EFTA01109111.pdf

THIS AGREEMENT made this day of , 2014, between LEON D. BLACK of the State of New York (hereinafter called the "Grantor"), and LEON D. BLACK (hereinafter, along with any other person, bank or trust company qualifying as additional or successor trustees, referred to as the "Trustees"). WITNESSETH: The property transferred to the Trustees hereunder shall be held by the Trustees IN TRUST subject to the following terms and conditions. This trust agreement shall be known as the LB REVOCABLE TRUST AGREEMENT. FIRST: DISPOSITION OF INITIAL TRUST (A) During the life of the Grantor, the Trustees shall pay to the Grantor so much of the income of this trust as the Trustees may deem advisable in their sole and absolute discretion, including such amount as the Trustees may deem advisable to enable the Grantor to pay income taxes. Any income not directed to be paid shall be accumulated by adding such income to the principal of the trust. (B) At any time and from time to time during the life of the Grantor, the Trustees may, in their sole and absolute discretion, pay to him so much of the principal of this trust as the Trustees may deem advisable, including such amount as the Trustees may deem advisable to enable the Grantor to pay income taxes. (C) At any time and from time to time during the life of the Grantor, the Grantor may withdraw from the income and/or principal of this trust so much of the income and/or principal as the Grantor shall direct by instrument in writing signed and delivered to the Trustees during his lifetime. DoeN: USI:9504045v3 EFTA01109111  (D) At any time and from time to time during the life of the Grantor, the Grantor, by instrument signed and delivered to the Trustees, may direct the Trustees to pay income and/or principal to any individual or entity. Any payment made by the Trustees pursuant to such direction shall be deemed to be a withdrawal by the Grantor followed by a transfer to such individual or entity, it being the Grantor's desire to avoid the multiple re-titling of assets. (E) In addition, during any period in which the Grantor is Incapacitated (as defined in Clause FOURTEENTH), the Independent Trustees (as defined in Clause FOURTEENTH) are authorized to make the following distributions: The Independent Trustees are hereby authorized and empowered to make gifts on the Grantor's behalf of cash or property, either outright or in trust, to or for the benefit of such one or more of (i) the Grantor's wife DEBRA R. BLACK ("DEBRA"), (ii) the Grantor's descendants, (iii) the Grantor's sister JUDY ELLEN BLACK ("JUDY") and (iv) Qualified Charitable Organizations (as defined in Clause FOURTEENTH), as the Independent Trustees, in their sole, absolute and uncontrolled discretion deem advisable, at any time and from time to time. It is the Grantor's intent to permit the Independent Trustees to make gifts either to continue any pattern of gift-giving that the Grantor may have established, or if the Independent Trustees believe that such gifts will be in the best interests of the Grantor's family, taking into consideration the tax consequences of making or refraining from making such gift. The Trustees are further authorized and empowered to pay any gift or generation- skipping transfer ("GST") taxes that may be payable in connection with any gift made pursuant to this provision. 2 DocN: USI:9504045v3 EFTA01109112  (2) The Independent Trustees are hereby authorized and empowered to pay on the Grantor's behalf such of the Grantor's enforceable debts as they come due. (F) Upon the death of the Grantor, the remaining trust property shall be disposed of as the Grantor may appoint by his Last Will in favor of any appointee or appointees, including his estate. (G) Upon the death of the Grantor, any remaining trust property which is not effectively appointed pursuant to his testamentary power of appointment, together with any property bequeathed to this trust by the Grantor or added hereto at or by reason of the Grantor's death, shall be disposed of as directed hereinafter under this Agreement. SECOND: PERSONAL PROPERTY/ART DISPOSITION (A) If DEBRA survives the Grantor: If the trust property includes any Individual Collectibles (as defined in Clause FOURTEENTH) or any interest in an Art Entity (as defined in Clause FOURTEENTH), the Grantor directs the Trustees to hold all of the Individual Collectibles, together with all insurance covering the Individual Collectibles, and any such interest in an Art Entity, IN TRUST, in accordance with Clause EIGHTH. (2) If the trust property includes any other articles of personal and household use or ornament, including, without limitation, automobiles, jewelry, furniture and furnishings, the Grantor directs the Trustees to distribute all of the remaining items of personal and household use or ornament, together with all insurance covering those articles, to DEBRA, outright and free of trust. 3 DoeN: USI:9504045v3 EFTA01109113  (B) If DEBRA does not survive the Grantor and one or more of the Grantor's children survive the Grantor: (1) (a) Subject to the power of appropriation granted in subparagraph (B)(1)(b) of this Clause SECOND, if the trust property includes any Individual Collectibles or any interest in an Art Entity, the Grantor directs the Trustees to distribute the Grantor's Collectibles (as defined in Clause FOURTEENTH), together with all insurance covering the Grantor's Collectibles, to the LEON BLACK FAMILY FOUNDATION (as defined in Clause FOURTEENTH), if it is then in existence and is then a Qualified Charitable Organization, or if it not then in existence and then a Qualified Charitable Organization, to such one or more other Qualified Charitable Organizations as the Trustees, in their discretion, shall select, including any Qualified Charitable Organizations as are then in existence or as the Trustees shall create after the Grantor's death. (b) The Grantor gives the Trustees the power to appropriate such of the Grantor's Collectibles (together with all insurance covering such Collectibles) as they shall select, in their absolute discretion, and to distribute such selected Collectibles among the Trustees of the Legacy Trusts (as defined in Clause FOURTEENTH) created for the Grantor's descendants. Without imposing any legal obligation, it is the Grantor's wish that the Trustees, in exercising the foregoing power to appropriate, take into account any requests regarding the disposition of such Collectibles as set forth in any writing signed by the Grantor that is in existence at his death. (c) The foregoing power of appropriation shall be exercised, if at all, by acknowledged, written instrument signed at least one day prior 4 Doc14: USIS504045v3 EFTA01109114 to the expiration of nine (9) months from the date of the Grantor's death, a copy of which shall be delivered contemporaneously to the Trustees of such Legacy Trust that shall receive a selected Collectible, and shall terminate completely if and to the extent it is not validly exercised within such time period. The Grantor confirms that this power of appropriation is intended to be, and shall be treated as, a power described in the flush language following Section 2055(a)(5) of the Code to consume, invade or appropriate property for the benefit of an individual, the complete termination of which before the date prescribed for the filing of the estate tax return for the Grantor's estate shall be considered and deemed to be a qualified disclaimer with the same full force and effect as though a qualified disclaimer of said power had been filed. (d) The Trustees may exercise the foregoing power of appropriation to any extent, or not exercise said power, in their complete discretion. Nevertheless, the Trustees shall be guided by the Grantor's wishes made known to them. Their decision as to whether or not, and the extent to which, to exercise said power shall be final and binding on all persons and entities interested hereunder, and they shall not be liable to any person or entity interested hereunder for any failure to exercise said power. (e) To the extent that the Trustees select any Collectibles that are held by an Art Entity, the Trustees shall instruct the manager of such Art Entity to distribute such Collectible to the Trustees of such Legacy Trust. The Grantor confirms that the Trustees have the further authority to direct the liquidation of any such Art Entity as is necessary in order to effect the disposition of the Collectibles pursuant to this Clause SECOND. 5 DoeN: USI:9504045v3 EFTA01109115  (2) (a) The remaining articles of personal and household use or ornament, including, without limitation, automobiles, jewelry, furniture and furnishings, together with all insurance covering those articles, shall pass to such of the Grantor's children as survive the Grantor, in shares of substantially equal value, to be divided among them as they agree, or all to the survivor of them if only one of the Grantor's children survives the Grantor. If the Grantor's children fail to agree, the division of such personal property shall be made as the Trustees (other than any child of the Grantor) determine and such determination shall be conclusive and binding on all of the Grantor's children. (b) The Trustees are authorized to sell such of the remaining items of personal and household use or ornament for purposes of division or otherwise to facilitate distributions. (C) The Trustees may pay, and charge as a general administration expense, without apportionment or reimbursement from any beneficiary, the expenses of selling, storing, packing, insuring, and mailing or delivering the tangible personal property hereinabove disposed of. THIRD: RESIDENTIAL PROPERTY (A) If DEBRA survives the Grantor: (1) The Trustees shall distribute to DEBRA the Manhattan Apartments (as defined in Clause FOURTEENTH). (2) The Trustees shall hold the balance of the Residential Property (as defined in Clause FOURTEENTH), IN TRUST, in accordance with Clause EIGHTH. 6 Doc/4: USI:9504045v3 EFTA01109116  (B) If DEBRA does not survive the Grantor: (1) (a) The Trustees shall sell, at Fair Market Value (as defined in Clause FOURTEENTH), the Manhattan Apartments, and the net proceeds of any such sale shall be added to the trust, to be disposed of as a part hereof. (b) The Grantor confirms that the Trustees, in their discretion, may sell the Manhattan Apartments to any one or more of the Grantor's children, the Trustees of the Heritage Trust (as defined in Clause FOURTEENTH) and/or the Trustees of the Legacy Trusts, provided such sale is for Fair Market Value. (c) The Trustees shall pay any such expenses that they deem reasonable in connection with selling the Manhattan Apartments, such as brokerage commissions and legal fees, and/or maintaining the Manhattan Apartments prior to a sale, including, without limitation, monthly maintenance charges, repairs, painting, telephone bills, electricity bills, and advertising costs. (2) The balance of the Residential Property shall be distributed to the Trustees of the Heritage Trust, to be added to and disposed of as part of the principal thereof. (C) The foregoing devises and bequests shall be subject to any mortgage or other encumbrance on such Residential Property. FOURTH: CASH LEGACIES (A) The Trustees shall pay the sum of Three Million Dollars ($3,000,000) to MELANIE SPINELLA, if she survives the Grantor. 7 Dock USI:9304045v3 EFTA01109117  (B) (1) The Trustees shall purchase an annuity that shall pay to JUDY the fixed annual sum of Five Hundred Thousand Dollars ($500,000) for the balance of her life. (2) JUDY shall receive the first payment under such annuity no later than the first (Pt) anniversary of the Grantor's death. (3) The Trustees shall have discretion in selecting the company issuing the annuity and negotiating the proper terms, including cost, associated with the purchase of the annuity. (4) If the Trustees, in their discretion, determine that the purchase of such an annuity is impractical, the Trustees may make other comparable arrangements for JUDY, including (without limitation) making payments to JUDY during the administration of the Grantor's estate and/or creating and funding a separate trust for JUDY's lifetime that shall provide that, upon JUDY's death, the remaining trust property be paid to the LEON BLACK FAMILY FOUNDATION, if it is then in existence and is then a Qualified Charitable Organization, or if it not then in existence and then a Qualified Charitable Organization, to such one or more other Qualified Charitable Organizations as the Trustees, in their discretion, shall select, including any Qualified Charitable Organizations as are then in existence or as the Trustees shall create after the Grantor's death. (C) (1) If, and only if, DEBRA does not survive the Grantor, the Trustees shall purchase an annuity that shall pay to JON RESSLER ("JON") the fixed annual sum ofFive Hundred Thousand Dollars ($500,000) for the balance of his life. 8 Doc14: USI:9504045v3 EFTA01109118  (2) JON shall receive the first payment under such annuity no later than the first (P9 anniversary of the Grantor's death. (3) The Trustees shall have discretion in selecting the company issuing the annuity and negotiating the proper terms, including cost, associated with the purchase of the annuity. (4) If the Trustees, in their discretion, determine that the purchase of such an annuity is impractical, the Trustees may make other comparable arrangements for JON, including (without limitation) making payments to JON during the administration of the Grantor's estate and/or creating and funding a separate trust for JON's lifetime that shall provide that, upon JON's death, the remaining trust property be paid to the LEON BLACK FAMILY FOUNDATION, if it is then in existence and is then a Qualified Charitable Organization, or if it not then in existence and then a Qualified Charitable Organization, to such one or more other Qualified Charitable Organizations as the Trustees, in their discretion, shall select, including any Qualified Charitable Organizations as are then in existence or as the Trustees shall create after the Grantor's death. (D) In connection with carrying out the foregoing bequests to JUDY and JON, the following restrictions shall apply: (1) The arrangements made by the Trustees for each of JUDY and JON shall be finally determined within nine (9) months of the Grantor's death. (2) The purchase price of any annuity for either JUDY or JON shall not exceed the sum of Ten Million Dollars ($10,000,000). Similarly, 9 DocN: USI:9504045v3 EFTA01109119 any trust established for either JUDY or JON pursuant to the authority granted to the Trustees under paragraphs (B) or (C) of this Clause FOURTH shall not be funded with an amount in excess of the sum of Ten Million Dollars ($10,000,000). (3) If DEBRA does not survive the Grantor, the foregoing power of the Trustees to determine how to make payments to JUDY and JON shall be deemed a power of appropriation that shall be exercised by acknowledged, written instrument signed at least one day prior to the expiration of nine (9) months from the date of the Grantor's death. The Grantor confirms that this power of appropriation is intended to be, and shall be treated as, a power described in the flush language following Section 2055(a)(5) of the Code to consume, invade or appropriate property for the benefit of an individual, the complete termination of which before the date prescribed for the filing of the estate tax return for the Grantor's estate shall be considered and deemed to be a qualified disclaimer with the same full force and effect as though a qualified disclaimer of said power had been filed. FIFTH: ESTATE TAX EXEMPTION DISPOSITION (A) If, and only if, DEBRA survives the Grantor and one or more of the Grantor's descendants survive the Grantor, the Trustees shall distribute the Exemption Amount (as defined in Clause FOURTEENTH), together with any other property herein directed to be disposed of as provided in this paragraph, to the Trustees of the Heritage Trust (as defined in Clause FOURTEENTH), to be added to and disposed of as a part of the principal thereof; provided, however, that to the extent that the Exemption Amount has an inclusion ratio of zero (0) for purposes of the Federal generation-skipping transfer tax under Chapter 13 of the Code (the "GST Tax"), whether as a result of the 10 Dock USI:9504045v3 EFTA01109120 allocation of LB's GST Exemption Amount (as defined in Clause FOURTEENTH) or otherwise, such portion of the Exemption Amount instead shall be distributed to the Trustees of the Black Family 1997 GST Exempt Trust (as defined in Clause FOURTEENTH), to be added to and disposed of as a part of the principal thereof. (B) In allocating cash or other property to the legacy under paragraph (A) of this Clause FIFTH, the Trustees are directed to include therein, to the extent possible, all property or interest in property (or the proceeds of sale or other disposition thereof) in respect of which the Federal marital deduction is not allowable. SIXTH: GST TAX EXEMPTION DISPOSITION (A) If one or more of the Grantor's descendants survive the Grantor, the Grantor directs the Trustees to set aside LB's GST Exemption Amount (as defined in Clause FOURTEENTH), to be disposed of in accordance with the provisions of paragraph (B) of this Clause SIXTH, if DEBRA survives the Grantor, or, if DEBRA does not survive the Grantor, in accordance with the provisions of paragraph (C) of this Clause SIXTH. (B) If DEBRA survives the Grantor, the amount set aside in paragraph (A) of this Clause SIXTH shall be held by the Trustees IN TRUST (the "GST Marital Trust"), as follows: (1) During the life of DEBRA, the Trustees shall pay to her all of the net income of the GST Marital Trust, at least quarter-annually. (2) Upon the death of DEBRA, the remaining GST Marital Trust property shall be disposed of in accordance with the provisions of paragraph (C) of this Clause SIXTH if one or more of the Grantor's descendants are then II USI:9504045v3 EFTA01109121 living. If no descendant of the Grantor is then living, the remaining trust property shall be paid to the LEON BLACK FAMILY FOUNDATION, if it is then in existence and is then a Qualified Charitable Organization, or if it not then in existence and then a Qualified Charitable Organization, to such one or more other Qualified Charitable Organizations as the Trustees, in their discretion, shall select, including any Qualified Charitable Organizations as are then in existence or as the Trustees shall create after DEBRA's death. (C) Any trust property directed to be disposed of in accordance with the provisions of this paragraph (C) shall be distributed to the Trustees of the Black Family 1997 GST Exempt Trust, to be added to and disposed of as a part of the principal thereof. SEVENTH: RESIDUARY TRUST FUND The balance of the trust property, real and personal and wherever situated, after payment of debts, expenses and taxes as provided in Clause ELEVENTH, shall be disposed of as follows: (A) If DEBRA survives the Grantor, the balance of the trust property shall be held IN TRUST in accordance with the provisions of Clause EIGHTH hereof. (B) If DEBRA does not survive the Grantor, the balance of the trust property shall be held IN TRUST in accordance with the provisions of Clause NINTH hereof. EIGHTH: MARITAL TRUST 12 DocN: USI:9504045v3 EFTA01109122  All trust property set aside for DEBRA and directed to be disposed of under, or in accordance with, this Clause EIGHTH shall be held by the Trustees IN TRUST (the "Marital Trust") in accordance with the following provisions: (A) During the life of DEBRA, the Trustees shall pay to her all of the net income of the Marital Trust, at least quarter-annually. (B) (1) At any time and from time to time during the life of DEBRA, the Trustees, in their sole and absolute discretion, may pay to DEBRA so much of the principal of the Marital Trust as shall not exceed the Principal Invasion Cap (as defined in Clause FOURTEENTH) for any purpose they deem advisable. (2) Notwithstanding the foregoing, the Trustees, in their sole and absolute discretion, may pay to DEBRA so much of the principal of the Marital Trust as the Trustees may deem advisable for DEBRA's medical needs and emergencies, and to satisfy any pledges to Qualified Charitable Organizations that are in existence at the Grantor's death and which are legally enforceable against DEBRA. (C) Upon the death of DEBRA, the remaining Marital Trust property shall be disposed of as follows: (1) If the trust property includes any Individual Collectibles or any interest in an Art Entity: (a) Subject to the power of appropriation granted in subparagraph (C)(1)(b) of this Clause EIGHTH, the Grantor directs the Trustees to distribute the Grantor's Collectibles to the LEON BLACK FAMILY FOUNDATION, if it is then in existence and is then a Qualified Charitable Organization, or if it not then in existence and then a Qualified Charitable Organization, to such one or 13 Dock USI:9304045v3 EFTA01109123 more other Qualified Charitable Organizations as the Trustees, in their discretion, shall select, including any Qualified Charitable Organizations as are then in existence or as the Trustees shall create after DEBRA's death. (b) The Grantor gives the Trustees of the Marital Trust the power to appropriate such of the Grantor's Collectibles (together with all insurance covering such Collectibles) as they shall select, in their absolute discretion, and to distribute such selected Collectibles among the Trustees of the Legacy Trusts created for the Grantor's descendants. Without imposing any legal obligation, it is the Grantor's wish that the Trustees of the Marital Trust, in exercising the foregoing power to appropriate, take into account any requests regarding the disposition of such Collectibles as set forth in any writing signed by the Grantor that is in existence at his death. (c) The foregoing power of appropriation shall be exercised, if at all, by acknowledged, written instrument signed at least one day prior to the expiration of nine (9) months from the date of DEBRA's death, a copy of which shall be delivered contemporaneously to the Trustees of such Legacy Trust that shall receive a selected Collectible, and shall terminate completely if and to the extent it is not validly exercised within such time period. The Grantor confirms that this power of appropriation is intended to be, and shall be treated as, a power described in the flush language following Section 2055(a)(5) of the Code to consume, invade or appropriate property for the benefit of an individual, the complete termination of which before the date prescribed for the filing of the estate tax return for DEBRA's estate shall be considered and deemed to be a qualified disclaimer with the same full force and effect as though a qualified disclaimer of said power had been filed. 14 USI:9504045v3 EFTA01109124  (d) The Trustees of the Marital Trust may exercise the foregoing power of appropriation to any extent, or not exercise said power, in their complete discretion. Nevertheless, the Trustees shall be guided by the Grantor's wishes made known to them. Their decision as to whether or not, and the extent to which, to exercise said power shall be final and binding on all persons and entities interested hereunder, and they shall not be liable to any person or entity interested hereunder for any failure to exercise said power. (e) To the extent that the Trustees of the Marital Trust select any Collectibles that are held by an Art Entity, the Trustees shall instruct the manager of such Art Entity to distribute such Collectible to such Legacy Trust. The Grantor confirms that the Trustees have the further authority to direct the liquidation of any such Art Entity as is necessary in order to effect the disposition of the Collectibles pursuant to this Clause EIGHTH. (2) If the trust property includes any Residential Property, the Residential Property shall be distributed to the Trustees of the Heritage Trust to be added to and disposed of as a part of the principal thereof. (3) (a) The Trustees shall purchase an annuity that shall pay to JON the fixed annual sum of Five Hundred Thousand Dollars ($500,000) for the balance of his life. (b) JON shall receive the first payment under such annuity no later than the first (Is') anniversary of DEBRA's death. 15 DocN: USI:9504045v3 EFTA01109125  (c) The Trustees shall have discretion in selecting the company issuing the annuity and negotiating the proper terms, including cost, associated with the purchase of the annuity. (d) If the Trustees, in their discretion, determine that the purchase of such an annuity is impractical, the Trustees may make other comparable arrangements for JON, including (without limitation) making payments to JON during the administration of the Grantor's estate and/or creating and funding a separate trust for JON's lifetime that shall provide that, upon JON's death, the remaining trust property be paid to the LEON BLACK FAMILY FOUNDATION, if it is then in existence and is then a Qualified Charitable Organization, or if it not then in existence and then a Qualified Charitable Organization, to such one or more other Qualified Charitable Organizations as the Trustees, in their discretion, shall select, including any Qualified Charitable Organizations as are then in existence or as the Trustees shall create after DEBRA's death. (e) In connection with carrying out the foregoing provision for JON, the following restrictions shall apply: (i) The arrangements made by the Trustees for JON shall be finally determined within nine (9) months of DEBRA's death. (ii) The purchase price of any annuity for JON shall not exceed the sum of Ten Million Dollars ($10,000,000). Similarly, any trust established for JON pursuant to the authority granted to the Trustees under subparagraph (C)(3)(d) of this Clause EIGHTH shall not be funded with an amount in excess of the sum of Ten Million Dollars ($10,000,000). 16 DocN: USI:9504045v3 EFTA01109126  (f) The foregoing power of the Trustees to determine how to satisfy the payments to JON shall be deemed a power of appropriation that shall be exercised, if at all, by acknowledged, written instrument signed at least one day prior to the expiration of nine (9) months from the date of DEBRA's death. The Grantor confirms that this power of appropriation is intended to be, and shall be treated as, a power described in the flush language following Section 2055(a)(5) of the Code to consume, invade or appropriate property for the benefit of an individual, the complete termination of which before the date prescribed for the filing of the estate tax return for DEBRA's estate shall be considered and deemed to be a qualified disclaimer with the same full force and effect as though a qualified disclaimer of said power had been filed. (4) If one or more of the Grantor's descendant is then living, Debra's GST Exemption Amount (as defined in Clause FOURTEENTH) shall be distributed to the Trustees of the Black Family 1997 GST Exempt Trust, to be added to and disposed of as a part of the principal thereof. (5) The balance of the Marital Trust property, after the payment of taxes as provided in paragraph (D) of Clause TENTH, shall be held IN TRUST in accordance with the provisions of Clause NINTH hereof. NINTH: CHARITABLE LEAD ANNUITY TRUST The trust property directed to be disposed of in accordance with the provisions of this Clause NINTH at the death of the survivor of the Grantor and DEBRA shall be held by the Trustees IN TRUST as follows: 17 Dock USI:9504045v3 EFTA01109127  (A) The Grantor intends that the trust created under this Clause NINTH shall be a charitable lead annuity trust within the meaning of Revenue Procedure 2007-46. (B) (1) Until the day preceding the twentieth (20th) anniversary of the date of the Grantor's death or DEBRA's death (if DEBRA survives the Grantor), as the case may be (the "Annuity Period"), the Trustees shall pay annually on the last day of each taxable year of the trust, the "Annuity Amount" (as defined in subparagraph (C)(1) below) to the LEON BLACK FAMILY FOUNDATION, if it is then in existence and is then a Qualified Charitable Organization, or if it not then in existence and then a Qualified Charitable Organization, to such one or more other Qualified Charitable Organizations as the Trustees, in their discretion, shall select, including any Qualified Charitable Organizations as are then in existence or as the Trustees shall create after the Grantor's death or DEBRA's death (if DEBRA survives the Grantor), as the case may be (the "Annuity Recipients"). (2) Payment of the Annuity Amount shall be made out of the income of the trust and to the extent that income is not sufficient, then from principal. Any income for a taxable year in excess of the Annuity Amount shall be accumulated and added to the principal of the trust. (C) For purposes of this Clause NINTH: The "Annuity Amount" shall mean an amount equal to the product of (i) the "Treasury Department Interest Rate" (as defined in subparagraph (C)(2) below) and (ii) the value, as finally determined in the Federal estate tax proceeding with respect to the Grantor's estate or DEBRA's estate (if DEBRA survives the Grantor), 18 DoeN: USI:9304045v3 EFTA01109128 as the case may be (whether by agreement, uncontested return, litigation or otherwise), of the property passing under this Clause NINTH (the "Trust Value"). (2) The "Treasury Department Interest Rate" shall mean the smallest percentage figure (rounded upward to the nearest ten thousandth of one percent) which, determined under the Treasure Department Regulations promulgated pursuant to Sections 7520 and 2031 of the Code, will result in a fair market value of the aggregate annuity payments directed to be paid under paragraph (B) of this Clause NINTH equal to at least One Hundred Percent (100%) of the value of the Trust Value. For purposes of this subparagraph (C)(2), the Trustees are directed to make applicable to the Trust Value the lowest Treasury Department Interest Rate available to the Grantor's estate or DEBRA's estate (if DEBRA survives the Grantor), as the case may be, for purposes of this Clause NINTH. (D) (1) The obligation to pay the Annuity Amount shall commence with the date of the Grantor's death or DEBRA's death (if DEBRA survives the Grantor), as the case may be, but payment of the Annuity Amount may be deferred from such date until the end of the taxable year in which the trust created hereunder is completely funded. Within a reasonable time after the end of the taxable year in which the trust is completely funded, the Trustees shall pay to the Annuity Recipients, on a pro rata basis, the difference between the Annuity Amount actually paid and the Annuity Amount payable, plus interest. The interest for any period shall be computed at the Section 7520 rate of interest in effect for the date of the Grantor's death or DEBRA's death (if DEBRA survives the Grantor), as the case may be, compounded annually. 19 Dock USI:9504045v3 EFTA01109129  (2) The Trustees shall prorate the Annuity Amount on a daily basis for any short taxable year. In the taxable year in which the Annuity Period ends, the Trustees shall prorate the Annuity Amount on a daily basis for the number of days of the Annuity Period in that taxable year. (3) If the value assigned to the property passing under this Clause NINTH is incorrectly determined, then within a reasonable period after the value finally is determined in the Federal estate tax proceeding with respect to the Grantor's estate or DEBRA's estate (if DEBRA survives the Grantor), as the case may be, the Trustees shall pay to the Annuity Recipients receiving property pursuant to paragraph (B) of this Clause NINTH (in the case of undervaluation) or receive from such Annuity Recipients (in the case of overvaluation) a proportionate share of the amount equal to the difference between the annuity amount(s) properly payable and the annuity amount(s) actually paid. (E) The Grantor confirms the following: (1) No additional contributions shall be made to the trust under this Clause NINTH after the initial contribution. The initial contribution, however, shall be deemed to consist of all property passing to the trust under this Clause NINTH by reason of the Grantor's death or DEBRA's death (if DEBRA survives the Grantor), as the case may be. (2) The charitable interest under this Clause NINTH shall not be commuted. (3) The Trustees shall not do any of the following acts: 20 Doc": USI:9504045v3 EFTA01109130  (a) Subject to subparagraph (E)(9) below: Engage in any act of self-dealing within the meaning of Section 4941(d) of the Code, as modified by Section 4947(a)(2) of the Code or make any taxable expenditures within the meaning of Section 4945(d) of the Code, as modified by Section 4947(a)(2) of the Code; (b) Retain any excess business holdings that would subject the trust to tax under Section 4943 of the Code, as modified by Sections 4947(a)(2) and 4947(b)(3); or (c) Acquire any assets that would subject the trust to tax under Section 4944 of the Code, as modified by Sections 4947(a)(2) and 4947(b)(3) of the Code, or retain assets which, if acquired by the Trustees, would subject the Trustees to tax under Section 4944, as modified by Sections 4947(a)(2) and 4947(b)(3). (4) The taxable year of the trust under this Clause NINTH shall be the calendar year. (5) Notwithstanding the foregoing provisions of this Clause NINTH: The Trustees are prohibited from exercising any power or discretion granted under state law or any other provisions of this Trust Agreement that would be inconsistent with the requirements for the charitable deductions available to a charitable lead annuity trust or for contributions to a charitable lead annuity trust. (6) The trust created under this Clause NINTH is irrevocable. Notwithstanding the foregoing, the Trustees shall have the power, acting alone, to amend the trust from time to time in any manner required for the sole purpose of ensuring that the annuity interest passing to the Annuity Recipients is a guaranteed 21 DoeN: USI:9504045v3 EFTA01109131 annuity interest under Section 2055(e)(2)(B) of the Code and the Treasury Regulations thereunder and that payments of the annuity amount to the Annuity Recipients hereunder will be deductible from the gross income of the trust to the extent provided by Section 642(c)(1) of the Code and the Treasury Regulations thereunder. (7) Except as provided in subparagraph (E)(3) above, nothing contained in the foregoing provisions of this Clause NINTH shall be construed to restrict the Trustees from investing the trust assets 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. (8) During the Annuity Period, no payment shall be made to any person other than the Annuity Recipients. (9) The Grantor confirms that, subject to the provisions of paragraph (F) of Clause TENTH, the Trustees acting under this Trust Agreement and the Executors of the Grantor's estate may engage in transactions with respect to the property directed to be disposed of pursuant to the provisions of this Clause NINTH so long as such transactions comply with the exception to the self-dealing rules for charitable lead annuity trusts that is provided under Treasury Regulation Section 53.4941(d)-1(b)(3). (F) Upon the termination of the Annuity Period, the Trustees shall distribute all of the then principal and income of the trust (other than any amount due to the Annuity Recipients under the provisions above) to the Trustees of the Heritage Trust (as defined in Clause FOURTEENTH), to be added to and disposed of as part of the principal thereof. 22 USI:9504045v3 EFTA01109132  (G) Notwithstanding anything herein to the contrary, the Grantor recognizes that, at the death of the survivor of the Grantor and DEBRA, because the balance of the trust property ultimately will pass to a charitable lead annuity trust to be created under this Clause NINTH, sales to disqualified persons (as defined in Section 4946(a) of the Code) are permitted only to the extent such sales conform to the requirements of Treasury Regulation Section 53.4941(d)-1(b)(3) ("Permissible Sales"). The Grantor confirms that the Trustees expressly are authorized to arrange for Permissible Sales. To the extent any property is sold to one or more disqualified persons in connection with a Permissible Sale, the Grantor confirms that such sale or sales shall be subject, among other requirements, to the approval of the probate court having jurisdiction over the Grantor's estate and this Trust Agreement. TENTH: MARITAL/CHARITABLE DEDUCTION PROVISIONS The following provisions shall apply to the GST Marital Trust created under paragraph (B) of Clause SIXTH and the Marital Trust created under Clause EIGHTH (each a "Marital Trust" and collectively, the "Marital Trusts"): (A) The Grantor confirms that the Grantor's Executors (other than DEBRA) have the absolute discretion to determine whether and to what extent to make an election pursuant to Section 2056(b)(7) of the Code, or any successor thereto, and any similar statute under state law. The Grantor's Executors (other than DEBRA) may determine to make said election or elections with respect to all or any part or none of the Marital Trusts, all in the Executors' complete discretion. The Grantor suggests to his Executors (other than DEBRA) by way of illustration and without limiting such Executors' absolute authority, that the Grantor's Executors consider in making said 23 Doc": USI:9504045v3 EFTA01109133 election not only the Federal and state estate tax consequences for the Grantor's estate but also the Federal and state estate and gift tax consequences for DEBRA which result from said election. The determination of the Grantor's Executors (other than DEBRA) as to whether and to what extent to make said election shall be absolute and conclusive, regardless of the personal interest any Executor may have in the consequences of such election. The Grantor's Executors shall not be held liable, responsible or accountable, in court or otherwise, to any beneficiary, for the consequences of the exercise, the manner of exercise or failure to exercise the power granted under this Clause TENTH. (B) The Grantor directs that any trust principal passing to a Marital Trust which the Grantor's Executors (other than DEBRA) do not elect to qualify for the marital deduction shall be held in a separate trust, apart from the principal of the Marital Trust for which an election is made by the Grantor's Executors to qualify for the marital deduction. The Grantor further directs that any trust principal passing to a Marital Trust for which the Grantor's Executors (other than DEBRA) elect to qualify for the marital deduction for either state estate tax purposes or Federal estate tax purposes, but not both, also shall be held in a separate trust. All such Marital Trusts shall be administered under paragraph (B) of Clause SIXTH and Clause EIGHTH, as the case may be, in accordance with the terms above set forth. Without imposing any legal obligation upon the Trustees, the Grantor recommends that, in making discretionary principal payments to DEBRA, the Trustees take into account all potential transfer taxes. (C) Notwithstanding anything in this Agreement to the contrary, any power, duty or discretionary authority granted to the Executors of the Grantor's estate or any Trustee hereunder (other than the power to make elections under 24 USI:9304045v3 EFTA01109134 any tax law) shall be absolutely void to the extent that the right to exercise such power, duty or authority or the exercise thereof would in any way affect, jeopardize or cause the disallowance to the Marital Trusts of all or any part of the tax benefit afforded by the marital deduction provisions of Section 2056 of the Code (to the extent so elected by the Executors of the Grantor's estate). (D) If any part of DEBRA's gross estate for Federal estate tax purposes consists of property which is includible by reason of Section 2044 of the Internal Revenue Code, relating to certain property for which the marital deduction was allowed in the Grantor's estate, the Executor of DEBRA's estate shall be entitled to recover from the Trustees of the Marital Trusts the estate taxes payable by DEBRA's estate by reason of such inclusion, in accordance with the Code and the law of DEBRA's domicile at the time of her death; provided that none of the payments shall be made from property of any Marital Trust which is not included in DEBRA's gross estate for Federal estate tax purposes; and provided further, however, that all such taxes, to the extent possible, shall be paid first from the property passing under subparagraph (C)(5) of Clause EIGHTH, thereby preserving (to the extent possible) the GST Marital Trust and the property passing under subparagraphs (C)(1) through (C)(4) of Clause EIGHTH. (E) If DEBRA, pursuant to the authority granted to her under paragraph (A) of Clause FIFTEENTH, at any time directs the Trustees to sell any of the Grantor's Collectibles or any of the Residential Property held by the Marital Trust: (a) The Trustees of Heritage Trust shall have the first option to purchase any or all of the Residential Property from the Marital Trust at the Fair Market Value (as defined in Clause FOURTEENTH) as determined by the