Exhibit 99.5
IRREVOCABLE TRUST AGREEMENT
MILGRAT I(Y)
This instrument contains all of the terms of an Irrevocable Trust
Agreement made at Naples, Florida, on June 25, 2002, by Xxxxxxxxx X. Xxxxxx as
the "Grantor" and Xxxxx X. Xxxxxx as the "Trustee". This Agreement may be known
as the "MILGRAT I(Y)."
SECTION 1
TRUST PROPERTY
1.1 The Grantor has delivered to the Trustee the property shown on Schedule A
attached hereto. No additional contributions shall be made to the trust.
1.2 The Trustee agrees to hold such property in accordance with the terms set
forth in this Agreement.
SECTION 2
SURRENDER OF RIGHTS BY GRANTOR
2.1 This Agreement is irrevocable, and the Grantor surrenders all rights to
amend or revoke it. Provided that the Trustee, acting alone, shall amend
the terms of this Agreement and restrict or remove any of the powers,
duties, rights and privileges of the Trustee, the beneficiaries, or any
other person in any manner required for the sole purpose of ensuring that
the interests of the Grantor qualify and continue to qualify as "qualified
annuity interests" within the meaning of Section 2702(b)(1) of the
Internal Revenue Code of 1986 as it may from time to time be amended or
restated. Notice of any amendment or other change in the Agreement shall
be given by the Trustee to each adult beneficiary and to the parent or
guardian (or other appropriate representative designated by the court) of
each minor beneficiary.
SECTION 3
PAYMENTS TO GRANTOR DURING TRUST
3.1 On the day before the first anniversary of creation of the trust, the
Trustee shall pay to the Grantor 49.55% of the initial net fair market
value of the trust assets. On the day before the second anniversary of
creation of the trust, the Trustee shall pay to the Grantor 59.46% of the
initial fair market value of the trust assets. The amount to be paid to
the
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Grantor under these provisions shall hereinafter be referred to as the
"annuity amount." The annuity amount shall be paid from income and, if the
annuity amount exceeds the income of the trust, from principal. In no event
shall the payment for any year be made later than 105 days after the stated
payment date. The taxable year of the trust shall be the calendar year. If
the Grantor dies prior to the time that all annuity amounts are paid, any
unpaid annuity amounts to which the Grantor is entitled shall be paid to
the Grantor's estate under the same terms and conditions as such annuity
amounts would have been paid to the Grantor. If short period proration is
required under Reg. Sec. 25.2702-3, the provisions of such Regulation are
hereby incorporated by reference.
3.2 In no event prior to the termination of the trust shall distributions be
made from the trust to or for the benefit of any person other than the
Grantor.
3.3 If the initial net fair market value of the trust assets is incorrectly
determined by the Trustee, then within a reasonable period after the
corrected value is finally determined for federal gift tax purposes, the
Trustee shall redetermine the annuity amount. If the initial value is
finally determined to have been too low, the Trustee shall pay the amount
of the increase in such amount (reduced by any excess income payments
previously paid to the Grantor, if any) to the Grantor if the underpayment
relates to payments that should have been received by the Grantor. If the
initial value is finally determined to have been too high, the Grantor
shall pay the amount of the decrease in such amount, if any, to the
Trustee. Any payment adjustment required under this Section 3.3 shall be
made within a reasonable time (not to exceed six months) after such final
determination.
3.4 The trust shall terminate on the day before the second anniversary of
creation of the trust under this Agreement, and the trust assets, less the
annuity amounts, shall be distributed to the Grantor's then living issue,
per stirpes, subject to Section 4. The Grantor's interest in this trust may
not be commuted.
SECTION 4
TRUSTS FOR PERSONS OTHER UNDER AGE 35
4.1 If any person who becomes entitled to all or any share of the trust estate
is under age 35 at the time set for distribution to him or her, his or her
share shall not be distributed to him or her directly, but shall continue
to be held by the Trustee as a separate trust for his or her benefit as
follows: The Trustee may, in the Trustee's sole discretion, pay to or for
the benefit of the person for whom the trust is held, at such times as the
Trustee determines, all or such part of the net income and, if necessary,
principal of the trust as the Trustee determines to be necessary to provide
for such person's support, maintenance, education and medical care. Any net
income not so distributed shall be accumulated and added to the principal
of the trust. The trust shall terminate on the first to occur of the
following:
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the date when the person for whom the trust is held attains age 35; the
date of death of such person; and the date when, in the sole opinion of the
Trustee, the trust estate has been so reduced as to make it uneconomical or
otherwise impractical to hold the trust estate in trust. Upon termination
of the trust, the Trustee shall distribute the principal and any
undistributed income thereof to the person for whom the trust is held, if
living, or if not, to his or her estate.
4.2 The word "education," when used in this Agreement, shall mean all types and
levels of education, both public and private, and shall include, but not be
limited to, primary and secondary education, college or university
education, post-graduate education, training such as that provided by a
business school, vocational school or technical school, and any education
which may be required because of the particular abilities or disabilities
of a beneficiary. It shall also include all tuition, board, lodging, fees,
books and equipment, travel expenses and other expenses incidental thereto.
4.3 Solely for the purpose of investment convenience, the Trustee may hold and
invest the assets of the separate trusts held under this Section 4 as a
unit, without physically dividing them, until actual division becomes
necessary in order to make distribution, and in such case the Trustee shall
allocate to each separate trust its proportionate part of receipts and
expenditures.
SECTION 5
GENERAL PROVISIONS
5.1 The Trustee shall have the following powers, in addition to authority the
Trustee may have under the laws of any state, which the Trustee may
exercise without order of court:
5.1.1 To collect, pay and compromise debts and claims.
5.1.2 To borrow money, including authority for a corporate Trustee to
borrow from itself in a nonfiduciary capacity.
5.1.3 To sell real and personal property, publicly or privately; to give
options to buy real and personal for any length of time; to
lease real and personal property for any term; to mortgage real
property; to pledge personal property; and to execute and deliver
instruments to effectuate such powers.
5.1.4 To retain property received by the Trustee regardless of whether
such property is authorized by law for investment by fiduciaries;
and to invest and reinvest the proceeds of the sale of such
property, and cash, in whatever property the Trustee
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3.
deems reasonable, whether or not the investment is authorized by
law for investment by fiduciaries.
5.1.5 To exercise and not exercise, as the Trustee deems reasonable,
rights of ownership incident to securities that the Trustee may
hold, including rights to vote, give proxies and execute
consents, provided that a corporate Trustee shall exercise voting
rights under any securities issued by it or its affiliate only at
the written direction of the primary income beneficiary of the
trust to which such securities are allocated, the guardian or
custodian (but not the Grantor) to act for any beneficiary who is
incapacitated or incompetent.
5.1.6 To hold property in the name of a nominee.
5.1.7 To hold, retain and continue to operate any business interest
received, whether organized as a sole proprietorship, partnership
(general or limited), limited liability company or corporation,
for such time and in such manner as the Trustee may deem
advisable, without liability on the part of the Trustee for any
losses resulting therefrom; to dissolve, liquidate or sell at
such time and upon such terms as the Trustee may deem advisable;
to use the assets of the trust estate for the purposes of the
business; to use the income from such business for business
purposes, including but not limited to the establishing of
additional reserve and depreciation accounts, establishing funds
for future expansion and growth and such other business purposes
as the Trustee may deem advisable; to borrow money for business
purposes and to pledge or encumber the assets of the business or
other assets of the trust estate to secure a loan; to employ such
officers, managers, employees or agents as the Trustee may deem
advisable in the management of such business, including electing
representatives of the Trustee to take part in the management of
such business as directors, officers or employees, and any such
representatives of the Trustee may receive compensation for their
services in addition to the fee to which the Trustee may be
entitled for the Trustee's services in the administration of the
trusts held hereunder; and to have such additional powers as may
be necessary to enable the Trustee to continue or to dispose of
any such business interest.
5.2 No person leasing or purchasing property from or lending money to or
otherwise dealing with any trust and no transfer agent requested to
transfer corporate securities to or from any trust need inquire as to the
purpose of the lease, sale, loan, transfer or assignment or see to the
application of the proceeds, and the receipt of the Trustee shall be a
complete acquittance and discharge of such person for the amount paid.
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5.3 Notwithstanding other provisions of this Trust Agreement, the Grantor shall
have the power to borrow assets of the trust without adequate security.
This power shall not be assignable.
5.4 The Trustee is authorized to distribute trust assets in cash or in kind, or
partly in each.
5.5 In allocating any credit or charge to principal or income the Trustee shall
have the power, exercisable as a fiduciary in good faith: to determine
whether assets received shall be treated as principal or income, provided
that distributions of capital gains by regulated investment companies,
capital gains on the sale of assets and stock dividends in stock of the
declaring corporation shall be allocated to principal; to charge or
apportion expenses or losses to principal or income; to establish and
maintain reasonable reserves for depreciation, depletion, amortization and
obsolescence, and if any portion of the trust estate consists of a wasting
asset, to establish and maintain reasonable reserves for such asset; and to
amortize or not to amortize both premiums and discounts on investments. The
Trustee is relieved of the duty of compliance with the provisions of
Sections 2109.66 through 2109.68 of the Ohio Revised Code and of Chapter
1340 of the Ohio Revised Code, as such provisions may from time to time be
amended, but the Trustee is authorized to treat such provisions of the Ohio
Revised Code as advisory in exercising the discretionary authority granted
herein.
5.6 The Trustee is authorized to employ legal counsel, investment counsel and
other agents in any matter in connection with the administration of the
trust, such as agents for the collection of rentals or the management or
sale of any of the trust estate. The Trustee may pay such compensation and
expenses in connection therewith as the Trustee deems reasonable under the
circumstances.
5.7 Income or principal of any trust created under this Agreement which becomes
payable or is, in the discretion of the Trustee, distributable to any
beneficiary who is incapacitated or incompetent may be paid to such
beneficiary, despite his or her incapacity or incompetency, to the guardian
or guardians of his or her estate, or to any person, corporation or
institution for the benefit of such beneficiary, as the Trustee deems
reasonable. The receipt of any such payee shall be a complete discharge and
release of the Trustee.
5.8 For all purposes of this Agreement, a person, including the Trustee, shall
be considered incapacitated or incompetent if so declared by a court having
jurisdiction, or if such person's personal physician or any two physicians
selected by the Trustee, or selected by the designated successor Trustee in
the event of the Trustee's incapacity, shall advise the Trustee, or such
successor Trustee, of such incapacity or incompetency in writing. Any such
incapacity or incompetency established in the first instance by declaration
of court may be removed only by such court, or if established in the first
instance by such person's
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personal physician or any two physicians selected as above provided, may be
removed by either the personal physician then serving such person or any
two physicians selected by the Trustee, or such successor Trustee (who need
not be the same two physicians who may have certified such person's
incapacity or incompetency).
5.9 The Grantor intends by this trust to make a completed gift of a vested
remainder in the trust assets, subject only to the Grantor's retention of
the right to receive the "annuity" amount under Section 3.1. The Grantor
intends that her interests in this trust be qualified interests, as defined
in Section 2702(b) of the Internal Revenue Code of 1986 as it may from time
to time be amended or restated. No power, right or duty under this
Agreement shall be effective or exercisable to the extent to which it would
cause the Grantor's annuity interest hereunder to fail to qualify as a
"qualified annuity interest" under Section 2702(b)(1) of the Internal
Revenue Code of 1986 as it may from time to time be amended or restated.
5.10 Notwithstanding any other provisions of this Agreement, unless terminated
at an earlier date under other provisions hereof, all trusts herein
created, including those created through the exercise of a power of
appointment, shall terminate 21 years after the death of the last to die of
such of the Grantor and the Grantor's issue who are living on the date of
execution of this Agreement, and thereupon the Trustee shall distribute to
the persons then entitled to receive income from any trust the share of the
trust from which any such person is then entitled to receive income.
5.11 The words "child" or "children," when used in this Agreement, shall mean
lineal descendants of the first degree only. The word "issue," when used in
this Agreement shall mean lineal descendants of any degree. A lineal
descendant shall include an adopted person but only if the adoption occurs
prior to the date such person attains age 18, the adopted person has lived
with the adoptive parent in a parent-child relationship for any two
consecutive years prior to the date of the Grantor's death and the adoption
was not effected primarily to permit the adoptive person to receive
distributions from the trust.
5.12 Notwithstanding any other provisions of this Agreement, the annuity amount
shall not be paid with a note or other obligation of the trust nor shall it
be paid in any manner that would result in disqualification of the annuity
amount as a "qualified interest" under Section 2702(b)(1) of the Internal
Revenue Code of 1986 as it may from time to time be amended or restated.
5.13 All questions pertaining to the trust and its validity and the
administration thereof, and to the construction of this Agreement, shall be
determined in accordance with the laws of the State of Ohio.
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SECTION 6
THE TRUSTEE
6.1 Xxxxx X. Xxxxxx shall serve as Trustee hereunder until the first to occur
of his death, resignation, incapacity or incompetence. At such time as
Xxxxx X. Xxxxxx ceases to serve as Trustee hereunder, the successor Trustee
shall be PNC Bank, National Association, Cincinnati, Ohio, or any
corporation which may succeed to its trust business.
6.2 The Grantor's son, Xxxxx X. Xxxxxx, may request the resignation of any
Trustee serving hereunder. Any Trustee acting hereunder shall have the
right to resign upon written notice to the Grantor, or if the Grantor is
not living or living but incompetent or incapacitated, to the Grantor's
children who are then living and competent and not incapacitated. After the
Grantor's death, the Trustee shall give such notice to all of the
beneficiaries then entitled to receive income under the trust or trusts as
to which the Trustee is resigning who are not incapacitated or incompetent
and to the guardian(s) or custodian(s) of those who are incapacitated or
incompetent.
6.3 Upon the resignation of any Trustee, voluntarily or involuntarily, the
Trustee shall turn over the assets and administration of the trust or
trusts then held hereunder as to which the Trustee is resigning to such
bank or trust company as may be selected by the Grantor's son, Xxxxx X.
Xxxxxx, or if he is incapacitated or incompetent, by the Grantor's son,
Xxxxxx Xxxxxx.
6.4 An individual Trustee shall be entitled to receive reasonable compensation
for serving hereunder. Such compensation has been agreed to as set forth in
a schedule prepared by Trustee. A corporate Trustee shall be entitled to
receive such compensation as is provided for in its current schedule of
fees effective from time to time or as otherwise agreed upon.
6.5 Any successor Trustee shall have each and every right, privilege, power,
discretion, authority and duty of the original Trustee and shall be subject
to the same responsibilities. Any successor Trustee shall qualify by
executing a written instrument of acceptance of the trusteeship which shall
be attached to any counterpart or copy of this Agreement. No bond shall be
required of any Trustee for serving as such.
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7.
IN WITNESS WHEREOF, the Grantor and the Trustee have signed
duplicates hereof, each of which shall be deemed an original, on the date first
above written. The Grantor has signed such duplicates in the presence of two
witnesses who signed the Agreement at the Grantor's request, in the presence of
the Grantor and in the presence of one another.
WITNESSES:
/s/ Xxxxxxx Xxxxxxxxxx /s/ Xxxxxxxxx X. Xxxxxx
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Print Name: Xxxxxxx Xxxxxxxxxx Xxxxxxxxx X. Xxxxxx, Grantor
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/s/ Xxxxxx Xxxxxxx
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Print Name: Xxxxxx Xxxxxxx
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Xxxxx X. Xxxxxx, Trustee
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8.
SCHEDULE A
to
MILGRAT I(Y)
DATED JUNE 25, 2002
Units/Shares Description
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184,828 Aldila, Inc.
CINlibrary/1214850.1
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9.
