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THIS IS AN AGREEMENT made this 1st day of January, 1998, between
Xxxxxxx X. Xxxx ("Trustor") and Xxxxxxx X. Xxxx ("Trustee").
1. TRANSFER OF PROPERTY:
Trustor desires to establish an irrevocable trust for the benefit of
Xxxx X. Xxxx, Lincoln X. Xxxx, Xxxxxxx X. Xxxx and Xxxxxx X. Xxxx
(hereinafter "Beneficiaries") and accordingly hereby transfers to the Trustee
the assets described on Schedule A attached hereto, the receipt of which is
hereby acknowledged by the Trustee. Trustor, or any other person, may
transfer additional property acceptable to the Trustee to be held,
administered and distributed as hereinafter provided. This trust shall be
known as the "Xxxxxxx X. Xxxx Family Trust."
2. SEPARATE SHARES:
The Trustee shall divide the trust property, without the necessity of
physically segregating assets, into equal and separate shares, one for and
bearing the name of each of: Xxxx X. Xxxx, Lincoln X. Xxxx, Xxxxxxx X. Xxxx, and
Xxxxxx X. Xxxx.
3. WITHDRAWAL RIGHTS OF SELECT BENEFICIARIES:
Whenever assets are transferred to the trust and the Trustee has
received notice from the donor that specified amounts thereof may be withdrawn
by a beneficiary of the trust, such beneficiary shall have the absolute right,
at all times during the thirty (30) day period commencing on the date of such
addition, to withdraw from the principal of the trust whatever amount has been
specified by the donor to be withdrawable. The withdrawable amount shall be
valued in the same manner as it would be for the donor's federal gift tax
purposes. Each withdrawal right shall be noncumulative and if not exercised
within the thirty (30) day period, it shall lapse. Each such withdrawal right
shall be exercisable by a written instrument executed by the beneficiary or his
guardian (acting solely in the beneficiary's interest) and delivered to the
Trustee prior to the expiration of the thirty (30) day period. The Trustee
shall, at all times that any withdrawal right is outstanding, retain sufficient
liquid funds and/or transferable assets in the trust to satisfy all such
withdrawal rights which are then outstanding. Each beneficiary designated as
having a withdrawal right shall be kept reasonably informed by the Trustee of
all withdrawable additions that are made to the trust.
4. DISTRIBUTION:
4.1 INCOME AND PRINCIPAL: The Trustee shall distribute to or use
for the benefit of each child so much or all of the net income of the child's
share of the trust as the Trustee determines necessary or advisable. Any annual
net income not distributed to or for the benefit of a child shall be accumulated
in such child's share and added to principal. The Trustee shall distribute to a
child one-third (1/3) of the remaining principal of the child's share
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when the child attains age twenty-five (25) years and the balance of the
principal of the child's share when the child attains thirty (30) years. The
Trustee may advance the distribution of any portion or all of the principal of
any child's share, as the Trustee determines necessary or advisable, for the
child's health, support, maintenance and education.
4.2 DEATH OF A CHILD PRIOR TO COMPLETE DISTRIBUTION: The Trustee
shall add the share of a child who dies prior to the complete distribution of
the child's share without descendants then living equally to the other shares of
the trust determined above (whether distributed or undistributed) and shall
hold, administer and distribute it accordingly. The Trustee shall distribute the
share of a child who dies prior to the complete distribution of the child's
share with descendants then living to such descendants by right of
representation; provided, however, if any such descendant be under the age of
twenty-five (25) years, the Trustee shall hold his or her share in trust until
the descendant attains age twenty-five (25) years, at which time the remainder
of the share shall be distributed to the descendant, free of trust. During the
period of time that the share is held in trust for a descendant, the Trustee
shall use so much of the net income and principal of such share as is necessary
for the health, support, maintenance and education of such descendant. If the
descendant dies before attaining age twenty-five (25) years, the Trustee shall
distribute the remainder of the descendant's share to the descendant's surviving
descendants by right of representation, and if none, then to the descendant's
surviving brothers and sisters in equal shares, and if none, to Trustor's then
living descendants by right of representation.
4.3 S CORPORATION: Notwithstanding the foregoing provisions of
this Agreement, if at any time any shares of stock in an electing small business
corporation for federal income tax purposes (hereinafter "S corporation") would
otherwise be held in the Xxxxxxx X. Xxxx Family Trust or in a trust or share of
a trust for a child or descendant of mine, or for my children as a group, and
any such trust would not qualify as a Qualified Subchapter S Trust, then so long
as such corporation continues to be an S corporation, such shares of stock shall
be held in a separate trust as hereinafter provided.
(a) If such shares of stock would otherwise be held in the
Xxxxxxx X. Xxxx Family Trust, such separate trust (hereinafter "Trust S") shall
be held, administered and distributed for the sole benefit of my children as a
group, the Trustee shall divide such separate trust into equal shares, one share
for each of my children who is then living and one share for each of my children
who is then deceased with descendants then living, such descendants to take by
right of representation (each such child or descendant hereinafter referred to
for purposes of this subsection as "the beneficiary"). From and after such
division, each beneficiary's share of the trust shall be known as the
beneficiary's "Trust S."
(b) All of the income of the beneficiary's Trust S shall be
distributed to the beneficiary, at least annually. The principal of the
beneficiary's Trust S shall
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be distributed in the same manner as the principal of the other trust or share
established for such beneficiary's benefit hereunder (hereinafter "such
beneficiary's primary trust"). The beneficiary's Trust S shall terminate at the
same time as such beneficiary's primary trust. If a beneficiary dies prior to
termination of his or her Trust S, his or her Trust S property shall be
distributed (subject to the provisions of this subsection) to the same persons
who would receive the property of such beneficiary's primary trust upon the
death of such beneficiary prior to termination of such beneficiary's primary
trust.
(c) It is my intention that no Trust S created hereunder be
administered in such a manner as to cause the termination of the S corporation
status of any corporation whose stock is held in such Trust S. Accordingly, to
the extent the terms of this Agreement are inconsistent with any trust created
hereunder qualifying as a Qualified Subchapter S Trust for federal income tax
purposes, it is my intent that the terms of the Trust S be construed and
administered in a manner that is consistent with qualifying the Trust S as a
Qualified Subchapter S Trust during any period that the Trust S holds S
corporation stock, and any provision incapable of being so construed or applied
shall be disregarded. The Trustee shall make all appropriate elections to
maintain the S corporation status and shall advise the beneficiary of the Trust
S or his or her legal representative of the need for such beneficiary to make
the election to treat the Trust S as a Qualified Subchapter S Trust for federal
income tax purposes.
5. SUCCESSOR TRUSTEE:
If Xxxxxxx X. Xxxx should become unable or unwilling to serve as the
Trustee of any trust herein established, Xxxxx X. Xxxx shall serve as Successor
Trustee without court proceedings. If at any time there would otherwise be a
vacancy in the position of Trustee, such individual or corporate Trustee as the
last serving Trustee shall designate in writing shall serve as Successor Trustee
without court proceedings; provided, however, in no event shall Trustor be
designated to serve as Trustee
5.1 REMOVAL OF CORPORATE TRUSTEE: If at any time a corporate
Trustee is serving, such Trustee may be removed without court proceedings by
delivery to it of a written notice of removal signed by a majority of the
beneficiaries who are then entitled to receive or have the benefit of the income
of the trust. Upon the removal or the resignation of a corporate Trustee, the
majority of the beneficiaries who are then entitled to receive or have the
benefit of the income a of the trust shall select a successor corporate Trustee
to serve as Trustee without court proceedings. For purposes of this subsection,
the Guardian of a beneficiary under a disability may act on behalf of such
beneficiary.
5.2 ACCOUNTING OF PRIOR TRUSTEE: A Co-Trustee or Successor Trustee
may accept a predecessor's accounting without independent review or audit upon
the assumption of duties and shall not be liable for any loss sustained during
or attributable to the period in which a predecessor served as Trustee.
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6. ADMINISTRATIVE PROVISIONS:
In the Trustee's administration of the trust created hereunder, the
following provisions shall apply:
6.1 TRUSTEE'S POWERS: In addition to and not in limitation of the
powers set forth in this instrument, the Trustee shall have all rights, powers
and duties given by law, including those set forth in the Montana Trust Code,
which Code is incorporated herein by this reference. In addition, the Trustee
shall have full power and authority:
(a) To retain, so long as the Trustee determines advisable,
without any liability for so doing, any property, real, personal or mixed, of
whatever kind and wheresoever situated which is received by the Trustee
hereunder from any sources (other than through investment or reinvestment by the
Trustee), regardless of whether the property so retained be of a kind and
quality which the Trustee would ordinarily purchase for trust accounts and
regardless of whether such property so retained should constitute a larger
portion of the trust estate than the Trustee would ordinarily deem advisable;
(b) To determine what is principal or income and what
charges are allocable to either, which authority shall specifically include the
right to make any adjustments between principal and income for premiums,
discounts, depreciation or depletion; in making such determination the Trustee
may, but shall not be required to, apply the Montana Revised Uniform Principal
and Income Act;
(c) To employ agents, depositories, and attorneys in and
about the execution of this trust without liability for their omissions or
neglect, but using reasonable care in their selection and to rely with
acquittance on advice of such attorneys;
(d) To invest and reinvest the trust assets as the Trustee
shall determine to be prudent under circumstances then prevailing but without
being limited in the character of investments by any statutory or other
governmental limitation on the investment of trust funds;
(e) To hold any property, real, personal, or mixed in the
Trustee's name or in the name of a nominee or such other form as the Trustee
determines best without disclosing the trust relationship; and
(f) To borrow upon such terms and conditions as the Trustee,
acting solely in a fiduciary capacity, shall determine appropriate for
investment purposes if the Trustee in the Trustee's sole discretion shall deem
it prudent and advisable to do so.
6.2 UNIFORM TRUSTEES' ACCOUNTING ACT: To the extent permitted
by law, the Trustee of any trust herein established shall be relieved from
the provisions of MCA 00-00-000, any successor statute of similar import,
and/or any amendments thereto. The
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Trustee's books and records shall be available for reasonable examination by the
beneficiaries of any trust, however, during all business hours, and the Trustee
shall render statements of account, at least annually, to the beneficiaries then
currently entitled to receive income distributions from the trust.
6.3 ACCRUED INCOME: Income accrued or unpaid on trust property
when received into the trust estate shall be treated as any other income. Income
accrued or held undistributed by the Trustee at the termination of any interest
or estate under the trust shall go to the beneficiaries entitled to the next
eventual interest in the proportion in which they take such interest.
6.4 RESTRAINT ON ALIENATION: No right, title, interest or equity
in any of the trust estate or the income or increase thereof shall vest in any
beneficiary until actual payment to him by the Trustee, and no part thereof,
either principal, interest, or increase shall be liable for the debts, present
or future, of any beneficiary or shall be subject to the right on the part of
any creditor of any beneficiary to seize or reach the same under any writ or by
any proceeding at law or in equity. No beneficiary shall have any power to give,
grant, sell, convey, mortgage, pledge, or otherwise dispose of, encumber or
anticipate the principal, income or increase of said trust estate, or any
portion thereof, or any installment thereof.
6.5 PAYMENTS TO MINORS: The Trustee may make payments for the
benefit of the beneficiary directly to the beneficiary or to the guardian of the
beneficiary's person, or to any other person deemed suitable by the Trustee, or
by direct payment of expenses incurred for the beneficiary's benefit.
6.6 CONSIDERATION OF OTHER RESOURCES: The Trustee, in exercising
the discretion granted in making payments hereunder, shall take into
consideration the reasonable use of all resources which may then be known by
the Trustee to be available to or for the use of the beneficiary, including the
ability of a beneficiary's parents or guardian to provide for such beneficiary's
support and maintenance. The Trustee, in the Trustee's sole discretion, may
request and rely upon a signed statement from the beneficiary or his parent or
guardian, satisfactory to the Trustee, as to such resources, and may, in the
Trustee's sole discretion, suspend benefits hereunder for the beneficiary during
any period in which a requested statement is not furnished. Notwithstanding the
foregoing, however, no distributions shall be made to or for the benefit of a
beneficiary if the distribution would satisfy the Trustee's obligation to
support the beneficiary.
6.7 CONSOLIDATION OF TRUSTS: If the Trustee is at any time
holding property in trust for the benefit of any beneficiary named hereunder
under terms substantially similar to the terms of any trust created herein,
whether such other trust has been created by Trustor or by any other person, the
Trustee is authorized, in the Trustee's discretion, to consolidate this trust
and such other trust and to hold and administer them as a single trust.
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6.8 DISTRIBUTION OF ASSETS: Upon the termination of any trust,
share in trust, or any interest in any trust created herein, the Trustee may
distribute assets in kind, including undivided interests therein, and may do
so without regard to the income tax basis of specific property allocated to
any beneficiary. The Trustee shall not be required to distribute assets of
the trust estate, or interests therein, pro rata to the beneficiaries
receiving such distributions, but may, in the exercise of the Trustee's
discretion, make non-pro rata distributions, so long as the distributees
receive assets of a value equal to the value of their respective interest in
the trust as of the time of distribution.
6.9 DIVISION INTO SHARES: Wherever it is provided in this trust
that a trust estate shall be divided into separate shares, each such share shall
be considered a separate trust. The Trustee shall not be required to make
physical segregation of the assets to effectuate such division.
6.10 SIGNIFICANT NON-ROUTINE TRANSACTIONS: The Trustee of any
trust herein established is hereby relieved from the duty to obtain an
independent appraisal and from the duty to sell in an open market transaction,
as might otherwise be required by law.
6.11 DEFINITION OF "EDUCATION": The term "education" as used
herein shall be given a broad interpretation, and may include, but is not
limited to:
(a) education at public or private elementary or high schools
(including boarding schools);
(b) undergraduate and graduate study in any and all fields
whatsoever, whether of a professional character or otherwise, at public and
private universities, colleges or other institutions of higher learning;
(c) training at a trade, industrial, or vocational school, or
other training designed to teach the beneficiary an employable skill;
(d) specialized formal or informal training in music, the
stage, the handicrafts, the arts or sports, whether by private instruction or
otherwise; and
(e) any other activity, including foreign or domestic travel,
which tends to develop fully the talents and potential of each beneficiary,
regardless of age.
The activities described in this subsection may be carried on either in
the United States or elsewhere.
7. IRREVOCABILITY:
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The trust created hereunder shall be irrevocable, and Trustor expressly
acknowledges that he/she shall have no right or power to alter, amend, revoke or
terminate the trust, or any of its terms, or to designate the persons who shall
possess or enjoy the trust property or the income therefrom. Trustor intends to
and does hereby relinquish absolutely and forever all possession or enjoyment
of, or right to the income from the entrusted property.
8. MISCELLANEOUS:
Unless some other meaning and intent is apparent from the context, the
plural shall include the singular and vice versa. Masculine, feminine, and
neuter words shall be used interchangeably.
EXECUTED by Trustor and the Trustee as of the day and year first
above written.
/s/ Xxxxxxx X. Xxxx
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XXXXXXX X. XXXX, TRUSTOR
/s/ Xxxxxxx X. Xxxx
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XXXXXXX X. XXXX, TRUSTEE
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SCHEDULE A
XXXXXXX X. XXXX FAMILY TRUST
