||||| Return-Path: Date: Tue, 1 Jan 2002 08:52:46 -0600 Message-ID: <200201011452.g01Eqkx10279@no-address-listed.fax> From: Tenyaka Author-Address: tenyaka nym xganon com Subject: Amended Trust Agreement AFT-B (Hubbard/Starkey) Newsgroups: alt.religion.scientology Mail-To-News-Contact: mail2news-abuse@freedom.gmsociety.org Organization: mail2news@freedom.gmsociety.org Path: corp.newsgroups.com!propagator-maxim!feed.newsfeeds.com!cyclone-sf.pbi.net!209.122.83.58!howland.erols.net!nntp.abs.net!news.itconsult.net!freedom.gmsociety.org!usenet-gateway Xref: newsfeeds alt.religion.scientology:1277171 -----BEGIN PGP SIGNED MESSAGE----- AMENDED TRUST AGREEMENT THIS AMENDED TRUST AGREEMENT is entered ino 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 RECITALS GIVING RISE TO THIS AMENDED AGREEMENT On may 10, 1982, Trustor created the AUTHOR'S FAMILY TRUST, for the benefit of his family, friends and the religion of Scientology, of which he is the Founder. By this instrument, Trustor intends to amend and (for the sake of convenience) restate the AUTHOR'S FAMILY TRUST. In declaring this Trust, Trustor has made few changes in the ultimate disposition of the assets to be held by the Trustee herein. ARTICLE TWO 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 [page 2] 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, administered and distributed by the Trustee as provided herein. ARTICLE THREE NAMES OF TRUSTS The Trusts created in this instrument may be referred to collectively as the AUTHOR'S FAMILY TRUST-B and each separate Trust created in this Agreement, unless otherwise provided, may be referred to by adding the name of the beneficiary. ARTICLE FOUR REVOCATION AND AMENDMEN 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 [page 3] 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 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 FIVE DISTRIBUTIONS OF PRINCIPAL AND INCOME DURING TRUSTOR'S LIFE _Payment of Net Income and Principal._ During [page 4] 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 of Trustor and Trustor's wife shall be accumulated and added to principal. ARTICLE SIX DISPOSITIVE PROVISIONS UPON TRUSTOR'S DEATH Upon the death of the Trustor all principal and accumulated income of AUTHOR'S FAMILY TRUST-A and AUTHOR'S FAMILY TRUST-B, together with all distributions to this trust from any probate estate, life insurance proceeds to this trust from any probate estate, life insurance proceeds or other source shall be divided and distributed as follows: A. _Specific Distributions to Trustor's Wife._ As soon as convenient following Trustor's death, the Trustee shall distribute or cause to be distributed to Trustor's wife, if she survives Trustor for thirty (30) days, the following: 1. The sum of One Million Dollars [page 5] ($1,000,000.00); and 2. That certain house, together with its contents, in which Trustor's wife currently resides, commonly known as 2345 Chislehurst Drive, Los Angeles, California 90027, and more particularly described as: Lot 72 of Tract No. 5337, as per map recorded in book 84, page 95 of maps, in the office of the Los Angeles County recorder. Such distribution shall be free and clear of all liens and encumbrances, or assessments and taxes of any kind which are due as of the date of the transfer. If Trustor's wife fails to survive for the requisite period, the distributions pursuant to this paragraph A shall be distributed in accordance with paragraph G of this ARTICLE SIX. B. _Specific Distributions to Trustor's Named Children._ As soon as is convenient following Trustor' s death the Trustee shall distribute the following sums to the following named individuals: 1. The sum of One Hundred Thousand Dollars ($100,000) to DIANA MEREDITH DeWOLF HUBBARD RYAN, if she survives Trustor for thirty (30) days, and if not then to her issue by right of representation. 2. The sum of One Hundred Thousand Dollars ($100,000) to MARY SUZETTE ROCHELLE HUBBARD, if she survives the Trustor for thirty (30) days, and if not then to [page 6] her issue by right of representation. 3. The sum of One Hundred Thousand Dollars ($100,000) to ARTHUR RONALD CONWAY HUBBARD, if he survives Trustor for thirty (30) days, and if not then to his issue by righ of representation. 4. The sum of [Twenty-five thousand dollars - crossed out and One hundred thousand dollars handwritten] to KATHERINE MAY HUBBARD GILLESPIE, is she survives Trustor for thirty (30) days, and if not then to her issue by right of representation. 5. If any individual named in subparagraphs 1, 2 and 3 of this paragraph B fails to survive for the requisite period and dies without issue, his or her bequest shall be divided equally among the remaining name individuals, or their issue by right of representation. C. _Specific Distributions to Grandchildren: As soon as is convenient following Trustor's death the Trustee shall distribute to each of the children of DIANA MEREDITH DeWOLF HUBBARD RYAN, MARY SUZETTE ROCHELLE HUBBARD and ARTHUR RONALD CONWAY HUBBARD, who are living or in gestation at the time of Trustor's death and who shall survive Trustor by thirty (30) days, the sum of Fifty Thousand Dollars ($50,000). In no event shall any distribution, pursuant to this paragraph C, be made to the issue of any other child of Trustor, whether such child is living or deceased on the date hereof. D. _Distribution Retained in Trust._ Any distribution provided for in paragraphs B, C or D of this [page 7] ARTICLE SIX to a person who at the time of such distribution shall be under the age of twenty-two (220 shall be retained in trust by the Trustee as a separate share and be held and administered as otherwise provided in this instrument and be distributed as follows: The Trustee shall accumulate the net income of such person's share. The Trustee may apply so much of the accumulated income and principal of said person's share as the Trustee in the Trustee's absolute discretion may from time to time deem necessary or advisable for such person's proper health, maintenance, support and education until said person attains the age of twenty-two (22) years. Upon each person attaining the age of twenty-two (22) years, the Trustee shall distribute and deliver all of the remaining balance of said person's share of the Trust Estate to said person. If any of said persons should die prior to attaining the age of twenty-two (22) years, then upon such person's death all of the balance of such deceased person's share of the Trust Estate shall be distributed to his or her then living issue, said issue to take by right of representation, or if there should be no such issue of such deceased person then living, then upon such person's death all the balance o such share of the Trust Estate shall be distributed in equal shares to the brothers and sisters then living of the whole blood of such deceased person, if any, and if none, then to the lawful issue then living of any deceased brother or sister of the whole blood who shall [page 8] take by right of representation, or if there be none then the remaining balance of such share of the Trust Estate shall be distributed to those of the Trustor's isse hen living who are beneficiaries or issue of beneficiaries specified in subparagraphs 1, 2 and 3 of Paragraph B and Paragraph C of this ARTICLE SIX above. Said issue shall take by right of representation, provided that if the Trustee is then holding another trust hereunder for the primary benefit of any such issue of the Trustor, his or her share shall augment prorata the distributed and undistributed portions of said trust and shall be held and administered as if it had been an original part of such trust. No distribution pursuant to this Paragraph D shall be made to any of the following or their issue: ALEXIS HOLLISTER and LAFAYETTE RONALD HUBBARD, JR., also known as L. RON HUBBARD, JR., also known as NIBS HUBBARD, also known as RONALD DeWOLF. it is believed that QUENTIN HUBBARD died, without issue: however, should the existence of issue become known at a later date, such purported issue shall receive no distributions hereunder. E. _Support Trust._ At the time of execution of this Trust Trustor is married to MARY SUE HUBBARD and is providing her with approximately $8,000.00 per month, after tax, for her support, maintenance and comfort. If she shall survive Trustor, the purpose of this Trust is to assure, to the extent possible, that after Trustor's death, she receive sufficient support to maintain a comparable [page 9] standard of living. Trustor believes that $10,000.00 per month tax free will be sufficient to assure Trustor's wife of a comparable standard of living. If Trustor's wife does not survive Trustor, then the distribution provided for in this paragraph E shall be distributed as provided in Paragraph G below. It is further Trustor's intention to provide this support through a qualified terminable interest property trust, which shall be eligible for the federal estate marital deduction allowable under the Economic Recovery Tax Act of 1981 and the Trustee is hereby authorized to join with the Executor of Trustor's estate in making any election necessary to so qualify such trust. The Trustee shall, in his sole discretion, determine the amount to be set aside to this Support Trust. In exercising such discretion, the Trustee shall first adjust the $10,000.00 monthly support by increasing or decreasing such amount in the same ratio as the Consumer Price Index of the United States Department of Labor, Bureau of Labor Statistics, for all Urban Consumers, Loas Angeles/Long Beach/Anaheim Metropolitan Area, Los Angeles, California, or any substitute or successor index published by the Department of Labor, shall have changed from the first day of the month in which this Agreement is executed to the month of Trustor's death. Taking into account the figure thus arrived at, Trustor's wife's then life expectancy, the anticipated rate of inflation and [page 10] investment yields over that expectancy, and anticipated Federal and State income tax rates, the Trustee is to fund the Support Trust with an account which in his sole discretion shall seem sufficient to provide to Trustor's wife sufficient after tax income with which to maintain a standard of living comparable to that which she was enjoying at the time of Trustor's death. Having determined the amount to be aside to the Support Trust, the Trustee is authorized to fund the Support Trust in money or in kind or partly in each, and if wholly or partly in kind, to select and transfer to the trust the specific asset or assets so selectedd; _provided_ that any asset transferred in kind to fund the trust shall be valued for that purpose at its fair market value determined as of the date of the transfer; and _provided_ _further_ that such assets shall not consist of Trustor's intellectual properties. Only assets which qualify for the marital deduction under Internal Revenue Code of 1954, as amended ("Code"_ shall be allotted to the trust. Also, to the extent that other assets qualifying for the marital deduction are available, the trust shall not be funded with: (a) assets with respect to which a credit for foreign taxes paid is allowable under the Code; (b) assets which may be subject to both income and estate taxes and which may be eligible for a credit or deduction; or (c) United States Treasury Bonds eligible for redemption at [page 11] par in payment of federal estate tax. Subject to the foregoing, the decisions of the Trustee as to which assets shall be set aside to fund this trust for the benefit of Trustor's wife shall be conclusive and binding on all persons. Subsequent to Trustor's death and prior to the funding of the Support Trust, the Trustee shall make monthly distributions to Trustor's wife in the amount of $10,000.00 adjusted for the cost of living change as above provided. Trustee shall distribute all net income of the Support Trust, which shall include all income retroactive to the date of Trustor's death attributable to the assets used to fund the Support Trust and the monthly distribution referred to above, to or for the benefit of Trustor's wife at least annuallly. The Trustee shall make additional distributions from principal if required to meet the previously determined monthly level of support. In making such distributions, the Trustee shall treat distributions made to Trustor's wife, following Trustor's death and prior to funding the Support Trust, as advances against distributions of income from the Support Trust and income earned by assets following Trustor's death by prior to their transfer to the Support Trust. In addition the Trustee shall be authorized to make distributions from principal as they in their sole discretion shall deem necessary or advisable for the support, maintenance and comfort of Trustor's wife at the same standard to which [page 12] she had become accustomed at the time of Trustor's death. No income or principal of the Support Trust shall be distributed to anyone other than Trustor's wife during her lifetime. During Trustor's wife's lifetime, she shall have the power to reasonably require the Trustee to make all or part of the principal of the Support Trust productive or to convert promptly any unproductive property into productive property. This power shall be exercised by Trustor's wife in a written instrument delivered to the Trustee. Notwithstanding the foregoing, Trustor's wife shall have no right to dictate specific investments for the Trust Estate. Trustor's wife shall not assign, transfer or convey, anticipate, pledge, hypothecate or otherwise encumber her interest hereunder, and neither the principal of this Support Trust nor any income thereof shall be liable for any debt of Trustor's wife or be subject to any bankruptcy proceedings or claim of creditors, or be subject to any judgment rendered against her or other process of any court in aid of execution of any judgments so rendered; and all of the income and principal of such trust shall be transferable, payable and delivereable only to her as above provided. The Suport Trust shall be subject to all authorizations and directions applicable to this Trust Agreement, as herein provided or hereafter amended, except [page 13] that no provision, authorization or direction which would prevent the Support Trust from qualifying for the marital deduction under the Code shall apply to the Support Trust. On the death of Trustor's wife, the Trustee shall distribute any remaining balance of the Support Trust, including principal and accrued or undistributed income, to such one or more persons and entities, including the Trustor's wife's own estate and on such terms and conditions, either outright or in trust, and in such proportion as Trustor's wife shall appoint by Will or codicil specifically referring to and exercising this power of appointment. This power of appointment shall be exercisable by Trustor's wife alone in all events. Any portation of the Support Trust not effectively appointed by the Trustor's wife under this Paragraph E shall be distributed in accordance with Paragraph G of this ARTICLE SIX. It is the Trustor's intention to have the Support Trust qualify for the marital deduction under the Internal Revenue Code Section 2056 and the regulations pertaining to that section or any corresponding substitute provisions applicable to the Trust Estate. In no event shall the Trustee take any action or have any power that will impair the marital deduction, and all provisions regarding the Support Trust shall be interpreted to conform to this primary objective. F. _Taxes, Expenses and Debts of My Estate._ [page 14] The Trustee is authorized and directed to pay out of the Trust Estate Trustor's debts, the estate and inheritance taxes, including interest and penalties, arising because of his death, Trustor's last illness and funeral expenses, attorneys' fees, and other reasonable and necessary costs incurred in administering Trustor's probate estate as and to the extent provided in his Last Will. Any such paymensts shall be paid out of the residue of the Trust after funding the distributions provided for in Paragraphs A, B, C, D, and E above. Notwithstanding the foregoing, no such payments shall be made from funds received by the Trustee from qualified employess benefit plans, or from payment of insurance policies on the Trustor's life, ans such funds shall not be used to satisfy any other obligations of the decedent's estate; provided, however, that to the extent there are no other assets available for such purposes, or the to the extent the Trust includes insurance in excess of the amount of the insurance exemption available under the California Revenue and Taxation Code, insurance proceeds may be used for such purposes. Nothing contained in this paragraph F shall accelerate any obligation or be construed as a direction to pay any obligation other than as the same becomes due. Notwithstanding anything contained in this paragraph F to the contrary, the Trustee shall have no right to pay any costs of administering Trustor's probate estate without the prior written approval of an [page 15] independant firm of certified public accountants as to the reasonableness and necessity of such costs. G. _Residue._ All principal and accumulated income remaining after the distribution provided for in paragraphs A, B, C, D, E, and F, above including any lapsed gifts, shall, as soon as is convenient, be distributed to the CHURCH OF SPIRITUAL TECHNOLOGY a nonprofit religious corporation, of Los Angeles, California; provided that the CHURCH OF SPIRITUAL TECHNOLOGY is then an organization described in Section 501(c)(3) of the Code. If at the time of Trustor's death the status of the CHURCH OF SPIRITUAL TECHNOLOGY as an organization described in Section 501(c)(3) of the Code is under challenge or question by the Commissioner of Internal Revenue in any administrative or judicial proceeding, then the Trustee shall withhold the remaining Trust Estate from distribution until either the status of the CHURCH OF SPIRITUAL TECHNOLOGY as an organization described in Section 501(c)(3) of the Code has been confirmed in an administrative or judicial proceeding, or the CHURCH OF SPIRITUAL TECHNOLOGY has exhausted all administrative and judicial remedies in pursuit of confirming its status as an organization described in Section 501(c)(3) of the Code. If the status of the CHURCH OF SPIRITUAL TECHNOLOGY as an organization described in Section 501(c)(3) of the Code is confirmed, then the Trustee shall distribute the entire [page 16] remaining Trust Estate to the CHURCH OF SPIRITUAL TECHNOLOGY. If the CHURCH OF SPIRITUAL TECHNOLOGY has exhausted all administrative and judicial remedies available to it and its status as an organization described in Section 501(c)(3) of the Code is not confirmed, or is denied, then the Trustee shall distribute the entire remaining Trust Estate to or among such other organization or organizations, whether domestic or foreign, which are organized exclusively for the purposes of the religion of Scientology as founded and further developed by Trustor and which is an organization or are organizations described in Section 501(c)(3) of the Code, as the Trustee may in his sole discretion determine. During any period in which the Trust Estate is withheld from distribution pending the outcome of proceedings respecting the status of the CHURCH OF SPIRITUAL TECHNOLOGY as an organization described in Section 501(c)(3) of the Code, the Trustee shall, not less frequently than annually, distribute all of the Trust's income to such organization, or among such organizations, as are organized exclusively for the purposes of the religion of Scientology as founded and further developed by Trustor and which is an organization or are organizations described in Section 501(c)(3) of the Code as the Trustee may in his sole discretion determine. [page 17] ARTICLE SEVEN 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 SEVEN. 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 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 judgment 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 transferable, 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 Against Perpetuities._ Having 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 terminate upon the expiration of twenty- [page 18] 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 created herein created becomes irrevocable and nonamendable as provided herein. The principal and undistributed income of a trust terminated pursuant to this Paragraph B of this ARTICLE SEVEN shall be distributed to the then income beneficiaries 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 to income are not fixed by the terms of the trust, distribution under this paragraph B shall be made, by right of representation, o 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 distribution, or to qualify the Support Trust for the marital deduction, 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 SEVEN hereof, whenever the right of any beneficiary to [page 19] 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._ Untill the Trustee receives written notice of any birth, marriage, death or other event upone 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 "educations" 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 institution of the beneficiary's choice, and in determing payments to be made for such college or postgraduate education, the Trustee shall take into consideration the beneficiary's related living expenses to [page 20] the extent they are reasonable ARTICLE EIGHT 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 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 participations, notes, any other form of securities (including but not limited to, corporate securities, corporate debt, U.S. Government securities, U.S. Agency securities and municipal 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 [page 21] received (or the form to which changed by reorganization, split-up, stock divided, or other like occurrence) any securities or other property the Trustee may at any time acquire under the Trust, it being the Trustor's expres 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 time shall be reasonable in light of then existing circumstances. Notwithstanding anything above to the contrary, the Trustee's powers shall be subject to the Trustee's duties to treat income beneficiaries and remaindermen equitable, and the following requirements shall be observed by the Trustee: 1. _Depreciation._ A reasaonable addition to a reserve for depreciation of all income-producing depreciable real and personal property,.and capital improvement 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 tax from time to time; 3. _Mutual Fund Distributions._ Distributions [page 22] 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 ratably over the life of such obligation by making appropriate 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 Trustor's wife as hereinbefore provided. C. _Power to Manage Securities._ To have all [page 23] 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, foreclosures, reorganizations, consolidations, mergers, liquidations and incident to such particpation to deposit securities with and transfer title to any protective or other committee on such terms as the Trustee may deem advisable; and to exercise or sell stock subscription or conversion rights. D. _Power to Hold Securities._ 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 lease Trust property 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, [page 24] provided that any such loan shall 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, 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 independent appraisal. J. _Release of Powers of Trustee._ To release or to restrict the scope of any power that the 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 to 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- [page 25] owner of Trust property, including without limitation, the power to purchase securities on margin account. L. _Power to Defend._ To commence or defent, at the expense of the Trust, such litigation with respect to the Trust or any property of the Truste Estate as the Trustee may deem advisable, and to compromise or otherwise adjust any claims of litigation against or in favor of the Trust. M _Power to Withhold From Distribution._ To withhold from distribution, in the Trustee's discretion, at the 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 discretion 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 [page 26] 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 discretion 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 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 distribution. In making any division or partial or final distribution of the Trust Estate, the Trustee shall be under no obligation to 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 beneficiares, have equivalent or proportionate or fair market value. Q. _Power to Deal with Insurance Policies._ To [page 27] retain or purchase or otherwise 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 payments to a minor or other beneficiary under disability by making payments to his parent or the guardian of his person, or the Trustee may apply payments directly for the beneficiary's benefit. The Trustee in the Trustee's discretion 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 discretion, in order to minimize the tax liabilities of [page 28] these trusts and their beneficiaries. The Trustee shall allocate the benefits from such action or election among the various beneficiaries. The Trustee shall make adjustments in the 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 beneficiaries over others, except that this paragraph shall not be 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 thse 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 [page 29] 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. 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, porcelain, 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. Z. _Power to Acquire Assets._ It is Trustor's intention that the beneficiary, or beneficiaries, of the [page 30] residue of the Trust Estate, as described in Paragraph G of Article SIX, own all of Trustor's copyrights, including but not limted to, and contingent renewal rights that may be exercisable by the Trustor's heirs. Therefore, the Trustee shall have shall have the power to acquire Trustor's copyright or any contingent renewal rights therefor. ARTICLE NINE 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 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 [page 31] beneficiaries of the Trust in proportion to their interest in it. C. _Successive Beneficiaries._ Among successive beneficiaries of this 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 TEN 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 Trustee and to do all things necessary or expedient thereto, and to make such agreements or settlements of any 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 [page 32] liability upon any such 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 omitted 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 pretend to be Trustor's heir, but in fact is not and never has been Trustor's heir. C. _Prohibition of Contest._ Should any Trust beneficiary, no matter how remote or contingent such beneficiary's interest appeasr, 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 or invalidate any of the Trust's provisions, or conspire with or voluntarily assist anyone attempting to do any of these 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 had such person predeceased the execution of this instrument without surviving issue. Notwithstanding the foregoing, the provisions of this paragrapg C shall not be deemed to apply to Trustor's wife in connection with the specific distributions to Trustor's wife under Paragraph A of [page 33] ARTICLE SIX and the benefits payable to Trustor's wife during her lifetime under Paragraph E of ARTICLE SIX. 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 Trustor's wife, and in such event 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 sucessor Trustee, as the case may be), then in such event, the beneficiary perpetrating the act shall not be entitled to [page 34] 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 success 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 ELEVEN hereof. ARTICLE ELEVEN TRUSTEE PROVISIONS A. _Designation of Trustee._ Trustor reserves during his lifetime the right, exercisable from time to time, to 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 the 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 exercies 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 [page 35] 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 Trustee, the Trustee shall, not less frequently than semi-annually, provide to Trustor a full and complete accounting respecting the state of affairs of the Trust. Moreover the books and 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, accounants or agents. No bond or other security shall be required of any person named as a Trustee in this Trust. No successor Trustee shall be liable or responsible 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 defaults 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, no shall they be deemed to include, the right to accept service of process, subpoena, or other legal notice of pending criminal or civil action on behalf of Trustor. B. _Succession of Trustees._ Subject to the [page 36] 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. LENSKE, Esq,. SHERMAN D. LENSKE, Esq. and LAWRENCE E. HELLER, Esq.. Should any Trust Protector decline or be unable to act as a Trust 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 Protectors 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 [page 37] 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 delievered 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 Trustee shall forthwith transfer all trust assets in his or her possession to the successor Trustee. 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. 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, postage 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 such notice. The affidavit of the [page 38] Trustee as to the date of mailing of such notice shall be conclusive evidence of its mailing and of the date of such [some kind of vertical line across the page at this point] E. _Trustor's 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, to the CHURCH OF SPIRITUAL TECHNOLOGY, the Trustee shall be entitled to an annual fee not exceeding the sum of [handwritten: $50,000.00] 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 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. _Termination 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 to 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 [page 39] 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 otherwise 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 conservator of the estate or of the person of such beneficiary. EXECUTED at [LOS ANGELES CALIF] on [JANUARY 21ST], 1986 TRUSTEE: [Signature] NORMAN F. STARKEY I certify that I have read the foregoing instrument and that it correctly states the terms and conditions under with the Trust Estate is to be held, managed and disposed of by the Trustee. I approve the instrument in all particularys and request that the Trustee execute it DATED [23 Jan], 1986 [Signature] L. 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