DISTRIBUTION COMMITTEE OPERATING PROCEDURES
OF THE
CALDWELL FAMILY DYNASTY TRUST
Adopted as of April 1, 2023
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ARTICLE I — TITLE AND PURPOSE
Section 1.1 — Title
These procedures shall be known as the "Distribution Committee Operating Procedures of the Caldwell Family Dynasty Trust" (hereinafter, these "Operating Procedures" or "Procedures"). These Operating Procedures are adopted pursuant to and in connection with that certain Caldwell Family Dynasty Trust Agreement dated April 1, 2023 (as it may be amended, restated, or modified from time to time, the "Trust Agreement"), by and between Jonathan R. Caldwell, as Grantor, Thomas R. Caldwell, as family trustee, and Northgate Trust Company of Delaware, as institutional trustee, establishing the Caldwell Family Dynasty Trust (the "Trust"). These Operating Procedures are adopted pursuant to Article IX of the Trust Agreement, which authorizes the establishment and governance of a Distribution Committee to exercise certain discretionary distribution authority as set forth therein.
Section 1.2 — Purpose
The purpose of these Operating Procedures is to govern the composition, authority, and functioning of the Distribution Committee (the "Committee") established under the Trust Agreement. The Distribution Committee is vested with the authority to exercise oversight and approval power over discretionary distributions from the Trust that exceed One Hundred Thousand Dollars ($100,000) per beneficiary per calendar year.
Distributions at or below the One Hundred Thousand Dollar ($100,000) per-beneficiary annual threshold shall remain within the sole authority of the Co-Trustees — Thomas R. Caldwell, in his capacity as family trustee, and Northgate Trust Company of Delaware, in its capacity as institutional trustee (collectively, the "Co-Trustees") — acting in accordance with the health, education, maintenance, and support ("HEMS") standard set forth in the Trust Agreement. Such distributions do not require review, approval, or any other action by the Distribution Committee.
These Operating Procedures are intended to supplement, and not to supplant, the terms, provisions, and conditions of the Trust Agreement. These Procedures shall be read and interpreted in a manner consistent with the Trust Agreement, and to the extent any provision of these Operating Procedures is found to conflict with or contradict any provision of the Trust Agreement, the Trust Agreement shall control and govern.
Section 1.3 — Effective Date
These Operating Procedures shall be effective as of April 1, 2023 (the "Effective Date"), which is the date of execution and delivery of the Trust Agreement. The Trust is established with its situs in the State of Delaware, and the Trust and these Operating Procedures shall be governed by and construed in accordance with the laws of the State of Delaware, including, without limitation, the Delaware Trust Act (12 Del. C. §§ 3501 et seq.) and Delaware's perpetual trust statute, pursuant to which the Trust is not subject to any rule against perpetuities or similar limitation on the duration of the Trust.
ARTICLE II — COMPOSITION OF THE DISTRIBUTION COMMITTEE
Section 2.1 — Initial Members
The Distribution Committee shall consist of three (3) members (each, a "Committee Member," and collectively, the "Committee Members"). The initial members of the Distribution Committee, as appointed under the Trust Agreement, are as follows:
(a) Thomas R. Caldwell, residing at 55 Perry Street, Unit 3, New York, New York 10014;
(b) Katherine C. Hartfield, residing at 210 Briarcliff Lane, Greenwich, Connecticut 06830; and
(c) Olivia G. Caldwell, residing at 1240 North Dearborn Street, Apt. 807, Chicago, Illinois 60610.
All three initial Committee Members are adult children of the Grantor, Jonathan R. Caldwell, and are also current beneficiaries of the Trust. The selection of the Grantor's three adult children as the initial members of the Distribution Committee reflects the Grantor's intention that distribution decisions involving significant Trust assets be subject to the collective judgment of those family members who are most familiar with the family's circumstances, values, and the Grantor's expressed intent for the multigenerational stewardship of Trust assets.
Section 2.2 — Eligibility
Only current beneficiaries of the Trust who have attained the age of twenty-five (25) years may serve as members of the Distribution Committee. This age requirement applies at the time of appointment and must continue to be satisfied throughout the individual's service. For the avoidance of doubt, an individual who is no longer a beneficiary of the Trust (whether by reason of the termination of such individual's beneficial interest, disclaimer, or otherwise) shall not be eligible to serve as a Committee Member and, if then serving, shall be deemed to have automatically ceased to serve as of the date such beneficial interest terminated.
No person who serves as a Co-Trustee in an individual (i.e., non-institutional) capacity shall simultaneously serve as a member of the Distribution Committee with respect to any matter in which such person is the requesting beneficiary. The recusal provisions set forth in Article V of these Operating Procedures shall govern the circumstances under which a Committee Member must recuse himself or herself from participation in particular distribution decisions. This restriction is intended to address dual-capacity conflicts that may arise by virtue of Thomas R. Caldwell's simultaneous service as family co-trustee and Committee Member.
The Trust Protector, initially Victoria Chambers of Calderwood & Harkness LLP, 375 Park Avenue, 42nd Floor, New York, New York 10152, may, in her non-fiduciary capacity and in accordance with her powers under the Trust Agreement, designate additional eligible members to serve on the Distribution Committee or replace existing members, subject to the eligibility requirements set forth in this Section 2.2. The Trust Protector's authority to designate or replace Committee Members shall be exercised in writing, with notice delivered to all then-serving Committee Members, the Co-Trustees, and the affected individual.
Section 2.3 — Vacancies and Succession
If a Committee Member ceases to serve for any reason — whether by death, incapacity (as determined in accordance with the Trust Agreement's incapacity provisions), resignation, or removal by the Trust Protector — the remaining Committee Members shall continue to act and exercise all of the Committee's authority under these Operating Procedures, provided that at least two (2) Committee Members remain in service.
In the event that the number of Committee Members falls below two (2), the Trust Protector shall appoint a replacement Committee Member from among the eligible beneficiaries of the Trust (as defined in Section 2.2 above) within sixty (60) calendar days of the date on which membership falls below two. During any interim period in which the Committee has fewer than two members, no distribution requiring Committee action under these Operating Procedures shall be approved, and all pending requests shall be held in abeyance until such time as the Committee is reconstituted with at least two members.
Any Committee Member may resign from the Distribution Committee by providing thirty (30) days' prior written notice of such resignation to each of the following:
(a) The other then-serving Committee Members;
(b) The Co-Trustees, including:
(i) Thomas R. Caldwell, in his capacity as family trustee, at the address set forth in Section 2.1(a) above or such other address as he may designate in writing; and
(ii) Northgate Trust Company of Delaware, in its capacity as institutional trustee, at 1201 North Market Street, Suite 1600, Wilmington, Delaware 19801, Attention: Philip A. Rossiter, SVP, Trust Administration; and
(c) The Trust Protector, at the address set forth in Section 2.2 above or such other address as the Trust Protector may designate in writing.
A resignation shall become effective upon the expiration of the thirty-day notice period, unless a shorter period is agreed to in writing by the remaining Committee Members and the Trust Protector.
Section 2.4 — No Compensation; Reimbursement of Expenses
Members of the Distribution Committee shall serve without compensation. Service on the Committee is undertaken voluntarily as part of each Committee Member's role within the family governance structure established by the Grantor and the Trust Agreement.
Notwithstanding the foregoing, reasonable out-of-pocket expenses incurred by a Committee Member in connection with the performance of his or her duties under these Operating Procedures — including, without limitation, travel expenses incurred in attending meetings, costs of legal consultation reasonably necessary in connection with the evaluation of distribution requests, and communication expenses — may be reimbursed from the Trust assets. Requests for reimbursement shall be submitted to the institutional trustee, Northgate Trust Company of Delaware, together with appropriate documentation, and shall be paid from the administrative expense allocation of the Trust in the ordinary course. The institutional trustee may, in its reasonable discretion, decline to reimburse expenses that it determines to be unreasonable or not related to Committee business.
ARTICLE III — JURISDICTION AND SCOPE OF AUTHORITY
Section 3.1 — Threshold for Committee Authority
The Distribution Committee has exclusive authority to approve or deny discretionary distributions from the Trust that would cause the aggregate distributions to any single beneficiary in a given calendar year to exceed One Hundred Thousand Dollars ($100,000). For the purposes of this threshold, aggregate distributions shall include all distributions made from the Trust to or for the benefit of a particular beneficiary during the calendar year in question, regardless of whether such prior distributions were made by the Co-Trustees under the HEMS standard or by the Committee under its broader discretionary authority.
Distributions at or below the One Hundred Thousand Dollar ($100,000) annual per-beneficiary threshold that fall within the HEMS standard as set forth in the Trust Agreement are governed exclusively by the Co-Trustees and do not require action by, or referral to, the Distribution Committee. The Co-Trustees shall retain and exercise their independent fiduciary authority with respect to such distributions, subject to the terms of the Trust Agreement.
Section 3.2 — Relationship to HEMS Standard
The interplay between the Co-Trustees' authority under the HEMS standard and the Committee's broader discretionary authority is as follows:
(a) Distributions within the HEMS standard and within the $100,000 annual per-beneficiary threshold. The Co-Trustees may approve and make such distributions without involvement by or referral to the Distribution Committee. These distributions are within the sole authority of the Co-Trustees and are subject only to the terms and conditions of the Trust Agreement.
(b) Distributions within the HEMS standard but exceeding the $100,000 annual per-beneficiary threshold. Such distributions require the approval of the Distribution Committee in addition to a recommendation from the Co-Trustees. The institutional trustee shall refer such requests to the Committee in accordance with the procedures set forth in Article IV. The Committee's role in this context is to evaluate the overall impact of the distribution on the Trust and the interests of other beneficiaries before authorizing a distribution that exceeds the $100,000 threshold.
(c) Broader discretionary distributions (beyond the HEMS standard). Distributions for purposes that extend beyond the HEMS standard — including, by way of example and not limitation, distributions for business opportunities, capital for investments, entrepreneurial ventures, lifestyle support, philanthropic endeavors, or other purposes not encompassed by the HEMS standard — require the approval of the Distribution Committee regardless of amount. For the avoidance of doubt, broader discretionary distributions may only be approved by the Committee in amounts that, together with all other distributions made to the requesting beneficiary during the calendar year, exceed One Hundred Thousand Dollars ($100,000). Broader discretionary distributions at or below the $100,000 threshold are not within the scope of the Co-Trustees' HEMS authority and therefore are not available absent Committee action.
Section 3.3 — Current Beneficiaries
The beneficiaries of the Trust as of the Effective Date are as follows:
(a) Thomas R. Caldwell, son of the Grantor, age thirty-eight (38);
(b) Katherine C. Hartfield, daughter of the Grantor, age thirty-five (35);
(c) Olivia G. Caldwell, daughter of the Grantor, age thirty (30);
(d) James W. Hartfield, grandson of the Grantor and son of Katherine C. Hartfield, age eight (8), a minor;
(e) Charlotte M. Hartfield, granddaughter of the Grantor and daughter of Katherine C. Hartfield, age five (5), a minor;
(f) Lucas T. Caldwell, grandson of the Grantor and son of Thomas R. Caldwell, age three (3), a minor;
(g) Nora E. Caldwell, granddaughter of the Grantor and daughter of Thomas R. Caldwell, age one (1), a minor;
(h) The future issue of the foregoing beneficiaries identified in subsections (a) through (g) above, per stirpes, as and when born; and
(i) The spouses of the children of the Grantor, who are eligible beneficiaries of the Trust for HEMS distributions only. As of the Effective Date, such spouses are:
(i) Dr. Sarah P. Caldwell, spouse of Thomas R. Caldwell; and
(ii) Dr. Andrew W. Hartfield, spouse of Katherine C. Hartfield.
The foregoing list is provided for reference only and is subject to change as the class of beneficiaries expands or contracts in accordance with the terms of the Trust Agreement. The institutional trustee shall maintain a current list of beneficiaries at all times and shall make such list available to the Committee upon request.
Section 3.4 — Matters Outside Committee Authority
The Distribution Committee's authority is expressly limited to discretionary distribution decisions as described in Sections 3.1 and 3.2 above. The following matters are outside the authority of the Committee and remain within the exclusive authority of the Co-Trustees, the Trust Protector, or other parties as specified in the Trust Agreement:
(a) Investment decisions. All investment decisions regarding Trust assets are governed by the Investment Policy Statement adopted by the Co-Trustees, as prepared in consultation with Havensbrook Wealth Advisors LLC (Diana R. Linden, CFP®, Managing Director), and are within the exclusive authority of the Co-Trustees acting in accordance with the Trust Agreement and applicable Delaware law.
(b) Administrative and ministerial trust matters. All matters relating to the day-to-day administration of the Trust, including but not limited to the filing of tax returns, the payment of trust expenses, the maintenance of books and records, and the selection of professional advisors, are within the authority of the Co-Trustees.
(c) Selection or removal of trustees. The selection, appointment, and removal of Co-Trustees, including the replacement of the family trustee or the institutional trustee, is reserved to the Trust Protector in accordance with the Trust Agreement.
(d) Change of trust situs. Any change in the situs of the Trust is reserved to the Trust Protector, acting in her non-fiduciary capacity, in accordance with the Trust Agreement.
(e) Modification of administrative provisions. The authority to modify, amend, or restate the administrative provisions of the Trust Agreement is reserved to the Trust Protector in accordance with her powers under the Trust Agreement.
The Committee shall not attempt to exercise authority over any of the foregoing matters, and any purported action by the Committee with respect to such matters shall be void and of no effect.
ARTICLE IV — DISTRIBUTION REQUEST PROCEDURES
Section 4.1 — Submission of Request
Any beneficiary of the Trust may submit a written request for a distribution from the Trust (a "Distribution Request") to the institutional trustee, Northgate Trust Company of Delaware, at the address set forth in Section 2.3(b)(ii) above or at such other address as the institutional trustee may designate in writing from time to time. In the case of a minor beneficiary (i.e., a beneficiary who has not yet attained the age of eighteen (18) years), the Distribution Request may be submitted by such minor beneficiary's guardian, parent, legal representative, or custodian under the applicable Uniform Transfers to Minors Act.
Each Distribution Request shall be in writing and shall include the following information:
(a) The full legal name and current residential address of the requesting beneficiary (or, in the case of a minor beneficiary, the name and address of the minor and the name, address, and relationship of the person submitting the request on behalf of the minor);
(b) The amount of the distribution requested, stated in United States dollars;
(c) A detailed explanation of the purpose of the distribution, including a statement as to whether the request falls within the HEMS standard (health, education, maintenance, and support) or whether the request involves broader discretionary authority (e.g., business opportunities, investment capital, lifestyle support, or other non-HEMS purposes);
(d) Supporting documentation substantiating the need for and purpose of the distribution, which may include, without limitation, medical bills, tuition invoices, enrollment agreements, mortgage or purchase agreements, business plans, construction or renovation estimates, and any other documentation that the requesting beneficiary believes is relevant to the Committee's evaluation; and
(e) A certification, signed by the requesting beneficiary (or, in the case of a minor beneficiary, by the person submitting the request on behalf of the minor), setting forth the aggregate distributions already received by such beneficiary from the Trust in the current calendar year, to the best of the certifying party's knowledge and belief.
Distribution Requests that do not include all of the foregoing information may be returned by the institutional trustee to the requesting beneficiary with a request for completion. The thirty (30) day timeline for Committee action set forth in Section 4.4 shall not commence until a complete Distribution Request has been received.
Section 4.2 — Preliminary Review by Institutional Trustee
Upon receipt of a complete Distribution Request, the institutional trustee, Northgate Trust Company of Delaware, shall conduct a preliminary review within ten (10) business days. Such preliminary review shall include the following:
(a) Verification of aggregate distributions. The institutional trustee shall verify the aggregate distributions made from the Trust to or for the benefit of the requesting beneficiary during the current calendar year, based on the institutional trustee's own records. To the extent there is any discrepancy between the beneficiary's certification under Section 4.1(e) and the institutional trustee's records, the institutional trustee's records shall be presumed to be correct, subject to verification.
(b) Threshold determination. The institutional trustee shall determine whether the requested distribution, if approved, would cause total annual distributions to such beneficiary to exceed One Hundred Thousand Dollars ($100,000) in the current calendar year.
(c) Action without Committee referral. If the institutional trustee determines that the requested distribution would not cause total annual distributions to the requesting beneficiary to exceed the $100,000 threshold, and the institutional trustee and the family trustee concur that the request falls within the HEMS standard, the Co-Trustees may act on the Distribution Request in accordance with the Trust Agreement without referral to, or involvement by, the Distribution Committee. The Co-Trustees shall document such action and the basis for their determination in the Trust's records.
(d) Referral to the Committee. If the institutional trustee determines that the requested distribution would cause total annual distributions to the requesting beneficiary to exceed the $100,000 threshold, or if the request involves broader discretionary authority beyond the HEMS standard (regardless of amount), the institutional trustee shall forward the Distribution Request and all supporting documentation to each member of the Distribution Committee within the ten (10) business day period. A copy of the referral package shall simultaneously be provided to the family trustee, Thomas R. Caldwell, in his capacity as Co-Trustee. If Thomas R. Caldwell is the requesting beneficiary, the referral shall note that fact and the recusal provisions of Article V shall apply.
Section 4.3 — Committee Recommendation by Co-Trustees
Together with each referral made pursuant to Section 4.2(d), the institutional trustee shall provide to the Committee Members the following information to assist the Committee in its evaluation of the Distribution Request:
(a) A summary of Trust assets as of the most recent reporting date, including total assets under management, current liquidity (cash and cash equivalents), and projected cash flow for the remainder of the calendar year;
(b) A recommendation from the Co-Trustees, if any, regarding the Distribution Request, including any observations the Co-Trustees may have regarding the appropriateness, amount, or timing of the requested distribution;
(c) Any relevant tax considerations, including, without limitation, the potential impact of the distribution on the generation-skipping transfer ("GST") tax exemption allocation, the Trust's grantor trust status (if applicable), the income tax consequences to the requesting beneficiary, and any state tax implications;
(d) A statement setting forth the aggregate distributions previously made to all beneficiaries during the current calendar year, organized by beneficiary, to provide the Committee with context regarding overall distribution activity and the relative treatment of beneficiaries; and
(e) Any other information that the institutional trustee, in its reasonable judgment, believes would be helpful to the Committee in evaluating the Distribution Request.
The Co-Trustees' recommendation, if provided, is advisory only and is not binding on the Committee. The Committee retains full discretion to approve, partially approve, or deny the request regardless of any Co-Trustee recommendation.
Section 4.4 — Timeline for Action
The Distribution Committee shall act on each Distribution Request referred to it under Section 4.2(d) within thirty (30) calendar days of receipt by the last Committee Member of the complete referral package (including all information required under Section 4.3). The date on which the last Committee Member receives the complete referral package shall be the "Referral Date," and the thirty-day period shall be measured from such date.
The Committee may, in its discretion, request additional information from the requesting beneficiary, the Co-Trustees, the Trust Protector, or any professional advisor to the Trust. Any such request for additional information shall be communicated in writing through the institutional trustee. The issuance of a request for additional information shall toll the thirty (30) day period beginning on the date of such request and continuing until the date on which the requested information is received by the Committee Members.
In the event the Distribution Committee fails to act on a Distribution Request within the thirty (30) day period (as such period may be extended by any tolling pursuant to this Section 4.4), the Distribution Request shall be deemed denied. A deemed denial under this provision shall be without prejudice to the requesting beneficiary's right to resubmit the same or a modified Distribution Request at any time thereafter in accordance with the procedures set forth in this Article IV.
ARTICLE V — RECUSAL REQUIREMENTS
Section 5.1 — Self-Interest Recusal
Any member of the Distribution Committee who is the requesting beneficiary — or whose spouse or minor child (including a child under the age of eighteen years) is the requesting beneficiary — must recuse himself or herself from all deliberation and voting with respect to such Distribution Request. The obligation to recuse is mandatory and may not be waived by the other Committee Members.
Upon becoming aware that a Distribution Request has been submitted by or on behalf of himself or herself, his or her spouse, or his or her minor child, the affected Committee Member shall promptly disclose the conflict to the other Committee Members in writing. Such written disclosure shall be provided no later than three (3) business days after the Committee Member becomes aware of the referral to the Committee. Following such disclosure, the recusing Committee Member shall not participate in any discussion, deliberation, correspondence, or vote concerning the Distribution Request in question.
Section 5.2 — Quorum and Voting After Recusal
If one (1) Committee Member recuses himself or herself pursuant to this Article V, the remaining two (2) non-recused Committee Members shall constitute a quorum and shall have full authority to act on the Distribution Request. In such event, the two non-recused Committee Members must vote unanimously to approve the distribution. A denial may be effected by the vote of either non-recused member.
In the event that two (2) Committee Members must recuse themselves with respect to a single Distribution Request — for example, in the case of a request submitted by or on behalf of a beneficiary who is the child of two Committee Members (a circumstance that is not currently applicable given the existing family structure but is reserved for future contingencies as the beneficiary class evolves) — the remaining single non-recused Committee Member shall not have authority to act on the Distribution Request alone. Instead, such member shall refer the matter to the Trust Protector, Victoria Chambers, for decision. The Trust Protector shall, in such event, exercise the distribution authority that would otherwise be exercised by the Committee, applying the same standards and considering the same factors set forth in Section 6.3 of these Operating Procedures.
Thomas R. Caldwell, who serves simultaneously as family co-trustee and as a Committee Member, must be especially attentive to dual-capacity conflicts. When acting on the Distribution Committee, Thomas R. Caldwell acts solely in his capacity as a Committee Member and not in his capacity as a trustee. He shall take care to ensure that his participation in Committee deliberations is distinct from and does not improperly influence his trustee functions, and vice versa. Without limiting the foregoing, Thomas R. Caldwell must recuse himself from Committee deliberations regarding any Distribution Request submitted by or on behalf of himself, his spouse (Dr. Sarah P. Caldwell), or his minor children (Lucas T. Caldwell and Nora E. Caldwell).
Section 5.3 — Related-Party Transactions
If a Distribution Request involves the payment of funds to an entity, business, or other person in which a Committee Member has a direct or indirect financial interest — including, by way of example and not limitation, a business entity owned in whole or in part by a sibling of the Committee Member, a partnership in which the Committee Member is a partner, or a limited liability company of which the Committee Member is a member — the affected Committee Member must recuse himself or herself from all deliberation and voting with respect to such Distribution Request.
The recusal obligation under this Section 5.3 extends to any distribution that would directly benefit the Committee Member's household, even if the named requesting beneficiary is a different person. For example, a Committee Member must recuse if the Distribution Request is submitted by or on behalf of the Committee Member's minor child and the distribution, if approved, would relieve the Committee Member of an obligation to provide financial support to such minor child. The determination of whether a recusal is required under this Section 5.3 shall be made by the affected Committee Member in good faith, and any doubt as to the existence of a conflict shall be resolved in favor of recusal.
ARTICLE VI — DELIBERATION AND VOTING
Section 6.1 — Meetings
The Distribution Committee may conduct its deliberations through meetings held in person, by telephone conference, or by video conference, or through any combination of such methods, as the Committee Members may agree. There is no requirement that the Committee meet at any fixed location or at regular intervals; the Committee shall convene as needed to address Distribution Requests referred to it under Article IV.
Notwithstanding the foregoing, no formal meeting is required for the Committee to take action. The Committee may act by unanimous written consent, executed by all non-recused Committee Members, without the necessity of convening a meeting. A unanimous written consent shall have the same force and effect as a vote taken at a duly convened meeting, provided that the written consent is signed by all non-recused Committee Members and sets forth the action taken, the Distribution Request to which the action relates, and the date of execution.
All meetings of the Distribution Committee shall be scheduled and coordinated by the institutional trustee, Northgate Trust Company of Delaware, at the request of any Committee Member. The institutional trustee shall use reasonable efforts to schedule meetings at times convenient to all non-recused Committee Members and shall provide not less than five (5) business days' notice of any meeting, unless all non-recused Committee Members agree to a shorter notice period.
Section 6.2 — Unanimity Requirement
All distribution decisions within the Committee's jurisdiction — that is, distributions exceeding the One Hundred Thousand Dollar ($100,000) per-beneficiary annual threshold, or broader discretionary distributions beyond the HEMS standard — require the unanimous approval of all non-recused Committee Members.
The Committee may approve a Distribution Request in full, or the Committee may, by unanimous vote, approve a partial distribution in an amount less than the amount requested by the beneficiary. A partial approval is a valid exercise of the Committee's authority and shall be implemented by the Co-Trustees in the amount approved.
A denial of a Distribution Request requires the vote of at least one (1) non-recused Committee Member to deny. For the avoidance of doubt, abstention is not permitted. Each non-recused Committee Member must cast a vote either to approve or to deny each Distribution Request submitted for the Committee's consideration. If any non-recused Committee Member votes to deny, the Distribution Request is denied (since unanimity is required for approval).
Section 6.3 — Factors to Be Considered
In evaluating any Distribution Request, the Committee shall consider the following factors, together with any other factors that the Committee, in the exercise of its discretion, deems relevant:
(a) The requesting beneficiary's other financial resources, including earned income, investment assets, and other sources of financial support available to the beneficiary outside the Trust;
(b) The impact of the proposed distribution on the long-term sustainability of the Trust for current and future generations of beneficiaries, consistent with the perpetual nature of the Trust under Delaware law and the Grantor's intent that the Trust provide for multiple generations of descendants;
(c) The needs of other current and reasonably anticipated future beneficiaries, including the equitable treatment of beneficiaries across generational lines;
(d) The tax consequences of the proposed distribution, including federal and state income tax implications to the beneficiary and the Trust, generation-skipping transfer tax implications, and any potential impact on the Trust's GST exemption allocation;
(e) Whether the Distribution Request falls within the HEMS standard or involves broader discretionary purposes, and the relative strength of the justification for the request in light of the applicable standard;
(f) The Grantor's expressed intent, as set forth in the Trust Agreement and any letter of wishes or similar non-binding guidance, to preserve and grow the Trust's wealth across multiple generations for the benefit of his descendants;
(g) Any guidance, observations, or recommendations provided by the Trust Protector or the Co-Trustees in connection with the Distribution Request; and
(h) The overall pattern and history of distributions from the Trust, including the aggregate amounts distributed to the requesting beneficiary and to other beneficiaries over time.
The foregoing factors are intended to guide the Committee's deliberations and do not constitute a mandatory checklist. The Committee retains full discretion to weigh the factors as it deems appropriate in the circumstances of each particular Distribution Request.
Section 6.4 — No Obligation to Approve
The Distribution Committee has absolute and unfettered discretion to deny any Distribution Request submitted to it under these Operating Procedures. No beneficiary has any entitlement to distributions from the Trust above the HEMS standard and the One Hundred Thousand Dollar ($100,000) per-beneficiary annual threshold. The submission of a Distribution Request does not create any obligation on the part of the Committee to approve such request, in whole or in part.
The Committee's decision with respect to any Distribution Request shall be final and shall not be subject to judicial review, challenge, or appeal except in the case of fraud, willful misconduct, or bad faith on the part of one or more Committee Members, to the fullest extent permitted under the laws of the State of Delaware. Nothing in this Section 6.4 shall be construed to limit the Trust Protector's authority to oversee the Committee's activities or to modify these Operating Procedures as set forth herein.
ARTICLE VII — NOTICE PROVISIONS
Section 7.1 — Notice to Beneficiary
Within five (5) business days following the Committee's action on a Distribution Request (whether by vote at a meeting or by unanimous written consent), the institutional trustee, Northgate Trust Company of Delaware, shall send written notice to the requesting beneficiary (or, in the case of a minor beneficiary, to the person who submitted the Distribution Request on behalf of such minor). Such notice shall include the following information:
(a) A statement as to whether the Distribution Request was approved in full, partially approved, or denied;
(b) If the Distribution Request was approved in full or partially approved, the specific dollar amount approved and the expected date of distribution (which shall generally be within fifteen (15) business days of the date of the Committee's approval, subject to the availability of liquid assets within the Trust); and
(c) If the Distribution Request was denied, a brief statement that the Distribution Request did not receive the required unanimous approval of the non-recused members of the Distribution Committee. The Committee and the institutional trustee shall have no obligation to state the specific reasons for the denial, and the absence of a statement of reasons shall not constitute a basis for challenging the denial.
Section 7.2 — Notice to Co-Trustees
Simultaneously with the delivery of notice to the requesting beneficiary under Section 7.1, the institutional trustee shall notify the family trustee, Thomas R. Caldwell, of the Committee's decision and shall provide a copy of the written notice sent to the beneficiary. The institutional trustee shall retain a copy of the Committee's decision in the Trust's administrative files for record-keeping purposes.
In the event a Distribution Request is approved (in full or in part), the institutional trustee shall coordinate with Havensbrook Wealth Advisors LLC (Diana R. Linden, CFP®, Managing Director) as needed regarding the liquidation of Trust assets to fund the approved distribution, taking into account the Trust's investment allocation, liquidity needs, and any applicable tax considerations. The family trustee and the institutional trustee shall cooperate to ensure that approved distributions are funded and disbursed promptly and in accordance with the Committee's decision.
Section 7.3 — Notice to Trust Protector
The Trust Protector, Victoria Chambers, shall receive quarterly summaries of all Distribution Requests received, Committee actions taken, and distributions made from the Trust during the preceding quarter. Such quarterly summaries shall be prepared by the institutional trustee and delivered to the Trust Protector within twenty (20) business days following the end of each calendar quarter. The quarterly summaries shall provide the Trust Protector with sufficient information to exercise her oversight responsibilities under the Trust Agreement.
Individual real-time notification to the Trust Protector of specific Committee actions is not required under these Operating Procedures, unless a matter is referred to the Trust Protector under Section 5.2 (dual recusal), in which case the institutional trustee shall promptly notify the Trust Protector and provide all relevant documentation.
Section 7.4 — Form of Notice
All notices required or permitted under these Operating Procedures shall be in writing and shall be delivered by one or more of the following methods: (i) personal delivery (hand delivery); (ii) nationally recognized overnight courier service (e.g., Severin Partners LLC, Halcyon Partners LLC); (iii) United States mail, postage prepaid, first class or certified, return receipt requested; or (iv) electronic mail (email) to the email address designated by the recipient, provided that delivery by email shall be deemed effective only upon confirmed receipt by the recipient (reply email, read receipt, or other reasonable confirmation).
Notices shall be sent to the following addresses, unless and until changed by written notice delivered in accordance with this Section 7.4:
Committee Members:
Thomas R. Caldwell 55 Perry Street, Unit 3 New York, New York 10014
Katherine C. Hartfield 210 Briarcliff Lane Greenwich, Connecticut 06830
Olivia G. Caldwell 1240 North Dearborn Street, Apt. 807 Chicago, Illinois 60610
Institutional Trustee:
Northgate Trust Company of Delaware 1201 North Market Street, Suite 1600 Wilmington, Delaware 19801
Attention: Philip A. Rossiter, SVP, Trust Administration
Trust Protector:
Victoria Chambers Calderwood & Harkness LLP 375 Park Avenue, 42nd Floor New York, New York 10152
Any party may change its address for notice purposes by providing written notice of such change to all other parties in accordance with this Section 7.4.
ARTICLE VIII — RECORD-KEEPING
Section 8.1 — Minutes and Written Consents
The institutional trustee shall establish and maintain a permanent record of all Distribution Committee activities, which shall include the following:
(a) Each Distribution Request received by the institutional trustee, together with all supporting documentation submitted by or on behalf of the requesting beneficiary;
(b) Each referral of a Distribution Request to the Distribution Committee, including the date of such referral, the Referral Date (as defined in Section 4.4), and the materials provided to the Committee pursuant to Section 4.3;
(c) Minutes of any Committee meeting, whether formal or informal, including the date, time, and method of the meeting (in person, telephone, or video conference), the names of all Committee Members in attendance, a summary of the matters discussed, any recusal disclosures, and the vote of each non-recused Committee Member;
(d) Each unanimous written consent executed by the Committee, including the date of execution, the names of the Committee Members executing the consent, and the action taken;
(e) Each written notice sent to a requesting beneficiary pursuant to Section 7.1, including the date of such notice and the substance of the Committee's decision communicated therein;
(f) Each recusal disclosure made by a Committee Member pursuant to Article V, including the date of disclosure and the nature of the conflict giving rise to the recusal; and
(g) All correspondence between the Committee Members, the Co-Trustees, and the Trust Protector relating to Distribution Requests and Committee actions.
The institutional trustee shall organize and maintain such records in a manner that permits efficient retrieval and review. Records may be maintained in electronic format, provided that adequate backup and security measures are in place, and that printed copies can be produced upon request.
Section 8.2 — Annual Distribution Report
Within sixty (60) calendar days following the end of each calendar year, the institutional trustee shall prepare an Annual Distribution Report (the "Annual Report") summarizing the distribution activities of the Trust during the preceding calendar year. The Annual Report shall include the following information:
(a) A schedule of all distributions made to or for the benefit of each beneficiary during the calendar year, broken down by distributions made within the $100,000 per-beneficiary threshold (under the Co-Trustees' HEMS authority) and distributions exceeding the threshold (approved by the Committee);
(b) A summary of all Distribution Requests denied during the calendar year, without identifying the specific reasons for denial, but including the date of denial, the amount requested, and the name of the requesting beneficiary;
(c) A statement of aggregate Trust assets as of December 31 of the calendar year, including a summary of asset allocation and the estimated fair market value of all trust holdings;
(d) A statement of the Trust's GST exemption status and allocation, including any inclusion ratio calculations, the remaining available GST exemption, and any events during the calendar year that may have affected the GST exemption allocation; and
(e) Such other information as the institutional trustee, the Committee, or the Trust Protector may reasonably request.
Copies of the Annual Report shall be provided to the following persons and entities:
(a) Each Committee Member;
(b) The Trust Protector, Victoria Chambers;
(c) The Grantor's tax advisors, Strathmore Corporation & Greaves LLP, Attention: Martin J. Prescott, CPA, 600 Third Avenue, 28th Floor, New York, New York 10016, for purposes of coordinating gift tax, estate tax, and GST tax reporting obligations; and
(d) Counsel to the Grantor, Calderwood & Harkness LLP, during any period in which Calderwood & Harkness LLP is actively engaged in providing legal services in connection with the Trust or the Grantor's estate plan.
Section 8.3 — Retention Period
All records maintained by the institutional trustee under this Article VIII shall be retained for the entire duration of the Trust. Given the Trust's perpetual nature under Delaware law, the institutional trustee shall establish appropriate protocols for the long-term preservation and accessibility of records, including digital archival and periodic migration of records to current storage formats.
Notwithstanding the foregoing, the Trust Protector may direct a shorter retention period for specified categories of records, provided that no records shall be destroyed prior to the expiration of the applicable statute of limitations for tax purposes, which shall generally be six (6) years from the date of filing of any tax return relating to the Trust or any distribution from the Trust. In cases where an audit or examination by a taxing authority is pending or threatened, all records relevant to the period under review shall be preserved until the final resolution of such audit or examination.
Section 8.4 — Confidentiality
Distribution Requests submitted by beneficiaries, the supporting documentation accompanying such requests, Committee deliberations (including minutes, written consents, and correspondence), and the Committee's decisions with respect to Distribution Requests are confidential. Such information shall be disclosed only to the following persons:
(a) The members of the Distribution Committee;
(b) The Co-Trustees;
(c) The Trust Protector;
(d) Professional advisors to the Trust, the Co-Trustees, or the Committee, to the extent such disclosure is reasonably necessary for the rendering of professional advice in connection with the Trust; and
(e) Such other persons as may be required by applicable law, legal process (including subpoena or court order), or the terms of the Trust Agreement.
No Committee Member shall disclose the substance, details, or outcome of any beneficiary's Distribution Request to any other beneficiary, family member, or third party, except as expressly authorized by the foregoing provisions or with the prior written consent of the requesting beneficiary. This confidentiality obligation shall survive a Committee Member's cessation of service on the Committee. Any breach of this confidentiality obligation may be grounds for removal of the Committee Member by the Trust Protector.
ARTICLE IX — AMENDMENT AND TERMINATION
Section 9.1 — Amendment
These Operating Procedures may be amended at any time by unanimous written consent of all then-serving Committee Members, provided that any such amendment has received the prior written approval of the Trust Protector. No amendment shall be effective until it has been approved by both the unanimous Committee and the Trust Protector.
Any amendment to these Operating Procedures must be consistent with the terms and provisions of the Trust Agreement and with applicable Delaware law. No amendment shall expand the Committee's authority beyond the scope authorized by the Trust Agreement, and no amendment shall diminish or impair the rights or interests of any beneficiary in a manner inconsistent with the Trust Agreement.
All amendments shall be in writing, shall clearly identify the provisions being amended and the nature of the amendment, and shall specify the effective date of such amendment. Each amendment shall be appended to these Operating Procedures as a numbered addendum, and the institutional trustee shall distribute copies of each amendment to all Committee Members, the Co-Trustees, and the Trust Protector.
Section 9.2 — Termination
These Operating Procedures shall automatically terminate, without further action required by any party, upon the occurrence of any of the following events:
(a) The termination of the Trust in accordance with the terms and provisions of the Trust Agreement;
(b) The elimination or dissolution of the Distribution Committee by the Trust Protector, in the exercise of her powers under the Trust Agreement to modify the administrative provisions of the Trust, effective upon the date specified in the Trust Protector's written instrument effecting such elimination; or
(c) The adoption by the Trust Protector of revised or superseding operating procedures for the Distribution Committee (or any successor committee), which revised procedures shall replace and supersede these Operating Procedures in their entirety as of the effective date specified therein.