X-Message-Number: 8211
Date: 15 May 97 00:22:21 EDT
From: "Stephen W. Bridge" <>
Subject: Summary of Alcor Trust
To CryoNet
From Steve Bridge, Chairman
Board of Directors
Alcor Life Extension Foundation
May 14, 1997
A Summary of Alcor's new Patient Care Trust. (A follow-up to CryoNet Post
#8186)
The full text of the Trust is available from Alcor. $3.00 for Alcor
suspension members and people in the sign-up process. $18.00 for all
others. The extra $15.00 will be a donation to the Patient Care Trust to
help cover some of the legal costs. Anyone who pays the $18.00 and enters
Alcor's sign-up process within 6 months will receive a $15.00 credit
against his or her sign-up fee.
Call 602-922-9013 or e-mail Joe Hovey () or Brian Shock
() to order copies of the Trust by credit card. Or send a
check to Alcor Life Extension Foundation at 7895 E. Acoma Dr., Suite
110, Scottsdale AZ 85260-6916.
This Trust was written by Arizona trust attorney Lawrence Stevens in
conjunction with me, with advice from Alcor's Board and staff and other
thoughtful reviewers. Two other attorneys have also reviewed it, Gary
Meade (now the Chairman of the Trust Board) and my personal attorney, Ted
Waggoner.
Lengthy direct quotes from the Trust are bracketed by lines of
asterisks (****). Shorter quotes will be in "quotation marks".
First, I quote the opening and the first three Articles in full:
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ALCOR PATIENT CARE TRUST
This Agreement is made this 4th day of May, 1997, between The Alcor
Life Extension Foundation, Inc. (a California non-profit, tax-exempt
corporation, hereinafter referred to as "Alcor"), as settlor, and the
Board of Trustees (hereinafter referred to as "the Trust Board") of the
Alcor Patient Care Trust, as Trustee.
Alcor hereby transfers to the Trust the property listed in the
attached Schedule A. That property, the proceeds of that property, all
additional property received by the Trust from Alcor or from any other
person or source, and all investments or reinvestments thereof are herein
collectively referred to as the "Trust estate" and shall be held upon the
following trusts:
FIRST: The Trust shall be named the ALCOR PATIENT CARE TRUST.
SECOND: The Trust shall be for the exclusive non-profit scientific
research and educational purpose of providing care for individuals
(hereinafter called "Patients") who have been placed into cryonic
suspension or other forms of biostasis as long-term research specimens by
Alcor until such future time as it may be possible to repair and revive
them to such a condition as will allow them to be considered legally
alive, functional, and independent. This applies both to those Patients
currently held in biostasis at Alcor and to those Patients who may be
placed into biostasis after this Trust has been established.
THIRD: The Alcor Life Extension Foundation shall be designated as
beneficiary of the Trust, acting on behalf of the Patients in biostasis,
since at the time this Trust takes effect, such Patients are classified as
"legally dead." Should these Patients be classified as "legally alive" at
some time in the future or should other Patients later be placed into
biostasis by Alcor under conditions where they are classified as legally
alive, Alcor shall continue to act on their behalf until such time as
these Patients may be made conscious and functional and able to act on
their own behalf.
The interests of the beneficiary in principal or income shall not be
subject to the claims of any creditor or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered.
****************************************************************
As you can see, one of tricks of a trust like this is building in
flexibility so that the primary object of the Trust -- protecting the
patients -- can be achieved even in the face of legal changes in the
future. Let's face it -- we don't know what the legal status of people in
biostasis will be in 50 years.
The last line of Paragraph THIRD is part of the legal separation of
Alcor and the Trust, to protect the Trust corpus from suits against Alcor.
Next is an iteration of how the Trust estate shall be held and
disposed.
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(a) The Trust estate shall be invested with a minimum goal of
enabling the amount of principal plus investment income to keep the
Patients in biostasis as long as may be necessary to fulfill the purpose
of the Trust.
****************************************************************
The Trust pays Alcor's patient care expense bills and will pay for
the eventual reanimation of the patients and their reintroduction into
society. There is also a provision that the Trust can pay for research
into repair and reanimation as long as the basic ability to keep the
patients frozen is not compromised (the wording is more specific). And of
course the Trust pays all reasonable expenses of Trust administration,
including travel expenses of the Trustees to meetings. (The Trustees
themselves are unpaid volunteers.)
Typically, Alcor will pay the PC expenses from its general operating
fund, then submit a monthly itemized bill for reimbursement to the Trust
Board. The Trustees can vote to approve or disapprove each item. Then
all approved items are reimbursed. Unapproved items must be paid for by
Alcor. Alcor can call for binding arbitration if it feels that the Trust
Board is wrong. Since arbitration would be expensive and time-consuming,
I would expect that Alcor would be extremely careful about its bills to
the Trust.
For large expenses (such as a new Bigfoot dewar) or emergencies,
Alcor can submit a request to the Trust Board to pay such expense
directly.
The Trust Board and Alcor's Board have approved a detailed definition
of what constitutes a patient care expense. Basically, "patient care"
begins only when the patient is in permanent storage in liquid nitrogen
(or whatever process or temperature may replace that as "permanent"
storage in the future).
The duties of Alcor include the election of the Trust Board (more on
that later), the appointment of the original Investment Manager,
contributions of assets to the Trust, all patient care itself, all
decisions about the care, safety, and location of the patients, and the
future revival of the patients.
There is an interesting check and balance here that may not be
immediately apparent. Alcor decides what needs to be done; but the Trust
Board can refuse to pay for something that isn't an appropriate expense.
This is a bit like the relationship between the U.S. President and the
House of Representatives.
Election and term of Trust Board:
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(a) The Trust Board shall consist of five individual Trustees
elected by Alcor's Board of Directors. All Trustees on this Trust Board
must be Suspension Members of Alcor. Only one individual Trustee shall be
a member of Alcor's Board of Directors. At least three of the individual
Trustees must be related to or have had a significant personal involvement
(such as a spouse or similar long-term companion) with an Alcor suspension
Patient.
(b) No individual Trustee may be an employee or officer of Alcor or
receive compensation from the Trust or from Alcor, except for those
benefits available to any Alcor member (e.g., standby credits) or as
otherwise expressly provided herein.
(c) Each individual Trustee shall be elected by a two-thirds (2/3)
vote of the Alcor Board of Directors for a term of five (5) years. The
terms of the individual Trustees shall be staggered to provide that no
more than one individual Trustee's term expires each year. There is no
limit on the number of terms an individual Trustee may serve.
****************************************************************
****************************************************************
(f) A unanimous vote of the Alcor Board of Directors is required to
remove an individual Trustee for any reason before his/her term has
expired. No more than two (2) Trustees may be removed in any twelve (12)
month period.
****************************************************************
I've left out a lot of the legal language here; but I think the
details above are sufficient for a first pass.
The Trust Board will select a Chairman, Secretary, and Treasurer. As
I said last week, Gary Meade is Chairman, Thomas Donaldson is Secretary,
and Warren Robertson is Treasurer.
There are several pages of the Trust Board's duties and powers, which
basically reiterates what I've said above and empowers them to make
investments of various kinds, appoint advisors and Special sub-Trustees,
pay the patient care expenses and other expenses, to write reports, and
have meetings.
A couple of notes on approvals and meetings: All meetings must have a
quorum of three. While the Trust Board approves patient care expense
payments by majority vote, ANY action requires at least three assenting
votes. In other words, if only three are at the meeting, all votes must
be unanimous. We didn't want a situation where only two Trustees could
take action. Any action which requires the unanimous vote of the Trust
Board requires the assent of all individual Trustees, whether present or
not.
As I said last week, the Trust is originally organized as a part of
Alcor, to take advantage of Alcor's tax-exempt status. However, if it
becomes necessary or seems wise (and affordable) at any time, the Trust
may be reorganized into a separate legal entity with its own tax-exempt
status.
There follows a long section about the circumstances under which the
Trust may or must terminate. The first paragraph points out the number
one consideration:
****************************************************************
(a) The Trust Board shall take all legal steps necessary to insure
that the Trust residue is used for the protection of Alcor biostasis
Patients before the Trust residue is distributed for any other purpose.
****************************************************************
The Trust will terminate when all patients have been revived and
reintroduced into society or when Alcor ceases to exist -- unless the
Trust has been reorganized into a separate entity. There are a number of
creative ideas about where the remaining money should go (other non-profit
organizations for revived patients rights, research into life extension,
etc.) We don't want it to simply be handed over to the state, even if we
ARE already immortal, supersmart, handsome, and rich.
For the next two years or less, the Trust is still revocable and
amendable by a 2/3 vote of the Alcor Board. We didn't want to paint
ourselves into a corner until we saw whether these provisions were
practical or not. There may be simple changes that we could make in the
next couple of years that would make it more likely that the Trust could
fulfill its purpose.
On May 4th, 1999, unless Alcor's Board has already revoked the Trust
or made it irrevocable, the Trust automatically becomes irrevocable. We
left one small loophole for future changes in the law or the economy:
****************************************************************
The accomplishment of the purposes of this Trust will depend on
developments in science and technology, in the world economy, or in other
areas which cannot be predicted at this time. Such changes may render
parts of this Trust irrelevant or unworkable, or may prevent the
accomplishment of the purposes of this Trust. Therefore, if amendment of
the Trust is necessary to accomplish the purposes of the Trust after the
Trust becomes irrevocable, the Trust may be amended by a unanimous vote of
the Trust Board and of the Alcor Board of Directors. The ultimate purpose
of the Trust, as described in Article SECOND, shall not be changed.
****************************************************************
Now a brief word about current assets and the Investment Manager.
The assets invested in bonds, equities, and money market instruments are
under the overall management of the Smith Barney Consulting Group. Smith
Barney contracts with independent investment management companies around
the country. These managers are top quality, familiar to some of you,
each with rigid investment standards and strategies. Currently we have
six different sub-managers, one each in the following areas: large cap
growth, large cap value equity, small cap equity, global equity,
intermediate gov/corp bonds, and 1-10 year Treasury notes. The Trust has
approximately $650,000 in these investments.
The Trust also has ownership of Alcor's position in Cryonics
Property, LLC, the limited liability company which owns the building Alcor
is in. I don't have the exact figures right in front of me, but the Trust
position in the LLC is about 60%. The Alcor book value is $185,000 (the
purchase price). The depreciated tax value is lower; the appreciated
sales value is about 50% higher (but we're not selling the building, so it
doesn't matter too much).
The Trust also takes over ownership of the mortgage on the building,
about $495,000 at 10%. For the past two years, rents on the building
(occupied by four other reliable tenants besides Alcor) have been well
ahead of expenses. For the past year, income to Alcor's Patient Care Fund
on the mortgage alone has been in excess of patient care expenses, leaving
the stock/bond investments to grow without being disturbed (and a darn
good year to do it).
Finally, the Trust will also have ownership of the patient dewars and
other equipment involved in patient care.
Steve Bridge
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