Midland-Guardian Co. Salaried Employees 401(k) Savings Plan and Trust
PRISM Participant Loan Policy
And Agency Agreement
For administrative convenience, in accordance with Section 11.10 of the
Midland-Guardian Co. Salaried Employees 401(k) Savings Plan and Trust (the
"Plan"), the Committee for the Plan adopts the following policies to govern the
administration of loans to Participants of the Plan ("Participant Loans"). The
Committee appoints Key Trust Company of Ohio, N.A. as Trustee (or as an
affiliate of the Trustee) to be the service provider (the "Service Provider")
and to act as the agent for the Committee for purposes of receiving
information from Participants requesting Participant Loans, determining
whether the Participant requesting a Participant Loan will qualify for a
Participant Loan ( in accordance with the standards set forth in this
Participant Loan Policy), and preparing the documents necessary to establish
the Participant Loan, including without limitation an appropriate loan
application ("Application"), a promissory note ("Note") and the personal loan
disclosure statement ("Disclosure Statement"), in substantially the form of
the attached Exhibits A through C, and collectively referred to as the "Loan
Documentation", all of which have been reviewed and approved by the Committee.
The Service Provider agrees to act as the agent for the Committee in the
operation of the Participant Loan program. All capitalized terms in this
policy statement shall have the meaning given to them in the Plan.
1. Applications. Applications from Participants shall be made
in writing on a form supplied by the Committee or the
Trustee, must be signed by the Participant and be submitted
to the Committee or its designee no later than the 15th day
prior to the date the Committee is regularly scheduled to
meet for the purposes of reviewing and approving loan
applications. The application of a married Participant for a
loan __x__Shall, _____Shall Not, include the written consent of
his or her spouse to use the Participant's account balances as
security for the loan. If necessary, spousal consent shall be
obtained no earlier than the beginning of the ninety (90)
day period that ends on the date the loan is to be made.
Consent must be witnessed by a member of the Committee or
its designee, or be notarized. Loan applications will be
reviewed by the Committee only once each month on the 15th
day of each such month, or at such other times as the
Committee may direct. If a loan is approved, the Trustee
will be notified, and directed to process the loan and issue
a check, accompanied by appropriate loan documentation as
soon as practical (usually within three days of notification
of approval). A Participant may have no more than 1 loan(s)
outstanding at any given time. A Participant _____may,
__x__ may not, consolidate an existing balance of a loan into
a new loan, or increase the amount borrowed on an existing
loan (as evidenced by an appropriate restated note) provided
the term of the new loan (or restated existing loan) does not
extend beyond the fifth anniversary of the existing loan.
No loan shall be made for a period of less than 12 months.
2. Review and Approval. Applications for loans will be
reviewed as soon as practicable by the Committee.
Incomplete applications, including those which do not
evidence spousal consent if necessary, will be denied.
Complete applications will be approved and the loan will
be granted under such terms and conditions as the Committee
deems reasonable, in the best interests of the Plan and its
Participants, and subject to such conditions as the
Committee believes, in its sole discretion, necessary to
protect the Plan's interests and obtain repayment of the
loan, if under all the facts and circumstances, it appears
to the Committee that the Participant has the ability to
timely satisfy his or her obligation to repay the loan to
the plan.
3. Loan Terms. Notwithstanding any other provision of this
policy statement, all loans granted from the Plan shall be
subject to the following:
a. No loan shall be granted in an amount less than $500.00,
nor greater than the limit specified in Section 11.10(e) of the
Plan, and loans will only be issued in whole dollar
amounts, and only in increments of $50.00;
b. All loans will be secured by an assignment, pledge or
other security interest in the Participant's vested
account balances and such other security as the
Committee, with the consent of the Trustee, may deem
necessary to adequately protect the interests of the
Plan. Each loan granted from the Plan shall contain
terms that allow the Committee to demand additional
security for a loan in the event the original security
for a loan is deemed by the Committee, in its sole and
absolute discretion, to be insufficient to protect the
interests of the Plan;
c. Loans shall bear a reasonable rate of interest as
determined by the Trustee at the time of granting the
loan. The Trustee shall determine an interest rate
commensurate with interest rates charged by the Trustee,
or any affiliate of the Trustee in the business of
lending money, for loans which would be made under
similar circumstances;
d. Loans made to Participants who are employed by the
Employer shall be repaid by automatic payroll deduction,
in equal per pay installments, consisting of principal
and interest, over a term determined by the Committee,
not to exceed five years with the exception of loans for
the purpose of purchasing a principle residence of a
Participant, which shall be for a term not to exceed 30
years.
e. No loan shall be made to any Participant until the
Participant has been provided with the appropriate
disclosure documents required under the Federal Truth-In-
Lending Act (15 U.S.C. Sectin 1601 et seq.) and Regulation Z
promulgated thereunder, and the Participant acknowledges
in writing receipt of all such disclosure documents;
f. All loans will be evidenced by a promissory note or such
other appropriate documents, which shall contain such
provisions as the Trustee deems advisable to protect the
interests of the Plan and its Participants.
Notwithstanding the foregoing, in the event of any
default which the Trustee, pursuant to the provisions of
the Plan, attempts to collect through legal action, the
Trustee in its sole discretion as a fiduciary of the Plan
may elect to waive any provision in the loan documents.
All original loan documents shall be assets of the trust
and shall be held by the Trustee until such time as the
loan obligation is satisfied in whole.
g. Each Participant who has a loan shall be charged a $50.00
fee at the time the loan is issued, and an annual fee
each year thereafter (at the start of the Plan Year) as
may be charged by the Trustee for the issuance and
processing of loans and repayments. To the extent
required, such loan fees shall be evidenced in the Truth-
in-Lending disclosure provided to the Participants.
h. Notwithstanding anything to the contrary in this policy
statement, a Participant shall have the right to prepay
any loan from the Plan in whole at any time by remitting
such prepayment to the Trustee.
4. Default. Default shall be defined as the failure of any
Participant to comply with the terms of any loan from the
Plan which shall continue uncorrected for a period of 90
days, or such longer of period of time as the Committee may
specify, based on the facts and circumstances of each such
case, as may be necessary to cure any default and is in the
best interests of the Plan and its Participants. Upon
default, the Committee shall:
a. Direct the Trustee to commence appropriate action to
collect the entire balance of the defaulted loan,
including but not limited to seeking legal recourse and
executing against any security or collateral securing the
loan which is not a Plan asset;
b. Direct the Trustee to deem the defaulted loan and any
interest accruing thereon to be a distribution to the
Participant, to the extent allowed by law;
c. Direct the Trustee to withhold from any distribution due
to the defaulting Participant, or any beneficiary
thereof, the amount necessary to satisfy the defaulted
obligation, including accrued interest; and,
d. Take such other steps as the Committee may deem
appropriate to protect the interests of the Plan and its
Participants.
Nothing contained in this policy statement shall be
construed to modify any provision of the Plan. In
administration of the loan program the Committee shall treat
all similarly situated Participants in as similar a manner
as possible, subject to the creditworthiness of the applying
Participants.
In Witness Whereof, the Committee hereby adopts this policy and appoints
Key Trust Company of Ohio, NA as the Service Provider this 29th day of
December, 1998.
Committee Members:
/s/W. Todd Gray
/s/Ronald L. Gramke
/s/Edward J. Heskamp