SEC Division of Corporation Finance no-action letter regarding Kake Tribal Corporation settlement trust

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"~" .,-:~ SECURITIES AND EXCHANGE COMMISSION ,,' '.~ WASHINGTON. DC 20549

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OIVISION OF
CORPORATION FINANCE

May 25, 1994

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= :~ON ti) Michael R. Sorensen

Sorensen & Edwards, P. S . RULE
1201 Third Avenue, suite 2900 PUBLIC 5/J-~qi Seattle, Washington 98101-3028 AVAILABILITY Re: Kake Tribal Corporation

Dear Mr. Sorensen:

In regard to your letter of April 25, 1994 our response

thereto is attached to the enclosed photocoPY of your

correspondence. By doing this i we avoid having to recite or

summarize the facts set forth in your letter.

sincerely ~l~~~
Meredi th B. Cross

Chief Counsel

~ ~c
May 25, 1994

RESPONSE OF THE OFFICE OF CHIEF COUNSEL

DIVISION OF CORPORATION FINANCE

Re: Kake Tribal Corporation ("Kake Tribal") Incoming letter dated April 25, 1994

Based on the facts presented, without necessarily agreeing

wi th your analysis, the Division will not recommend any

enforcement action to the Commission if Kake Tribal, in reliance

upon your opinion as counsel that such registration and/or

reporting is not required, establishes and distributes beneficial

interests in the Trust as proposed without compliance with the

registration requirements of the Securities Act of 1933 or the

registration and reporting requirements of the Securities

Exchange Act of 1934. In reaching this position, we have noted

especially that: (1) the Trust will be established in accordance

with the provisions of the Alaska Native Claims Settlement Act

("ANCSAII); (2) the Trust will be established by a Native

Corporation organized under ANCSA; (3) the beneficial interests

in the Trust will be subj ect to the restrictions against alienation found in ANCSA and, therefore, will be -virtually no':
transferable; and (4) the certificates representing the

beneficial interests in the Trust will bear a restrictive legend

regarding such transfer restrictions.

The Division of Investment Management has asked us to advise

you that, on the basis of the facts and representations in your

letter, particularly your representation that the Trust will

comply with all applicable provisions of ANCSA, it will not

reco~~end enforcement action to the Commission if the Trust is

established and operation without registration as an investment

company.
Because these positions are based on the representations

made in your letter, it should be noted that any different facts

or conditions might require a different conclusion. Further,

this response only expresses the Divisions i position on

enforcement action and does not purport to express any legal

conclusion on the questions presented.

Sincerely, ~/~~
Mart in P. Dunn

Deputy Chief Counsel

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SORENSEN a ECWARCS. P.S.
1201 THI"O AVENUE, SUITE 2SK C' i .f r. ') 2 r J i ..: . \ a P' 5 t J SEATTL.E. WASHINGTON e8101.3028 !; :. :
TEL.E~HONE (2015) 22"80

FACSIMIL.E (2015) 22..8250

VIA DHL COURIER

Deputy Chief Counsel Martin Dunn

Office of Chief Counsel

Division of Corporate Finance

United states Securities and Exchange Commission

450 Fifth street Northwest

MS 33
Washington, D.C. 20549

Re: Ruling Request As To Settlement Trust Under ANCSA

Our File 55545-002

Dear Deputy Chief Counsel Dunn:

We are writing to request certain no-action rulings from the

staff of the Securities and Exchange Commission ("SEC") as to the

Federal securities laws and the manner in which those laws will

apply to a settlement trust (herein the "Trust") which Kake Tribal

Corporation (herein "Kake Triballl) proposes to establish. As a preliminary matter we note that the staff of the SEC has

already issued a no-action letters to Shee Atika, Incorporated and

Goldbelt, Incorporated (two other Native Corporations) relative to

the establishment of a settlement trust similar to that which Kake

Tribal purposes to establish. A copy of these no-action letters . is attached.
I. RULINGS REQUESTED

We hereby request the following rulings:

(1) that the establishment of the Trust by Kake Tribal to benefit Kake Tribal shareholders does not require any form of

compliance with the Securities Act of 1933 (the '''33 Act") or the

Securities Exchange Act of 1934 (the '''34 Act") provided the Trust is established as a settlement trust in accordance with the Alaska

Native Claims Settlement Act (herein "ANCSA");

(2) that, following establishment of the Trust as a settlement trust in accordance with ANCSA, contributions may be

Deputy Chief Couù~ ~l Dunn

made to the Trust without the necessity of any form of compliance

with the '33 Act or the '34 Act provided such contributions occur

in accordance with ANCSA:

(3) that, following establishment of the Trust as a settlement trust in accordance with ANCSA, transfers may be made

of the beneficial interests in the Trust (herein the "Trust . Unitstl) with:out the necessity of any form of compliance with the

'33 Act or the '34 Act provided such transfers occur only in

accordance with the terms of the Trust A~reement and ANCSA: and .

(4) that, following establishment of. the Trust as a settlement trust in accordance with ANCSA, the Trust is exempt

from the provisions of the Investment Company Act of 1940 (the ti , 40 Act ti) .
II. FACTS

A. The Meeting. There will be a June 18, 1994 Special

Meeting of the shareholders of Kake Tribal (the "Meeting") to vote

upon the establ ishment of the Trust as a settlement trust in

accordance with ANCSA. Kake Tribal will file various proxy

solicitation materials with Alaska state regulators regarding the

Meeting as required by 3 Alaska Administrative Code ("ACC") 08.305

et seq. These materials will include the Notice of Meeting and

Proxy Statement, Proxy, and various other items to be used in the solici tation of proxies relative to the Meeting. There will not be any other items on the agenda at the Meeting besides the vote

whether to establish the Trust as a settlement trust in accordance

with ANCSA.

B. Purpose of Settlement Trusts. Under ANCSA, the purpose of

a settlement trust is to preserve the heritage and culture of

Alaska Natives and to promote the health, education, and welfare

of the settlement trust's beneficiaries. Section 39(b) (1) of

ANCSA, 43 U.S.C. section 162ge(b) (1). The beneficiaries of a

settlement trust must be the shareholders of the Native'

corporation which sponsors the settlement trust. Section 3 (t) of

ANCSA, 43 U.S.C. section 1602(t). The benefits of a settlement

trust can only inure to the benefit of the shareholders as a whole

and cannot discriminate in favor of the officers, employees or directors of the Native corporation. Section 39 (b) (1) (C) of ANCSA, 43 U.S.C. Section 162ge(b) (1) (C).
c. Establishment of Settlement Trusts. Section 36 of ANCSA,

43 U.S.C. Section 1629b, specifies the process under which the

Trust is to be established. section 36(d) of ANCSA, 43 U.S.C.

Section 1629b (d), requires that the holders of an absolute

majority of Kake Tribal's voting securities must approve the

establishment of the Trust. section 36(b) (2) of ANCSA, 43 U.S.C.

Section 1629b(b) (2), further specifies that a written notice,

Deputy Chief Coun_~l Dunn

together with a proxy statement if required under applicable law,

is to be sent to each shareholder at least 50 days but not more

than 60 days prior to the shareholders' meeting at which

establishment of the Trust is considered. Kake Tribal represents

that it will provide the notice required by ANCSA and has provided

its sharenolders with the proxy statement required by Alaska law.

If the requisite approval is obtained from its shareholders, Kake

Tribal intends to transfer up to $25 million in cash to the Trust

at such time as Kake Tribal receives approval of the Trust from

the IRS. It is expected that it will take several months to

receive this approval, and funding may not occur, therefore, until

early 1995. Other assets may also be placed in Trust from time to

time.
D. Purpose of the Trust. Consistent with the foregoing

provisions of ANCSA,the Trust Agreement provides that the purpose

of the Trust is to establish a permanent fund to promote the

long-term economic stability of Kake Tribal's shareholders by providing them with a source of funds for regular distribution. The Trust benefits the shareholders by preserving and augmenting

Trust assets through investment, by minimizing taxes, and by

permanent fund assets to the greatest extent

possible from the claims of the creditors of the beneficiaries of

the Trust ("Beneficiaries") and of Kake Tribal.

protecting those

E. Beneficiaries/Transfers. Consistent with the foregoing

provisions of ANCSA, section 2 of the Trust Agreement provides

that the Beneficiaries are all of the holders of Kake Tribal's

common stock. The Beneficiaries will hold the same numer of Trust

Units as they hold shares of Kake Tribal's common stock. Valid

transfers of Kake Tribal's common stock (which can occur in only

very limited circumstances pursuant to Section 7 (h) of ANCSA, 43

U.S.C. Section 1606(h)) result in an automatic transfer of the

corresponding Trust Units. Except as noted below, the Trust

Uni ts are not transferable wi thout also transferring the

corresponding shares of Kake Tribal's common stock. In essence,

the Trust Units are "stapled" to the shares of Kake Tribal's

stock.
There are Class A and Class B Trust Units, corresponding to

Class A and Class B shares of Settlement Common Stock of Kake

Tribal. Both receive equal distributions from the Trust; however,

Class B Trust Units do not generally vote. In the event Kake

Tribal no longer has Class A and Class B shares of Settlement

Common Stock, then rules similar to those presently used to

determine Class A and Class B status for Kake Tribal's shares

would apply to the Trust Units. If Kake Tribal permissibly issues

addi tional Settlement Common Stock under ANCSA (see Section

7(g)(1) of ANCSA, 43 U.S.C. Section 1606(g)(1)), the number of

Trust units will be increased accordingly and the additional Trust

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;.):,d~P\1tyd .Cl.iE!f.COUri_c!i Dunn _April.~25í'.1994 Page4'of 13

Uni ts will be issued to' those of Kake Tribal's shareholders who

receive the additional Kake Tribal Settlement Common Stock.

As noted above, shares of Kake Tribal Settlement Common stock

(and, therefore, the Trust Units) are subject to severe transfer

restrictions. Under section 7 (h) of ANCSA¡ 43 U.S.C.
section 1606 (h) , Kake Tribal's Settlement Common Stock is
transferrable inter vivos only to Alaska Natives and even then

only (1) pursuant to a divorce or child support decree; (2)

pursuant to professional licensing requirements applicable to

Alaska Natives engaging in certain occupations; or (3) by gift to

members of the donee's immediate family. Kake Tribal's Settlement

Common Stock is also transferrable in accordance with the terms of

the last will and testament of a deceased shareholder. Because

the Trust units are

transferrable only in conjunction with the related Kake Tribal

stock, the restrictions of section 7(h) of ANCSA 43 U.S.C. 1606(h)

also limit transferability of the Trust units.

the Trust Agreement provides that

The Trust also provides that if Kake Tribal is merged,

terminated or consolidated, or if Kake Tribal's shareholders vote

to terminate the ANCSA nontransferability restrictions presently

applicable to Kak~ .Tribal's Settlement Common Stock, then (i) the

Beneficiaries would be the holders of Kake Tribal's Settlement

to such event; (ii) the Trust units

are transferable only' in the same restricted circumstances Kake

Tribal's Settlement Common Stock could have been transferred

Common Stock on the day prior

lifted; (iii) no addi￾tional Trust Units would be issued if Kake Tribal issues addi￾tional Settlement Common stock; and (iv) three Trustees would be

before the alienation restrictions were

elected each year by the holders of the Class A Trust units. These provisions are' included to prevent outsiders from taking over the Trust. .

F. Trustees. The Board of Directors of Kake Tribal Corporation will be the Trustees of the Trust. However if Kake

Tribal is merged, dissolved or consolidated, or if Kake Tribal's

shareholders vote to terminate the ANCSA nontransferability

restrictions presently applicable to Kake Tribal's Settlement

Common Stock, or if Kake Tribal's Settlement Common stock no

longer elects a majority of Kake Tribal's Board of Directors, then

the Trust Beneficiaries will elect the Trustees. Three of the

Trustees would be elected each year.
G. Distributions. All distributions from the Trust, whether

such distributions are of Trust principal or income, must be made

pro rata based upc;m the number of Trust units held by each

Beneficiary. Because the Trust Units are stapled to Kake Tribal's

stock, any distributions by the Trust will necessarily also be pro

rata based on the Kake Tribal stock held.

~...;.:..~~~:.,:::~'';-.1~..;...,!;¡'A~~:'='~-,-~''''-'' Deputy Chief Coun _1 Dunn

B. Representations of Kake Tribal and Trust. Kake Tribal and

the Trust hereby represent that the procedure which has been

followed (and will be followed) relative to the establishment of

the Trust as a settlement trust will comply with the applicable provisions of ANCSA. Kake Tribal and the Trust also h.-areby represent that any future contributions to the Trust will be made

in accordance with applicable provisions of ANCSA. Further, Kake

Tribal and the Trust represent that transfers of the Trust units

will be permitted only in accordance with the provisions of the

Trust Agreement and ANCSA.

III. ANYSIS

A. congress Intended Settlement Trusts for Remedial Restructuring of Native corporations. The legislative history behind Section 39 of ANCSA indicates that the settlement trust

option was added to ANCSA because the corporate structure

initially imposed by ANCSA had not always worked well for Alaska

Natives. See, e.g., House Explanatory Statement, 133 Congo Rec. H

11933, 11936-11937 (December 21, 1987), reprinted in 1987-5 U.S.

Code Congo & Admin. News 3299, 3307-09; see also H.R. Rep. No.

100-31, 100th Cong., 1st Sess., 4-5. Thus, congress' intent in enacting section 39 of ANCSA, 43 U.S.C. section 162ge,was to afford Native corporations such as Kake Tribal an opportunity to

restructure themselves, in whole or in part, into a form (the

settlement trust) more responsive to the needs of their

shareholders.
B. Exemption from Federal Laws. Kake Tribal's fundamental

posi tion is that Congress intended that settlement trusts

(including without limitation, the establishment and funding of

such trusts and the subsequent transfers of beneficial interests

therein) were to be exempt from all aspects of the federal

securities laws (including the '33 Act, the '34 Act and the '40

Act) . Instead, Congress intended "that the specialized provisions

of ANCSA alone would control settlement trusts, including any

potential securities law aspects of these trusts.

ANCSA has contained provisions since 1976 which have

expressly exempted the stock of Alaska Native corporations from

the '33 Act, the '34 Act, and the '40 Act. section 28 of ANCSA,

43 U.S.C. section 1625. Moreover, as early as 1973, the staff of

the SEC indicated it would take no action with regard to the

decision by the various ANCSA regional corporations to not

register their securities under the '33 Act. A copy of this no-

action request and the 1973 SEC Staff response accompanies this

rul ing request.
The legislative history of the 1976 amendments which formally

exempted the Native corporations from the federal securities laws

makes clear that the various cited federal securities laws "have

..- -. -..... ,. ..'': ...., .-.,..."*.. . -, Deputy Chief Coun 1 Dunn

little proper application to Native corporations and do not

fulfill their intended purpose in this context." H. R. Rep. No.

94-729, 94th Cong., 1st Sess. 19 (1975), reprinted in, 1975-2 U.S.

Code Congo & Admin. News 2376, 2386. The result of applying

registration rules to the Native corporation would likely be a

complex document that "clearly is not an appropriate method of

informing the stockholders", and, moreover, would also be likely

"(to preclude) the one effective means of communication" regarding

a proposed transaction. H. R. Rep. No. 94-729, supra at 20,

reprinted in 1975-2 U. S. Code Cong. & Admin. News, supra at 2385.

The same comii ttee report indicates that the exemption of ANCSA

corporations from the Federal securities law was appropriate so

long as their corporate stock was essentially inalienable, that

is, transferable only to the limited extent ANCSA permits. Id.

Moreover, when Congress extended the nontransferability rules in

1987 so that such rules would not automatically lapse in 1991,

Congress similarly indefinitely extended the exemptions from the

'33 Act and the '34 Act. Section 28 of ANCSA, 43 U.S.C. section

1625. So long as ANCsA stock is nontransferable under ANCSA, the

exemptions from the ' 33 Act and the '34 Act continue. The linkage

Congress intended between the exemptions from the securities laws

and the nontransferability of a Native corporation's stock is

obv ious .
Thus, ANCSA expressly exempts the establishment (and by

implicit extension, the funding) of Native corporations from

compliance with the ' 33 Act and the '34 Act. The legislative

history of the settlement trust provisions clearly reveals that

Congress viewed those provisions as an opportunity for Native

corporations to restructure themselves i with an absolute minimum' the problems encountered in of collateral consequences, to avoid using the corporate form previously required by Congress. It makes no sense to exempt the process by which the Native

corporations themselves were originally established and funded

from the securities laws but not the remedial process which

Congress prescribed for Native corporations to avoid the problems

with corporate form.

The Trust Units that Kake Tribal' s Native shareholders will have in the Trust are virtually identical to the interests those

shareholders received in Kake Tribal when Kake Tribal was

established. For example, each Trust Unit is stapled to one share of Kake Tribal stock; the Trust Units are not transferable or otherwise alienable except in the same restricted circumstances as

apply to Kake Tribal's stock; and the Trust's distributions may

only be made on the same pro rata basis as are Kake Tribal

distributions. Thus i a distribution of $1.00 from the Trust will

necessarily benefit precisely the same persons that distribution

of $1.00 from Kake Tribal would benefit.

Deputy Chief Cour. .1 Dunn

We note that ANCSA does contain an express exemption for settlement trusts from the provisions of the ' 4 0 Act,
section 28(d)(2) of ANCSA, 43 U.S.C. section 1625(d)
(2), while no such express exemption is set forth from the ' 33 Act or the ' 34 Act. However, we do not think any inference should be drawn that

settl ement trusts were somehow to be subj ect to the ' 33 Act or ' 34 Act. The language relative to the '40 Act was added presumably

because Congress intended different treatment with regard to the '40 Act between Native corporations and settlement trusts. (Settlement trusts are permanently exempt from the ' 40 Act, while

Native corporations lose their exemption from the ' 40 Act in

2001.) It should be noted, too, that the exemption for Native

corporations from the ' 40 Act was rewritten (for other reasons) at

the same time the settlement trust provisions were added in 1987.

Thus, Kake Tribal believes Congress simply overlooked the

opportunity to expressly exempt settlement trusts from the '33 Act

and the ' 34 Act when the settlement trust provisions were added.

Exemption from the Federal securities laws does not mean that

settlement trusts are unregulated. For example, Congress has

specified the notice and, by necessity, the solicitation period

for the shareholder vote on a settlement trust. Congress has also

specified that an absolute majority of shareholders must approve a

settlement trust. Congress has also provided that any pertinent

state laws governing proxy solicitations remain applicable. In this way the treatment of settlement trusts parallels that of Native corporations themselves. That is, Native corporations' must still comply with Alaska laws on proxy solicitation and reporting

to shareholders even though Native corporations are exempt from the federal securities laws. A critical. distinction in this regard is that prior to the point ANCSA stock becomes alienable,

an uninformed public cannot become involved with a Native

corporation in the way the public could with other issuers. The

uninformed public likewise has no potential involvement with a

settlement trùst, since only the Native corporation's shareholders

can be the beneficiaries of the settlement trust. Moreover, even

if Kake Tribal's stock becomes transferable, the Trust Units

remain inalienable under the terms of the Trust. Thus, the

"uninformed public" can never become potential investors in the

Trust.
It follows that the establishment and funding of the Trust

should be no more subject to the '33 Act and the '34 Act than was

the establishment and funding of the Native corporations

themsel ves. That is, the only result consonant with the purposes

of ANCSA is to exempt settlement trusts from the '33 Act and the

, 34 Act.
D. Trust units Are Not Securities. Section 2 of the ' 33 Act provides a def ini tion of a "security". Section 3 (10) of the ' 34

Act provides a similar definition. None of the items specifically

Deputy Chief COUi. .l Dunn

listed in either statute (such as a note, stock, treasury stock,

bond, debenture, evidence of indebtedness, certifieate of interest

or participation in any profit sharing agreement, collateral

trust certificates, preorganization certification or subscription, transferable share, or investment contract) are a "beneficial interest jn trust" or similar language. The closest phrase within

ei ther statute is the catch-all phrase "or, in general, any

interest or instrument commonly known as a 'security'".

Tyically, a security is found in an arrangement in which one person (the transferor) transfers money or property to another wi th an expectation that a return will be. generated for the transferor without his or her direct involvement. See, e.g., Securities and Exchange Commission v. Howey, 328 U.S. 293 (1946); reh'g denied, 329 U.S. 819 (1946). The notion of a "security" therefore implies a voluntary association of two or more parties

for profitable business purposes. Properly understood, however,

the Trust is akin to an ancestral trust having no such voluntary association for business purposes. Trust Units are passed only

through donative transfers, almost exclusively among family

members, rather than sold. See section 2 of the Trust Agreement.

Trust Units cannot be pledged or otherwise encumbered. See

section 12 of the Trust Agreement. And operation of a business by

the Trust is prohibited by ANCSA. Section 39 of ANCSA, 43 U.S.C.

Section 162ge..

Moreover, there is no real volitional choice to participate

in the Trust arrangement as there would be in the common

understanding of a "security". While shareholders are required to

vote whether to establish a settlement trust, see Section 36 (d) of

ANCSA, 43 U.S.C. Section 1629b(d), the actual decision to fund the

trust is made by the directors of Kake Tribal, not by the Trust

Beneficiaries. Moreover, this is not a situation where the

shareholders are electing whether to receive cash or the Trust Units; if the vote to establish the settlement. trust fails, the assets which could otherwise fund the Trust will simply be

retained in corporate form and utilized by the corporate Board of Directors as they think best. For the foregoing reasons, Kake TribcÜ believes the Trust

Units are not securities. Accordingly no compliance with either

the '33 Act or '34 Act is required as to the establishment of the

Trust, the funding of the Trust, or the subsequent transfers of

Trust Units.
E. No Sales Occur. Section 2 (3) of the '33 Act provides a defini tion of "sale" (and the related term "sell"); this definition includes "every attempt * * * to dispose of * * * a

security for value" (emphasis added). Section 3(14) of the '34 Act

contains -a similarly expansive definition of "sale"; the term

includes "any contract to sell or otherwise dispòse of." The

Deputy Chief Coun~_l Dunn

definition of "sale" in the ' 34 Act does not specifically require

that a sale must be for value. Nevertheless, case authority interpreting Section 3 (14) of the '34 Act makes clear that the absence of the word "value" is of no significance and that the

definition of "sale" in both Acts is the same. In Lawrence v.

SEC, 398 F.2d 276 (1st Cir. 1968), the court reasoned that it was

"unable to detect any significant difference * * * between the two

• • • statutes" and that there was "no reason to believe that

Congress intended, one year after the passage of the Securities

Act (of 1933) to dilute the concept of 'sale' * * *". Thus, both the '33 Act and the '34 Act require that value be given for a sale to exist. Even if it is assumed that "securities" are present, no

sales will occur with respect to the Trust. The Kake Tribal

shareholders are not giving value to acquire the Trust Units - they are receiving the Trust Units simply because they are Kake

Tribal shareholders. Similarly, when contributions are made to

the Trust, the shareholders also do not give value even though

their respective pro rata share of the Trust, represented by a

particular Trust Unit, has been increased.. Further, when

transfers of the Trust units permissibly occur, those transfers can only occur in donative settings, whether inter vi VO$ or at

death.
We note further that the staff of the SEC has previously

issued at least five no-action letters which are of relevance on

the point of whether a sale occurs with regard to the issuance or

distribution of securities by an Alaska Native corporation. All

of these no-action letters support Kake Tribal's position that no

sale is present with regard to the establishment or funding of the

Trust, or to the subsequent transfers of the Trust units.

Of particular relevance are the no-action letters dated

December 28, 1992 and January 11, 1994. In the no-action letter

dated December 28, 1992, the SEC staff concluded that the

establishment of a settlement trust by Shee Atika, Incorporated,

the Alaska Native Corporation for Sitka, Alaska, was not an event

requiring registration with the SEC. In the no-action letter dated

January 11, 1994, the SEC staff concluded that the establishment

of a settlement trust by Goldbelt, Incorporated, the Alaska Native Corporation for Juneau, Alaska, was not an event requiring registration with the SEC. The provisions of both the Shee Atika

Settlement Trust and the Goldbelt Settlement Trust are virtually

identical to those of the Settlement Trust which Kake Tribal proposes to establ ish. In addition to the December 28, 1992 no-action letter issued

to Shee Atika, and the January 11, 1994 no-action letter issued to

Goldbel t, there are four other no-action letters issued by the

staff of the SEC of relevance.

Deputy Chief Cou~ _1 Dunn

The first of these other no-action letters, dated December

27, 1973, concerned whether action would be taken if the twelve

regional corporations formed under ANCSA did not register the

stock they were to issue pursuant to ANCSA. The regional

corporations argued in their no-action request that no sale was

surrendering value to acquire

their respective stock interests. The SEC staff concluded no

action would be taken. It should be noted that this first no-

action request (as well as the second request discussed in the

next paragraph) occurred prior to the amendment of ANCSA to exempt

present because the Natives were not

Native corporation stock from the '33 Act and the '34 Act. See
section 28(a) (1) of ANCSA, 43 D.S.C. section 1625.

The second of these other no-action letters, dated April 1,

1974, involved the same issue as the December 27, 1973 no action

letter, except the parties seeking the no-action letter were the

Village and Urban Corporations which were to issue stock under ANCSA. The SEC staff concluded that no action would be taken despite the failures to register the securities. The third of these other no-action letters, dated December 12, 1978, concerned whether action T,¡ould be talcen regarding a limited partnership formed by Cook Inlet Region, Inc. ("CIRri'), with regard to the subsequent distribution by CIRI of the limited

partnership units to CIRI' s shareholders. As represented to the

SEC staff, the limited partnership interests were to be

transferable only under the same circumstances as could' CIRI' s

shares. These are the same restrictions Kake Tribal has placed upon transfers of the Trust units. CIRI distributed all of the

limited partnership units to its shareholders, and thus, did not

retain any such units. CIRI also argued that because there would

be no investment decision which the CIRI shareholders would be

making whether to acquire the limited partnership units, and that

because there was as a practical matter no ability to transfer the

~ni ts, no public purpose would be served by requiring registration of the limited partnership units. The SEC staff concluded that no

action would be taken.

The last of these no-action letters, dated November 25, 1980,

concerned whether action would be taken with regard to Kavilco,

Inc.'s distribution to its shareholders of the stock of Kavilco's

wholly owned subsidiary, Skowl Arm Timber Corporation. Kavilco

argued that the distribution of the Skowl Arm shares was not a

"sale" because no value was being surrendered by the Kavilco

shareholders to receive the Skowl Arm shares. The SEC staff

concluded that no action would be taken.

As a final note, the staff of the SEC has long recognized

that, as a general rule, distribution of a dividend by a

corporation to its shareholders does not constitute a sale of a

security. SEC Release No. 33-929 (July 29, 1936), 17 CFR

Deputy Chief COUi. .l Dunn

§ 231.929. While there are exceptions to this (as when a

corporation intends to foist unregistered securities upon an

uninformed public market), those exceptions have no relevance here

given the virtual nontransferability of the Trust Units.

For .the foregoing reasons, Kake Tribal believes neither the

establishment of the Trust, the funding of the Trust, nor subsequent transfers of Trust Units constitute "sales". Accordingly no compliance with either the '33 Act or the '34 Act

is . required.
F. The Trust Units Need Not Be Registered Under § 12 (g) of

the '3. Act. Section 12 (g) (1) of the '34 Act requires that every

"issuer" engaged in interstate commerce which meets certain

threshold requirements must file a registration statement with the

Securities & Exchange Commission. Section 12 (g) (1) appears to be the only registration requirement in the ' 34 Act which could be

applicable to the Trust and the Trust Units. Kake Tribal assumes

arguendo that at least certain of the threshold requirements of

Section 12 (g) are met by the Trust. Nevertheless, Kake Tribal

does not believe that Section 12 (g) (1) i S registration requirements are applicable to the Trust or to the Trust Unj ts. .

Section 12 (g) (1) applies only to "issuers." Under Section

3 (8) of the' 3 4 Act, an issuer is "any person who issues or

proposes to issue any security." For reasons detailed above, Kake

Tribal believes that, under both the '33 Act and the '34 Act, the

Trust Uni ts are not securities. Because no securi ties are

present, the Trust is not an " issuer" within the meaning of

Section 12 (g) (1) and thus Section 12 (g) (1) is inapplicable to the

Trust.
Even if the Commission is inclined to rule that the Trust

Uni ts are securities so that the Trust is an issuer, both the

Trust and the Trust Units should be exempt from the registration

requirements of the ' 34 Act by Section 12 (h) of that Act.

Section 12 (h) confers upon the Commission the discretion to exempt

any issuer of securities

if the Commission finds, by reason of the

number of publ ic investors, amount of trading

interest in the securities, the nature and

extent of the acti vi ties of the issuer, income

or assets of the issuer, or otherwise, that

such action is not inconsistent wi th the

public interest or the, protection of investors.
As discussed above, the Trust Units only benefit the relatively

small number of holders of Rake Tribal's common stock. The Trust

Uni ts cannot be freely traded; they are "stapled" to shares of

Deputy Chief Coun_~l Dunn

Kake Tribal stock, and Kake Tribal's shares can only be

transferred in very limited circUmstances by Federal law. The

Trust can only issue new Trust Units in the future, in extremely

limited circumstances (see Section 7 of ANCSA, 43 U.S.C.

Section 1606 (g)) and only then if an absolute majority of Kake

Tribal's existing stock approves the new shares. Congress' intent

was cl ear: Kake Tribal's stock and the Trust Units are exempt

from the application of federal securities laws; this exemption is

due in large part to the narrow and specialized scope of stock

transactions in the Alaska Native context. In light of this unique context, the Commission would be acting. well wi thin the bounds of its proper discretion to exempt the Trust and Trust

Units under Section 12 (h) of the '34 Act.
iV. ENCLOSED DOCUMNTS

We include copies of the foregoing in support of our ruling

requests:
A. Copy of the Trust Agreement establishing the Trust;

B. Copy of no-action request and SEe Staff Response dated January

11, 1994;

C. Copy of no-action request and SEC Staff Response dated December 28 , 1992 ;
D. Copy of Section 3 of ANCSA, 43 U.S.C. § 1602 ; E. Copy of Section 7 (g) and 7 (h) of ANCSA, 43 U.S.C. § 1606(g) and (h) ; F. Copy of Section 28 of AN CSA , 43 U.S.C. § 1625. G. Copy of Section 36 of ANCSA, 43 U.S.C. § 1629b:
H. Copy of section 39 of ANCSA, 43 U.S.C. § 162ge;
I. Copy of ANCSA legislative history, including the House

Explanatory Statement;
J. Copy of no-action request and SEC Staff response dated

December 27, 1973;

K. Copy of no-action request and SEC Staff response dated April

1, 1974;

L. Copy of no-action request and SEC Staff response dated

December 12, 1978;

Deputy Chief Coun_ ~l Dunn
M. Copy of no-action request and SEC staff response dated

November 25, 1980 ¡

N. Copy of Excerpts From House Report No. 94-729, 94th Cong., 1st

Sess. (1975) ¡

o. Copy of House Report No. 100-31, 100th Cong., 1st Sess. (1987) ¡ and
V. PROCEDUR HATTERS

In the event the SEC staff is inclined to issue any

unfavorable ruling, Kake Tribal requests a conference before the

issuance of the ruling. The establishment of the Trust is an

actual transaction, and is not a hypothetical nor alternative transaction. Nevertheless, the Trust has not been fully consumated and is subj ect to minor, nonmaterial modifications as may be suggested.

We hereby request an aàvance copy of the ruling to be issued

to the undersigned as Kake Tribal's authorized representative via facsimile transmission. The telecopier number of Kake Tribal r s authorized representative is: (206) 224-8250.

VI. CONCLUSION

Based on the foregoing, we hereby request the staff of the

SEC to provide no~action rulings as indicated above.

Please contact us if you have any questions.

SORENSEN & EDWARDS, P. S . v1f: ( ~."., " / ¿"LQ --'L ..'~ "',J--=/l .// Bruce N. Edwards

I-securities exem/3

h-55545-001

.".'.'::.":-.., '.,"-, ..,.~, ,~. 1..'-. .',:.'V '--.. ..",'-.. ,- . '- Kake Tribal

Shareholder

Settlement Trust

, .

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,

TABLE OF CONTENTS

Resolution establishing the trust................................................... 1

Name of the Trust........ ................... ........................ ......... ........ .......... 2

Beneficiaries and Trust Units ......................................................... 2

Transfer of Assets to the Trust ........................................................ 4

Additional Contributions to Trust Estate ........................................ 4

I rrevocabilty of Trust ... ...... ......................... ....... ............. ....... ............ 4

Distributions to Beneficiaries ............................................................ 5

Review of the Trust ........................................................................... 6

Othe r T ermi nation ......... ...... ............ ...... ............................................ 8

Investment Advice and Services ..................................................... 8

Trustees ... .......... .......... ...... .... ........................ ....... ..... ...... ............ ..... 9

Ascertaining Beneficiaries .............................................................. 12

S pendth rift Clause ... ...... ...... ........... .............. .......... ....... ...... ............ 13

Trustees' Powe rs ... ............ ............ ..... ....... ..... ......... .... .................... 13

Trustees' Standard of Care ........................................................... 16

Responsibilties of Trustees .......................................................... 16

'Third Part Reliance ........................................................................ 17

Accounting by Trustees ................................................................... 17

Payments tò Minor or Disabled Beneficiaries ................................. 18

Principal and Income ....................................................................... 18

ANCSA Prohibitions on Trust Activity ......................................... 18

Acceptance of Trust ........................................................................ 19

Savings Clause ... ......... ............. ......................... ...... ....... ...... ...... .... 19

Headi ngs ..... ...... ....... ........................... .................. .......................... 19

Situs and Applicable Law................................................................ 19

Reg istration ..,...................... ......... ...... ...... ........ ............... ....... .......... 19

Grammatical References ................................................................. 19

Amendments to the Trust ................................................................ 19

Defi n itio ns ................................................................................. ...... 21

Effective Date ... ....... ........... ............... ..................... ............ ....... ...... 22

In Witness Whereof ......................................................................... 23

Schedule A ...... ................................................................................ 24

THE KA TRIBAL SHAHOLDER SETTEMENT TRUST

There is hereby established the "Ke Trbal Shareholder Settle￾ment Trst," which is a Trst effective on the date appearg below. Tls Trst is among Kae Trbal Corporation (Kae Trbal), and the

intial Board of Trstees, composed of Gordon Jackson, Harold Marn, Lolanda Cavanaugh, Staney Adams, Henrch Kadake, Sr., Mar Kadake, Archie Cavanaugh Jr., Pete Mar, Jr., and Nor￾man Jackon (the "Tstees"). WHREA, Kae Trbal is an Vilage Corporation, organed and existing under the Alaska Native Claims Settlement Act, 43 U.S.C.

§ l60l,et seq. (herein, the "ANCSA"), and is authonzed to hold,

invest, manage and/or distribute propert and fuds for and on behalf of its shareholders; and WHREA ANeSA authonzes the conveyance of assets by a Native corporation to a Settlement Trut; and WHREA, consistent with the intent and puroses of ANCSA as amended, Kae Trbal desires to create a Settlement Trt (herein the "Tst") under ANCSA for the purose of establishig a settle￾ment trst to promote the long-term economic stabilty of Kse

Trbal's shareholders by providig a source of fuds for reguar

distrbution to the Trst Beneficiares, which would be done by

preservg assets and growig those assets through investment and

by minizng taxes, and by protectig such settement trst assets to the greatest extent possible from the clai of credtors of the

Beneficiares and of Kae Trbal; and Diectors ofKae Trbal has approved the establishment of ths Settlement Trst and has authonzad the President, Vice President and Secreta of Kae Trbal to execute WHEREA, the Board of

ths Trst on behal of Kae Trbal; and

WHREA, Kae Trbal recognzes that cicustaces and events wi change as time passes and that it is desirable to have the contiued existence of the Trust reviewed by the Trtees and the Beneficiares at periodic inter.ial; and the Tr wi reuie tht WHREA, the effcient management of

the Trstees employ such personnel, admintrators, moneymanag￾ers, fiancial advisors, brokers, custodians, and such other entities

the Tr Assets; to assist in the investment and management of

NOW THREFORE, it is hereby agreed and declar as follows:

1. NAM OF TRUST.
   Ths Trst shall be known as the Kae Trbal Shareholder Settle￾ment Tr.it.

2. BENEFICIAES AND TRUST UNTS.
   2.1 The provisions of ths secton shal determe the Beneficia￾ries of ths Trst.
   2.1.1 The Initial Beneficiares of
   ths Trst shal be the holders of

the Settlement Common Stock of Kae Trbal. Each Intial Benefi￾ciar shal own a number of Trust Units 'equal to the number of shares of Kae Trbal Settlement Common Stock owned by such

Trst Units outsd- Initial Beneficiar so that the total number of

ing shal equal the total number of shares ofKae Trbal Settlement Common Stock then outstandig. There shal be Class A and Class B Trst Units as described below.

2.1.2 The intial oWnership oîTrst Units shal be determed as

of 5:00 p.m. on the day the shareholders of Kae Trbal approve a resolution fist establishig a settlement trst, whether or not the

provisions of ths Agreement are subsequently moded as set out herein
2.2 The Trust Units shall be subdivided into Class A Trt

Units, which shall have one vote per unt on each mattr speced in tl-¡Ìs Ageement for a vote by the Beneficiares, and Class B Trt Units, which shal have no vote on any matter. Class A Trst Units

shal correspond to the Class A shares of Kae Trbal, and Class B Trst Units shal correspond to the Class B shares ofKae Trbal.

Notwthtanding the foregoing, Class B Trt Units shal be con￾verted into Class A Trst Units automaticaly upon a vald trfer

is a Native or Descendant of of Class B Trst Units to a person who a Native, and Class A Trst Units shal be convert automaticay into Class B Trst Units upon a vald transfer of such Class A Tr Units to a person who is not a Native or Descendant of a Native. Except with regard to votig rights, Class A and Class B Trt Units shal in al maners be equivalent. Furer, even ünon-Natives or

persons not Descendants of aN ative are at any time permtt in any fashion to vote on matters relative to Kae Trbal, such persons shal not be permitted to vote on any matter pertaig to th Trt.

' ~~

, .
2.3 So long as (i Kae Trbal has not been merged (regardless

whether Kake Trbal is the survig corporation), consolidate or dissolved and (ü) the restrctions on stock alenation imposed by of
section 7 of ANCSA (as such proviion reads on the Effecve Date of
. ths Trst) apply to Kae Trbal's Settlement Common Stock:

2.3.1 The Beneficiares of ths Trst shal be the holders of the

Settlement Common Stock of Kae Trbal, with one Class A Trt

Unit correspondig to each Class A share ofKae Trbal, and with one Class B Unit correspondig to each Class B share ofKae Trbal.
2.3.2 In the event that additional shares of Kae Trbal Sette￾ment Common Stock are issued pursuant to Secton 7 of ANCSA (as
such provision reads on the Effective Dàte of ths Trt), the number

of Trst Units shal be increased accordigly and the additional

Trst Units shal be issued to the same persons and in the same

number as is the additional Kae Trbal Settlement Common Stok.
2.3.3 The Trut Units may only be transferred at the same tie
and in the same maner as the related share of Kae Trbal Settlement Common Stock may permssibly be tranferred. If a Kae Trbal shareholder shall tranfer in any permssible maner his or her Kae Tribal Settlement Common Stock, then that Benefi￾ciar shall also be deemed to have transferred the correspondig

Trst Units in the Trt to the transferee of the Kae Trbal

Settlement Common Stock, so that the Trt Units wi accompany the ownership of Kae Trbal Settlement Common Stoc
2.4 IfKae Trbal has been merged (regardless of
whether Kae
Trbal is the survig corporation), consolidated or dissolved, or if

the restrctions on stock alenation imposed by Secton 7 of ANCSA . (as such provision reads on the Effectve Date of ths Tr) no longer

apply to Kae Trbal's Settement Common Stok, then:
2.4.1 The Beneficiares of th Trt shal be the holders of the
Settlement Common Stok of Kae Trbal, with one Class A Tr Unit correspondig to each Class A share ofKae Trbal, and with one Class B Trst Unit correspondig to each Class B shar ofKae Trbal, determined as of the day imediately prior to the date upon which Kae Trbal was merged (regardless of whether Kae Trbal is the survig corporation), consolidated, or dissolved, or as of the day prior to the fit date upon which suchANCSA stk restrctons no longer apply to Kae Trbal's Settlement Common Sto. The transfer agent of Kae Trbal shal prepare and deliver to the

Trstees a list of the shareholders of Kae Trbal and their las

known addresses as of such day. No fuer shareholder lits shal

be requied from Kae Trbal's tranfer agent. Nothg in th
Section 2.4.1 shal prevent a transfer of Trst Units afr such day

which is otherwse in accord with Secton 2.4.3.
2.4.2 In the event that additional shares of Kae Trbal Sette￾ment Common Stock are issued puruant to ANCSA, the number of
Trust Units shal not be increased and issued accordigly.

2.4.3 Beneficiares may tranfer their Trst Units only to the extent and in the maner that transfer of
the Settlement Common
Stock ofKae Trbal was alowed on the day prior to the date Kae whether Kae Trbal is the suv￾ing corporation), consolidated or disolved, or the day prior to the Trbal was merged (regardless of

fist date the restrctions on stock alenation imposed by secton 7 of

Ai'WSA (as such provision reads on the Effective Date of th Tr) no longer apply to Kae Trbal's Settement Common Stock
3. TRASFER OF ASSETS TO TRUST.
Kake Tribal hereby tranfers and delivers to the Tr the propert listed and descrbed in Schedule "A" attched hereto and

made a par of ths Trst, for the Trstees to manage, inves, and

reinvest, and to receive and manage al interest, dividends, rents and other income and profits from the propert as hereinafer provided. Ths propert, together with any other propert which may hereafer be conveyed to the Trstees hereunder shal cons￾tute the Trst Fund and shan be held, admstered and ditruted as provided in this Ageement.
4. ADDITIONAL CONTRIBUTIONS TO TRUST ESTATE.
Kae Trbal, or any other person or entity, may at any tie, make contrbutions to this Trut, by any maner whatsoever, in addition

to the intial contrbution descrbed in Secton 3 and al such additional contrbutions shal be governed by the provisions of th Trst. The Trstees are authorized and empowered, in their dicre￾tion, to receive additional contrbutions and to add the same to the Trt Fund to be admistered puruant to the proviions of th Trt.
5. IRRVOCABILITY OF TRUST.
Ths 'Trust is irevocable, and Kae Trbal shall not have the right or power to alter, amend, revoke or terminate ths Trt, as other￾4

wie provided in Sectons 7 and 27 of ths Ageement.
6. DISTRIBUTONS TO BENEFICIAES.
6.1. Begig with the caendar year followig the caendar

. year in which trst assets first exceed $25,000,000 and contiuig thereafer durg the term of ths Trt, the Trstees shal distrb￾ute seventy-five percent (75%) of the estimated Net Cash Income to the Beneficiares on the second Monday of each of the followig

month:
(i) June -- distributing 75 % of the estiated Net Cash Income for

fist six month of the current calendar year; and

(ü) December - distrbutig such amount which, when added to the

June distrbution, wil equal 75 % of the estiated Net Cash Income

for the current calendar year.
6.2. Net Cash Income distrbutions shal be pro rata based upon

the number of Trst Units owned by each Beneficiar.

6.3. Durg the term ofthis Trt, no ditrbution sha be made
to any Beneficiar from Trt Prcipal except as descrbed in

Secton 7. Any pricipal distrbution which is made shal be pro rata

based upon the number of Trt Units owned by each Beneficiar.

6.4. Afer fist makg the distrbution(s) provided for in the Sections 6.1 and 6.5, the Trstee shal then add,
any remainig undistrbuted Net Cash Income to the Prcipal of thi Trt Fund.

6.5. The Trstees may, in their dicretion, alo distrbute any
porton of the Net Cash Income from a parcuar caendar year which is not distrbuted under Secton 6.1. The distbutions under ths Section 6.5 may only be made with regard to Net Cash Income eared in years begig in the caendar year 2000. Net Cash

Income eared in year before the caendar year 2000 may not be

distrbuted under th Secton 6.5. Any ditrbution under th

Section shal be made only at the same tie as the other ditrbu￾tions for such calendar year. Any Net Cash Income from such year
begig the calendar year 2000 which could be, but is not, cu￾rently distrbuted under ths Seon 6.5 or under Secon 6.1 shal

be added to Principal, and thereafr distrbute to Beneficiares

only as Principal is distrbuted. Nothg in th Secton permts the Trstees to distribute Net Cash Income from a period other than the

current calendar year which has been accuulate.

~

6.6. The Trstees shal compare the amount of distrbutions

distrbuted with regard to a parcuar year under Secton 6.1 (and

to the extent applicable, Secton 6.5) with the amount which would have been distributed for such year determined by substitutig actua Net Cash Income for the estimated Net Cash Income.
6.6.1 In the event that the amount of distrbutions actaly made
for such year is less than the amounts which would have been

distrbuted for such year based on actal Net Cash Income (an

"under distribution"), the amount of such under ditrbution, if it exceeds $100,000, shall be distrbuted with the period permttd by Treasur Reguation Secton 1.663(b)-1 as amended to the hold￾ers of the TrstU nits of record on the record datefor the imediately preceg distrbution. If the amount of the under distrbution is $100,000 or less, no distribution under th Secton shal be made.
6.6.2 In the event that the amount of ditrbutions actaly made

for such year is more than the amounts which would have been distrbuted for such year based on actal Net Cash Income,(an .over

distrbution"), the amount of such over distrbution shal be re￾couped by reducing the amount ofthe June distrbution for the next succdig calendar year to those Beneficiares of record as of the record date for such June distrbution.
6.6.3 The adjustments provided in th Secon 6.6 shal be made

regardless of whether the record holders of the Trt Units which received the over distrbution or the under distrbution, as the cae may be, are different from the record holders which bear the burden or reive the benefit of the adjustment.
7. REEW OF TRUST.
7.1. Withn a 180 day period followig the tenth Anversar of
thi Trst, the Trstees may:

7.1.1 Modi the percentage of estiated Net Cash Income which
is requied to be distributed by deletig "75%" and substitutig any whole integer between "0%" and "100%";
7.1.2 Mod the Pricipal distrbution provisions by permttg
the Prcipal to be ditrbute, whether on a recug basi or in a single lump sum; or any portion of

7.1.3 Terminate this Trust and distribute al pricipal (includig
accred income) to the Beneficiares.

7.2. Any such decision by the Trstees would requie the af￾mative vote of at least two-thds of the incubent Trstees. The
modication would not be effective unti approved by the afative vote of the holders of more than one-hal(at least 50%+ 1) of the Class A Trt Units.
7.3. Except as described in Sectons 7.1 and 7.2, the Trst would

automatically continue for a fuer ten year (measured from the tenth Anversary of ths Trst) ü there is no fial acton of the Trstees and/or Beneficiares with such 180 day period. Durg such contiuation, the method of income ditrbution specied in

Secton 6 shall contiue. With 180 days of each succeedig ten-

year Anversar of the Trt, the Trtees, upon an afative

two-thds vote of the incubent Trstees, subject to a vote of the Class A Trt Units as descrbed in Secton 7.2, could make the same

choices as descrbed in Secton 7.1.
7 .4. Neither the Beneficiares nor the Trstees have any inde￾pendent abilty to make the modications descrbed in ths Secton 7, and such modications may only be made as provided herein.
7.5 In no event shall the Trust Assets ever revert to Rae

Tribal.
7.6. Votes by the holders of the Class A Trst
Units puruant to this Trst Agreement (includig puruant to Secon 7.2) shal be done by mai, without the need for a formal meetig, with each Class A Trst Unit havig one ¡vote. Solicitation of competig balots by rival groups shall not be permttd, and the Trstees shal number each ballot sequentially and take al other stps as shal be necessar to ensure the integrty of such balotig. If competig solicitation , does occur , or misleadig solicitation is occg in any maner, the Trstees may petition the Superior Cour for the Fit Judicial Distrct, Juneau, Alaska, to enjoin such actvities, to order that no vote at all shal occur, or to tae such other remedal acton as shal be deemed necessar. The Trstees shal permt votig to occu over

at least thi days. In al events, such votig shal be concluded no

later than the 180th day followig the respecve ten-year anver￾sar of the Trt.
7.7. If the Trst is to be disolved, the Trs, afer payig al
necessary and proper expenses of admtration, includig its fees,

and income taxes due from the Trst, shal ditrbute the balance of

the Trst Fund pro rata to the Beneficiares based upon the Trt Units. Thereafer, the Trt shal termate.

l
7.8. Durg the period of tie the vote of
the Class A Trst Units

is occg, the Trstees shal contiue to make ditrbutions to the

Beneficiares as specied in Secon 6.
8. OTHER TERMIATION.
8.1. If at any tie durg the term of the Trst any of the

followig events occur, the Trtees may, but need not, termate the Tr:
8.1.1. A change in state, federal, or other governentalaw or
reguation, includig judicial interpretations thereof, which wi have a Material Adverse Effect on the puroses for which the Tr has been established. Before termination may occur under th provision, both of the following must fid that a Material Adverse Effec will result: (i the Trstees (as set forth in §10.4.3); and (ü) a

cour of competent jursdicton. The fidigs of the Trstees must be made, and the petition or complait for the judicial determination must be fied, withi thi-six (36) months afer the effective date

the change, or else the change caot be found to have a Material Adverse Effect. of
8.1.2. Faiure of the Trt to receive favorable rugs from the

Internal Revenue Servce on or before December 31, 1995, as to such tax issues upon which the Trstees in their absolute discretion sha deem it necessar and prudent to obta such rugs.

8.2. To terminate the Trt Under this Secton, the Trtes

shal follow the procedure set fort in Secton 7.7.

9. INSTMENT ADVICE AN SERVICES.
   9.1. Without intendig to lit the Trtees' powers grante

elsewhere in this Agreement, the Trtees may place al or a porton of the Trst Assets under the suPervsion of one or more professional money managers, who may be delegated the authority by the Tru~s to diect specific investment of such porton of the Tr Assets. Alternatively, the Trtees may themselves diect the in- the Trt Assets, and in th connecon, may seek such professional advice from fiancial advisors and/or consutants as the Trstes deem necsar. vestment of some or al of

9.2. Subject to any wrtten contractal agreements entered by

the Trstees, al money managers and fiancial adviors serve at the pleasure of the Trstees.

10. TRUSTEES.
    10.1. The Trst shal at al ties be managed by a Board of

Trstees, who shal be selected as follows:
10.1.1 So long as (i Kae Trbal has not been merged (regardless of
whether Kae Trbal is the survig corporation), consolidated or dissolved, and (ü) the restrictions on stock alenation imposed by
Section 7 of ANCSA (as such provision reads on the Effecve Date
ofthis Trst) apply to Kae Trbal's Settlement Common Stock and (il) Kae Tribal's Settlement Common Stock elec a majority of

Kae Trbal's Board of
Directors, the Trstees for the Trt shal be the Kae Trbal Board of Diectrs. the then incumbent members of

Removal of any diector ofKae Trbal puruant to Alaska law shal

be deemed the automatic removal by Kae Trbal of such person as a Trstee. Any vacancies created by the death, incapacity, resigna￾tion or removal of a Trstee shal be deemed fied when the correspondig diectorship of Kae 'l"rbal is fied.
10.1.2 If Kae Trbal has been merged (regardless of whether

Kae Trbal is the survig corporation), consolidate or disolved,

or if the restrctions on stock alienation imposed by Secton 7 of ths Trt) ANCSA (as such provision reads on the Effectve Date of

no longer apply to Rae Trbal's Settlement Common Stock, or if elect a majority Kae Trbal's Settlement Common Stock no longer

of KakeTrbal's Board of Directors, then the Trtees shal be selected for the Trust as follows:

(a) On the day prior to such merger, consolidation, or dissolution, or the lifing of the restrictons imposed by Secton 7 of ANCSA on the Kae Trbal Settlement Common Stock (as such proviion reads on the Effective Date of ths Trt), or on the day prior to the day on

which Kae Trbal's Settlement Common Stock no longer elect a majority of Kae Trbal's Board of Directors, each then servg Trstee shal be converted to a term appointment as Trtee, with

the unexpired porton of each respectve term as a diectr ofKae Trbal (but for such merger, consolidation or other such descrbed event) constitutig each respectve remaig term in offce as Trstee. Thereafer, upon the expiration of each Trte's term,

electons shall be held to fi such vacacy. Ninety (90) days prior to

the term of a Trstee, or upon the death, resigna￾tion or disabilty of a Trstee, the Chaian of the Trtees shal such expiration of

the need for a successor member and the noti the Trstees in wrting of

the Trstees shal conduct an election for a successor member of

Trstees.

the notice descrbed in (b) Withi fieen (15) days afr receipt of

Secton 10.1.2(a) stating the need for a successor member, the Trstees shal mai to the holders of the Class A Trt Units a wrtten request for nominations of a successor member of the

Trstees and a form for the nominations. Each holder of a Class A Trst Unit may nominate one person for each position to be fied. The holders of Class A Trust Units'must retur the nomiations to afer the date the Trtees the Trstees withi fieen (15) days

nomiations. Upon receipt of the nomi mailed the request for notice of the tions, the Trstees shal mai each nomiee wrttn

nomination. Any person who desires to have hi, or her name withdrawn must respond in wrtig to the Trtees with fien the notice. The Trtees shal the date of the maig of (15) days of the Class A Tr then prepare and mai the balots to the holders of

Units within twenty-one (21) days afer the deadle for responses

from the nominees. Each Class A Trst Unit has one vote for each with cuulative votig to apply. The holders Trstee to be elected,

of the Class A Trst Units must retu their balots to the Trees within thi (30) days after the date the Trstees maied the balots.

The nominees with the most vote shal be elected to the positions to be fied in order of the most votes received. The Trtees sha tabulate the results and immediately noti the nomiees of the the results, shal make the results avaiable for review at the offce of the results to the Beneficiares Trstees, and shal enclose a report of

with the next Income distrbution.
10.2. The Trstees shal meet at least once each year durg the

month of March. The Trstees shal also meet at the ca of the Chairman or any three Trstes.

10.3. The Trstees shal elect a Chaian and Seceta, and
other offcers, and shal hie employees and agents as the Trstee deem appropriate.
10.4. The duties of the Trtees shal include in addition to the
other duties set forth herein, and subject to the other proviions of ths Agreement, the duty:
10.4.1. To imediately ensure the proper cutoy of al asets

contrbuted to the Trt;

10.4.2. To establish investment policy, to formulate the alocation
for the Trst's assets to comprise an investment portolio, and to

review such policy and asset alocation at least anualy, makg such modifications therein as shal be deemed necessar. It shal

~ ..;.' ,,- . .:. :-..- ¡:-.. ",-,- -. -,.. two-thrds of the incubent Trtees requie the afative vote of

to establih or amend investmeút policy or asset aloctions;
10.4.3. To petition for, afer approval by two-thds (2.3) of the
ihcumbent Trstees, ajudicial determation as to whether a change

in governental law or reguation wi result in a Material Adverse Effect as provided in Secton 8;
10.4.4. To determe whether to retai varous fiancial and legal
specialists as the Trustees shal deem necessar and prudent to perform ths Trst, and to establish compensation therefor, to

review the performance thereof, and to terminate their servces;
10.4.5. To make amendments to ths Trst as provided in Seons
7 and 27.
10.4.6. To compromise, settle, arbitrate, defend any clai or de￾mand in favor of or against the Trt;,

10A.7. To incu reasonable expenses related to Trst admtra￾tion and to authorie the payment therefor from the Tr ,

10.4.8. To determine alocations of varous items (in whole or in
par) between Prcipal and Income as provded in thi Trt

Agreement; and
10.4.9. To exercise al other powers necessar to car-th Trt

which shal be exercised in a fiduciar capacity as into effect, al of

provided within AS 13.36.075 and ths Agreement.
10.5. A majority of
the Trstees shal constitute a quoru for the transacton of Trust business. No acton shal be taen by the members at a meetig in Trstees without approval of a majority of

which a quoru is present. Notwthstanding the foregoing, where ths Trst Ageement requies a greater number cfTrtee to vote to approve a specic acton, such greater number shal apply.

10.6. Persons servg as Trtees shal be entitled to receive
reasonable compensation and reimbursement of thei reasnable

expenses in performg their duties as offcers and Trtes of the Trt.
10.7. No bond, surety, or secuty shal be requied to secue
performance of the Trstees's duties, although the same may be the Trt. the Trstees at the expense of obtained in the discretion of

the Trst obtai such Trs' The Trustees may at the expense of Insurance coverage insurng the Trstees ofthe Trst and the Tr against errors and omissions and such other liabilty expsurs as the Trustees deem appropriate.
11. ASCERTAIG BENEFICIAIES.
whether Kae Trbal is the 11.1. Prior to the merger (regardless of

surving corporation), consolidation or dissolution of Kae Trbal, and so long as the restrctions on stock alenation imposed by Seon 7 of Ai'-CSA (as such provision reads on the Effective Date of th

Trst) apply to Kake Trbal's Settlement Common Stoc then al communications, votig docents, and payments shal be maied

to a Beneficiar at the most recent address fuhed to the Trs by the transfer agent ofKake Trbal. The Trstees shal have no duty or responsibilty to determe who the Beneficiares are, or to veri

the shareholder lit fushed to the the completeness or accuracy of

Trstees by Kae Tribal's tranfer agent.
11.2. Afer merger (regardless of whether Kae Trbal is the

surving corporation), consolidation or dissolution ofKae Trbal, or afer the restrictions on stock alenation imposed by Secton 7 of th Tr) ANCSA (as such prevision reads on the Effectve Date of no longer apply to Kake Trbal's Settlement Common Sto then the Trstees shal thereafer be responsible for determing the Benefi￾ciares of the Trst. The Trtees shal rely on the las address

received from Kake Trbal's transfer agent unti a wrttn notice of

clange of address is received from a Beneficiar. The Trs sha not have a duty to locate Beneficiares and any unclaied ditrbu￾tions shal be added to Trst Prcipal until claied by the appropri￾ate Beneficiar. Any distributions not claied afer a five (5) year pEriod shal be forfeited by the Beneficiar. At the tie ofterma￾tion of the Trst, any distrbutions which have been unclaied for Any twelve (12) months or more shal be forfeited by the Beneficiar.

distrbutions which have been unclaimed for less than twelve (12) the month shal be held unti one (1) year afr the termation of

Trut, at which time the unclaied distrbution shal be forfeite and distrbuted proportonately to al other Beneficiares. In addi￾tion, if a Beneficiar's share of the fial Trst ditrution is remai unclaied for retued to the Trstees as unclaied, and

twelve (12) months, that payment shal be forfeited and ditrbute

proportonately to al other Beneficiares.
11.3. Afer merger (regardless of whether Kae Trbal is the

surving corporation), consolidation or dissolution ofKae Trbal,

,';,,:"..~' ,.;":"';.;;-'---~. . or afer the restrctions on stock alenation imposed by Secton 7 of

ANeSA (as such provision reads oil the Effectve Date ofthis Trt)

no longer apply to Kae Trbal's Settement Common Stok, no transfer of a Trst Unit which is otherwe permssible shal be e'ffective unti the transferee of a Trst Unit shal provide a wrttn notice of the transfer to the Trustees together with any evidence of transfer requested by the Trstees. Pror to the tie a tranferee has

properly documented the transfer, the Trtees may, but need not, do any of the followig: (a) contiue to make ditiibutions to the record owner of the Trst Units; (b) interplead such deposits into a

court of competent jursdicton or (c) deposit al payments due to the

transferee in an interest bearig account. In the event the Trstees elect to pursue (b) or (c) above, and the transferee has not adequately documented such transfer withi five (5) year of any deposit into such account or cour, the amounts of such deposit shal be forfeited and added to Trst Pricipal. In addition, if the tranfer has not been adequately documented prior to the fial Trst distribution, and is not adequately documented within twelve (12) monJ:h thereafer, to al that payment shall be forfeited and distrbuted proportonately

other Beneficiares.
12. SPENDTHRFT CLAUSE.
No beneficial interest or Trst Unit under ths Trst, whether in Income or Prcipal, shal be subject to anticipation, assignent, pledge, sale, gi or transfer in any maner, except as herein

provided, nor shal any Beneficiar have the power to 8fticipate, encumber, or charge such interest or Trst Unit, nor shal such

interest or Trst Unit be liable for or subject to the debts, contracts,

obligations, liabilties, or torts of any Beneficiar or of any person except those of the Trst itself.
13. TRUSTEES' POWERS.
In the admstration of the Trst, the Trtees shal have such

power as shal be necessar and commensurate with their duty to manage the Trst. By way of ilustration and not of litation (except as expressly indicated), the Trstees shal have the followig powers, al of which shal be exercied in a fiduciar capacity as provided with AS 13.36.075, as amended:

13.1. To hold and contiue to hold as an investment the fuds or
assets received hereunder, and any additional propert which may be received and accepted by the Trstees, so long as the Trtes deem proper, and to invest and reinvest in any secuties or propert,

,.""~' deemed by the Trstees to be for the bet interest of the Trt and the Beneficiares, except that no investment shal be made which is prohibited for Settlement Trsts under ANCSA or by ths Agee￾ment or does not meet the policies estalihed by the Trtees;

13.2. To deduct, retain, expend, and payout of any money belong￾ing to the Trst any and all necessar and proper expenses in

the Trst, and to pay connection with the operation and conduct of

all taxes (except income taxes), insurance premiums, and other legal

assessments, debts, claims, or charges which at anytie may be due

and owing by, or which may exist agait, the Trst. Income taes'

due and payable by the Trt shal be payable from Prcipal, but not

from Cash Income;

13.3. To vote all securties belongig to the Trt, and to become

a par to any stockholders' agreements deemed advisable by the

Trstees in connecton with such securties;
13.4. To compromise, settle, arbitrate, or defend any clai or
demand in favor of or against the Trs; to enforce any bonds,

mortgages, securty agreements, or other obligations or liens held hereunder; and to enter upon such contrct and agreements and to make such compromises or settlements of debts, clais or controver￾sies as the Trstees may deem necessar or advisable;
13.5. To incur and pay the ordiar and necessar expenses of

admstration including, but not lited to, reasonable attorney, accounting and other professional fees;
13.6. To act hereunder though an agent or attorney-in-rad, by
and under power of attorney duly executed by the Trstees, in the powers and duties herein authoried; carg out any of

13.7. To determine the maner in which the expenses incidenta
to or in connecton with the admtration or the Trt shal be apportoned between Pnncipal and Income;

13.8. To make any division or distrbution requied under the
terms of th Trst in kid or in money, or pary in kid and parly

in money. The Trstees sha not be reuied to make physica

division of the Trst Fund except when necsar for distrbution of Pnncipal, but may, in their dicretion, keep the Prcipal of the

Trst in one or more consolidated fuds. The Trutees shal not be

requied to make any proviion for deprecation in respect of any tangible propert, or for the purse of amortg or makg good

any amounts paid in premium on the purase of secuties or of any other propert;
13.9. To freely act under al or any of the powers given to the

. Trstees by this Trst in al matters concerng the Trst herein created, afer forming their j~dgment based upon al the cicu￾stances of any paricular situation as to the wiest and best course to pursue in the best interests of the Trst and its Beneficiares, without the necessity of obtanig the consent or approval of any

cour;
13.10. To invest and reinvest in such stocks, bonds and other
securties and propertes as the Trtes may deem adviable, includig stocks and unsecured obligations, undivided interests, interests in investment trsts, legal and dicretionar common trt fuds, mutual funds, leases, and propert which is with or outside of Alaska. Notwthstandig th authorization, the Trstees shal limit investments to those which are alowed by this Ageement, are allowed for Settlement Trsts under ANCSA, and are alowed by the policies established by the Trtees. Provided, in no event may the Trustees purchase or hold shares of stock in Kae Trbal and its successors or subsidiares, nor sha the Trtees loan money to any person or entity other than though the purchase of a bond or other

security for which a recogned and reguar market exts;
13.11. To make any electon permitLod by tax law which is deemed
to be in the best interest of the Trst, Kae Trbal, or the Beneficia￾ries;
13.12. To restate thi Trt Ageement without acton of the

Beneficiares at any tie followig any modcation permtted to be , made by this Agreement; and
13.13. To issue certcates representig the Trst Uaits, ü cert￾cates are deemed appropriate, with such certcates in such form

and to contain such proviions as the Trstees shal deem appropri￾ate. Without limitig the generalty of the foregoing, such cert￾cates may contain a Testaentar Diposition Clause similar to that descrbed in AB 13.16.705, as amended, to facitate non-probate transfer of the Trst Units upon death of a holder. The proviions of

ths Secton shal apply only afr the merger (regardless of whether Kae Tribal is the survig corporation), consolidation or disolu￾tion of Kae Trbal, or after the restrctons on stok alenation imposed by Section 7 of ANCSA (as such provision reads on the Effective'Date of ths Trst) no longer apply to Kae Trbal's

Settlement Common Stock.
13.14. The powers herein
granted to the Trstees may be exercied in whole or in par, from tie to tie, and sha be deemed to be

supplementar to and not exclusive of the general powers of Trt￾ees pursuant to law, and shal include al pOwers necessar to ca the Trst into effect, and in general the Trtes shal have the powers of an individual owner of propert who is under no trt

obligation.
14. TRUSTEES' STANAR OF CAR.
14.1. The Trustees, as fiduciares, wi be requied to discharge
their duties with respect to the Tru solely in the interests of the Beneficiares and with the cae, skill, prudence and digence under the circumstances then prevaiing that a prudent investor actg in

a like capacity and familar with such matters as a layperson and not an expert would use in the conduct of an enterprise of a lie charactr

and with lie ais.

14.2. The Trst hereby indemnes each Trstee from any and al
loss, without limitation al attorneys' fees and costs of defense

occasioned by such Trstee's servce as a Trstee of th Trt to the

greatest extent permitted by law.
14.3. Ifindemnication of a Trstee exists under Secton 14.2, but
that ths Trst shal, for whatever reasons, not make some or al of

the required indemncatio-n, then to the extent that indemnca￾tion is not so made by the Trst, Kae Trbal hereby indemnes each Trstee from any and al loss ocioned by such Trte's

servce as a Trstee of this Tr.
15. RESPONSIBILITIES OF TRUSTEES.
By way of ilustration and not of litation, the Trtees sha be conclusively presumed to have met the stadard of cae requied by

Secton 14.1 in the followig cicumstaces:
15.1. The Trstees may act upon any wrttn notice, request,
waiver, consent, receipt or other paper or docuent fuhed to them, not only as to its due execution and the valdity and effecve￾ness ofits proviions, but also as to the trth and accptabilty of any inormation therein contaied. The Trtees shal not incu any liability and shal be fuy protected in actg in accordance with any of the foregoing which the Trustees in good faith believe to be

I, \ genuie and what it purort to be.
15.2. The Trutees may consult with and obta independent legal
and accounting advice in the event of any questions as to any provision herein and as to any of the Trstees' duties. The Trutees shall not incur any liabilty and shal be fuy protected in acting in

good faith in accordance with the opinons and intrctions of such

legal counselor accountants.
1'5.3. The Trstees may consult with and obta investment ad-

vice from fiancial advisors, aid may place some or al of the Trst Assets under the direct management of one or more money manag￾ers. The Trtees shal not incur any liabilty and shal be fuy protected in actg in good faith in accordance with the advice so

received, and in the case of money managers, in permttg the investments directed by the money managers to occu.
15.4. In makng their estiates of
Net Cash Income, the Trstees shal not incu any liabilty and shal be fuy protectd in actg in good faith in relyig upon the estimates of such Net Cash Income made by their financial advisors and money managers, whether the distrbutions resulting therefrom are an Under ditrbution or Over distrbution of actual Net Cash Income.

15.5. Any clais of damages, causes of actons or rights the

Trùstees may have agaist any person (includig without lita￾tion, accountants, legal counsel, fiancial adviors, or money man￾agers) as to an event for which the Trstees' liabilty has been lited

under this Section shal be assigned by the Tres to the Trt.

16. THIRD PARTY RELIACE.
    No person dealg with the Trst or with the Trstees in any maner (includig without litation in purchasing, renting, or leasing any

of the propert of the Trst) shal be requied to inquie into the

authority of the Trstees to enter into any trancton, or to account

for the application of any money paid to the Trstes on any account.
17. ACCOUNG BY TRUSTEES.
The fiscal year ofthe Trst shal be the caendar year. The Trees shal cause to be prepared for each year audite fiancial statements

in conformity with the basis of accountig defied in ths Ageement. Such statements shal be forwarded to the Beneficiares with the fist Income ditrbution of the succeedig caendar year. Anual

",~"~.",,,,,,,, ~",. ~..c_.... "
.l. t. i " accountigs shal be on fie with the Trtees and sent to those the account- Beneficiares who submit a wrttn request for a copy of

ing. The Trstees may at any tie render an account ofits procee￾ings for the Trst to a cour of competent jursdicton.
18. PAYMENTS
TO MINOR OR DISABLED BENEFICIAIES.

In case any payments or any notice becomes due or payable to a minor, as defied by Alaska law, or to a person under legal disabilty, then the notice shal be given or amounts shall be paid out by the Trustees in one of the followig ways:
18.1 to the legally appointed guardian or conservator of such

Beneficiar, or if none, then
18.2 to any Custodians appointed for such person, puruant to

the Alaska Uniform Gifs to Miors Act, to hold such person's reads on the Effectve Date interest under ANCSA (as such proviion

of th Trt), or ünone, then
18.3 to any parent of a minor Beneficiar provided such parent is
a "Native" or "Descendant of aN ative" as defied in AN CSA (as such provision reads on the Effectve Date of ths Trt).

19. PRINCIPAL AN INCOME.
    bonds , notes, or other evidence ofindebtedness 19.1. In the case of

taken or purchased at a premiUI, the Trtees shal not be requid

to set aside any par of the income therefrom as a sing fud to

retie or absorb such premium.

,Trst Ageement, the Trtees 19.2. Except as provided in ths

shal have the right and power to determe how al receipts, disbursements, and gais or losses from the sale of assets held by the Trst shal be credited, charged, or apportoned as between Prci￾pal and Income. In default of any such determination by the Tr￾ees, the provisions of Alaska law shal control.
20. ANCSA PROIDBITIONS ON TRUST ACTIVTY.
the followig activities so long Ths Trst shal not engage in any of

as such activities are prohibited by ANCSA (i) alenate land or any interest in land received from Kae Trbal; (ü) operate as a business; or (il) discrinate in favor of a group ofindividuals composed only

pricipally of the offcers, diecrs or employees of Kae Trbal or

the Trstees; (iv) be the transferee or purchaser of Net Operatig Losses from Kake Trbal; or (v) receive a conveyance of a subsurace estate in land.
21. ACCEPlA."'CE OF TRUST.
Subject to the other proviions of this Agreement, the Trtees hereby accept the Trt created by ths intruent and agree to

car out the provisions hereof.

22. SAVINGS CLAUSE.
    If any provisions of thi Trst are unenforceable, the remaig provisions shal nevertheless be cared into effec.
23. HEADINGS.
    Headings used in this Trt are inserted for convenience only and

shal be disregarded in constrng this Trt.

24. SITUS Ai~D APPUCABLE LAW.
    .All questions pertaining to the valdity, function and adminstration of ths Trust shall be determed in accordance with the laws of the State of Alaska. Kae, Alaska is hereby designated as the situs of the Trt.
25. REGISTRATION.
    Ths Trst shal be registered pursuant to AS 13.36.005 et seq., as

amended, with the Clerk of the Cour, Fist Judicial Distrct, Juneau, Alaska.

26. GRAMATICAL REFERENCES.

All grammatical references to number; gender or person shal be

read and interpreted as may be required by the existig fact as they

exist at the tie this Trt is created, and no straied interpretation

is to be permtted.
27. AMENDMENTS TO THE TRUST.
Even though this Trst is irevocable, and even though the share￾holders ofKae Tribal have theretofore approved the establishment of ths Trust as requied by applicable law, the Trtees may make -"

:.-~",.;"';~ '~,,,,,"'~".M~""" t., , liited amendments to th Trt as follows:
the Trt, the 27.1. At any tie durng the fist thee (3) year of

Trustees may amend any techncal aspect of the Tr, includig,

but not lited to: (i) the timing of distrbutions, (ü) the votig

procedures to be used by the Trstees, (iü) the Trstees's powers, (iv) the date for the anual meetig of the Trstees, (v) the numberig the need for bondig of Sections, pages, and cross-references, and (vi) of the Trstees. An amendment described in this Section shall be accomplished by one or more wrtten agreements between Kae Tribal and the Trstees. the Trst, amendments descrbed in
27.2. Afer the thid year of

Section 27.1 may only be made once each five (5) year at the anual

meetig of the Trstees and then in the maner descrbe for such changes in Secton 27.1. two-this of the 27.3. At any tie the Trstees, upon a vote of Judicial incumbent Trustees, may petition the Superior Cour, Fir

Ditrct, Juneau, Alaska, to reform in any maner th Trt as petitionig necessar to avoid any Material Adverse Effect in lieu of

such cour to termate thi Trst as descrbed in Secton 8. The

Trstees shal be the only necessar pares to such proceedig,

although interested Beneficiares may appear in such acton at their own expense.
27.4. N otwthstardig any provision of
ths Trut
Ageement, the
Trstees may not use the powers contaied in ths Secton to change the Trust or their respecve shares the designated Beneficiares of

of the Trst, to revoke the Trust, to cause the Trt Fund to rever in any maner to Kake Trbal, or to reduce the lengt of tie

between votes as described in Secton 7.
27.5. At any tie prior to December 31, 1995, the Trtees and

Kae Trbal by wrtten agreement shal make any and al sucl changes herein (including without liitation, deletig or amendig
Section 6, Section 7 or any other provision from th Ageement) as
shal be necessar to obtai favorable rugs or avoid unavorable the request rugs from the Internal Revenue Servce as a result of

described in Secton 8.

...~. ._~....,-~~ _!.~,;""~~:..3,t;:"..

it' 11

28. DEFINITIONS.
    As used herein the followig terms shal have the followig mean￾ings:
    28.1. "Anversar of th Trst" means, with regard to any

calendar year, the calendar day withi such year which corresponds to the calendar day when the shareholders of Kae Trbal adopted the fist resolution establishig a settlemènt trst, whether or not

the provisions of this Agreement are subsequently modied as set out herein.
28.2. "Cash Income" mean the total of al eargs of
the Trst
Fund, including but not lited to interest, rents, ordiar divi￾dends, and any other dividends or capital gais alocated to Income pursuant to this Trst Ageement, calculated on a cash accountig

basis.
28.3. "Beneficiaries)" means the holders ofthe Trst Units.

28.4. "Material Adverse Effect" means any change which has a

likeliood of frstrating the puroses of the Trst to the degree that

the Trst would not have been create if the change was in effec at the tie the Trust was created. Examples of a Material Adverse

Effect would include, but are not limited to, a material change in the Settlement Trst proviions of ANCSA (as such provisions read on

the Effective Date of th Trst), signcant increases in the income taxes on accumulated Trust income or Trust distributions, discontinuation of the income tax credit on ditrbutions of acc-i￾lated income for taxes paid by the Trst on accumulated income, changes in law which would result in double taation of income by a single taxng authority, or restrctons on investment alternatives.

28.5. "Net Cash Income- means the Cash Income remaig afer
payment of all necessar and proper eXpenses of admintration, but before the payment of any item properly alocated to Prcipal (including without litation any taes, such as income, real estate, or excise taxes), calcuated on a cash accountig basis.
28.6. "Principal" mean the intial contrbution to the Trt by
Kae Trbal, plus any additional propert which may thereafr be contrbuted to the Trt puruat to Section 4, plus undistrbute

Net Cash Income (which has ben added to Prcipal).

28.7. "Tst" mean the tr created under ths Ageement.

, l' .

the Trst when referr to
28.8. "Tstees" means the Trs of
the Trut when referr to collectively. "Trstee" mean a,Trstee of

singly.
28.9. "Tst Fund" means the propert listed in Exhbit "AJl, plus
all property thereafer contributed to ths Trst and al rents, whatever nature generated by the diVidends, income and profits of

propert listed in Exhbit "A", or from propert thereafr contrb￾uted to the Trst.

28.10. "Trust Unit" mean a beneficial interest in the Tr as
descrbed in Section 2. '
28.11 Other Terms: other capitaled terms (words or phrases)
used herein and not otherwse defied have the meang given by ANCSA, on the Effective Date of ths Trt.

29. EFFECTIV DATE.
    Ths Trst is executed, effectve as of the date of signg. The the propert Trstees, by execution hereof, acknowledge receipt of

listed on Schedule A hereto. Upon approval of the shareholders of Kae 'l'rbal of a resolution establishig a settlemènt trt, th

Trust shal be deemed to become a Settlement Trst withi the

meang of ANCSA (as such proviion reads on the Effectve Date of this Trust), whether or not the provisions of this Agreement are subsequently modied as set out herein.

!!~, ~__.. ..""j).;,--ti., "1 -: _.~'-""'T;;~;"~~~~,,~'~;:""",""O:"-:i :;~~'h~¡¡:~

'"
IN WITNSS WHEREOF, the pares hereto have caused th Agreement to be signed ths 18th day of Apri 1994. TRUSTEES . IS!

Gordon Jackson
Chairman and Trstee

IS!
Harold Mar, Trstee
IS!
Lolanda Cavanaugh, Trstee

IS!
Archie Cavanaugh, Jr., Trtee
IS!
Pete Mar, Jr., Trustee
KA TRIBAL, INCORPORATED

By:

IS!

Gordon Jackson,
PresidentJCEO

IS!

Harold Marin,Vice President

Is!
Henrch Kadake, Sr.
Secretar and Trtee
Is!
Staey Adams, Trtee

Is!
Norman Jackson, Trstee

Is!
Mar Kadake, Trstee
Is!
Henrch Kadake, Sr.
Corporate Secreta

.- t, "r

SCHEDULE A

Trust Property
Cash of
$1,000.00
(Ts $1,000 is intended as a nominal amount so that the Trst ca

be established. Other amounts may be contributed in the dicretion .ofthe Kake Tribal Corporation Board of Directors. Th is descrbed in more detai in the Notice of Meetig and Proxy Statement Maied to Kae Trbal Shareholders on approxiately Apri27, 1994.)

'
I
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