THE AHNS 2009 DESCENDANTS TRUST AGREEMENT
Exhibit
1
THE
AHNS 2009 DESCENDANTS TRUST AGREEMENT
THIS
TRUST AGREEMENT, entered into this 29th day
of April, 2009, by and between XXXXX-XX XXX (hereinafter referred to as the
“Grantor”), and XXXXX XXXX (hereinafter referred to as the
“Trustee”).
1.
Family
Designation/Trust Property/Grantor’s Intent.
1(a)
Family
Designation. The Grantor is married to XXXX XXX (“XXXX”) and,
at the time of the execution of this Trust Agreement, they have two (2) sons,
namely XXXXX X. XXX (“XXXXX”) and XXXXXXX X. XXX (“XXXXXXX”). Any
references herein to the Grantor’s “sons” or "children" shall mean XXXXX and
XXXXXXX. Any references herein to the Grantor’s "issue" shall mean
DAVID, MICHAEL, and their descendants in the first, second or other
degree.
1(b)
Trust
Property. For good and valuable consideration, the Grantor
hereby transfers and delivers to the Trustee all of his right, title and
interest in the property listed in Schedule "A" attached hereto and made a part
hereof, hereinafter referred to as the "Trust Estate," for the purposes and
subject to the conditions as hereinafter stated for the primary benefit of the
Grantor’s descendants. The Grantor wishes to establish this Trust as
part of his estate planning and to provide a vehicle to manage and administer
assets for the benefit of the Grantor’s descendants.
1(c)
Grantor’s
Intent. It is the Grantor’s intent in creating this Trust
that: (i) all contributions made to the Trust shall be completed gifts for
federal transfer tax purposes; (ii) this Trust shall be deemed to be owned by
the Grantor during his lifetime for federal income tax purposes; and (iii) for
federal estate tax purposes, the Trust assets shall be excluded from the
Grantor’s estate and the estates of the Grantor’s descendants. The
provisions of this Trust Agreement shall be read and administered
accordingly. To the extent the applicable provisions of this Trust
Agreement are inconsistent with or in conflict with the above intent, the Trust
Protector (defined in Paragraph 7 hereof) may amend or restate this Trust
Agreement solely for the purpose of ensuring that terms of this Agreement
conform and continue to carry out the Grantor’s intentions and purposes as
expressed in this Paragraph 1(c). Said amendment or restatement shall
be in writing and signed by the Trust Protector, with copies provided to each of
the Grantor (if living), the Trustee, and the adult beneficiaries and to the
representative of any minor beneficiaries of the Trust, but without requirement
of prior consent of any beneficiary or other person interested herein or order
of any court. The amendment or restatement shall not become effective
or binding on the Trustee until the date that is ninety (90) days after the date
the Trustee is furnished the amendment or restatement (or a copy thereof) unless
the Trustee consents in writing to an earlier effective date.
2.
Administration of Trust
Estate – Separate Shares. The Trust shall be divided into two
(2) separate shares, one such share to be created for the benefit of XXXXX and
his descendants, and one such share to be created for the benefit of XXXXXXX and
his descendants. Each such share shall be retained in trust and
administered in accordance with the provisions of Paragraph
3. Contributions into the Trust shall be allocated equally between
the two shares, unless the person making the contribution provides to the
contrary, in writing, before or at the time the contribution is made to the
Trust.
3.
Trusts for
Descendants. The Trust that may be created for the primary
benefit of an issue of the Grantor pursuant to the provisions of Paragraph 2
hereof shall be administered for the benefit of said issue and his/her
descendants upon the terms and conditions and subject to termination as
hereinafter set forth in this Paragraph 3.
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3(a)
During Issue’s
Lifetime. The Trustee shall have the power, in the Trustee’s
discretion, to pay over from time to time unto or for the benefit of said issue
and his/her descendants, from said issue’s separate Trust, so much of the
income, and principal to the extent income is insufficient, as shall be
advisable or proper for their continued maintenance, health and education;
provided, however, in no event shall said issue, as Trustee, use Trust income or
principal to discharge the legal obligation of support that said issue may have
for any of his/her descendants. The Independent Trustee (defined in
Paragraph 5(a)(3) hereof) shall also have the authority to pay to or apply for
the benefit of said issue and his/her descendants, or any of them, so much of
the net income, and principal to the extent the income is insufficient, of said
issue’s Trust as the Independent Trustee in such Trustee’s sole and absolute
discretion shall deem advisable or proper. Any current income not
distributed shall be accumulated annually and thereafter treated as
principal.
3(b)
Said Issue’s
Death. Upon said issue’s death, all property comprising
his/her separate Trust shall be: (i) retained in trust for the benefit of said
issue’s then living issue, per stirpes, subject to
the terms and conditions of this Paragraph 3; or (ii) if said issue shall leave
no surviving issue, then retained in trust for the benefit of the then living
issue, per
stirpes, of
said deceased issue's parent who is an issue of the Grantor, subject to the
terms and conditions of this Paragraph 3; or (iii) if said deceased issue's
parent who is an issue of the Grantor has no issue then living, then retained in
trust for the benefit of the Grantor’s then living issue, per stirpes, subject to
the terms and conditions of this Paragraph 3; or (iv) if the Grantor has no then
living issue, then in accordance with the provisions of Paragraph 3(i), to the
beneficiaries designated therein who are then living.
3(c)
Priority Given to Current
Income Beneficiary. In determining whether, when and for whom
any such payment shall be made, and the amounts thereof, if any, the Trustee is
hereby requested to take into consideration the individual needs and best
interests of the respective beneficiaries of said issue’s separate Trust, and
may make payments to or for any one or more of such beneficiaries without any
duty or obligation to make any payments to or for all of them. In
making distributions hereunder and in investing the assets of any Trust
hereunder, the Grantor intends that an issue’s separate Trust shall be
administered and distributed primarily for the benefit of said issue, even to
the point of exhaustion of the Trust, and the interests of said issue’s
descendants in such Trust shall be subsidiary to the interests of said
issue. Payments of principal to any of said issue’s descendants
during the lifetime of said issue shall not be taken into account in any later
division of the principal among said issue’s descendants. Payments of
income and principal hereunder shall be made after consideration of all other
sources of money which said issue and his/her descendants may have and are known
to the Trustee.
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3(d)
Distributions to Encourage
Productive Behavior. Notwithstanding the broad delegation of
discretion to the Trustee under this Paragraph 3, the Grantor encourages the
Trustee to exercise discretion in a manner that encourages productive behavior,
and discourages the lack of productive behavior, on the part of the Trust
beneficiaries. For purposes of this Paragraph 3(d), the Grantor
expressly includes within the scope of productive behavior not only engagement
in gainful employment (regardless of the level of remuneration), but also
meaningful volunteer efforts, time spent in raising children, time spent in
caring for sick or elderly relatives, civic and charitable involvement, and
other socially productive behavior. Indeed, the Grantor encourages
the Trustee to use the resources of an issue’s separate Trust to support such
issue’s engagement in socially productive behavior, particularly if such
behavior does not generate significant income for such issue. The
provisions of this Paragraph 3(d) shall be considered a material purpose of any
Trust administered pursuant to this Paragraph 3.
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3(e)
Assets of
Trusts. The Trustee may use all or any portion of the
principal of said issue’s separate Trust hereunder as shall be appropriate, in
the Trustee’s sole discretion, to acquire as an asset of said Trust a personal
residence for occupancy by a beneficiary of such Trust rent free without any
requirement that such property become productive of income. The
Trustee, other than any Trustee who is a beneficiary of said issue’s Trust or
who may become a beneficiary of said Trust, may lend all or any portion of the
principal of said Trust as shall be appropriate to a Trust beneficiary, provided
that such loan is evidenced by a promissory note having such terms and security
as the Trustee may determine, and provided further that such terms and security
are comparable to those that would be used in any arm’s-length loan between
unrelated parties. The Trustee, in his/her sole discretion, may use
all or any portion of the principal of said issue’s separate Trust to acquire as
an asset of such Trust an interest in a privately held business or other
business or professional opportunity for a beneficiary, provided that any
Trustee who owns any interest in such business shall not participate in any such
decision and, provided further, such investment does not constitute an act of
self-dealing by any Trustee exercising discretion under the provisions of this
sentence. Further, the Trustee may purchase items of tangible
personal property for the use of a beneficiary or spouse of a beneficiary
(including by way of illustration, but not limitation, jewelry, art, and
antiques) even though such assets are not productive of income and may not be
productive of capital appreciation, provided that legal title to any such
property shall be held by the Trust and not by the beneficiary, and provided
further, that such beneficiary and such beneficiary’s spouse shall not commit
waste to such property and shall re-deliver possession of such property to the
Trustee upon the Trustee’s demand. The portion of said issue’s separate Trust to
be used to acquire such real estate or interests in real estate, business and/or
professional opportunities, and/or items of tangible personal property shall be
within the Trustee’s sole and absolute discretion. The Grantor intends hereby to
provide the Trustee flexibility, when exercising discretion, to invest the
assets of said issue’s separate Trust in a manner that allows the beneficiaries
of said Trust to receive the benefit of the assets of said Trust without
receiving a distribution of such assets. Nonetheless, the Grantor
also intends that the Trustee balance (i) any tax benefits that may be achieved
through investing the assets of said issue’s separate Trust in a manner that
allows the beneficiaries of said Trust to receive the benefits of such assets
without having to distribute such assets to the beneficiaries against (ii) the
benefits of facilitating the ability of the beneficiaries of said issue’s
separate Trust to own certain assets in their own names, or jointly with a
spouse or with other joint owners, even to the detriment of tax efficiency and
protection from creditors.
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3(f)
Limits on Exercise of
Discretion by Trustee. In no event shall any person serving as
Trustee of said issue’s separate Trust participate in the exercise of discretion
to expend Trust income or principal in a manner that discharges the legal
obligation of support that said Trustee may have for any beneficiary of said
Trust, nor may any Trustee who is a beneficiary of said Trust exercise
discretion to distribute trust assets for any purpose other than the health,
support, maintenance and education of a Trust beneficiary.
3(g)
Material Purposes of Trust
and Limitations on Power to Modify Trusts. Obtaining the
generation-skipping transfer tax benefits of retaining the assets of said
issue’s separate Trust in trust for perpetuity and preserving or increasing the
value of such assets in said Trust shall each be a material purpose of said
Trust. It is the Grantor’s intent, in creating said issue’s separate
Trust, to shelter the maximum value of the assets of the Grantor’s estates from
wealth transfer taxes for perpetuity. Another material purpose of
said issue’s separate Trust is to encourage said issue to be
productive. Accordingly, but subject to the provisions of Paragraph
7(b)(i) hereof, the Trust Protector shall not have the power to modify or
terminate any Trust hereunder in a manner that would undermine these tax
purposes unless as a result of changes in the estate tax laws or the
generation-skipping transfer tax laws, the estate tax savings and the
generation-skipping transfer tax savings purposes of these Trusts are no longer
applicable, and shall not have the power to modify or terminate such Trust in a
manner that would undermine the non-tax purposes of such Trusts. In
any event, in deciding whether or not to terminate said issue’s separate Trust,
the Trust Protector shall be mindful of the resulting loss of asset
protection.
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3(h)
No Estate Tax
Inclusion. The Grantor intends that no portion of the assets
of said issue’s separate Trust shall be included in the gross estate of said
issue or the estate of any Trustee for federal estate tax purposes unless and
until a distribution is actually made to any such person, and then only to the
extent of such actual distribution. To effectuate this intention, and
notwithstanding any other provision of this Agreement or rule of law to the
contrary, the Grantor directs that all provisions of this Trust Agreement that
may appear to conflict with or in any way defeat such intention shall be
construed or applied in such manner so as to best accomplish that intention, and
all powers, authority and discretion granted to the Trustee hereunder or by law
shall be exercisable at all times only in a manner consistent with this
intention. The Trustee of said issue’s separate Trust may modify the
terms of the Trust in order to protect the tax savings purposes of said issue’s
separate Trust.
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3(i)
No Issue
Living. If, at any time during the administration of any Trust
under this Paragraph 3, the Grantor has no living issue, then the remaining
principal of said Trust Share shall be distributed to the Xxxxx-Xx and Xxxx Xxx
Foundation (or if no such charitable foundation is then in existence, then to a
charitable foundation created by the Grantor and/or INOK, or if no such
foundation is then in existence, then to a charitable foundation to be created
by the Trustee).
4. Withdrawal Right for
Beneficiaries.
4(a) Withdrawal
Rights. Each of the Grantor’s then living descendants shall
have the right and power to appoint to any person, including themselves, a
pro-rata portion of the contributions made by any donor to the Trust during any
calendar year, but in no event shall a beneficiary’s withdrawal right exceed the
annual exclusion amount (or double that if married) allowed under Section
2503(b) of the Code, as reduced by the value of any prior gifts, either direct
or indirect, made by such donor during the calendar year to or for the benefit
of said beneficiary that qualified as an annual exclusion gift. This
withdrawal right shall apply only to inter vivos contributions made by a donor
that are intended to qualify as "annual exclusion" gifts within the meaning of
Section 2503(b) of the Code, and shall not apply to: (i)
amounts received as a result of an individual's death under a Will or Trust; or
(ii) any amounts gifted to the Trust in one year that exceed the donor's
available exclusion amount with respect to said beneficiary under Section
2503(b) of the Code.
4(b)
Limitations on Withdrawal
Rights. A beneficiary’s withdrawal power granted under
Paragraph 4(a) must be exercised no later than thirty (30) days after the date
the beneficiary has been notified by the Trustee of receipt of a
contribution. If the Trust assets are not readily capable of
withdrawal at the time that a beneficiary exercises his withdrawal power
hereunder, then said beneficiary shall be deemed to own a portion of the Trust
assets in an amount equal to the amount subject to withdrawal. This
power shall be non-cumulative and, except as provided below, if not exercised in
any calendar year, shall lapse, but only as to that year. The power
herein granted is unqualified and the beneficiaries under this Paragraph 4 shall
be answerable to no one for the exercise or non-exercise of this
power.
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4(c)
Notice
Requirements. A donor of any contribution made to the Trust
shall specify to the Trustee, in writing, concurrently with making the aforesaid
contribution, whether the power of appointment set forth above may not be
exercised, in whole or in part, by one or more of the above named beneficiaries
with respect to that contribution. The Trustee, upon receipt of a
contribution subject to the above power of appointment made to the Trust during
any calendar year, shall promptly notify in writing the above named
beneficiaries of such receipt. Withdrawals shall be by written
direction delivered to the Trustee. Notices to a beneficiary while
he/she is a minor at the time of contribution shall be sent to his/her parent,
custodian or guardian, other than the donor of the contribution.
4(d)
Minor
Beneficiary. If a Guardian or Custodian exercises the above
power of appointment on behalf of a minor beneficiary, any amounts so withdrawn
for the benefit of the minor beneficiary, shall be held under the Uniform
Transfers (Gifts) to Minors Act. The foregoing power shall not be
exercisable by a donor as Guardian or Custodian of any minor child or grandchild
of the Grantor.
4(e)
Lapse of Withdrawal
Power. Notwithstanding anything in this Trust Agreement to the
contrary, a beneficiary’s (or his/her Guardian or Custodian's) unexercised right
to withdraw a contribution under Paragraph 4(a) shall lapse to the extent such
amount not exercised does not exceed the greater of Five Thousand Dollars
($5,000.00) or Five Percent (5%) of the Trust corpus during that
year. The excess (unlapsed) amount shall continue to be exercisable
in future years, subject to the same lapse provisions.
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5.
Trustee.
5(a) Designation.
5(a)(1) Appointment. Subject
to the provisions of Paragraphs 5(a)(2) and 5(a)(3), the Grantor nominates and
appoints his friend, XXXXX XXXX, of Germantown, Maryland, as Trustee of this
Trust (and any other Trust created hereunder). If XXXXX XXXX is
unable or unwilling to serve at any time as Trustee hereunder, the Grantor
nominates and appoints XXXXXXX XXXXX as Trustee of this Trust (and any other
Trust created hereunder).
5(a)(2) Issue is Trustee at
40. Notwithstanding anything in Paragraph 5(a)(1) to the
contrary, an issue of the Grantor who has attained the age of forty (40) years
shall serve as sole Trustee of the Trust administered for the primary benefit of
said issue pursuant to the provisions of Paragraph 3 hereof. If said
issue who is the primary beneficiary of said Trust is unable or unwilling to
serve at any time as Trustee hereunder, then the provisions of Paragraph 5(a)(1)
shall apply.
5(a)(3) Independent
Trustee. Notwithstanding anything herein to the contrary, with
respect to any Trust created hereunder for which there is no Independent Trustee
then serving, the Trustee of any Trust created hereunder shall have the
authority to name an Independent Trustee for such Trust. An
Independent Trustee shall be any Trustee, whether named in this Trust Agreement
or appointed as provided herein (or by law), that qualifies as an Independent
Trustee under Section 672(c) and 2041(b)(1)(C)(ii) of the Code. Such
Independent Trustee shall be designated in a written instrument filed with the
trust records and signed by the Trustee. The Trustee, at any time and
from time to time, may remove any Independent Trustee and replace (or choose not
to replace) such Independent Trustee with a successor Independent Trustee by
delivery to the Independent Trustee herein a notice removing the then serving
Independent Trustee and, if a successor or substitute Independent Trustee is
being appointed by the Trustee, then also naming such successor or substitute
Independent Trustee. Notwithstanding the foregoing, if by the
exercise of the power to remove and/or replace an Independent Trustee, the
Trustee could be deemed, in the Trustee’s non-fiduciary capacity, to possess a
general power of appointment for federal estate or gift tax purposes, the
Trustee shall not have such power deemed to constitute a general power of
appointment otherwise granted in this Paragraph 5(a)(3). The
Independent Trustee shall serve without bond or surety.
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5(b)
Removal and Appointment of
Trustee.
5(b)(i) Grantor. Notwithstanding
anything in this Paragraph 5 to the contrary, the Grantor at any time shall have
the power, in his sole and absolute discretion, to remove the Trustee(s) of this
Trust (and any Trust created hereunder), with or without cause, and appoint
another Trustee(s) to serve in his/her/their place, by giving fifteen (15) days
written notice to such removed Trustee(s). Notwithstanding the
preceding sentence, the following persons shall be prohibited from serving as a
Trustee: (i) the Grantor; (ii) any person that is related or subordinate to the
Grantor, as such terms are defined in Code Section 672(c), except as otherwise
provided in Paragraph 5(a)(2); and (iii) any person that is not a “United States
Person,” as such term is defined in Code Section 7701(a)(30)(A) if that would
cause the Trust to cease being a domestic Trust for federal tax purposes as
defined in Code Section 7701(a)(30)(E).
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5(b)(ii) Oldest Adult
Beneficiary. If the Grantor is not then living, or is
otherwise unable to so act, the oldest living adult beneficiary of any separate
Trust created hereunder who has attained the age of thirty-five (35) years shall
have the power, in his/her sole and absolute discretion, to remove the
Trustee(s) of said separate Trust, with or without cause, and appoint another
Trustee(s) to serve in his/her place, by giving fifteen (15) days written notice
to such removed Trustee(s). Notwithstanding the preceding sentence,
the following persons shall be prohibited from serving as a Trustee: (i) the
appointing beneficiary; (ii) any person that is related or subordinate to the
appointing beneficiary, as such terms are defined in Code Section 672(c); and
(iii) any person that is not a “United States Person,” as such term is defined
in Code Section 7701(a)(30)(A) if that would cause the Trust to cease being a
domestic Trust for federal tax purposes as defined in Code Section
7701(a)(30)(E).
5(c) Removal and Appointment of
Trustee. If a successor Trustee is not so designated in the
manner provided in Paragraph 5(b), then the last remaining Trustee may designate
in writing one or more successor Trustee(s) of this Trust (and any Trust created
hereunder), or if the last remaining Trustee fails to designate a successor,
then the adult beneficiaries, by unanimous vote, may designate in writing one or
more successor Trustee(s). If the adult beneficiaries are unable to
agree by unanimous vote on one or more successor Trustee(s) after sixty (60)
days, a simple majority of the adult beneficiaries may designate in writing one
or more successor institutional Trustee(s). Notwithstanding the
preceding sentence, the following persons shall be prohibited from serving as a
Trustee: (i) the Grantor; (ii) the appointing beneficiaries; (iii) any person
that is related or subordinate to the appointing beneficiaries, as such terms
are defined in Code Section 672(c); and (iv) any person that is not a “United
States Person,” as such term is defined in Code Section 7701(a)(30)(A) if that
would cause the Trust to cease being a domestic Trust for federal tax purposes
as defined in Code Section 7701(a)(30)(E).
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5(d) Resignation of
Trustee. A Trustee may resign by giving thirty (30) days
advance written notice to the then living Grantor, or if the Grantor is not
living, then to the adult beneficiaries entitled to income at the time of such
resignation (or if there is no current adult beneficiary, then the oldest
beneficiary who is a descendant of the Grantor) .
5(e) Powers of Successor
Trustees. Any Successor Trustee appointed hereunder shall have
the same powers and duties as are conferred upon and assumed by the Trustee
pursuant to this Trust Agreement.
6.
Grantor’s Reserved
Powers. Notwithstanding Paragraph 20 or any other provision of
this Agreement or rule of law to the contrary, the Grantor, in his individual
capacity (and expressly not in a fiduciary capacity), and without requirement of
the prior consent or approval of any Trustee, except as provided in this
paragraph, or other fiduciary of this Trust, any beneficiary or any other person
interested in this Trust, or any court, reserves to himself (or his agent or
attorney-in-fact acting on the Grantor’s behalf under any durable power of
attorney if the Grantor is then disabled) the following powers: (i) to reacquire
all or any part of the Trust Estate by substituting other property of equivalent
value; and (ii) if approved in advance by the Trust Protector, in the Trust
Protector’s sole and absolute discretion (provided that the Trust Protector is a
non-adverse party within the meaning of Code Section 675), to borrow all or any
part of the Trust Estate without adequate interest or security, but not without
both, provided that any such borrowing shall only be on terms such that the
borrowed funds are equal in value to the Grantor’s promise to repay such
loan. However, the Grantor shall have no right to require that the
Trustee transfer to the Grantor any insurance policies or assets related to
insurance policies, including any right to borrow against or from such policies,
on the life of the Grantor, or any shares of voting stock of any corporation in
which the Grantor owns directly or indirectly, including ownership by
attribution under Code Section 318, the right to vote stock constituting at
least twenty percent (20%) of the total combined voting power of all classes of
the said corporation’s stock. Any exercise by the Grantor of the
power of substitution requires the Trustee to be satisfied that the properties
acquired and substituted by the Grantor are in fact of equivalent
value. The Trustee shall not honor any exercise of the power of
substitution or the power to borrow assets if the Trustee believes that such
effectuation would shift benefits among the Trust beneficiaries. The
Grantor further reserves to himself (or his agent or attorney-in-fact acting on
the Grantor’s behalf under any durable power of attorney if the Grantor is then
disabled) the power at any time, by a writing delivered to the Trustee,
irrevocably to disclaim any of the powers reserved to the Grantor under this
Paragraph 6.
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7.
Trust
Protector.
7(a)
Appointment.
7(a)(i)
During Grantor’s
Lifetime. During the Grantor’s lifetime, the Grantor may
appoint a Trust Protector; provided, however, and notwithstanding the foregoing,
neither the Grantor, the Trustee, any beneficiary of the Trust, or the spouse of
any of the foregoing, or any other person related to or subordinate to (as
defined in Code Section 672(c)) the Grantor shall be appointed as the Trust
Protector.
7(a)(ii) Upon Grantor’s
Death. After the Grantor’s death, the Trustee of this Trust
(and any Trust created hereunder), by majority vote (if applicable), shall have
the power to appoint a Trust Protector; provided however, and notwithstanding
the foregoing, neither the Trustee, any beneficiary of the Trust, or the spouse
of any of the foregoing, or any other person related to or subordinate to (as
defined in Code Section 672(c)) the Grantor or any such person(s) entitled to
make such appointment hereunder shall be appointed as the Trust
Protector.
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7(a)(iii) Any
action taken pursuant to this Paragraph 7(a) shall be in writing, sworn to
before a notary, and delivered to the Trust Protector so appointed, and shall be
effective upon acceptance thereof by execution of an acknowledged, written
instrument by the Trust Protector so appointed. The original of such
instrument shall be attached to the original of this Agreement. Any
instrument appointing a successor Trust Protector may specify that it takes
effect in the future upon the occurrence of one or more specified events and may
state the order of priority if more than one successor Trust Protector is
named. Any such instrument may be executed in one or more
counterparts. Any such appointment may be subsequently revoked by the
person originally making such appointment by such person’s executing a written
instrument that contains a statement revoking such appointment. The
revocation of appointment will be effective on the date delivered to the person
then acting as Trust Protector, provided that any third party dealing with a
Trust Protector named herein shall not be bound thereby unless said party has
actual knowledge that such appointment has been revoked. Any
appointment of a Trust Protector, where permitted under this Paragraph 7(a),
shall not require the prior approval or consent of any beneficiary (expect as
expressly authorized herein) or any court.
7(b) Powers of Trust
Protector.
7(b)(i) Amend Trust
Agreement. The Trust Protector may amend or restate the Trust
Agreement in accordance with the provisions of Paragraph 1(c) hereof solely for
the purpose of ensuring that terms of this Agreement conform and continue to
carry out the Grantor’s intentions and purposes as expressed in Paragraph 1(c)
hereof.
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7(b)(ii) Appointment of Institutional
Trustee. The Trust Protector may appoint an institutional
Trustee that will have exclusive control over Trust investment
decisions.
7(b)(iii) Change
Situs. Upon the request of any beneficiary hereunder, or upon
the Trust Protector’s own determination, the Trust Protector may (from time to
time, and potentially exercising said power more than once): (a) change the
situs of this Trust (and any Trust created hereunder); (b) change the governing
law which applies to the administration of the Trust (and any Trust created
hereunder); and (c) change the construction of this Trust Agreement from the
governing law of the prior situs to the governing law of the new
situs. Provided, however, any situs or governing law selected
hereunder must be a jurisdiction within the United States so that the Trust
shall at all times be considered a domestic trust and a U.S. Person for federal
income tax purposes under Code Section 7701(a)(30)(E).
7(b)(iv) Terminate
Trust. Notwithstanding the provisions of Paragraph 14 hereof,
and notwithstanding the loss of creditor protection to the beneficiaries of the
Trust resulting thereby, the Trust Protector may accelerate the termination of
any Trust hereunder if, in the Trust Protector’s discretion, (a) the ongoing
cost of administering the Trust renders maintaining the Trust no longer
advisable, (b) the Trust Protector, in the Trust Protector’s discretion,
determines that a primary purpose of retaining assets in trust would be to
obtain certain tax benefits and the tax laws, regulations or interpretation
thereof have been modified so that retaining the assets in trust no longer
serves such tax purposes, and there are no remaining significant purposes in or
benefits of retaining such assets in trust, or (c) changes in the laws or the
interpretation of the laws renders continued retention of the assets in trust no
longer advisable. Notwithstanding anything in this Trust Agreement to
the contrary, if because of changes in the laws affecting the imposition of
estate, generation skipping transfer and/or income taxes, the tax purposes of
this Trust shall no longer be necessary or the tax effects of this Trust shall
no longer be in the best interests of the beneficiaries, then the Trust
Protector may, in the Trust Protector’s discretion, modify the terms of this
Trust Agreement to accommodate such changes in the tax laws and/or to accelerate
some or all of the distribution of the assets of any Trust, even to the extent
of terminating any such Trust. One factor the Trust Protector may
take into consideration in exercising discretion hereunder is the possibility
that any such tax may be re-enacted in any form at some later
date. The Trust Protector shall not be liable to any beneficiary or
any other person for the exercise or failure to exercise such discretion
hereunder.
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7(b)(v) Notwithstanding
anything herein to the contrary, in no event may the Trust Protector exercise
any powers for the Trust Protector’s own direct or indirect benefit, and/or for
the direct or indirect benefit of a member of the Trust Protector’s family,
within the meaning of Code Section 267(c), or in favor of any individual to whom
the Trust Protector owes a legal obligation of support.
7(c) Removal/Appointment of Trust
Protector.
7(c)(i) During Grantor’s
Lifetime. Subject to the foregoing, during the Grantor’s
lifetime, the Grantor may remove the then serving Trust Protector, with or
without cause, and appoint in the Trust Protector’s stead a successor to serve
in that capacity; provided, however, and notwithstanding the foregoing, neither
the Grantor, the Trustee, any beneficiary of the Trust, or the spouse of any of
the foregoing, or any other person related to or subordinate to (as defined in
Code Section 672(c)) the Grantor shall be appointed as the Trust
Protector.
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7(c)(ii) Upon Grantor’s
Death. After the Grantor’s death, the adult beneficiaries of
this Trust (and any Trust created hereunder) and the guardians of any minor
beneficiaries of this Trust (and any Trust created hereunder), by majority vote,
shall have the right (a) to remove the then serving Trust Protector, with or
without cause, and appoint in his stead a successor to serve in that capacity,
and (ii) to appoint a successor to serve if none of the above named Trust
Protectors shall be able and willing to serve in that capacity; provided
however, and notwithstanding the foregoing, neither the Trustee, any beneficiary
of the Trust, or the spouse of any of the foregoing, or any other person related
to or subordinate to (as defined in Code Section 672(c)) the Grantor or any such
person(s) entitled to make such appointment hereunder shall be appointed as the
Trust Protector.
7(c)(iii) Any
action taken pursuant to this Paragraph 7(c) shall be in writing, sworn to
before a notary, and delivered to the Trust Protector so removed and/or
appointed, as the case may be, and in the case of an appointment, shall be
effective upon acceptance thereof by execution of an acknowledged, written
instrument by the Trust Protector so appointed. The original of such
instrument shall be attached to the original of this Agreement. Any
instrument appointing a successor Trust Protector may specify that it takes
effect in the future upon the occurrence of one or more specified events and may
state the order of priority if more than one successor Trust Protector is
named. Any such instrument may be executed in one or more
counterparts. Any such appointment may be subsequently revoked by the
person originally making such appointment by such person’s executing a written
instrument that contains a statement revoking such appointment. The
revocation of appointment will be effective on the date delivered to the person
then acting as Trust Protector, provided that any third party dealing with a
Trust Protector named herein shall not be bound thereby unless said party has
actual knowledge that such appointment has been revoked. Any
appointment of a Trust Protector, where permitted under this Paragraph 7(c),
shall not require the prior approval or consent of any beneficiary (expect as
expressly authorized herein) or any court.
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7(d) Resignation of Trust
Protector. Any Trust Protector may resign by giving notice in
the manner as provided in Paragraph 7(f), and a successor may be appointed in
the same manner as if the Trust Protector had been removed. An
individual Trust Protector shall be deemed to be disabled, to have resigned his
position, and to have given such notice if the Trustee obtains an opinion signed
by two (2) doctors who have examined such individual and who have determined
that he/she is no longer capable of carrying out his responsibilities as Trust
Protector.
7(e) Exoneration/Indemnification
of Trust Protector.
7(e)(i) Exoneration. Except
as otherwise provided herein, the Trust Protector shall exercise the powers
granted to the Trust Protector under this Agreement at all times as a fiduciary
for the general best interests of the Trust beneficiaries. Other than
for bad faith, gross negligence (and ordinary negligence in the case of an
institutional Trust Protector) or willful misconduct, the exercise or failure to
exercise such powers shall not be subject to challenge in any court by any
beneficiary or any other person interested in this Trust (and any Trust created
hereunder). Specifically, the Trust Protector shall not be liable for
failing to remove any Trustee unless such Trustee is guilty of gross negligence
(and ordinary negligence in the case of an institutional Trust Protector),
willful misconduct or a gross violation of his/her fiduciary duties hereunder,
and the Trust Protector is, or should have been, aware of such Trustee’s
negligence, willful misconduct or gross violation of fiduciary
duties. Moreover, nothing in this Trust Agreement shall be construed
to impose on the Trust Protector a duty to review the actions and/or decisions
of any Trustee hereunder on a day-to-day basis. The Trust Protector
shall have the same right as the Trustee to rely upon the provisions of
Paragraphs 9(a), 9(b), 9(d) and 9(f) hereof, as if each of said sections also
referred to the Trust Protector to the extent not otherwise inconsistent or in
conflict with this Paragraph 7, and in no event shall the Trust Protector be
liable for damages or otherwise to any beneficiary or any other person
interested in this Trust (and any Trust created hereunder) for the bona fide or
good faith exercise or failure to exercise the powers granted to the Trust
Protector under this Agreement.
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7(e)(ii) Indemnification. The
Trust Protector may seek indemnification from the Trust, as appropriate and
reasonable, before carrying out the Trust Protector’s duties under the Trust
Agreement. The Grantor directs the Trustee to provide the Trust
Protector such indemnification when providing such indemnification is
reasonable.
7(f)
Notice. Any
written notice required under this Paragraph 7 shall be considered sufficient if
given to the person entitled hereunder to receive such notice at such person’s
last known address either by personal delivery, overnight courier, facsimile or
other means of written telecommunication, or local mail using certified or
registered mail or their equivalent, return receipt requested. For
personal delivery or overnight courier such notice shall be deemed received upon
delivery. For mail sent certified or registered mail, return receipt
requested, or by facsimile or other form of telecommunication, such notice shall
be deemed received upon sending provided that written confirmation of
transmission is obtained. For mail sent by local mail, or by first
class U.S. mail if mailed in the U.S., such notice shall be deemed received
after three (3) business days from the date of depositing such notice with the
local mail or with the U.S. Postal Service.
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7(g)
Miscellaneous.
7(g)(i) Advisors. The
Trust Protector may: (a) employ and/or retain such advisors and agents,
including but not limited to tax counsel or other counsel, as the Trust
Protector deems advisable to assist in carrying out his fiduciary
responsibilities under this Trust Agreement; (b) fix and pay out of the Trust
Estate reasonable compensation for the services of such advisors and/or agents;
and (c) obtain payment from the Trust Estate for all of the Trust Protector’s
reasonable expenses incurred in the performance of the Trust Protector’s duties
hereunder. Further, the Trust Protector shall be entitled to receive
compensation for services rendered in such capacity in accordance with said
Trust Protector 's schedule of rates, published from time to time and in effect
at the time of the performance of such services. If no schedule shall
be in effect at that time, the Trustee shall be entitled to reasonable
compensation for the services rendered. The Grantor recognizes that
such compensation may exceed the compensation for such services in effect from
time to time under applicable law. In addition, any person who, while
serving as a Trust Protector hereunder, renders professional services to the
Trust shall be entitled to receive from the Trust compensation at those rates
charged for professional services rendered by such individual.
7(g)(ii) Trust
Records. The Trust Protector shall be entitled to access to
and copies of all Trust records, documents and accounts, provided at the expense
of the Trust Estate, as are reasonably necessary to enable the Trust Protector
to carry out his duties hereunder.
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7(g)(iii) More than One Trust
Protector. If there is more than one person acting as the
Trust Protector from time to time, such persons shall act jointly and
unanimously.
7(g)(iv) Must be a U.S.
Person. Each Trust Protector shall be a U.S. Person if
required in order for the Trust to remain classified as a domestic Trust and a
U.S. Person for federal income tax purposes under Code Section
7701(a)(30)(E).
7(g)(v) References. Any
reference to the Trust Protector shall refer to the Trust Protector serving from
time to time.
8.
Situs and
Severability. Except as otherwise provided in Paragraphs
7(b)(iii) and 9(g), this Trust shall be governed and construed in all respects
according to the laws of the State of Maryland. If any provision of
this Trust Agreement should be invalid or unenforceable, the remaining
provisions thereof shall continue to be fully effective.
9.
Trustee -- Miscellaneous
Provisions.
9(a)
Good
Faith. An individual Trustee, while acting in good faith,
shall not be liable for any loss or depreciation in the value of any Trust
created hereunder, but shall be liable only for loss or depreciation resulting
from his/her own willful default or gross negligence. An
institutional Trustee, while acting in good faith, shall not be liable for any
loss or depreciation in the value of any Trust, but shall be liable only for
loss or depreciation resulting from its own willful default or ordinary or gross
negligence.
9(b)
Compensation. As
compensation for the Trustee's services performed hereunder, an individual
Trustee shall be entitled to retain fair and reasonable compensation for
services rendered; provided, however, a Trustee that is a professional service
provider shall be entitled to compensation at the normal rates charged for
professional services rendered. An institutional Trustee shall be
entitled to retain compensation for services rendered in accordance with its
schedule of rates, including minimum fees and
separate compensation for real estate, interests in closely-held businesses, and
other special investments, as published from time to time and in effect at the
time services are rendered. The above compensation shall be
exclusive of all costs, charges or expenses necessary or proper which may be
incurred in the administration of the trust, such as counsel fees, court costs,
if litigation arises, and such travel expenses as may be necessary in the
Trustee's judgment to properly conserve the interests involved, all of which are
hereby authorized when, in the Trustee's judgment, they are deemed
necessary.
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9(c)
Trust
Advisors. The Trustee is hereby given the right and power to
employ or retain advisors, accountants, attorneys, investment counsel,
investigators, and other agents and employees; from time to time prescribe the
authorities and duties of such advisors, accountants, attorneys, investment
counsel, investigators, and other agents and employees, and fix and pay out of
the Trust Estate reasonable compensation for their services, and, generally,
make, take, or cause to be taken, every action, and may do, or cause to be done,
every matter and thing which, in the Trustee's judgment, shall be necessary or
advisable in connection with the administration of this Trust. A
Trustee that is a professional may employ any firm with which he/she is
affiliated to provide services for any Trust created hereunder.
9(d)
Indemnification. The
Trust shall indemnify the Trustee from and against any and all liabilities,
losses, damages and costs which may arise from the Trustee's actions as Trustee
of this Trust, except for those liabilities, losses, damages and costs which may
arise as a result of the Trustee's bad faith, willful default, gross negligence
(and ordinary negligence in the case of an institutional Trustee), and/or
reckless or wanton behavior.
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9(e)
More than One
Trustee. If more than one Trustee is serving hereunder, any
Trustee shall have the power to perform ministerial acts on behalf of the Trust
created herein, but the agreement of a majority of the Trustees then serving
shall be necessary for the performance of any discretionary acts by the
Trustees. Ministerial acts shall include, by way of illustration but
not limitation, the power to sign checks and other negotiable instruments, and
other documents. Discretionary acts shall include, by way of
illustration but not limitation, the decision to make distributions of income
and principal, decisions as to the form of investments, and the
like.
9(f)
Liability of Successor
Trustees. No successor or alternate Trustee shall be liable
for any act or omission of his/her predecessor nor shall he/she be obligated to
inquire into the validity or propriety of any such act or omission; any such
successor shall be entitled to accept as conclusive any accounting and statement
of assets furnished to such successor by his/her predecessor.
9(g) Power to Change
Situs. If no Trust Protector is then serving, the Trustee, in
the Trustee’s discretion, may transfer the situs of any Trust created by this
Agreement, and/or the location of the property of any Trust, to another
jurisdiction, and may direct that the administration of the Trust shall
thereafter be governed by the laws of such other jurisdiction. The
Trustee is authorized to take whatever action is necessary or desirable
(including the commencement of an appropriate judicial proceeding) in order to
effectuate such a transfer of Trust situs or the location of Trust
property. The power conferred on the Trustee under this sub-paragraph
shall be a continuing power which may be exercised any number of times for the
purpose of effectuating additional transfers of Trust situs and/or the location
of Trust property. The determination of the Trustee to transfer (or
not to transfer) the situs of the Trust and/or the location of Trust property
shall be conclusive and binding on all persons interested in the affected Trust
or Trust property.
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9(h)
Waiver of Court
Accountings. To the extent allowable under applicable law, the
Trustee shall be excused from the duty to render to any court annual or other
periodic accounts, whether required by statute or otherwise. The
Trustee shall take such action for the settlement or approval of her accounts at
such time and before such courts or without court proceedings as she shall in
her discretion determine.
9(i)
Accounting by
Trustee. The Trustee shall make an annual accounting of the
Trust to the current income beneficiaries (or their guardians) showing the
receipts, disbursements, and distributions since the last accounting, and the
status of the principal and any undistributed income on hand at the date of
accounting. Giving the beneficiaries copies of the monthly account statements of
the Trust shall be sufficient to satisfy the accounting requirement under the
previous sentence. The approval of any account by a beneficiary or
his guardian shall be final and binding on all persons as to the matters and
transactions shown in that account. Notwithstanding the foregoing,
the Trustee may at any time apply for a judicial settlement of
accounts.
9(j)
Environmental
Issues. The Trustee is authorized to deal with matters
involving the actual or threatened contamination of property held in the Trust
Estate hereunder (including any interests in sole proprietorships, partnerships,
corporations or other entities and any assets owned by such business
enterprises) by any Hazardous Substance (as defined herein), or involving
compliance with Environmental Laws (as defined herein). When used
herein, the term "Hazardous Substance" shall mean any substance defined as
hazardous or toxic or otherwise regulated by any federal, state or local law,
rules or regulations relating to the protection of the environment or human
health ("Environmental Laws"). In particular (but not in limitation
of the generality of the foregoing), the Trustee is empowered: (i) to
inspect and monitor the property of the Trust Estate hereunder periodically (for
example, to obtain tests, reports or audits), as may be deemed necessary, to
determine compliance with any Environmental Laws affecting such property, and
all expenses of such inspection and monitoring shall be paid from the income or
principal of the Trust Estate; (ii) to respond, or take any other action
necessary or appropriate to prevent, xxxxx or "clean up," as may be deemed
necessary, prior to or after the initiation of any enforcement action by any
governmental or regulatory body, to any actual or threatened violation of any
Environmental Laws affecting any such property, and the cost of such response or
action shall be paid from income or principal of the estate; (iii) to settle or
compromise at any time any claim against the Trust Estate hereunder related to
any such matter asserted by any governmental body or private party; (iv) to
disclaim any power set forth in this Trust Agreement which the Trustee
determines may cause such fiduciary to incur personal liability as a result of
any such matter; (v) to decline to serve as Trustee hereunder or, having
undertaken to serve, resign at any time the Trustee reasonably believes there is
or may be a conflict of interest between the Trustee, as a fiduciary and as an
individual, by virtue of potential claims or liabilities which are or might be
asserted against this Trust (or any Trust created hereunder) because of the type
or condition of any property in this Trust (or any Trust created
hereunder). Except for bad faith, willful misconduct or gross
negligence, the Trustee shall not be personally liable to any beneficiary or
other party interested in this Trust (or any Trust created hereunder), or to any
third parties, for any claim against this Trust (or any Trust created hereunder)
for the diminution in value of such property resulting from such matters,
including any reporting of or response to (1) the contamination of such property
by any Hazardous Substance, or (2) violations of any Environmental Laws related
to this Trust (or any Trust created hereunder).
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9(k)
Reimbursing Grantor for
Income Taxes. The Trustee, in her discretion, may (but are not
required to) reimburse the Grantor for all or any portion of the Grantor’s
income tax liability that is attributable to the income of this Trust (and any
Trust created hereunder). Provided, however, and notwithstanding
anything herein to the contrary, in no event shall a Trustee that is a related
or subordinate party (within the meaning of Code Section 672(c)) to the Grantor
participate in any decisions under this Paragraph 9(k). A Trustee
that is a related or subordinate party (within the meaning of Code Section
672(c)) to the Grantor may appoint an unrelated party as Trustee for the sole
purpose of making decisions under this Paragraph 9(k).
9(l)
Bond. Neither
the Trustee nor any Successor Trustee shall be required to give any bond or
other security.
10. Principal and
Income.
10(a) Dividends
received by the Trustee shall be treated as follows:
10(a)(1) Regular
or ordinary dividends payable in cash, stock, bonds, or other property
(including those so-called wasting asset corporations) shall be income
regardless of whether or not such dividends represent either wholly or in part
assets of the declaring corporations other than earnings.
10(a)(2) Extraordinary
dividends payable in the stock of the corporation declaring the dividend shall
be principal.
10(a)(3)
All other extraordinary dividends
payable in cash, bonds, or other property of the declaring corporation (or in
stock, bonds, or other property of a non-declaring corporation) to the extent
they represent or are charged against earnings of the declaring corporation,
regardless of when earned, shall be income.
The
Trustee shall have discretion to resolve any doubts concerning the application
of the above paragraph, or the allocation of any property between principal and
income the receipt for which no express provision is made in this Trust, and her
decision shall be binding upon all interested parties.
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10(b) If
at any time during the term of this Trust any property constituting principal is
sold, redeemed or otherwise disposed of, the proceeds from said sale,
redemption, or other disposition, whether at a profit or a loss, including
mortgages and real estate no matter how acquired, shall be dealt with as
principal, and in no event are the proceeds derived therefrom to be considered
income.
10(c) In
the case of real estate investments, for which distributions are frequently
calculated in accordance with "cash flow" accounting principles, as opposed to
strict "income" accounting principles, any such distributions received by the
Trustee for the benefit of the beneficiaries, which were calculated in
accordance with said "cash flow" accounting principles shall be considered
income for the purposes of the dispositive provisions of this Trust and shall be
distributed to the beneficiaries accordingly.
11. Limitation on
Powers. Notwithstanding anything herein contained to the
contrary, no powers enumerated herein or accorded to trustees generally pursuant
to law shall be construed to enable the parties named herein as a Grantor or
Trustee, or either of them, or any other person, to purchase, exchange, or
otherwise deal with or dispose of the principal or income of the Trust created
hereunder for less than an adequate or full consideration in money or monies'
worth, or to enable the Grantor or Trustee to borrow the principal or income of
the Trust, directly or indirectly, without adequate interest or
security. Except as otherwise provided in Paragraph 6 hereof, no
person, other than the Trustee, in that capacity, shall have or exercise the
power to vote (except as proxy) or direct the voting of any stock or securities
of the Trust, to control the investments of the Trust either by directing
investments or reinvestments, or by vetoing proposed investments or
reinvestments, or to reacquire or exchange any property of the Trust by
substituting other property of an equivalent value.
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12. Expenses of
Trust. With regard to any necessary and proper charges and
expenses in connection with the Trust Estate but notwithstanding any statute or
rule of law for distinguishing income from principal, the Trustee shall have the
power, in her discretion: (1) to deduct, retain, expend, and pay out of any
money belonging to the Trust Estate any such charges and expenses, including,
without being limited to taxes, insurance premiums, any expense of making and
changing investments, attorneys' fees, repairs or improvements, legal
assessments, debts, claims or charges which at any time may be due and owing by,
or exist against, the Trust Estate; (2) to determine the apportionment of any
such charges and expenses between principal and income; (3) to determine whether
to make any provision for depreciation in respect of any tangible property; and
(4) if the charges and expenses of any period apportioned to income exceed the
income of such period, to charge such excess against the earliest net income of
the Trust Estate thereafter realized.
13. Additional
Property. The Grantor reserves the right to himself or to any
other person at any time, by deed, will, Trust or beneficiary designation, to
add to the principal of the Trust created herein. The Trustee is
empowered to receive additions to the Trust hereunder by deed, gift, Will, Trust
or beneficiary designation, or otherwise, and to hold the same under the
provisions hereof.
14. Spendthrift
Provision. No beneficiary shall have any right to alienate,
encumber, or hypothecate his/her interest in the principal or income of the
Trust Estate in any manner, nor shall such interest of any beneficiary be
subject to claims of his/her creditors or liable to attachment, execution or
other process of law. This spendthrift provision is a material
provision of this Trust (and any Trust created hereunder).
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15. Trustee's
Powers. To the extent not inconsistent with Paragraph 6
hereof, the Trustee shall have the following powers with regard to this Trust,
in addition to any other powers granted by law and those set forth in Paragraph
11, all of which shall be exercised in a fiduciary capacity in the interest of
the beneficiaries of the Trust:
15(a) The
Trustee may hold, manage, sell, invest, reinvest, encumber or otherwise dispose
of the Trust Estate, and to commingle the property in this Trust with the
property of any other similar trust created for the benefit of the
beneficiaries, for the purpose of facilitating investment or management of the
combined Trust Estate.
15(b) The
Trustee, without regard to diversification and without regard or effect to any
restriction or requirement of the laws of any jurisdiction on the kind or type
of obligations in which trust funds may be invested, may retain indefinitely any
investments and to invest and reinvest the Trust Estate in any stocks, shares
and obligations of corporations, of unincorporated associations, of trusts and
of investment companies; in a common trust fund in any bonds, debentures and
obligations secured by deeds of trust or mortgages; in any real or personal
property; and in life insurance policies, real estate ventures or other business
undertakings, notwithstanding the fact that any or all the investments made or
retained are of a character or size which but for this express authority would
not be considered proper for a Trustee. All of the foregoing
transactions may be made by the Trustee without prior notice to the
beneficiaries.
15(c) The
Trustee may sell, exchange, lease or make contracts concerning any real or
personal property for any purpose and, if deemed advisable, for terms extending
beyond the duration of the Trust, to create restrictions and easements affecting
such property and to execute deeds, transfers, leases, options and other
instruments of any kind.
15(d) The
Trustee may compromise any claim existing in favor of or made against the Trust
or any property comprising the Trust Estate.
15(e) The
Trustee may vote in person or by proxy any stock or securities held in the Trust
Estate and to participate in reorganizations and other transactions involving
the common interest of security holders.
15(f) The
Trustee may borrow money in order to pay taxes, or to exercise subscription
rights and options, or to pay assessments, or to refinance mortgages, or to
accomplish any other purpose in the administration and management of the Trust,
and to give security if required for any such loans, and the lender or lenders
shall not be required to see to the proper application of such borrowed
money.
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15(g) The
Trustee may hold bonds, shares or other securities in bearer form, or in the
name of the Trustee or in the name of a nominee, without indication of any
fiduciary capacity; to deposit cash in a checking or savings account in a bank,
without indication of any fiduciary capacity.
15(h) The
Trustee may improve or develop real estate; to construct, alter, or repair
buildings or structures on real estate; to settle boundary lines and easements
and other rights with respect to real estate; to partition and to join with
co-owners and others in dealing with real estate in any way.
15(i) The
Trustee may purchase assets from the Grantor (or a revocable Trust established
by the Grantor). The Trustee may borrow money for such purchase and
may pledge all or part of the Trust Estate to secure such borrowing, without
incurring any personal liability therefor.
15(j) To
the extent allowable under applicable law, the Trustee may determine any
questions which may arise as to what constitutes principal or
income.
16. Merger. If
the Grantor creates another Trust(s), whether by Will or by agreement, the
provisions of which are substantially the same as those of the Trust or Trust
shares created hereunder, the Trustee in her discretion may, after the Grantor's
death, merge such other Trust(s) into this Trust, such other Trust(s) thereafter
to be held, administered and distributed as a part of this
Trust. Provided, however, if any such merger shall cause inclusion of
any portion of the Trust created hereunder to be included in the Grantor's gross
estate for federal estate tax purposes, the Trustee shall not merge any other
Trust into this Trust. In determining whether the provisions of such
Trust(s) are substantially the same as those of the Trust(s) created hereunder,
the Trustee's discretion shall be conclusive and shall not be subject to
judicial review. It is expressly provided, however, that in the event
of such a merger of Trusts, no part of the within Trust estate (including
principal and undistributed income) shall be used for the payment of any taxes,
debts, legacies, expenses of administration or other obligations enforceable
against the Grantor or his estate, it being the Grantor’s intent that none of
the property comprising the within Trust estate shall be includible in his gross
estate for federal or state estate or inheritance tax purposes.
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17. Rule Against
Perpetuities. To the fullest extent permitted by law, the Rule
Against Perpetuities (or any similar rule of law) shall not apply to any Trust
or interest created or otherwise arising under this Trust
Agreement. If for any reason the immediately preceding sentence is
ineffective and the creation of any interest herein in any person shall violate
the Rule Against Perpetuities or any other similar rule of law, then the vesting
of the interest of that person shall be accelerated and shall be deemed to occur
within the latest time as will not violate the Rule Against Perpetuities or any
other similar rule of law. The Grantor hereby intends, and this Trust
Agreement shall be liberally construed to effect this intent, and
notwithstanding any other provision in this Trust Agreement to the contrary,
that the Trustee of this Trust and any Trust hereunder shall have the full power
to sell, lease or mortgage any part of any trust interest created herein for any
period of time which may extend beyond the period that is required for an
interest created under this Trust Agreement to vest so as to be good under the
Rule Against Perpetuities if such rule applied to any Trust or interest created
under this Trust Agreement as if the first sentence of this Paragraph 17
provided otherwise.
18. QSST
Election. Notwithstanding anything in this Trust Agreement to
the contrary, if a Trust administered under Paragraph 2 hereof shall consist, in
whole or in part, of shares of stock of an S Corporation, and if said Trust is
not otherwise an eligible S Corporation stockholder, then said shares of stock
shall be administered as a separate Qualified Subchapter S Trust ("QSST Trust")
for the applicable beneficiary’s benefit within the meaning of Section
1361(d)(3) of the Code. Said Trust shall be administered in
accordance with the terms and conditions of Paragraph 2, except to the extent
that said provisions are inconsistent with or in conflict with Code Section
1361(d)(3) and the Treasury regulations thereunder. In such
situation, (i) the provisions of Code Section 1361(d)(3) and regulations
thereunder shall be deemed to override and supersede the applicable provisions
of this Trust Agreement; (ii) the provisions of Code Section 1361(d)(3) and
regulations thereunder shall be incorporated into this Agreement by reference
and shall be deemed to have the same effect they would have had if they had been
expressly set forth in the applicable provisions of this Trust Agreement; and
(iii) the Trustee may amend and restate the applicable provisions of this Trust
Agreement in accordance with those provisions. The Grantor directs
the Trustee to assist the income beneficiary of such QSST Trust to make the
necessary election for the applicable Trust to be treated and maintained as a
Qualified Subchapter S Trust.
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19. Restrictions on Powers of
Trustee and Trust Protector. Notwithstanding any provision
herein to the contrary, the Grantor shall have no power or authority to
participate in (i) the exercise, or decision not to exercise, any discretion
over payments, distributions, applications, uses or accumulations of income or
principal to or for the benefit of a beneficiary; (ii) the exercise or decision
not to exercise any power conferred on the Trustee under Paragraph 15(i) hereof;
(iii) any decision about whether or not to change the situs of the Trust; (iv)
the exercise or decision not to exercise any power to disclaim any property or
power; (v) the exercise of any power which would be deemed a general power of
appointment described in Section 2041 or 2514 of the Code; (v) the exercise of
any power described in Section 2036(a) (2), 2036(b), 2038 or 2042 of the Code;
or (vi) any decision about whether, and in what manner, to amend this Trust
Agreement to the extent such amendment relates to any of the foregoing
matters. Except as otherwise provided in Paragraph 5(a) hereof,
neither the Grantor nor any person related or subordinate to the Grantor within
the meaning of Section 672(c) of the Code shall be eligible to become a Trustee
or Trust Protector hereunder. No Trustee or Trust Protector shall
participate in the exercise of any discretion (including, but without
limitation, any discretion which would constitute an “incident of ownership”
within the meaning of Section 2042(2) of the Code) with respect to any insurance
policy on his/her life held hereunder. In each case, the
determination of the remaining Trustee(s), or any other Trust Protector (as
applicable) then serving shall be final and binding upon the beneficiaries of
such Trust. In addition, no individual shall serve as Trustee of any Trust which
holds property with respect to which such individual has made a qualified
disclaimer within the meaning of Section 2518 of the Code.
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20. Irrevocability. Subject
to the provisions of Paragraph 1(c) hereof, and except as may otherwise be
provided herein, the Trust (and any Trust created hereunder) shall be
irrevocable. The Grantor hereby expressly acknowledges that he shall
have no right or power, whether alone or in conjunction with others, and in
whatever capacity, to alter, amend, revoke, or terminate the Trust, or any of
the terms of this Trust Agreement, in whole or in part, or to designate the
persons who shall possess or enjoy the Trust Estate, or income
therefrom. By this instrument the Grantor intends to and does
relinquish absolutely and forever all possession or enjoyment, or right to
income from the Trust Estate, whether directly, indirectly, or constructively,
and every interest of any nature, present or future, in the Trust
Estate.
21. Definitions,
Construction. The masculine shall be read in the feminine (and
vice versa) and the singular shall be read in the plural (and vice versa)
whenever the context of this Trust shall plainly so require.
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Any
reference to the "Trustee" shall be deemed to include not only the Trustee first
named but also any substitute or successor at any time serving
hereunder.
Whenever
distribution is to be made to designated "issue" on a per stirpes and not per capita basis, the
property shall be distributed to the persons and in the proportions that
personal property of the named ancestor would be distributed under the laws of
the State of Maryland in force at the time stipulated for distribution, as if
the named ancestor had died intestate at such time, domiciled in the State of
Maryland, not married and survived only by such issue. In determining
the meaning of the words "children" and "issue" for the purpose of this Trust,
adopted children and afterborn children of any person, including the Grantor,
shall be treated as though they were natural born children of that
person. For the purposes of this Trust, afterborn children shall
include a child in gestation.
This
Trust Agreement may be executed in one or more counterparts each of which shall
be deemed a duplicate original, but all of which together shall constitute one
and the same instrument, as long as it is signed by all of the
parties.
Any
reference in this Trust to sections of the "Code" are to sections of the
Internal Revenue Code, as amended from time to time. All references
to a particular section of the Code shall be deemed to refer as well to any
comparable provisions of subsequent federal tax laws.
The
Grantor specifically acknowledges that this Trust Agreement contains exculpatory
and indemnification clauses intended to limit a Trustee’s
liability. Except as otherwise specifically provided, any Trustee is
held harmless for all actions, inactions, decisions, and votes made in his/her
capacity as Trustee of the Trust Agreement except for his/her own willful
default or gross negligence (and in the case of an institutional Trustee,
ordinary negligence). The Grantor agrees with such provisions of this
Trust Agreement.
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IN
WITNESS WHEREOF, the parties hereto have set their respective hands and seals as
of the date first hereinabove mentioned.
| /s/ Xxxxx-Xx Xxx |
(SEAL)
|
||
|
|
XXXXX-XX
AHN, Grantor
|
||
| /s/ Xxxxx Xxxx |
(SEAL)
|
||
|
|
XXXXX
XXXX, Trustee
|
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SCHEDULE
A
400,000
shares of stock in Rexahn Pharmaceuticals, Inc.
This
schedule is included only for the convenience of the Trustee and the
beneficiaries, and any failure to list Trust assets on this schedule shall not
affect the Trust's ownership of those assets.
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