beneficiary, including, without limitation, the right to vote and to receive distributions, to the same extent as if it was not the Liquidating Trustee hereunder.
ARTICLE IV DURATION AND TERMINATION OF LIQUIDATING TRUST
4.1 Duration . The existence of this Liquidating Trust shall terminate upon the earliest of (i) a termination required by the applicable laws of the State of Delaware, (ii) the termination due to the distribution of all Liquidating Trust Assets as provided in Section 5.5, or (iii) December 31, 2006; provided, however, that the Liquidating Trustee, in its discretion, may extend the existence of this Liquidating Trust to such later date as it may designate, if it determines that an extension is reasonably necessary to pay or m ake provision for then known liabilities, actual or contingent.
4.2 Other Obligations of the Liquidating Trustee upon Termination . Upon distribution of all the Liquidating Trust Assets, the Liquidating Trustee shall ...