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DOCUMENT TITLE: Trust Agreement (creating "Author's Family Trust-A") SUBJECT: Establishes one of two interrelated trusts, the other being "Author's Family Trust-B," accounting for the full distribution of all of L. Ron Hubbard's assets, including his 10,000+ copyrights. PARTIES: Purportedly, L. Ron Hubbard, Trustor; Norman F. Starkey, Trustee; Patrick Broeker, as Notary Public for "Hubbard;" David Miscavige, as Notary Public for Starkey; the law firm of law firm of Lenske, Lenske & Heller named in the trust instrument as counsel for the Trustee; Stephen A. Lenske, Sherman D. Lenske, and Lawrence E. Heller (of Lenske, Lenske & Heller) as "Trust Protectors." BACKGROUND AND NOTES This Trust Agreement establishes Author's Family Trust-A. It was executed first by Norman F. Starkey in Los Angeles on 21 January 1986, then later by "Hubbard" on 23 January 1986, the day before he is reported to have died. The later date is used here for chronological placement. This is a companion trust, Author's Family Trust-B, which includes this trust by reference. Although Norman F. Starkey is named as Trustee for both trusts, and is also named as Executor of the referenced Will of L. Ron Hubbard, Starkey will be, at all times, under the strictest control of Sherman Lenske, his brother, Stephen Lenske, and their law partner, Lawrence E. Heller. Sherman Lenske will be counsel for Starkey in Starkey's role as Executor of the Will and Estate through probate. And once the Estate is distributed to Starkey as Trustee of Author's Family Trust-B (which includes this trust by reference) at the close of probate, Starkey will also be under Lenske's control, since Starkey is instructed in the instruments for both trusts to consult Lenske, Lenske & Heller "in all matters," and, just to make sure Starkey doesn't get out of line, Lenske, Lenske & Heller are also named as "Trust Protectors." This document makes reference to Author's Family Trust-B, but only by the description, "that certain AMENDED TRUST AGREEMENT of even date." That "Amended Trust Agreement" is Author's Family Trust-B. Contrariwise, Author's Family Trust-B refers specifically to Author's Family Trust-A by name, and including Author's Family Trust-A by reference. An odd aspect to the two trust agreements is that they have so much language that is virtually verbatim between them. We can offer no legal analysis of the many ramifications of the two trust agreements, but we are able to provide a comparison reportedly done by paralegals that at least details the differnces between the two agreements. The specific breakdown for final distribution of the estate and trusts is in Author's Family Trust-B, which goes into great detail. Here is the complete outline of these trust agreements: 1. AUTHOR'S FAMILY TRUST (no letter designation): 10 May 1982 Later amended and restated by AUTHOR'S FAMILY TRUST-B 2. AUTHOR'S FAMILY TRUST-A: 23 January 1986 (this trust) Companion to, and included by reference in, AUTHOR'S FAMILY TRUST-B 3. AUTHOR'S FAMILY TRUST-B (also referred to as "AMENDED TRUST AGREEMENT"): 23 January 1986 "Amends and restates" the original 10 May 1982 AUTHOR'S FAMILY TRUST (no letter designation) Here is Author's Family Trust-A: [page 1] Trust Agreement TRUST AGREEMENT is entered into on the [23rd] day of [JANUARY], 1986, between L. RON HUBBARD, also known as LAFAYETTE RONALD HUBBARD, hereinafter referred to as the "Trustor", and NORMAN F. STARKEY, hereinafter referred to as the "Trustee". ARTICLE ONE PROPERTY CONSTITUTING TRUST ESTATE The Trustor has transferred and delivered to the Trustee, without any consideration on the Trustee's part, the sum of Ten Dollars ($10.00), the receipt of which is acknowledged by the Trustee. The Trustor also intends to transfer substantial additional property to this Trust, either by lifetime transfer or by testamentary transfer. Said property, together with any other property which may later become subject to this Trust, shall constitute and be referred to as the "Trust Estate" and shall be held, admini- stered and distributed by the Trustee as provided herein. ARTICLE TWO NAMES OF TRUSTS The Trusts created in this instrument may be referred to collectively as the AUTHOR'S FAMILY TRUST-A and each [page 2] separate Trust created in this Agreement, unless otherwise provided, may be referred to by adding the name of the beneficiary. ARTICLE THREE REVOCATION AND AMENDMENT DURING TRUSTOR'S LIFE A. _Revocation of Trust_. During the lifetime of the Trustor, this Trust may be revoked in whole or in part by an instrument in writing signed by the Trustor delivered to the Trustee. On revocation, the Trustee shall promptly deliver to Trustor all or the designated portion of the Trust assets. If this instrument is revoked with respect to all or a major portion of the assets subject to the instrument, the Trustee shall be entitled to retain sufficient assets reasonable to secure payment of liabilities lawfully incurred by the Trustee.in the administration of the Trust, including Trustee's fees that have been earned, unless the Trustor shall indemnify the Trustee against loss or expense. B. _Amendment of Trust Agreement_. Trustor may at any time during his lifetime amend any of the terms of this instrument by an instrument in writing signed by Trustor and delivered by hand or certified mail (postage prepaid) to the Trustee. No amendment shall substantially increase the duties or liabilities of the Trustee or change the Trustee's compensation without the Trustee's consent, nor shall the [page 3] Trustee be obligated to act under such an amendment unless the Trustee consents to it. If a Trustee is removed, the Trustor shall pay to such Trustee any sums due and shall indemnify the Trustee against liability lawfully incurred by the Trustee in the administration of the Trust. C. _Personal Nature of Power_. The powers of the Trustor to revoke or amend this instrument are personal to him and shall not be exercisable on his behalf by any guardian, conservator, attorney in fact, or other person. ARTICLE FOUR DISTRIBUTIONS OF PRINCIPAL AND INCOME DURING TRUSTOR'S LIFE _Payment of Net Income and Principal_. During the lifetime of the Trustor, the Trustee shall pay to or apply for the benefit of the Trustor so much of the net income or principal as the Trustor shall from time to time direct in writing. Should the Trustor for any reason be unable to direct payment of net income or principal, the Trustee shall pay to, or for the benefit of Trustor and Trustor's wife such amounts of net income or principal as are deemed necessary for their proper health, maintenance, and support in accordance with their then accustomed manner of living. Any income in excess of the amounts applied for the benefit [page 4] of Trustor and Trustor's wife shall be accumulated and added to principal ARTICLE FIVE DISPOSITIVE PROVISIONS UPON TRUSTOR'S DEATH Upon the death of the Trustor all principal and accumulated income, together with all distributions to this trust from any probate estate, life insurance proceeds or other source shall be held, administered and distributed in accordance with the provisions of that certain AMENDED TRUST AGREEMENT of even date, [NOTE: refers to Author's Family Trust-B] between L. RON HUBBARD, as Trustor, and NORMAN F. STARKEY, as Trustee, including any amendments made to such Trust Agreement prior to the death of Trustor. ARTICLE SIX TRUST ADMINISTRATION Unless otherwise provided in this instrument or otherwise directed in writing by the Trustor, all trusts created herein shall be administered as provided in this ARTICLE SIX. A. _Creditors' Rights--Spendthrift Provisions_. No beneficiary under the trusts created herein shall assign, transfer or convey, anticipate, pledge, hypothecate or otherwise encumber his or her interest hereunder, and neither the principal of these trusts nor any income of [page 5] these trusts shall be liable for any debt of any beneficiary or be subject to any bankruptcy proceedings or claim of creditors, or be subject to any judgement rendered against any beneficiary or other process of any court in aid of execution of any judgments so rendered; and all of the income and principal of these trusts shall be transfereable, payable and deliverable only to the beneficiaries designated hereunder at the time they are entitled to take the same under the terms of the trusts created herein. B. _Rule Agains Perpetuties_. Havin in mind the Rule Against Perpetuities, and notwithstanding anything herein to the contrary, each of the trusts created herein, unless sooner terminated in accordance with the provisions hereinabove set forth, shall in any event cease and termi- nate upon the expiration of twenty-one (21) years from and after the date of the death of the last survivor of the Trustor and the survivor of the Trustor's children and issue who are in being on the date when any one or more of the trusts herein created becomes irrevocable and nonamendable as provided herein. The principal and undistributed income of a trust terminated pursuatn to this Paragraph B of this ARTICLE SIX shall be distributed to the then income bene- ficiaries of that trust in the same proportion that the beneficiaries are entitled to receive income when the trust terminates. If at the time of such termination the rights [page 6] to income are not fixed by the terms of the trust, distribu- tion under this Paragraph B shall be made, by right of representation, to the persons who are entitled or authorized, in the Trustee's discretion, to receive trust payments. C. _Physical Division of Property_. Property need not be physically divided between the respective trusts herein created, except to the extent necessary for distribu- tion, or to qualify the support trust for the marital deductions, but at all times the Trustee shall keep records and books of account with respect to each such trust whereby all of its assets, income and liabilities will be clearly distinguishable from each other trust herein created. D. _Successor Beneficiary's Right to Income_. Except as otherwise provided in Paragraph B of ARTICLE SIX herein, whenever the right of any beneficiary to payments from net income or principal hereunder shall terminate, either by reason of death or otherwise, all such payments accrued or undistributed by the Trustee at the date of such termination shall be distributed to the beneficiary entitled to the next successive interest thereunder; and income earned but not received by the Trustee at the time of the death of an income beneficiary shall not be apportioned but shall pass to the next successive income estate. E. _Notices of Events_. Until the Trustee receives written notice of any birth, marriage, death or other event [page 7] upon which the right to payments from these trusts may depend, the Trustee shall incur no liability to persons whose interests may have been affected by that event for disbursements made in good faith. F. _Definition of Education_. Whenever provision is made in this instrument for any payment for education of a beneficiary, the term "education" shall be construed to include college, postgraduate study, or study in any trade or professional school, so long as pursued to advantage of the beneficiary at an institution of the beneficiary's choice, and in professional school, so long as pursued to advantage of the beneficiary at an instituion of the bene- ficiary's choice, and in determining payments to be made for such college or postgraduate education, the Trustee shall take into consideration the beneficiary's related living expenses to the extent they are reasonable. ARTICLE SEVEN TRUSTEE'S POWERS In order to carry out the provisions of the trusts created by this instrument, and unless otherwise provided in this instrument or otherwise directed in writing by the Trustor, the Trustee shall have these powers in addition to those now or hereafter conferred by law: A. _Investment Powers_. To invest and reinvest all or any part of the Trust Estate in such common or preferred [page 8] stocks, both listed and unlisted, publicly and privately held, oil, gas or mineral interests, commodities, including security or commodity futures (including short sales), physical commodities, hedges, short positions, options (covered writing, uncovered writing, buying spreading, uncovered call writing), puts, calls, straddles, shares of investment trusts and investment companies, bonds, warrants, debentures, mortgages, deeds of trust, mortgage participa- tions, notes, any other form of securities (including but not limited to, corporate securities, corporate debt, U.S. Government securities, U.S. Agency securities and municpal securities) or commodities positions, real estate, or other property as the Trustee in the Trustee's discretion may select; and the Trustee may continue to hold in the form in which received (or te from to which changed by reorganiza- tion, split-up, stock dividend, or other like occurrence) any securities or other property the Trustee may at any time acquire under the Trust, it being the Trustor's express desire and intention that the Trustee shall have full power to invest and reinvest the Trust funds without being restricted to forms of investment that the Trustee may otherwise be permitted to make by law; and the investments need not be diversified; _provided_, that the aggregate return of all investments of the support trust from time to times shall be reasonable in light of then existing circumstances. Notwithstanding anything above to the contrary, the [page 9] Trustee's powers shall be subject to the Trustee's duties to treat income beneficiaries and remaindermen equitably, and the following requirements shall be observed by the Trustee: 1. _Depreciation_. A reasonable addition to a reserve for depreciation of all income-producing depreciable real and personal property, and capital improvements and extraordinary repairs on income-producing property shall be charged to income from time to time; 2. _Depletion_. A reasonable addition to a reserve for depletion of all depletable natural resources, including, but not limited to, oil, gas, and mineral and timber property, shall be charged to income from tim to timel 3. _Mutual Fund Distributions_. Distributions by mutual funds and similar entities of gains from the sale or other disposition of property shall be credited to principal; 4. _Amortization_. A reasonable addition to a reserve for amortization for all intangible property having a limited economic life including, but not limited to, patents and copyrights, shall be charged to income from time to time. 5. _Bond Premium and Discount_. All premiums paid and all discounts received in connection with the purchase of any bond or other obligation shall be amortized [page 10] ratably over the life of such obligations by make appro- priate charges or credits to income as the case may be. B. _Power to Retain Property or Business_. To continue to hold any property including all assets received by the Trustee (from any and all sources), and to operate at the risk of the Trust Estate any property or business received by this Trust as long as the Trustee may deem it advisable; the profits and losses thereon to inure or be chargeable to the Trust Estate and not to the Trustee. _Provided, however_, no underproductive or unproductive property shall constitute an asset of the support trust for more than a reasonable time after the receipt of such property without the consent of the Trustor's wife as herein- before provided. C. _Power to Manage Securities. To have all the rights, powers and privileges of an owner with respect to any securities held in trust, including, but not limited to, the powers to vote, give proxies, and pay assessments; to participate in voting trusts, pooling agreements, fore- closures, reorganizations, consolidations, mergers, liquida- tions and incident to such participation to deposit securities with and transfer title to any protective or other committee on such terms as ther Trustee may deem advisable; and to exercise or sell stock subscription or conversion rights. [page 11] D. _Power to Hold Securites._ To hold securities or other property in the Trustee's name as Trustee under this Trust or in Trustee's own name, or in the name of a nominee, or the Trustee may hold securities unregistered in such condition that ownership will pass by delivery. E. _Power to Hold Property._ To manage, control, grant options on, sell (for cash or on deferred payments), convey, exchange, partition, divide, improve and repair Trust property, whether real or personal. F. _Power to Lease Property._ To least Trust prop- erty for terms within or beyond the terms of the Trust for any purpose, including exploration for and removal of gas, oil and other minerals; and to enter into community oil leases, farmout, pooling, and unitization agreements. G. _Power to Lend to Others._ To lend money to any person, including the probate estate of the Trustor, provided that any such loan be adequately secured and shall bear a reasonable rate of interest. H. _Power to Purchase from Probate Estate._ To purchase property at its fair market value as determined by the Trustee in the Trustee's discretion, from the probate estate of the Trustor. I. _Power of Trustee Regarding His Own Funds._ To loan or advance the Trustee's own funds to the Trust for any Trust purpose, with interest at current rates; to receive security for such loans in the form of a mortgage, pledge, [page 12] deed of trust, or other encumbrance of any assets of the Trust; to purchase assets of the Trust at their fair market value as determined by an independent appraisal of those assets; and to sell property to the Trust at a price not in excess of its fair market value as determined by an indepen- dent appraisal. J. _Release of Powers of Trustee. To release or to restrict the scope of any power that Trustee may hold in connection with the Trust created under this instrument, whether such power is expressly granted in the instrument or implied by law. The Trustee shall exercise this power in a written instrument executed by the Trustee, specifying the powers ot be released or restricted and the nature of the restriction. K. _Power to Borrow._ To borrow money, and to encumber Trust property by mortgage, deed of trust, pledge, or otherwise for the debts of the Trust or a co-owner of Trust property, including, without limitation, the power to purchase securities on margin account. L. _Power ot Defend._ To commence or defend, at the expense of the Trust, such litigation with respect to the Trust or any property of the Trust Estate as the Trustee may deem advisable, and to compromise or otherwise adjust any claims or litigation against or in favor of the Trust. M. _Power to Withhold from Distribution._ To with- hold from distribution, in the Trustee's discretion, at the [page 13] time for distribution of any property in this Trust, without the payment of interest, all or any part of the property, as long as the Trustee shall determine in the Trustee's discre- tion that such property may be subject to conflicting claims, to tax deficiencies, or to liabilities, contingent or otherwise, properly incurred in the administration of the estate, except that Trustee shall distribute all net income of the Support Trust at least annually to Trustor's wife and Trustee shall have no power to withhold the same. N. _Power to Purchase Bonds._ To purchase bonds and to pay such premiums in connection with the purchase as the Trustee in the Trustee's discretion deems advisable, provided, however, that such premiums shall be restored periodically to principal out of the interest on the bond in such reasonable manner as the Trustee shall determine and, to the extent necessary, out of the proceeds on the sale or other disposition of the bond. O. _Power to Purchase Bonds at Discount._ To purchase bonds at such discount as the Trustee in the Trustee's discretions deems advisable _provided, however,_ that each discount shall be treated periodically as interest in such reasonable manner as the Trustee shall determine and to the extent necessary and paid out of the proceeds on the sale or other disposition of the bond or out of principal. P. _Power to Partition._ To partition, allot and distribute the Trust Estate, on any division or partial or [page 14] final distribution of the Trust Estate, in undivided interests or in kind, or partly in money and partly in kind, at valuations determined by the Trustee, and to sell such property as the Trustee may deem necessary to make division or distributions. In making any division or partial or fianl distribution of the Trust Estate, the Trustee shall be under no boligation ot make a prorata division, or to distribute the same assets to beneficiaries similarly situated; but rather, the Trustee may, in the Trustee's discretion, make a nonprorata division between trusts or shares and nonprorata distributions to such beneficiaries so long as the respective assets allocated to separate trusts or shares, or distributed to such beneficiaries, have equivalent or proportionate fair market value. Q. _Power to Deal with Insurance Policies._ To retain, to purchase or otherwsie acquire life insurance policies on the life of any person and, except where such rights have been retained by the Trustor, to exercise all rights of ownership and control contained in the policies. R. _Power to Lend to Probate Estate._ To loan funds or assets belonging to the Trust Estate to the probate estate of the Trustor and from one trust to any other trust created hereunder upon such terms and in such amounts as the Trustee deem advisable. S. _Power to Make Payments to Minors._ To make pay- ments to a minor or other beneficiary under disability by [page 15] making payments to his parent or the guardian of his person, or the Trustee may apply the payments directly for the beneficiary's benefit. The Trustee in the Trustee's discre- tion may make payments directly to a minor if in the Trustee's judgment the minor is of sufficient age and maturity to spend the money properly. T. _Power to Pay Taxes._ Except as otherwise specifically provided in this instrument or in the Trustor's Will, to pay federal estate tax or State Inheritance Tax, if any, imposed by reason of inclusion of any portion of the Trust Estate in the gross estate of the Trustor under the provisions of any Federal Estate Tax or State Inheritance Tax law. U. _Power to Make Tax Elections._ To take any action and to make any election, in the Trustee's dicretion, in order to minimize the tax liabilities of these trusts and their beneficiaries. The Trustee shall allocate the benefits from such action or election among the various rights of any beneficiaries, or between the income and principal accounts, to compensate for the consequences of any tax election, investment or administrative decision that the Trustee believes has had the effect of directly or indirectly preferring one beneficiary or group of benefici- aries over others, except that this paragraph shall not be [page 16] applied in such a fashion as would preclude Trustor's wife from receiving all net income of the Support Trust. V. _Power to Employ Agents and Advisors._ To employ any reputable custodian, attorney, accountant, corporate fiduciary, or any other agent, agents, advisor or advisors to assist the Trustee in the administration of this Trust and to rely with acquittance on the advice given by these agents. Specifically, the Trustee shall retain the law firm of Lenske, Lenske & Heller, A Law Corporation, or their successor, and the management firm of AUTHOR SERVICES, INC. The Trustee shall consult with such firms in all matters pertaining to execution of the Trust created herein (including but not limited to administration, investment, management and distribution). Reasonable compensation for all services performed by these agents shall be paid from the Trust Estate out of either income or principal as the Trustee in the Trustee's reasonable discretion shall determine. W. _Power to Write Call Options._ To write call options on securities held as Trust assets, to repurchase such call options, to purchase a call on the same security then held subject to a call option, and to engage in other forms of option transactions which are directly related to outstanding call options and which are not acquired as original investments. [page 17] X. _Collectibles._ The Trustee may, as he deems advisable, purchase or otherwise acquire, invest in, collect, manage, sell, exchange, or otherwise dispose of or trade in paintings, sculpture, watercolors, lithographs and other works of art; cut, uncut, mounted and unmounted stones and gems; coins, stamps, commemorative medals, decorations and other government issued objects of value; books, porce- lain, furniture, stained glass, carpets, silver, vintage wines, and any other types of personal property. The Trustee may, as he deems advisable, lend out, hire out or place such objects on exhibition. Y. _Currency Trading._ The Trustee may hold accounts comprising the entire Trust fund or any part or parts thereof in any currency they may in their sole discretion deem advisable, and is hereby specifically authorized to trade or speculate in any currency or foreign exchange in any manner it may deem advisable. ARTICLE EIGHT DETERMINATIONS OF PRINCIPAL/INCOME, AND ADDITIONAL PROPERTY A. _Income and Principal Act._ Except as otherwise specifically provided in this instrument, the determination of all matters with respect to what is principal and what is income of the Trust Estate, and the apportionment and allocation of receipts and expenses between these accounts [page 18] shall be governed by the provisions of the California Revised Uniform Principal and Income act from time to time existing. Any such matter not provided for, either in this instrument or in the California Revised Uniform Principal and Income Act, shall be determined by the Trustee in the Trustee's reasonable discretion. B. _Treatment of Income._ Income accrued or unpaid on Trust property when received into the Trust shall be treated as any other income. Income accrued or held undistributed by the Trustee at the termination of any Trust created herein shall go to the next beneficiaries of the Trust in proportion to their interest in it. C. _Successive Beneficiaries._ Among successive beneficiaries of the Trust, all taxes and other current expenses shall be prorated over the period to which they relate on a daily basis. D. _Addition of Property._ Other property acceptable to the Trustee may be added to these trusts by any person, by the Will or Codicil of the Trustor, by the proceeds of any life insurance policy or policies or otherwise. ARTICLE NINE INSURANCE, DISINHERITANCE, TAX RETURNS A. _Collection of Insurance Proceeds._ Upon the death of the Trustor, the Trustee is authorized to collect the proceeds of any insurance policies then payable to such [page 19] Trustee and to do all things necessary or expedient thereto, and to make such agreements or settlements of ay such policy or policies, or to take such action thereon as such Trustee shall deem advisable; provided however, that such Trustee need not, except in the sole discretion of such Trustee enter into or maintain any litigation to enforce payment of any such policy unless and until such Trustee shall have been indemnified to the satisfaction of such Trustee against all expenses and liabilities which may be incurred therein. The receipt of proceeds by such Trustee shall release the insurance company from all liability upon any insurance policy or policies contained in the Trust Estate. B. _Disinheritance._ The Trustor declares that, except as otherwise provided in this Trust, he has intentionally and with full knowledge omited to provide herein for LAFAYETTE RONALD HUBBARD, JR., also known as L. RON HUBBARD, JR., also known as NIBS HUBBARD, also known as RONALD DeWOLF, the issue, if any of QUENTIN HUBBARD and any other of Trustor's heirs who may be living at the time of his death. Further, Trustor has intentionally omitted to provide herein for ALEXIS HOLLISTER, who may pretent to be Trustor's heir, but in fact is not and never has been Trustor's heir. [page 20] C. _Prohibition of Contest._ Should any Trust beneficiary, no matter how remote or contingent such bene- ficiary's interest appears, or any legal heir of the Trustor or any person claiming under any of them, contest the provisions of this Trust or attack or seek to impair the provisions of this Trust or attack or seek to impair or invalidate any of the Trust's provisions, or conspire with or voluntarily assist anyone attempting to do any of those things, then in such event the right of that person to take any interest given to him by this Trust shall be determined as it would have been determined has such person predeceased the execution of this instrument without surviving issue. D. _Choice of Law, Gender, Number and Headings._ This Trust has been accepted by the Trustee administered in the State of California. The validity, construction and all rights thereunder shall be governed by the laws of the State of California. As used in this instrument, the masculine, feminine and neuter gender and the singular or plural number shall each be deemed to include the others wherever the context so indicates. If any provision or provisions of this Trust Agreement shall be invalid or unenforceable, the remaining provisions thereof shall continue to be fully effective. The headings in this instrument are inserted only for the convenience of reference and are not to be considered in the construction thereof. E. _Joint Income Tax Returns._ The Trustee shall have the power to file Joint Income Tax Returns with [page 21] Trustor's wife, and in such even the Trustee shall not require any contribution from Trustor's wife of any part of the income tax payable thereon, and to compromise, settle, and adjust claims and demands in favor of or against the Trust Estate. F. _Unlawful Death of Trustor or Trustee._ Should any Trust beneficiary unlawfully and intentionally cause the death of Trustor or the Trustee (or successor Trustee, as the case may be), then in such event, the beneficiary perpetrating the act shall not be entitled to any portion of the Trust Estate or to take under any Will of the Trustor; but the portion thereof to which such individual would otherwise be entitled to succeed shall go to those other persons who would be entitled thereto if said beneficiary had predeceased the Trustor. Should any Trustee, or successor Trustee, unlawfully and intentionally cause the death of Trustor or a person designated as a Trustee, or successor Trustee, hereunder, then in such event, the Trustee perpetrating the act shall immediately cease to act as Trustee and his or her post shall be filled as provided in ARTICLE TEN hereof. ARTICLE TEN TRUSTEE PROVISIONS A. _Designation of Trustee._ Trustor reserves during his lifetime the right, exercisable from time to time, to [page 22] remove any incumbent Trustee and to designate a successor Trustee or Trustees of the Trust. Such right shall be exercised by means of a writing delivered to the incumbent Trustee, which makes specific reference to this Agreement, which is signed by Trustor, which specifies the date upon which such removal is to be effective, and which contains the name of the successor Trustee. Upon Trustor's exercise of this right to remove any incumbent Trustee, the Trustee then incumbent shall cooperate with the successor Trustee designated by Trustor, and shall perform such acts and provide such assurances as may be necessary or helpful to enable the successor Trustee to discharge his obligations, or her obligations, as the case may be, commencing with the effective date of such removal. In aid of Trustor's right to remove any incumbent Trustee and to designate a successor, the Trustee shall, not less frequently than semi-annually, provide to Trustor a full and complete accounting respecting the sate of affairs of the Trust. Moreover, the books ad records of the Trustee as the same relate to the Trust shall at all reasonable times be open to inspection by the Trustor his attorneys, accountants or agents. No bond or other security shall be required of any person named as a Trustee in this Trust. [page 23] No successor Trustee shall be liable or respon- sible in any way for any acts or defaults of any predecessor Trustee or for any loss or expense occasioned by anything done or neglected to be done by any predecessor Trustee, but such successor Trustee shall be liable only for such Trustee's own acts and defauls in respect to property actually received by such successor Trustee. The powers and authority hereby conferred upon the Trustee by this instrument do not include, nor shall the be deemed to include, the right to accept service of process, subpoena, or any other legal notice of pending criminal or civil action on behalf of Trustor. B. _Succession of Trustees._ Subject to the paramount right of Trustor and the right of the Trust Protectors, if a Trustee should at any time or for any reason fail, decline or be unable to serve in such capacity or having commenced to serve shall for any reason cease to serve, then the person named in a written instrument or instruments signed by Trustor and previously delivered to the law firm of Lenske, Lenske & Heller, A Law Corporation (the "List of Trustees"), in the order of preference designated therein, shall serve as successor Trustee. C. _The Trustor Protectors and Their Role._ The Trust Protectors shall be STEPHEN A. LENSK, Esq., SHERMAN D. LENSKE. Esq. and LAWRENCE E. HELLER, Esq. Should any Trust Protector decline or be unable to act as a Trust [page 24] Protector, then the remaining persons shall act in such capacity. In the event that only one Trust Protector remains able to act, then such person shall designate his successor Trust Protector, who must be an attorney licensed to practice law in the State of California. At any time while more than two Trust Protecors are in office, any action taken by a majority of the Trust Protectors in office shall be binding and may be relied upon by third parties dealing with the Trustee. Subject always to the paramount right of the Trustor as provided herein, the Trust Protectors shall have the power to remove any Trustee acting under this instrument and then shall designate a person on the List of Trustees in order of preference designated therein. Removal and replacement of the acting Trustee shall be made in writing by the Trust Protectors and delivered to the then acting Trustee and becomes effective on the designated successor Trustee's written acceptance of the Trust and the delivery of the acceptance to the Trust Protectors. After acceptance by the successor Trustee, the previous Truste shall forthwith transfer all trust assets in his or her possession to the successor Trusteel In the event that the person lowest in order of Trustor's preference becomes Trustee, then such person shall designate his or her successor Trustee. [page 25] The Trustor, during his lifetime, reserves the right to remove any incumbent Trustee at any time, to add or remove the names of persons from the List of Trustees, and to change the Trustor's order of preference upon the List of Trustees. D. _Resignation of a Trustee._ Any Trustee may at any time resign from the respective trusts hereby created by depositing in the United States mail, postate prepaid, a notice of such resignation addressed to the person or persons then entitled to receive payments hereunder, and to the remaining Trust Protector or Trust Protectors, at the addresses of such person or persons last known to such Trustee, and such resignation shall take effect at the expiration of sixty (60) days from the date of mailing of such notice. The affidavit of the Trustee as to the date of mailing of such notice shall be conclusive evidence of its mailing and of the date of such mailing. E. _Trustees' Fees._ During the lifetime of Trustor the Trustee, shall not receive any fees. Upon death of Trustor and continuing until the occurrence of the distributions, required by this Agreement, the Trustee shall be entitled to an annual fee not exceeding the sum of $100.00. F. _Application of California Probate Code._ Article 2.5 of Chapter 19 of Division 3 of the Probate Code of the State of California enacted in 1970, or any similar [page 26] legislation, and as it may exist from time to time shall be fully effective, operative and applicable with respect to this instrument and any amendment thereto. G. _Termaination of Trusts._ Notwithstanding any other provision of this instrument, should the principal of any trust created under any provision of this instrument be or become, according the discretion of the Trustees, sufficiently small in value that the administration thereof is no longer economically desirable, that the cost of administration is disproportionate to the value of the assets, or that the continuation thereof is no longer in the best interest of the beneficiary or beneficiaries, then the entire principal and all accumulated income of such trust shall be distributed outright to the person or persons entitled at the time to the income therefrom in the proportions in which they were entitled to receive the income, and upon such termination, the rights of all other persons who might otherwsie have an interest as succeeding life income beneficiaries or as remaindermen shall cease. If any such person be then a minor, or in the opinion of the Trustee is physically incapacitated, then the Trustee may pay the share of such fund to which such person would otherwise be entitled to the parent, the guardian, or to the [page 27] conservator of the estate or of the person of such beneficiary. EXECUTED at [Los Angeles Calif] on [January 21st], 198. TRUSTEE: [Signature] NORMAN D STARKEY I certify that I have read the foregoing instrument and that it correctly states the terms and conditions under which the Trust Estate is to be held, managed, and disoposed of by the Trustee. I approve the instrument in all particulars and request that the Trustee execute it. DATED: [23 Jan], 1986. TRUSTOR: [Signature] L. RON HUBBARD [thumbprint] [page 28] State of California ) ) ss. County of [SAN LUIS OBISPO] ) On [JANUARY 23RD, 1986], before me, a Notary Public in and for the State of California, personally appeared L. RON HUBBARD, known to me or proved to me on the basis of satisfactory evidence to be the Trustor of the Trust created by the above instrument, and to be the person whose name is subscribed to the instrument, and he acknowledged that he executed the same as such Trustor. WITNESS my hand and official seal. [OFFICIAL SEAL] [Signature] [PATRICK BROEKER] Notary Public in and for the [NOTARY PUBLIC - CALIFORNIA] State of California residing at [SAN BERNARDINO COUNTY] [My comm. expires JAN 27, 1989] [CRESTON, CA] My Commission Expires [JANUARY 27TH], 198[9]. State of California ) ) ss. County of [LOS ANGELES] ) On [January 21st 1986], before me, a Notary Public in and for the State of California, personally appeared NORMAN F, STARKEY, known to me or proved to me on the basis of satisfactory evidence to be the Trustee of the trust created by the above instrument, and to be the person whose name is subscribed to the instrument, and he acknowledged that he executed the same as such Trustee. WITNESS my hand and official seal. [OFFICIAL SEAL] [Signature] [DAVID MISCAVIGE] Notary Public in and for the [NOTARY PUBLIC - CALIFORNIA] State of California, residing at [LOS ANGELES COUNTY] [Los Angeles, Calif] My comm. expires Mar 31, 1989] My Commission Expires [March 31st], 198[9] |
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