GALA MANAGEMENT SERVICES, INCORPORATED TRUST AGREEMENT
Exhibit
1
GALA
MANAGEMENT SERVICES, INCORPORATED
GALA
MANAGEMENT SERVICES, INC., a corporation organized and existing in accordance
with the laws of the Republic of Panama by means of public deed No
5875,
granted by Public Notary Fifth of the Circuit of Panama on July 23, 1981,
recorded in the Public Registry Office, Microfilm Section (Mercantile), under
Microjacket 075941, Film Roll 6659, Image 0080 (henceforth referred to herein
as
THE FIDUCIARY), for the one part, and for the other part THE ADMINISTRATIVE
COMMITTEE, acting in conformity with the authorization provided for in Clause
XXIX of the Trust Agreement entered into on March 1, 1987, by this means
agree
the following:
CLAUSES
FIRST:
(THE
AGREEMENT) This Trust Agreement shall be governed by the clauses and
stipulations contained hereinafter; to the Panamanian legislation, in general,
and, in particular, to Law 1 of January 5,1984, enacted by the Republic of
Panama.
SECOND:
(SETTLOR(S)) The parties agree that, in addition to XXXXXXX, XXXXX & XXXXX,
originally designated as SETTLOR in the contract of March 1, 1987, other
persons
may join this trust as SETTLORS, and designate beneficiaries. However, such
joining as SETTLORS shall be limited only to individual applicants, insureds
and/or owners of life insurance contracts (henceforth referred to as INSURANCE
CONTRACTS) with CITIZENS INSURANCE COMPANY OF AMERICA (henceforth referred
to as
CICA), a wholly-owned subsidiary of CITIZENS, INC. (henceforth referred to
as
CITIZENS), provided however, THE FIDUCIARY shall have the right to reject
any
person, at its option, as a SETTLOR(S) and furthermore that said applicants,
insureds or owners may not be citizens or residents of the United States
of
America, such applicants, insureds and owners being henceforth referred to
herein as SETTLOR(S).
THIRD:
(THE
ENTRUSTED ASSETS) THE FIDUCIARY shall hold in its name, but exclusively in
a
fiduciary capacity, the following assets (hereinafter THE ENTRUSTED
ASSETS):
a)
Policy
dividends and retirement fund benefits which THE FIDUCIARY receives from
CICA on
behalf of SETTLOR(S) in accordance with the assignment of INSURANCE CONTRACT
dividends (hereinafter referred, to as THE DIVIDENDS) executed by the
SETTLOR(S).
b)
The
class
A common stock of CITIZENS (hereinafter referred to as THE STOCK) acquired
and
to be acquired from time to time by THE FIDUCIARY under the terms of this
Agreement, or received or to be received due to consolidations, mergers and
similar operations.
c)
The
other
amounts and extra amounts - over and above dividends of THE INSURANCE CONTRACTS
and of THE STOCKS - (hereinafter THE ADDITIONAL AMOUNTS) that THE FIDUCIARY
may
directly or indirectly
receive
from SETTLOR(S); provided however, that said extra amounts may not annually
be
less than five hundred dollars (US$500) nor more than twenty-five thousand
dollars (US$25,000), legal tender of the United States of America.
d)
The
dividends from THE STOCK acquired by THE FIDUCIARY in compliance to this
contract.
e)
The
interest which may be earned on the funds received by THE FIDUCIARY, said
funds
being referred to in a), c) and d) of this clause.
Paragraph:
The
monies referred to in paragraphs a), c), d) and e) of this clause shall
hereinafter be known as THE AMOUNTS.
FOURTH:
(SETTLOR
OR BENEFICIARIES) THE SETTLOR(S), or in the event of the death of a SETTLOR(S),
the BENEFICIARIES of said SETTLOR(S) designated under his/her INSURANCE
CONTRACT, or otherwise, shall be BENEFICIARY(IES) of this trust (henceforth
referred to herein as the BENEFICIARY(IES)).
FIFTH:
(PURPOSE
OF THE TRUST) The purpose of this trust is to provide the SETTLOR(S) with
an
investment mechanism for THE AMOUNTS delivered to or received by THE FIDUCIARY,
by means of the acquisition and accumulation of THE STOCK, which shall be
held
by THE FIDUCIARY in trust or in custody, as the case may be.
SIXTH:
(ASSIGNMENT) For the purposes of this trust the SETTLOR(S) assign to THE
FIDUCIARY, by this means, or shall assign at the time of their incorporation
to
this trust, THE
DIVIDENDS to be paid by CICA on THE INSURANCE CONTRACTS, as well as THE OTHER
AMOUNTS.
SEVENTH:
(DESTINATION OF FUNDS) THE FIDUCIARY, upon receiving THE AMOUNTS remitted
directly or indirectly by SETTLOR(S)or CICA, shall immediately deposit same
in
THE FIDUCIARY name in a money market of interest bearing savings account
or
short-term certificate of deposit, whichever is in the best interest at the
time
of receipt, in a first line bank or with a USA securities firm, with the
intent
that said deposits shall earn interest until invested in THE STOCK.
THE
FIDUCIARY shall, at its sole discretion as to timing of purchases, quantities
and price to pay, acquire THE STOCK for the SETTLOR(S) trust in the USA open
stock market through a USA securities firm. Notwithstanding the foregoing,
should THE STOCK, for any reason, not be readily available in the marketplace,
THE FIDUCIARY may purchase same directly from CICA or CITIZENS without a
securities firm mediation, or at its discretion, from SETTLOR(S) liquidating
all
or part of their interest in the trust, or abstain from purchasing same if
to
its exclusive judgement the acquisition of STOCK could be regarded as a
violation of its duties as THE FIDUCIARY or is inconvenient to SETTLOR(S)
interests.
It
is
expressly provided that THE FIDUCIARY shall abstain from purchasing THE STOCK,
upon receipt of written notice to it by two-thirds of the SETTLOR(S) instructing
it not to purchase for their account additional STOCK. In such a case, THE
FIDUCIARY shall proceed in accordance with clause XXII
hereunder.
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EIGHT:
(NO
LIENS OR ENCUMBRANCES) THE FIDUCIARY can use and invest the trust assets
only
for the purposes outlined in this Trust Agreement and, unless necessary to
make
a partial distribution to SETTLOR(S) or pay the trust expenses (including
THE
FIDUCIARY’S fees), it shall not sell, mortgage, pledge, hypothecate or otherwise
in anyway further entrust any of the trust assets.
NINTH:
(PROPORTIONALITY) As THE FIDUCIARY purchases THE STOCK, it shall distribute
same
on a pro rata basis between those SETTLOR(S) with whose funds the purchases
were
made.
Interests
shall be distributed with the same criterion, while the expenses shall be
divided in proportion to SETTLOR(S) respective aggregate account
balance.
Should
fractions result when making a STOCK distribution among SETTLORS, then THE
FIDUCIARY shall eliminate fractions lesser to a half and shall adjudicate
same
those having fractions greater to a half, making upwards roundings.
TENTH:
(STATEMENTS OF ACCOUNT) Every three (3) months, from the date of their joining
the trust, and to their last known address, THE FIDUCIARY shall send to SETTLORS
a statement of account, in which the following information shall be
presented:
a)
The
SETTLOR(S) current year total, THE AMOUNTS, received by the trust from or
for
his/her account.
b)
The
quantity of STOCK held by the trust and then current market value thereof
which
relates to the SETTLOR(S) interest in the trust.
c)
The
cash
amount held by the trust which relates to the SETTLOR(S) interest in the
trust.
d)
The
total
expenses incurred by the trust year to date.
ELEVENTH:
(LIQUIDATIONS) SETTLOR(S) shall at all times have the right to request, by
means
of a written communication addressed to THE FIDUCIARY, that all or part of
SETTLOR(S) interest in the trust be issued to SETTLOR(S); provided however,
that
should it be a partial liquidation, SETTLOR(S) shall be required to maintain
in
the trust (in STOCK at bid market value and cash) at all times, an amount
equal
to at least eighty percent (80%) of the SETTLOR(S) total annual interest
in the
trust; and further provided, that with regard to SETTLOR(S) part of the trust
to
this date, this limitation shall not become effective until ninety (90) days
from the date this document is mailed to them.
In
the
event of a total liquidation of SETTLOR(S) rights, termination of this trust,
or
death of SETTLOR(S), then THE FIDUCIARY shall cause to be issued to the
SETTLOR(S), or SETTLOR(S) BENEFICIARY0ES) or a new fiduciary, as the case
may
be, upon receipt of proper documented written request, the part of his/her
interest in THE ENTRUSTED ASSETS, or the total ENTRUSTED ASSETS (if to a
new
fiduciary).
THE
FIDUCIARY shall comply with SETTLOR(S) instructions given to the effect and,
in
the absence of instructions, SETTLOR(S) interest in THE ENTRUSTED ASSETS
shall
be delivered
3
in
the
most practical and safe manner. Notwithstanding the foregoing, should the
instructions be inconvenient, confuse, contradictory, complicated or risky,
then
THE FIDUCIARY may choose the simplest method and manner to deliver SETTLOR(S)
interest in THE ENTRUSTED ASSETS.
When
liquidating the totality of SETTLOR(S) interest in the trust, all of SETTLOR(S)
rights and obligations hereunder shall immediately terminate.
TWELFTH:
(SETTLEMENT AUTHORITY OF THE FIDUCIARY) At all times and at any moment during
the duration of this trust and should THE FIDUCIARY deem it convenient, it
may
transfer to one or more SETTLOR(S), even if never requested, SETTLOR(S) interest
in THE STOCK. However, if THE FIDUCIARY decides to make such transfer, it
may
keep THE STOCK in custody, ceasing the rights derived from the fiduciary
relationship and coming forth with those of a deposit/custody contract, provided
that in such a case the depository (THE FIDUCIARY) shall be empowered by
SETTLOR(S) to directly or through a securities firm, sell THE STOCK to their
benefit, but not to exercise the voting rights.
In
the
event of a total or partial liquidation, THE FIDUCIARY shall have the exclusive
right to decide how SETTLOR(S) interest in the trust shall be delivered to
SETTLOR(S) or SETTLOR(S) BENEFICIARY(IES); that is, if in STOCK, cash or
a
combination of both.
THIRTEENTH:
(AUDIT)
Annually, at the expense of the trust, during the month of January, there
shall
be an audit of the trust and all accounts of THE FIDUCIARY related to this
trust, including trust expenses. Said audit shall be performed by an independent
public auditing firm with offices in the Republic of Panama. The selection
of an
auditor shall be made by THE FIDUCIARY; however, THE ADMINISTRATIVE COMMITTEE
shall have the right to designate the auditor should it so elect, in which
case
said designation shall prevail.
FOURTEENTH:
(LIMITATION OF RESPONSIBILITY) THE FIDUCIARY shall only be responsible for
fraud
or gross negligence and it shall not incur any kind of liability for errors
of
others.
FIFTEENTH:
(TAXES,
EXPENSES AND EXPENSE FUND) THE FIDUCIARY is hereby expressly authorized to
pay
out of THE ENTRUSTED ASSETS or the income it produces, THE FIDUCIARY’S fees and
expenses incurred by the trust, as well as all taxes, assessments and
liabilities of any nature which may be incurred by the trust or THE ENTRUSTED
ASSETS, provided that in no case shall THE FIDUCIARY’S own patrimony be
compromised.
THE
FIDUCIARY, for the purpose of paying the expenses mentioned above, is authorized
to establish a special expense account to cover the expenditures occasioned
by
the trust, including its fees. The expenses of the trust shall be allocated
on a
pro rata basis to each respective SETTLOR(S) account.
SIXTEENTH:
(BASIS
OF FEES) For services (fiduciary or custody) rendered by THE FIDUCIARY to
or for
SETTLOR(S), THE FIDUCIARY shall receive fees in accordance to the following
table:
a)
0.50%
annually on the first US$500,000.
4
b)
1.00%
annually on sums from US$500,001 through US$1,000,000.
c)
1.50%
annually on sums from US$1,000,001 through US$2,000,000.
d)
1.25%
annually on sums from US$2,000,001 through US$3,000,000.
e)
1.00%
annually on sums from US$3,000,001 through US$4,000,000.
f)
0.75%
annually on sums from US$4,000,001 through US$5,000,000.
g)
0.50%
annually on sums in excess of US$5,000,000.
The
fees
shall be computed annually on the totality of the amounts given to THE FIDUCIARY
and said fees shall be paid monthly.
SEVENTEENTH:
(OPERATIONAL EXPENSES DEFINED) The Operational Expenses of the trust shall
be
limited to the items which follow:
Attorney’s
fees, auditors’ fees, taxes, postage, cables, telexes, long-distance telephone
xxxx, telefaxes, stockbroker commissions, transfers of stocks, cargo expenses,
insurance premiums, performance bond premiums, and any other operational
expenses, which may be deemed necessary for proper administration of the
trust.
EIGHTEENTH:
(NOTIFICATIONS) THE FIDUCIARY is obligated to immediately notify the SETTLOR(S),
at SETTLOR(S) last address registered with the trust, of any informational
requirement formulated by any regulatory authorities of Panama or the United
States of America. In the same manner, the SETTLOR(S) shall be notified by
THE
FIDUCIARY of any new tax or assessment which may be enacted that would affect
this trust or THE ENTRUSTED ASSETS in custody, as well as any investigation
or
legal action (civil or criminal) initiated by or on behalf of the authorities
of
the aforementioned countries.
NINETEENTH:
(RENDERING OF ACCOUNTS) Notwithstanding anything herein to the contrary,
upon
receipt of a written request by THE ADMINISTRATIVE COMMITTEE, THE FIDUCIARY
shall provide said Committee with a detailed account of its administration,
including, but no limited to, all amounts received, all deposits made, all
purchases of stock, as well as proof of existence and location of said stock,
all interest, dividends and other amounts received, the distribution of THE
STOCK to SETTLOR(S), settlements made, and all administration expenses and
FIDUCIARY fees incurred by the trust.
TWENTIETH:
(INDEMNIFICATION) The SETTLOR(S) and the BENEFTCIARY(IES) shall indemnify
THE
FIDUCIARY, its employees, directors, officers, agents, representatives, managers
and administrators, and hold them harmless and free from any and all liability
or damage which any one of them may suffer as a result of any legally imposed
fine or penalty arising from the operation of this trust for SETTLOR(S),
provided such event shall not have occurred as a result of gross negligence
or a
fraudulent act on the part of THE FIDUCIARY and/or the others mentioned above
affiliated therewith.
TWENTY-FIRST:
(SURETY
BOND) THE FIDUCIARY shall be required to secure and maintain, at all times,
a
surety bond to protect SETTLOR(S) and/or BENEFICIARY(IES) against fraudulent
acts, thefts or larceny committed by THE FIDUCIARY or its employees or
5
associates.
Said bond will be secured from and issued by a bonding or insurance company
authorized to operate in the Republic of Panama for a bond amount which may,
from time to time, be increased or decreased by written request of THE
ADMINISTRATIVE COMMITTEE. Initially said bond shall not be less than two
hundred
fifty thousand dollars (US$250,000).
TWENTY-SECOND:
(TERMINATION) This Trust Agreement shall be automatically terminated and
distribution of all ENTRUSTED ASSETS made to SETTLOR(S) or delivered to a
new
fiduciary (appointed by THE ADMINISTRATIVE COMMITTEE or a Circuit Judge of
Panama) should any of the events set forth in Panama Law 1 of 1984 as to
reasons
for termination occur, or if the termination is requested by two-thirds of
SETTLOR(S).
Upon
termination of the trust for any reason, THE FIDUCIARY shall, within reasonable
time, render a full and final account of the trust to the SETTLOR(S) and
to THE
ADMINISTRATIVE COMMITTEE, having the right to retain any fees not previously
paid and expenses not previously reimbursed at the time of transfer, provided
it
has in no way breached its responsibilities hereunder.
TWENTY-THIRD:
(VOTING
RIGHTS) When acting as fiduciary or as custodian, THE FIDUCIARY shall not
have
the voting right of THE STOCK. SETTLOR(S) have such right. However, if
SETTLOR(S) so instructed, THE FIDUCIARY may exercise such voting right when
provided a proxy by SETTLOR(S).
TWENTY-FOURTH:
(PAYMENT
OF LEGAL EXPENSES) SETTLOR(S) shall bear notarial expenses, stamp taxes and
lawyers’ fees caused in connection with the drafting, modification,
authentication, protocolization, etc., of this agreement.
TWENTY-FIFTH:
(CONFIDENTIALITY) THE FIDUCIARY, its employees, directors and associates
are
hereby bound to maintain this trust, its condition as fiduciary and the identity
of SETTLOR(S) and BENEFICIARY(IES) in strict secrecy.
Notwithstanding
the foregoing, THE FIDUCIARY may disclose all or part of the information
related
to this trust and the custody, if required by any competent authority of
Panama
or of the United States. Likewise, THE FIDUCIARY may also disclose information
to authorities of other countries, if requested in connection with criminal
activities.
TWENTY-SIXTH:
(DOMICILE) This trust shall be domiciled on the sixth floor of the Edificio
Fiduciario, located at 000 Xxx Xxxxxx, Xxxxxx, Xxxxxxxx of Panama, which
is THE
FIDUCIARY’S domicile.
TWENTY-SEVENTH:
(AUTHORITY TO RESIGN) THE FIDUCIARY is hereby authorized to resign as
depository/custodian as well as THE FIDUCIARY of this trust, upon reasonable
notice in writing of its intent to resign being given to THE ADMINISTRATIVE
COMMITTEE. In such event THE ADMINISTRATIVE COMMITTEE shall appoint a new
trust
entity, or the procedure outlined in the TWENTY-SECOND clause hereof shall
control should THE ADMINISTRATIVE COMMITTEE fail to designate a new trust
entity.
TWENTY-EIGHTH:
(ADMINISTRATIVE COMMITTEE AND MODIFICATIONS TO THE TRUST) The SETTLOR set
forth
by name in the SECOND clause hereof shall appoint
6
from
one
to five persons to serve as members on the ADMINISTRATIVE COMMITTEE, who
shall
serve thereafter for one year or until their successors shall be appointed
by
said SETTLOR, which committee shall have all authority assigned to it in
this
Agreement. THE FIDUCIARY and THE ADMINISTRATIVE COMMITTEE, when the majority
of
its members are in agreement, may effect without reservation any modification
to
this document they deem necessary.
TWENTY-NINTH:
(IRREVOCABILITY) Except for the right of the SETTLOR(S) to request total
or
partial settlements of their respective interest in the trust, under the
limits
set forth in the ELEVENTH clause hereof, this trust is irrevocable. However,
SETTLOR(S) have the right to terminate the custody, should it
exist.
THIRTIETH:
(RESIDENT AGENT) The resident agent for this trust is the law firm XXXXXXX,
XXXXX & XXXXX, with offices at Na 000 Xxx Xxxxxx, Xxxxxx, Xxxxxxxx of
Panama.
THIRTY-FIRST:
This
Agreement, by authority vested in THE ADMINISTRATIVE COMMITTEE in clause
TWENTY-NINE of the Agreement dated March 1, 1987, replaces and supersedes
all
prior agreements between THE FIDUCIARY and SETTLOR (therein referred to as
INSUREDS) and cannot be rescinded, modified or changed, except as provided
in
TWENTY-EIGHTH clause hereof.
For
the
record, this Agreement is signed in triplicate in the city of Panama, Republic
of Panama, on the 1st day of July, 1990.
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By:
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/s/
Xxxxxxx Xxxxx
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By:
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/s/
Xxxxx Xxxxxxx
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XXXXXXX
XXXXX (PE-1-516)
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XXXXX
X. XXXXXXX (8-99-303)
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Administrative
Committee
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The
Fiduciary
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Fiduciario
Building, 6th Floor - Xxx Xxxxxx, 000 - Xxxxxx, Xxxxxxxx xx Xxxxxx
