EFTA01111057.pdf

MORTIMER B. ZUCKERMAN MANAGEMENT TRUST Amendment and Restatement Pursuant to the provisions of Paragraph B of Article I of the Mortimer B. Zuckerman Management Trust created by Trust Agreement dated November 2, 2010, between Mortimer B. Zuckerman, as Settlor, and the said Mortimer B. Zuckerman, as Trustee, as most recently amended and restated on October 31, 2013 (the "Trust"), I, the said MORTIMER B. ZUCKERMAN, hereby amend the Trust by striking out ARTICLE I through ARTICLE XXV, constituting the whole of the Trust Agreement, and substituting therefore the following Table of Contents and Articles I through XXV, which constitute the entire Trust and may be relied on by any person without reference to any prior document "Table of Contents Article I Disposition of Trust Property and Reservation of Powers During My Lifetime 2 Article II Payment of Taxes, Debts, Expenses and Bequests under my Will, Disposition of Art Following My Death 3 Article III Maintenance and Support ProvisiOns for Marla Prather 4 Article IV Other Provisions Related to the Separation Agreement 7 Article V Abigail's Inheritance 8 Article VI Provisions for Abigail During Minority 8 Article VII Provisions for Abigail until her Emancipation 9 Article VIII Other Provisions for Abigail and Renee 9 Article IX Other Gifts at My Death 11 Article X Disposition of Remaining Property 12 Article XI Trust for the Benefit of a Descendant of Mine 13 Article XII Trust for the Benefit of a Descendant of a Niece or Nephew of Mine 15 Article XIII Qualified Subchapter S Trusts 16 Article XIV Further Provisions Regarding the Disposition of the Trust Property 18 Article XV Powers of Appointment; Disclaimer; Division and Consolidation of Trusts 18 -1- MN IAA 4••••• •••• EFTA01111057 Article XVI Survivorship; Manner of Payment; Restrictions on Alienation; Contingent Termination and Distribution 19 Article XVII Trustees' Powers 20 Article XVIII Management of Business Interests 23 Article XIX Trustees' Compensation 26 Article XX Other Provisions Relating to the Trustees 28 Article XXI Trustees' Accounts 29 Article XXII Resignation and Appointment of Trustees 30 Article XXIII Liability of Trustees and Others 33 Article XXIV Miscellaneous Matters 33 Article XXV Definitions 34 Article I Disposition of Trust Property and Reservation of Powers During My Lifetime A. During my lifetime my Trustees shall dispose of the net income and principal of the trust property in such manner as I shall direct from time to time. In the absence of express written direction from me to the contrary, my Trustees other than myself are at all times authorized in their discretion to apply all or part of the income or principal for my benefit; to satisfy any of my obligations, including my obligations under the Separation Agreement; to make distributions to any one or more of my issue (a) for their support or (Li) to utilize gift tax exclusions and applicable credit amounts and/or to facilitate any gifts authorized to be made under any power of attorney granted by me. B. During my lifetime I shall have the power, acting alone, at any time and from time to time: 1. To amend or revoke this trust; 2. To appoint a Co-Trustee or Co-Trustees; 3. To remove any Trustee hereof; 4. To appoint a successor Trustee or Trustees; 5. To exercise any rights, options or privileges pertaining to any insurance policy payable to my Trustees. -2- EFTA01111058  The exercise of any such power shall be by written instrument specifically referring to this trust signed by me and deposited with my Trustees, either during my lifetime or within a reasonable time after my death, but any act properly performed by my Trustees before any such instrument has been deposited with them shall not be affected thereby. C. While I am serving as a Co-Trustee with another person, until the receipt by any other Trustee or Trustees then serving hereunder of a statement signed by me or by my duly authorized attorney-in-fact to the effect that this paragraph is no longer in effect, I, as a Trustee, shall have sole responsibility for all decisions as to the retention, disposition, investment, reinvestment or other administration of the assets held by the Trust. Any other Trustee or 'Trustees serving hereunder shall abide by such decisions and execute all documents which may be requited to effectuate them, including, without limitation, proxies, subscriptions and documents of sale, acquisition or exchange. If such other Trustee or Trustees shall fail to receive timely instructions from me as to any action which must be taken within a specified time period with respect to a particular matter, such other Trustee or Trustees may, but shall have no duty to take such action as he or they shall deem appropriate. Article II Payment of Taxes. Debts. Expenses and Bequests under my Will Disposition of Art Following My Death Following my death, my Trustees shall pay or apply such sum or sums from the principal of the trust property as my executor may request, in writing, for the satisfaction of legacies, my lawful debts, my legally binding charitable pledges, funeral expenses and expenses of administration of my estate and any death tax payable by reason of my death with respect to property held under this trust or with respect to property passing under my Will if such taxes are apportioned to my residuary estate. If my executor fails to request funds sufficient for the payment of taxes, debts, expenses and legacies, I direct my Trustees to make such payment or payments as may be necessary to make up such deficiency directly to the person or organization entitled to the same. To the extent possible, no part of any payment pursuant to the foregoing shall be made from funds or property which is exempt from any such taxes if such funds or property would thereby become subject to any such taxes. Except as otherwise provided in this Agreement or my Will, any such payments by my Trustees shall be made out of the residue of the trust property that would otherwise be disposed of under Article X hereof and shall not be made from or charged against any of the other assets passing to any other person hereunder. I recognize that such payments will reduce the charitable deduction allowable to my estate. -3- EFTA01111059  In addition, my Trustees shall satisfy all specific bequests under Articles FIRST, SECOND and THIRD of my Will of property that may have been transferred by me to the Trustees during my lifetime and that is held by my Trustees at the time of my death. Death taxes shall be apportioned to the persons who receive such specific bequests as provided in my Will. My Trustees shall sell any works of art and antiques held hereunder at the time of my death and dispose of the net proceeds as provided in this Agreement My Trustees' good faith determination as to what constitutes a work of art or antique shall be final and binding on all concerned. Article III Maintenance and Support Provisions for Math Prather Upon my death, if Marla Prather (hereinafter called "Marla") has not violated the terms of our Separation Agreement and our Separation Agreement is still in effect, my Trustees shall make the following provisions for Marla and for my daughter Abigail (hereinafter called "Abigail") in accordance with Sections 5.A and 633 of the Separation Agreement A. Subject to Paragraph E hereof, if Marla survives me, my Trustees shall set aside an amount equal to the sum of Five Million ($5,000,000) Dollars and shall hold and dispose of the same as a separate trust upon the following terms: I. In each taxable year of such mist, my Trustees shall pay to Marla, during her lifetime, an annuity amount equal to Two Hundred Fifty Thousand ($250,000) Dollars. The annuity amount shall be paid in quarterly installments on or about the first day of January, April, July, and October of each year. Any income of such trust for a taxable year in excess of the annuity amount shall be added to principal. In determining the annuity amount, my Trustees shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with Marla's death. 2. Upon Marla's death, my Trustees shall dispose of any remaining principal and undistributed income in accordance with the provisions of Article X hereof. 3. This arrangement is intended to satisfy a portion of my obligation under Section 633.1 of the Separation Agreement to pay Marla the sum of Three Hundred Fifty Thousand ($350,000) Dollars per year for a period ending on the earlier of her death or the 19th anniversary of the Start Date (as defined in Section 6.13.3 of the Separation Agreement), as well as my obligation under Section 6.B.2 of the Separation Agreement to continue paying Marla the sum of Two Hundred Fifty Thousand ($250,000) Dollars per year thereafter for the balance of her life. B. If my death occurs prior to January 1, 2020, and Marla survives me, my Trustees shall -4- IPA AM , 4. EFTA01111060 set aside an amount equal to the sum of One Million ($1,000,000) Dollars and shall hold and dispose of the same as a separate trust upon the following terms: 1. In each taxable year of such trust, my Trustees shall pay to Marla, during her lifetime, an annuity amount equal to One Hundred Thousand ($100,000) Dollars. The annuity amount shall be paid in quarterly installments on or about the first day of January, April, July, and October of each year. Any income of such trust for a taxable year in excess of the annuity amount shall be added to principal. In determining the annuity amount, my Trustees shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with Marla's death or the termination of her annuity interest 2. Upon the first to occur of January 1, 2020 or Marla's death, my Trustees shall dispose of any remaining principal and undistributed income in accordance with the provisions of 3. This arrangement is intended to satisfy the balance of my obligation under Section 6.B.1 of the Separation Agreement to pay Marla the sum of Three Hundred Fifty Thousand ($350,000) Dollars per year for a period ending on the earlier of her death or the 19th anniversary of the Start Date, as described above. C. If my daughter Abigail survives me and my death occurs prior to her Emancipation (as defined in Section 5.E of the Separation Agreement), my Trustees shall set aside the sum of One Million ($1,000,000) Dollars and shall hold and dispose of the same as a separate trust upon the following terms: 1. In each taxable year of such trust, my Trustees shall pay to Marla, during her lifetime, or to Abigail following Marla's death, an annuity amount equal to Eighty Thousand ($80,000) Dollars. The annuity amount shall be paid in quarterly installments on or about the first day of January, April, July, and October of each year. Any income of such trust for a taxable year in excess of the annuity amount shall be added to principal. In determining the annuity amount, my Trustees shall prorate the same on a daily basis for a short taxable year and for the taxable year ending with the termination of the annuity interest 2. The annuity interest shall continue for a term ending on August 1, 2022, except that the annuity interest shall terminate earlier upon the first to occur of either of the following qualified contingencies (within the meaning of Section 664(0(3) of the Code): Abigail's death; her marriage; or her completion of four academic years of college education (within the meaning of the -5- EFTA01111061 definition of "Emancipation" in Section 5.E of the Separation Agreement). Upon such termination, my Trustees shall dispose of any remaining principal and undistributed income in accordance with the provisions of AtrielLX hereof. 3. This arrangement is intended to satisfy my obligation under Section 5A of the Separation Agreement to pay Marla the sum of $80,000 per year for Abigail's support and maintenance for a period ending on Abigail's Emancipation. D. Subject to Paragraph E hereof, each of the trusts under this Article is intended to qualify as a charitable remainder annuity trust within the meaning of Section 664(cl)(1) of the Code. The provisions of this instrument shall be construed and enforced to carry out that intention. Without limiting the foregoing. I. No additional contributions shall be made to any such trust after the initial contribution. The initial contribution, however, shall consist of all property passing to the trust as a result of my death. 2. My Trustees shall make distributions at such time and in such manner as not to subject any such trust to tax under Section 4942 of the Code. Except for the payment of the annuity amounts to the recipients, my Trustees shall not engage in any act of self-dealing, as defined in Section 4941(d) of the Code, and shall not make any taxable expenditures, as defined in Section 4945(d) of the Code. My Trustees shall not make any investments that jeopardize the charitable purpose of such trusts, within the meaning of Section 4944 of the Code and the regulations thereunder, or retain any excess business holdings, within the meaning of Section 4943(c) of the Code. 3. My Trustees are prohibited from exercising any power or discretion granted under the laws of the State of New York or under other provisions of this instrument that would be inconsistent with the qualification of such trusts under Section 664(d)(1) of the Code and the corresponding regulations. 4. My Trustees have the power, acting alone, to amend this instrument in any manner required for the sole purpose of ensuring that each such trust qualifies and continues to qualify as a charitable remainder annuity trust within the meaning of Section 664(d)(1) of the Code. 5. Nothing in this instrument shall be construed to restrict my Trustees from investing the assets of such trusts in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale or disposition of trust assets. 6. In each case, the obligation to pay the annuity amount shall commence with -6- inn awn 0'1 EFTA01111062 the date of my death, but payment of such amount may be deferred from such date until the end of the taxable year in which occurs the complete funding of the trust Within a reasonable time after the end of the taxable year in which occurs the complete funding of the trust, my Trustees shall pay to the respective recipients of the annuity amounts (in the case of an underpayment) or receive from such recipients (m the case of an overpayment) the difference between: (a) any annuity amounts actually paid, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under Section 664 of the Code prescribe for the trust for such period; and (b) the annuity amounts payable, plus interest, compounded annually, computed for any period at the rate of interest that the federal income tax regulations under Section 664 of the Code prescribe for the trust for such period. E. Notwithstanding the foregoing, if the trust arising under Paragraph A of this Article fails to satisfy the exhaustion test described in Revenue Ruling 77-374 or the requirements of Section 664(d)(1)(D) of the Code, my Trustees shall, rather than establishing the trust described in Paragraph A, distribute to a separate trust the amount neercsary to purchase a commercial annuity to satisfy my obligations under Section 6.B of the Separation Agreement The trust established under this Paragraph shall administer such annuity to satisfy the payments my estate must pay to Marla pursuant to Section 6.13 of the Separation Agreement. Such annuity shall be purchased within six (6) months of my death. kick W Other Provisions Related to the Separation Agreement The provisions set forth below in this Article W shall take effect only if Marla has not violated the terms of out Separation Agreement and our Separation Agreement is in effect at the time of my death. A. If Math survives me and, at the time of my death, she owns the townhouse at 17 East 75th Street, New York City, New York, my Trustees shall discharge the balance as of the date of my death of any mortgage on said townhouse that complies with Section 7.B.2 of the Separation Agreement This provision is intended to satisfy my obligation under Section 7.B.6 of the Separation Agreement. B. Upon my death, if Marla survives me and, at the time of my death, she owns the townhouse at 17 East 75th Street, New York City, New York, my Trustees shall set aside the sum of Two Million ($2,000,000) Dollars and shall hold and dispose of the same as a separate trust upon the following terms, which are intended to satisfy my remaining obligations to Marla 'under the Separation -7- 4.A. •••••1.0 EFTA01111063 Agreement 1. My Trustees shall, from time to time, make such payments to or on behalf of Marla as my Trustees shall deem necessary to satisfy the obligations, if any, that I have under Section 7.13 of the Separation Agreement 2. Upon Maria's death or at such earlier time as there shall be no remaining obligations to satisfy under Section 7.B of the Separation Agreement, my Trustees shall allocate any remaining principal and undistributed income by right of representation among my then living issue. My Trustees shall use the property so allocated to any descendant of mine to create or add to a trust for the benefit of such person under Article XL hereof. If no descendant of mine is then living, my Trustees shall dispose of said principal and income in accordance with the provisions of Astick_X hereof. Article V Abigail's Inheritance If my daughter Abigail survives me, my Trustees shall set aside an amount equal to Fifty Million (150,000,000) Dollars plus, to the extent that I have not during my lifetime fully satisfied the amount that I am obligated to leave to Abigail under Section 5.F of the Separation Agreement (the "Section S.F Amount"), an amount necessary to satisfy the Section 5.F Amount. For purposes of the preceding sentence, the value as of the date of my death of any trust created by me during my lifetime for the primary benefit of my descendants shall be determined as if the trustees of such trust had no discretion to distribute income or principal of such trust to any beneficiary from the date of my death until the funding of separate trusts for my children under such trust To the extent this gift is applied to satisfy the Section 5.F Amount, it shall take precedence over any other gift hereunder that is not in satisfaction of an obligation of mine under the Separation Agreement This gift shall be subject to a proportionate share of any death taxes payable by reason of my death. My Trustees shall hold and dispose of such amount as a separate trust for Abigail's benefit pursuant to the provisions of Article XI hereof. VI Provisions for Abigail During Minority If the Separation Agreement is in effect at the time of my death, my daughter Abigail survives me and I die prior to her eighteenth (18th) birthday, my Trustees shall set aside an amount equal to the -8- ft. dIOVI. let EFTA01111064 sum of Three Hundred Thousand ($300,000) Dollars multiplied by the number of years between the date of my death and Abigail's eighteenth (18th) birthday (including the final, fractional year, computed on a daily basis) and shall add such amount to the trust for Abigail's benefit under Article XI hereof. This amount is intended to satisfy, and shall be administered and distributed by my Trustees to satisfy, my obligations to provide for child care and household help while Abigail is under age eighteen (18) pursuant to the terms and conditions set forth in Section 5.D of the Separation Agreement Article VII Provisions for Abigail until her Emancipation If the Separation Agreement is in effect at the time of my death, my daughter Abigail survives me and I die prior to her Emancipation (as defined in Section 5.E of the Separation Agreement), my Trustees shall set aside an amount equal to the sum of Two Million ($2,000,000) Dollars and shall add such amount to the trust for Abigail's benefit under Article XI hereof. This amount is intended to satisfy, and shall be administered and distributed by my Trustees to satisfy, my obligations to pay for Abigail's educational expenses and medical coverage until Abigail's Emancipation pursuant to the terms and conditions set forth in Sections 5.B and 5.0 of the Separation Agreement. Article VIII Other Provisions for Abigail and Renee If either or both of my daughter Abigail and my daughter Renee survive me, my Trustees shall make the following provisions for their benefit A. If Renee survives me, my Trustees shall set aside for Renee an amount equal to (1) the amount set aside for Abigail (or, if Abigail does not survive me, the amount that would have been set aside for Abigail had she survived me) under Article V hereof (calculated net of death taxes apportioned to the amount set aside for Abigail (or that would have been apportioned to such amount had Abigail survived me), it being my intent that any death taxes charged against the amount set aside for Renee shall be paid from the residue); (2) an amount determined in the same manner as provided in Article VI hereof for Abigail if I die prior to Renee's eighteenth (18th) birthday which shall be set aside whether or not the Separation Agreement is in effect at the time of my death and whether or not Abigail survives me; and (3) the amount set aside for Abigail under Article VII hereof. My Trustees shall add any amount set aside for Renee under clause (1), (2) or (3) of this Paragraph to the trust for -9- An •na • PM., le• EFTA01111065 the benefit of Renee under Article XI hereof. B. Paragraph A of Article THIRD of my Will provides for bequests to my Trustees of my residences located at 950 Fifth Avenue, New York City, New York and on Drew Lane in East Hampton, New York. Regardless of whether such properties are transferred to my Trustees pursuant to Paragraph A of Article THIRD of my Will or held hereunder by my Trustees prior to my death, upon my death, my Trustees shall hold such properties in trust for Abigail's benefit under Article la hereof; provided that Abigail survives me and the Separation Agreement is in effect at my death. These bequests or gifts shall be subject to any mortgages, liens or other encumbrances on said properties at the time of my death and shall also be subject to a proportionate share of any death taxes payable by reason of my death, based on the ratio between the net value of such properties included in the measure of any such tax and the net taxable amount on which such tax is imposed. C. If the bequests or gifts described in Paragraph B of this Article take effect and my daughter Renee survives me, my Trustees shall set aside an amount equal to the net estate tax value of the bequests or gifts (taking into account any death taxes charged against the bequests, as well as other liens and mortgages) and shall add the same to the trust for Renee's benefit under Article XI hereof. • D. Paragraph B of Article THIRD of my Will provides for a bequest to my Trustees of my residence in Aspen, Colorado and its contents. Regardless of whether such property and its contents are transferred to my Trustees pursuant to Paragraph 13 of Article THIRD of my Will or held hereunder by my Trustees prior to my death, upon my death, my Trustees shall hold and dispose of said property and its contents or the proceeds from the sale of such property and its contents in equal shares for the benefit of my children who survive me as part of the respective trusts for their benefit under Article XI hereof. If Renee survives me, and if upon my death Renee is younger than twenty-five (25) years old, my Trustees shall set aside an amount equal to One Million ($1,000,000) Dollars multiplied by the number of years between the date of my death and Renee's twenty-fifth (256) birthday, and my Trustees shall pay over and add such amount to the trust arising for Renee's benefit under Article.X1 hereof to be administered as an integral part thereof. My Trustees shall prorate the amount of One Million ($1,000,000) Dollars on a daily basis for any partial calendar year, such as the year of my death or the year in which Renee turns twenty-five (25) years old. The amount payable pursuant to this Paragraph E shall be in addition to any other amount provided for Renee hereunder or under my Will. -10- 'An Oa., • A EFTA01111066  Other Gifts at My Death Upon my death, my Trustees shall make the following payments, which shall be free and clear of any death taxes payable by reason of my death except as otherwise provided in this Article: A. My Trustees shall pay the following amounts to each of the following persons who survives me. 1. Fifty Thousand ($50,000) Dollars to each child of my friend, M. Gordon Ehrlich; 2. One Hundred Fifty Thousand ($150,000) Dollars to William Whitworth of little Rock, Arkansas; 3. One Hundred Fifty Thousand ($150,000) Dollars to Harold Evans of New York City, New York; 4. Six Hundred Thousand ($600,000) Dollars to Dora Pompey; 5. Six Hundred Thousand ($600,000) Dollars to Clare Probert; and 6. The following amounts to Yesdy Villanueva: (i) One Hundred Thousand ($100,000) Dollars upon my death, (u) Fifty Thousand ($50,000) Dollars at the end of each calendar year following my death, up to the fifth anniversary of my death, if she is then employed by my Trustees or by my executors as a childcare provider for any of my children, and (di) One Hundred Thousand ($100,000) Dollars upon the fifth anniversary of my death if she is then employed by my Trustees or by my executors as a childcare provider for any of my children. B. My Trustees shall set aside the sum of Twenty Million ($20,000,000) Dollars for each of my nephews, Eric Gertler and James Gertler, who survives me or who has issue who survives me. My Trustees shall distribute the property so allocated to a then living nephew of mine to such nephew, outright and free of all trusts. My Trustees shall hold, administer and pay over all or any fractional portion of such amount that a then living nephew of mine disclaims in accordance with the provisions of Paragraph A of Article XII hereof, and my Trustees shall hold, administer and pay over such amount that is allocated to the then living issue of a then deceased nephew of mine in accordance with the provisions of Paragraph B of Article XTj hereof, subject in either case to any generation-skipping transfer taxes attributable to such amount. C. My Trustees shall set aside the sum of Two Million ($2,000,000) Dollars for each of my nieces, Andrea Robinson Talamo and Nancy Robinson, and n:iy nephew, Andrew Gertler, who -11- EFTA01111067 survives me or who has issue who survives me. My Trustees shall distribute the property so allocated to a then living niece or nephew of mine to such niece or nephew, outright and free of all trusts. My Trustees shall hold, administer and pay over all or any fractional portion of such amount that a then living niece or nephew of mine disclaims in accordance with the provisions of Paragraph A of Article )CII hereof; and my Trustees shall hold, administer and pay over such amount that is allocated to the then living issue of a then deceased niece or nephew of mine in accordance with the provisions of Paragraph B of Article XII hereof, subject in either case to any generation-skipping transfer taxes attributable to such amount. D. I have created a set of eight charitable remainder unitrusts dated December 11, 2012, designated as "The Mortimer B. Zuckerman 2015 Charitable Remainder Unitrust" through "The Mortimer B. Zuckerman 2022 Charitable Remainder Unitrust" (the "CRTs"). I have also entered into an agreement dated December 13, 2012 (the "Columbia Agreement") relating to the establishment and funding of The Mortimer B. Zuckerman Mind Brain Behavior Institute (the "MBZ Institute') at Columbia University ("Columbia'). The Columbia Agreement commits a specified amount of the funds remaining in each of the CRTs upon the termination of such CRTs for the funding of the M/3Z Institute. If the assets in any of the CRTs arc insufficient to satisfy any outstanding commitment of CRT funds to Columbia under the Columbia Agreement, my Trustees shall make a distribution to Columbia in an amount, determined in the manner specified in such agreement, sufficient to make up the deficiency. iAr ifle Disposition of Remaining Property From and after my death, my Trustees shall dispose of any trust property that is not otherwise disposed of as follows: A. Except as hereinafter provided, my Trustees shall distribute all such property to the Mortimer B. Zuckerman Foundation, a charitable trust created by me by declaration of trust dated December 21, 1983, as the same may be amended from time to time, or its successor (hereinafter the "Foundation"). If the Foundation does not exist or does not qualify as a charitable organization at the time of my death, my Trustees shall make distributions in satisfaction of this gift to such other charitable organization or organizations as my Trustees shall determine. B. It is my intention that the gift under this Article shall, to the maximum extent possible, qualify for the deduction under Section 2055 of the Code in computing the federal estate tax and any -12- EFTA01111068 state death tax payable with respect to my estate. The provisions of this instrument shall be construed so as to effectuate this intention. Article XI Trust for the Benefit of a Descendant of Ming My Trustees shall hold and dispose of any property retained or received by them for any descendant of mine (the "Beneficiary') as a separate trust for the benefit of the Beneficiary and such Beneficiary's issue upon the following terms: A. In the case of any separate trust held under this Article of which Abigail is the Beneficiary, and if the Separation Agreement is in effect at the time of my death, my Trustees shall pay so much of the net income and principal of the trust for Abigail as is required to be paid to or for the benefit of Abigail under the Separation Agreement, and no distribution of the income or principal of such trust shall be made to any beneficiary other than Abigail unless the health, education, maintenance and support of Abigail have been fully provided for. B. In the case of any trust held under this Article, my Trustees shall pay to or for the benefit of such one or more of the Beneficiary (including Abigail or Renee) or, subject to Paragraph A hereof, the Beneficiary's issue of any generation living from time to time so much of the net income and principal of the trust as my Trustees deem desirable for the health, education, maintenance and support of such person or persons, in my Trustees' discretion. In addition, the Disinterested Trustee of the trust may also make payments from the net income and principal of such trust to or for the benefit of such one or more of the Beneficiary or, subject to Paragraph A hereof, the Beneficiary's issue, at such times and in such amounts as the Disinterested Trustee deems desirable. Any undistributed income shall be added to the principal of the trust C. Upon the death of the Beneficiary, my Trustees shall dispose of the then remaining principal and undistributed income of the trust for the benefit of such Beneficiary in accordance with the Beneficiary's exercise of a Special Power of Appointment. To the extent the Beneficiary shall fail to exercise such power effectively, my Trustees shall allocate said principal and income by right of representation among the Beneficiary's then living issue or, in default of such issue, by right of representation among the then living issue of the nearest ancestor of such person who was either myself or a descendant of mine and who has issue then living. My Trustees shall use the property so allocated to any descendant of mine to create or add to a trust for the benefit of such person under this Article. If no descendant of mine is then living, my Trustees shall dispose of said principal and -13- EFTA01111069 income in accordance with the provisions of Article X hereof. D. Without limiting the discretion my Trustees would otherwise have, my Trustees may transfer or distribute any portion of the net income and principal of the trust for the primary benefit of the Beneficiary under this Article to any other trust created by me for the primary benefit of the Beneficiary, or may merge the trust for the primary benefit of the Beneficiary under this Article with any other trust created by me during my lifetime or upon my death and determine under which instrument such continuing trust will be held; provided, however, that such other trust has substantially similar terms and the same Beneficiary or beneficiaries, provided further that if the ultimate remainder provisions of such mists are not identical, the trustees of the resulting merged trust shall keep a record of the initial proportions of the trusts so merged so that if such ultimate remainders become operative, the remaining principal of the resulting merged trust shall pass proportionately according to the original governing provisions of the trusts so merged. If the duration of two trusts that are merged pursuant to this Paragraph is measured or limited by a provision referring to the death of the survivor of a group of individuals, such provisions shall be considered substantially similar even if the groups include different individuals, as long all members of one group are included in the other. If such trusts are merged, the duration of the merged trust shall be measured or limited by the group that has fewer members. E. With respect to any trust held under this Article for the benefit of a child of mine who is a minor at the time of my death, after first satisfying the provisions of Paragraph A hereof with respect to such trust, my Trustees may distribute to the guardian or guardians of such minor child, other than Marla Prather if she is then acting as guardian of such minor child, for the guardian's own use, such sum or sums as my Trustees in their discretion deem appropriate to relieve the financial burden on such guardian and his or her family resulting from such minor child's presence in the guardian's household. For example, my Trustees may distribute funds to such guardian to provide additional domestic help, enlarge such guardian's home or purchase a new home, to the extent necessary to provide a suitable living arrangement for my minor child and to ensure that such guardian will not personally bear any additional cost as a result of his or her care for my minor child. In the exercise of such discretion, my Trustees shall take into account the size of such trust, the needs and age of such minor child, and the financial resources of the guardian to the extent known to my Trustees. No Trustee who is simultaneously acting as guardian of such child shall participate in decisions regarding any distribution pursuant to this Paragraph E to himself or herself or for his or het -14- EFTA01111070 benefit as guardian of such child. In addition, my Trustees may distribute to any nanny or other person who is determined by my Trustees to serve a quasi-parental role in such minor child's life (other than Marla) such amounts as my Trustees determine to be appropriate to provide for costs of care provided to the child so that such person may maintain a close relationship with such child. Article XII Trust for the Benefit of a Descendant of a Niece or Nephew of Mine My Trustees shall hold and dispose of any property retained or received by them for the benefit of the issue of a niece or nephew of mine as follows: A. Whenever any niece or nephew of mine has disclaimed any property passing hereunder, my Trustees shall hold such disclaimed property in one separate trust for the issue, taken collectively, of such niece or nephew. Until the death of such niece or nephew of mine who disclaimed such property, my Trustees shall pay so much of the net income and principal of the trust to or for the benefit of one or more of the issue of such niece or nephew, of any generation, who is living at the time such distribution is made, as my Trustees deem desirable for the health, education, maintenance and support of such person or persons, in my Trustees' discretion. In addition, the Disinterested Trustee may also make payments from the net income and principal of such trust to or for the benefit of one or more of such person or persons, at such times and in such amounts as the Disinterested Trustee deems advisable. Notwithstanding the foregoing, no distribution of income or principal shall be made from a trust held under this Paragraph that would discharge a legal obligation of support that my niece or nephew who disclaimed such property owes to any beneficiary of such trust. Any income not so paid shall be accumulated and added to principal. Upon the death of such niece or nephew of mine who is the parent of the issue for whom a trust is held under this Paragraph, or such earlier date as the Disinterested Trustee shall determine, my Trustees shall pay over the remaining principal of such trust in accordance with Paragraph B hereof. B. Whenever I have herein directed that property be held, administered or paid over in accordance with this Paragraph B, my Trustees shall divide the same into shares by right of representation among the then-living issue of my niece or nephew who would have received such property if she or he were living at the time of my death and shall hold each such share in a separate trust for the benefit of such person to be held, administered and paid as follows: 1. My Trustees shall pay to such person, from time to time, so much of the net -15- •II EFTA01111071 income and principal of the trust as my Trustees deem desirable for the health, education, maintenance and support of such person, in my Trustees' discretion. In addition, the Disinterested Trustee may also make payments from the net income and principal of such trust to or for the benefit of such person at such times and in such amounts as the Disinterested Trustee deems advisable. Any income not so paid shall be accumulated and added to principal 2. From and after the time such person attains thirty (30) years of age, my Trustees shall pay to such person from time to time such portion or portions of the principal thereof as such person shall request in writing. 3. Upon the death of such person, my Trustees shall allocate the then remaining principal and undistributed income by right of representation among such person's then-living issue or, in default of such issue, by right of representation among the then living issue of the nearest ancestor of such person who was a descendant of my grandparents and who has issue then living. My Trustees shall pay the share so allocated to a niece or nephew of mine to such niece or nephew, outright and free of all trusts. My Trustees shall retain the share so allocated to any other person for the benefit of such person upon the trusts set forth in this Article. In default of such issue, my Trustees shall dispose of the same in accordance with the provisions of A rtiele g hereof. Article XIII Qualified Subchapter $ Trusts Notwithstanding anything to the contrary hereinbefore contained, if my Trustees are holding of acquire stock in a corporation, if my Trustees determine that it would be desirable for such corporation to make or preserve an election to be treated as an S corporation under Section 1362(a) of the Code or any successor thereto, and if the Disinterested Trustee shall determine that it would be desirable for all or a portion of such stock to be held in Qualified Subchapter S Trusts, my Trustees shall transfer such stock or such portion to one or more Qualified Subchapter S Trusts, each for the benefit of a person (the "Beneficiary') for whose benefit such stock was theretofore held, as determined by the Disinterested Trustee, and thereafter shall hold and dispose of the same upon the following terms: A. Unless sooner terminated as hereinafter provided or by distribution of all of the property held therein, each Qualified Subchapter S Trust shall continue during the lifetime of the Beneficiary thereof. During any year in which stock in an S corporation is held in any such trust, my Trustees shall pay the net income of such trust to the Beneficiary at least as often as quarterly during -16- EFTA01111072 his or her lifetime. In addition to any payments required by the preceding sentence, my Trustees shall pay to the Beneficiary from time to time such portion or portions of the net income and principal as the Disinterested Trustee shall deem advisable for his or her benefit No distributions shall be made to anyone other than the Beneficiary during such Beneficiary's lifetime. B. Upon the death of the Beneficiary, my Trustees shall dispose of the then remaining principal and undistributed income in accordance with the exercise by the Beneficiary of a Special Power of Appointment To the extent the Beneficiary shall fail to exercise said power effectively, my Trustees shall divide said principal and income into equal shares by right of representation among the Beneficiary's then living issue or, in default of such issue, by right of representation among the then living issue of the nearest ancestor of such person who was a descendant of my parents and who has issue then living. Except to the extent that the property so allocated to any person is used to create a Qualified Subchapter S Trust for the benefit of such person, my Trustees shall use the property so allocated to any person to create or add to a trust for the benefit of such person under Article XI or Article XI[ hereof, as the case may be. C. As used herein, the term "Qualified Subchapter S Trust" means a trust that satisfies the requirements of Section 1361(d)(3)(A) of the Code that 1. During the life of the current income beneficiary, there shall only be one income beneficiary of the trust; 2. Any corpus distributed during the life of the current income beneficiary may be distributed only to such beneficiary; 3. The income interest of the current income beneficiary in the trust shall terminate on the earlier of such beneficiary's death or the termination of the trust; and 4. Upon the termination of the trust during the life of the current income beneficiary, the trust shall distribute all of its assets to such beneficiary. D. It is my intention that each trust hereunder shall be eligible to be a shareholder in an S corporation. The provisions of this instrument shall be construed and all actions of my Trustees shall be taken so as to effectuate this intention. It is my expectation that each beneficiary will make any elections required for such eligibility under Section 1361(d) of the Code. Nothing herein shall be construed to prevent my Trustees from joining in the revocation or termination of any corporation's election to be an S corporation, if my Trustees determine that such revocation or