Exhibit 5d
Trust Agreement between Home Federal Savings Bank
and Mellon Bank, N.A.
23
TRUST AGREEMENT
between
HOME FEDERAL SAVINGS BANK
and
MELLON BANK, N.A.
Dated as of July 24, 1996
TABLE OF CONTENTS
PAGE
SECTION 1. Establishment of Master Trust 1
1.1 The Master Trust 1
1.2 Establishment of Separate Funds 2
1.3 Company as Agent 2
1.4 Title to Assets 2
1.5 Acceptance of Trust 2
1.6 Master Trustee Responsibilities 2
SECTION 2. Investment of Master Fund 2
2.1 Appointment of Investment Managers
and Investment Committee 2
2.2 Directed Funds 3
2.3 (a) Permitted Investments 3
2.4 (b) Orders placed with the Master Trustee 4
(c) Brokerage Commissions 4
(d) Investment Instructions 4
2.3 Discretionary Funds 5
2.4 Settlement of Securities Transactions 5
2.5 Cash Balances 5
2.6 Appointment of TPA 5
2.7 Transfer Among Funds 5
2.8 Transfers to Collective Trusts 6
2.9 Insurance Contracts 6
(a) Procuring and Holding Contracts 6
(b) Exercising Rights under Contracts 7
(c) Payment of Premiums 7
(d) Payments under Contracts 7
(e) Liability of Master Trustee;
Indemnification 7
2.10 Loans to Participants 8
SECTION 3. Powers of Master Trustee 8
3.1 In General 9
3.2 At Direction of Named Fiduciary 10
3.3 With Respect to Participant-Directed Funds 10
3.4 Administrative Powers 10
SECTION 4. Company Securities 12
4.1 Registration of Company Securities 12
4.2 Voting of Company Securities 12
4.3 Tenders for Company Securities 13
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SECTION 5. Accounts to be Maintained by the Master Trustee;
Payments from the Master Trust 15
5.1 Accounts 15
5.2 No Separate Recordkeeping 15
5.3 Payments; Disputes 15
5.4 Direct Deposit of Payments 15
5.5 Responsibility of TPA 15
5.6 Returned and Uncashed Payments 16
5.7 No Liability for Contributions 16
SECTION 6. Valuation of the Master Fund 16
6.1 Valuation 16
6.2 Units 16
SECTION 7. Administrative Expenses, Taxes and
Master Trustee's Compensation 17
7.1 In General 17
7.2 Fees of Investment Managers 17
SECTION 8. Master Trustee's Liability; No Duty
to Review; Indemnification 17
8.1 Liability of Master Trustee 17
8.2 No Duty to Review 18
8.3 Reliance on Certain Appraisals 18
8.4 Indemnification of Master Trustee 18
8.5 Limitation of Indemnity 19
8.6 Indemnification of Successor Trustee 19
SECTION 9. Settlement of Master Trustee's Accounts 19
9.1 Annual Accounting 19
9.2 Other Accountings 20
9.3 Settlement of Accounts 20
SECTION 10. Segregation of Parts of the Master Trust 20
10.1 Segregation 20
10.2 Segregated Property 20
SECTION 11. Resignation and Removal of Master Trustee 21
SECTION 12. Evidence of Action by Company, Investment
Managers, Investment Committee and TPA, and
of Appointment of Named Fiduciary,
Investment Managers, Investment and
Committee and TPA 21
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SECTION 13. Amendment of Agreement, Termination of
Trust, Termination of Plan 22
13.1 Amendment of Agreement 22
13.2 Termination of Master Trust 22
13.3 Termination of the Plan 22
13.4 Exclusive Benefit 23
SECTION 14. Inalienability of Benefits and Interests 23
SECTION 15. No Merger, Consolidation or Transfer of
Plan Assets or Liabilities 23
SECTION 16. Governing Law 24
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TRUST AGREEMENT
THIS AGREEMENT made as of July 24, 1996 by and between HOME FEDERAL
SAVINGS BANK ("Company"), and MELLON BANK, N.A., a national banking association
("Master Trustee"),
WITNESSETH:
WHEREAS, the Company and certain of its subsidiaries and affiliates have
heretofore adopted or may hereafter adopt a qualified deferred compensation
plan for the benefit of its or their employees (such plan, as amended from time
to time, is referred to as the "Plan", and the Company and any such subsidiary
or affiliate are referred to as the "Employer"); and
WHEREAS, the Employer has adopted the Plan as part of certain qualified
plan services offered by Pentegra Services, Inc. ("Pentegra") including 401 (k)
plan design and administrative services and investment options (the "PSI
Program"); and
WHEREAS, the Plan provides, among other things, for the financing by
means of a trust fund of all or a part of the benefits to be paid pursuant to
the Plan to certain employees ("Participants") of the Employer and their
beneficiaries ("Beneficiaries"); and
WHEREAS, the Company now wishes to appoint Mellon Bank, N.A. as Master
Trustee in accordance with the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
NOW, THEREFORE, the Company and the Master Trustee agree as follows:
SECTION 1. ESTABLISHMENT OF MASTER TRUST.
1.1 THE MASTER TRUST. The Company hereby establishes with the Master
Trustee a trust (hereinafter referred to as the "Master Trust") which shall
comprise all of the funds and other assets deposited herewith, together with
such other sums of money and such property acceptable to the Master Trustee as
shall from time to time be paid or delivered to the Master Trustee hereafter,
all investments made therewith and proceeds thereof and the earnings and
profits thereon. "Property" as used herein shall not include any direct
interest in real property, leaseholds or mineral interests. All such funds and
property, together with such investments, proceeds, earnings and profits, less
the payments or other distributions which, at the time of reference, shall have
been made by the Master Trustee as authorized herein, are referred to as the
"Master Fund". Any Company Securities (as defined in Section 4.1) deposited to
the Master Fund or which the Master Trustee is directed to purchase for the
Master Fund must satisfy the requirements of Section 407(d) of ERISA. The
Master Trustee shall have no duty for any property until it is received and
accepted by the Master Trustee.
1.2 ESTABLISHMENT OF SEPARATE FUNDS The Master Fund shall consist
initially of a single fund. At any time and from time to time the Master
Trustee shall, if so directed by the Company, the party that under the terms of
the Plan is the named fiduciary with respect to control or management of the
assets thereof (hereinafter referred to as the "Named Fiduciary"), establish
within the Master Fund one or more investment funds, each of which shall be
invested or reinvested as provided in Section 2. The term "Fund", as used
herein, shall mean the initial fund or any other investment fund so
established, depending upon the fund to which such provision is being applied
at the time, and the term "Master Fund" shall refer to all such funds in the
aggregate. The functions of the Named Fiduciary may be divided among more than
one person or persons (in which case the term "Named Fiduciary" shall refer to
any such person or persons, as the context requires), and the same person or
persons may serve as the Named Fiduciary and the Investment Committee. The
Master Trustee shall hold, manage, administer, value, make purchases and sales
for, distribute, account for, and otherwise deal with each Fund separately.
1.3 COMPANY AS AGENT. Each subsidiary or affiliate of the Company
adopting the Plan appoints the Company as its agent for purposes of this
Agreement and agrees that it shall be bound by the decisions, actions and
directions of the Company, the Named Fiduciary and any Investment Manager,
Investment Committee (as defined in Section 2.1) or TPA (as defined in Section
2.6) under this Agreement and that the Master Trustee shall be fully protected
in relying upon such decisions, actions and directions and shall in no event be
required to give notice to or otherwise deal with such subsidiary or affiliate
except by dealing with the Company as agent of such subsidiary or affiliate.
1.4 TITLE TO ASSETS. Neither the Plan nor the Participants or their
Beneficiaries shall have any right, title or interest in or to any specific
assets of the Master Fund, but shall have an undivided beneficial interest in
the Master Fund valued in accordance with Section 6 hereof. Ownership of all
the individual assets of the Master Fund shall be by the Master Trustee. The
Master Trustee shall not issue any certificate or other documentation
representing any interest in the Master Fund or part thereof.
1.5 ACCEPTANCE OF TRUST. The Master Trustee hereby accepts the Master
Trust created by this Agreement on the terms and conditions herein set forth.
1.6 MASTER TRUSTEE RESPONSIBILITIES. The Master Trustee is not a
party to, and has no duties or responsibilities under, the Plan other than
those that may be expressly contained in the Trust Agreement. In any case in
which a provision of the Trust Agreement conflicts with any provision in the
Plan, this Agreement shall control as to the duties and responsibilities of the
Master Trustee. The Master Trustee shall have no duties, responsibilities or
liability with respect to the acts or omissions of any prior trustee.
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SECTION 2. INVESTMENT OF MASTER FUND.
2.1 APPOINTMENT OF INVESTMENT MANAGERS AND INVESTMENT COMMITTEE. At
the time each Fund is established, and from time to time thereafter, the
Company shall determine and advise the Master Trustee whether the investment of
such Fund is to be managed (a) by the Master Trustee in its sole discretion,
(b) by an investment manager who (i) is duly appointed by the Named Fiduciary,
and (ii) qualifies as an investment manager under Section 3(38)(B) of the Act
(an "Investment Manager"), or (c) by an Investment Committee appointed by the
Named Fiduciary (the "Investment Committee"). Any Fund that is managed by the
Master Trustee is hereinafter referred to as a "Discretionary Fund", and any
Fund that is managed by an Investment Manager or Investment Committee is
hereinafter referred to as a "Directed Fund". In the event that the Plan
provides for allocation of Trust Fund assets to the Funds at the direction of
Participants, the Funds in which Participants may direct their investments,
whether or not otherwise constituting Directed Funds or Discretionary Funds,
shall be referred to herein as "Participant-Directed Funds".
In the event the Investment Manager of any Directed Fund resigns
or is removed, the Named Fiduciary shall promptly notify the Master Trustee of
such resignation or removal and of the appointment of a successor to such
Investment Manager. Upon resignation or removal of an Investment Manager, the
Master Trustee shall not have or be deemed to have any responsibility to manage
and control any asset held in the Directed Fund of such former Investment
Manager, except as set out in the sentence immediately following. If an
Investment Committee has been appointed, the Master Trustee shall treat such
Fund as managed by the Investment Committee pending notification from the Named
Fiduciary of the appointment of a different successor to the former Investment
Manager; if no Investment Committee has been appointed and if no notification
of the appointment of such a successor is received within seven days of
notification to the Master Trustee of the former Investment Manager's
resignation or removal, the Master Trustee shall thereafter treat such Directed
Fund as managed by the Company unless and until it receives other instructions
from the Named Fiduciary as to the investment of such Fund.
2.2 DIRECTED FUNDS.
(a) PERMITTED INVESTMENTS. Each Directed Fund shall be invested and
reinvested, within the parameters of the PSI Program, without distinction
between principal and income, in such property as the Master Trustee may be
directed by an Investment Manager or the Investment Committee with respect to
any Funds managed by such Investment Manager or Committee, including without
limitation: any and all common stocks, preferred stocks, bonds, debentures,
mortgages on personal property wherever situated, equipment trust certificates,
notes or other evidence of indebtedness, or any other securities, certificates
of deposit, demand or time deposits (including any such deposits, demand or
time deposits which pay a reasonable rate of interest with the Employer and any
such deposits, demand or time deposits with the Master Trustee or an
affiliate), shares of investment companies and mutual funds (including
affiliates of the Master Trustee), interests in partnerships and trusts,
insurance policies and contracts, repurchase agreements, and any other property
or joint or other part interest in property
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(including, without limitation, part interests in bonds and mortgages or notes
and mortgages), United States or foreign, whither situated within or outside
the United States (provided that, except as provided in Section 3.4 hereof, the
indicia of ownership thereof are not maintained outside the jurisdiction of the
district courts of the United States), and of any kind, class or character, and
irrespective in any case of whether the Master Trustee, an affiliate thereof or
another, individually or as trustee or agent, is acting as participator of any
part interest in property that may be acquired. Such investment and
reinvestment shall not be restricted to property authorized for investment by
trustees under any present or future law. A Discretionary Fund may be invested
and reinvested whether or not the property acquired is productive of income, is
marketable or constitutes a wasting asset. Without limiting the generality of
the foregoing, a Directed Fund may be invested in stocks of any classification,
bonds or other securities issued or guaranteed by the Company, or by any
subsidiary or affiliate thereof, which shall be deemed to purport to authorize
any investment or reinvestment in violation of the requirements or ERISA.
(b) ORDERS PLACED WITH THE MASTER TRUSTEE. An Investment Manager or
Investment Committee may direct the Master Trustee to have its trading desk
issue orders to a broker for the purchase or sale of securities for any
Directed Fund that such Investment Manager or Investment Committee manages.
Such directions shall include instructions as to whether such order is to be
placed "at market" or for a specific price (including a grand of prices). The
Master Trustee shall not be liable for any claim, liability, loss, damage or
expense attributable to its inability to place an order at a specific price,
whether due to the timing of such order or otherwise, unless the inability to
place such order is due to the Master Trustee's own negligence, bad faith or
willful misconduct.
(c) BROKERAGE COMMISSIONS. In placing securities transactions for a
Directed Fund, the Master Trustee's primary objective will be to obtain the
most favorable net results, taking into account such factors as the best net
price available, the size of and diffuclty in executing the order, and the
reliability, efficiency and financial responsibility of the broker or dealer.
When it can be done consistently with this goal, the Master Trustee may
allocate orders of the Securities Exchange Act of 1934). The Company
understands that such brokerage and research generated through commissions paid
by such other accounts may be useful in connection with a Discretionary Fund.
(d) INVESTMENT INSTRUCTIONS. An Investment Manager or the Investment
Committee at any time and from time to time may issue orders directly to a
broker for the purchase or sale of securities for any Directed Fund that it
manages. The Investment Manager or Investment Committee will promptly give or
cause to be given to the Master Trustee notice of the issuance of such order
and the broker will confirm such order or cause it to be confirmed to the
Master Trustee. Such notice and confirmation may be given in writing, by
telecopy or by any other electronic means using a code for the authentication
of messages, and may include Trade Reports issued by the Institutional Delivery
System of Depository Trust Company. Receipt of a
4
matching notice and confirmation or of such a Trade Report shall be authority
for the Master Trustee to settle such trade. Except as provided in Section 2.
1, in the absence of directions or authorization from the Investment Manager or
Investment Committee, the Master Trustee shall have no power, duty or authority
to invest any Directed Fund.
2.3 DISCRETIONARY FUND [Reserved]
2.4 SETTLEMENT OF SECURITIES TRANSACTIONS. When the Master Trustee is
instructed to deliver property against payment, delivery of the property and
receipt of payment may not be simultaneous. The risk of non-receipt of payment
shall be the Master Trust's and the Master Trustee shall have no liability
therefor. All credits to the Master Trust of the anticipated proceeds of sales
and redemptions of property and of anticipated income from property shall be
conditional upon receipt by the Master Trustee of final payment and may be
reversed to the extent final payment is not received. At the discretion of the
Master Trustee, the Master Trust may make use of such conditional credits. To
the extent such credits do not become unconditional by receipt of final
payment, the Master Trust shall reimburse the Master Trustee upon demand for
the amount of such conditional credits so used. When the Master Trustee is
instructed to receive property, it is authorized to accept documents in lieu of
such property as long as such documents contain the agreement of the issuer
thereof to hold such property subject to the Master Trustee's sole order. The
Master Trustee may, in its discretion, advance funds to the Master Trust to
facilitate the settlement of any trade. In the event of such an advance, the
Master Trust shall immediately reimburse the Master Trustee for the amount
thereof.
2.5 CASH BALANCES. The Master Trustee may invest all or any portion of
any cash balances in any Discretionary Fund, and an Investment Manager or the
Investment Committee may, with the prior written acceptance of the Master
Trustee, by written authorization delegate to the Master Trustee authority to
invest all or any portion of any cash balances in any Directed Fund, in the
Master Trustee's sole discretion, including, without limitation, investments in
part interests in obligations, irrespective of whether the Master Trustee or
another, individually or as trustee or agent, is acting as a participator. The
Master Trustee shall not be liable for interest on any cash balances in any
Directed Fund that it holds uninvested pending receipt of directions from the
Investment Manager or the Investment Committee, in the absence of authorization
from the latter to invest the same in the Master Trustee's sole discretion, nor
liable for interest on any cash balances it may be authorized to invest in its
sole discretion, and may hold uninvested as it deems to be in the best
interests of the Master Fund.
2.6 APPOINTMENT OF TPA. The Named Fiduciary hereby certifies to the
Master Trustee that Pentegra is the third party administrator (the "TPA")
appointed by it or the Company to receive, cumulate and communicate investment
and distribution directions with respect to Participant-Directed Funds from
Plan Participants, and the Named Fiduciary has delegated such responsibility
and authority to Pentegra as specified in this Agreement and as it shall
communicate to the Master Trustee from time to time. For the purposes of this
Agreement, such TPA shall be a delegee of the Named Fiduciary in accordance
with Section 405(c)(1)(B) of the Act. The Master Trustee may rely on such
certification and delegation until notified in writing to the contrary by the
Named Fiduciary.
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2.7 TRANSFER AMONG FUNDS. The TPA shall direct the Master Trustee with
respect to the allocation of assets to the Funds and with respect to transfers
among the Funds. The Master Trustee shall have no duty to invest, and shall not
be liable for interest on, any such assets it holds uninvested pending receipt
of directions from the TPA to allocate contributions among the Funds.
2.8 TRANSFERS TO COLLECTIVE TRUSTS. Notwithstanding any provision of
the Plan or of this Agreement to the contrary, the Master Trustee may, in its
sole discretion with respect to any Discretionary Fund and, if authorized or
directed by the Investment Manager or Investment Committee of any Directed
Fund, with respect to such Directed Fund, transfer all or any part of the
assets of such Fund to, or withdraw the same from, any collective investment
trust that shall be or shall have been created and administered by the Master
Trustee or any collective investment trust maintained by any other bank
(including affiliates of the Master Trustee) for the collective investment of
the property of employee benefit trusts, provided that such trust is qualified
under the provisions of Section 401(a) of the Internal Revenue Code ("Code")
and exempt under the provisions of Section 501(a) of the Code. To that end, the
Master Trustee is hereby expressly authorized to permit the commingling of any
or all of the assets of such Fund with the assets of other trusts eligible to
participate in such collective investment trusts. The Master Trustee shall have
no responsibility for the custody or safekeeping of assets transferred to any
collective investment trust not established and maintained by the Master
Trustee. To the extent that property of the Master Fund is invested in any
collective investment trust as provided above, the declaration of trust
pertaining thereto, as amended from time to time, and the trust thereby
created, shall be a part of this Agreement. The Master Trustee shall have, with
respect to the interest of such Fund in such collective investment trust, the
powers conferred by this Agreement to the extent that such powers are not
inconsistent with the provisions of such declaration of trust. For purposes of
any valuation of the Master Fund or any valuation of the interest or of the
account of any Participant or Beneficiary under the Plan, the interest of the
Master Trust in such collective investment trust shall be valued at the times
and in the manner prescribed by the declaration by which such trust was
created. The Named Fiduciary expressly understands and agrees that any such
collective investment fund may provide for the lending of its securities by the
collective investment fund trustee and that such collective investment fund
trustee will receive compensation for the lending of securities that is
separate from any compensation of the Master Trustee hereunder, or any
compensation of the collective investment fund trustee for the management of
such fund. A copy of the declaration of trust as presently in effect of any
collective investment trust to which the assets of the Plan are transferred
pursuant to this Section 2.8 shall be provided to the Named Fiduciary and
copies of amendments thereto shall be forwarded to the Named Fiduciary promptly
after their adoption.
2.9 INSURANCE CONTRACTS.
(a) PROCURING AND HOLDING CONTRACTS. The Master Trustee, upon written
direction of the Named Fiduciary or an Investment Manager, shall pay from the
Master Trust such sums to such insurance company or companies as the Named
Fiduciary or an Investment Manager may direct for the purpose of procuring
individual or group annuity contracts or other
6
insurance contracts (hereinafter referred to as "Contracts"). The Named
Fiduciary or an Investment Manager shall prepare, or cause to be prepared in
such form as it shall prescribe, the application for any Contract to be applied
for. The Master Trustee shall receive and hold in the Master Trust, subject to
the provisions hereinafter set forth in this Section, all Contracts obtained,
the proceeds of any sale, assignment or surrender of any such Contract and any
and all dividends and other payments of any kind received with respect to any
such Contract.
(b) EXERCISING RIGHTS UNDER CONTRACTS. The Master Trustee shall be the
complete and absolute owner of Contracts held in the Master Trust, provided
that the Named Fiduciary or an Investment Manager shall have power to direct
the Master Trustee to exercise any and all of rights, options, or privileges
that belong to the Master Trustee as such absolute owner or that are granted by
the terms of any such Contract or by the terms of this Agreement, and the
Master Trustee shall not exercise any of the foregoing powers or take any other
action permitted by any such Contract other than upon the written direction of
the Named Fiduciary or an Investment Manager. The Master Trustee shall have no
duty to exercise any of such power or to take any such action unless and until
it shall have received such direction. The Master Trustee, upon the written
direction of the Named Fiduciary or an Investment Manager, shall deliver any
Contract held in the Master Trust to such person or persons as may be specified
in the direction.
(c) PAYMENT OF PREMIUMS. Upon the written direction of the Named
Fiduciary or an Investment Manager, the Master Trustee shall pay from the
Master Trust premiums, assessments, dues, charges and interest, if any, upon
any Contract held in the Master Trust. The Master Trustee shall have no duty to
make any such payment unless and until it shall have received such direction.
(d) PAYMENTS UNDER CONTRACTS. Any sums paid out by any insurance company
under the terms of a Contract held in the Master Trust either to the Master
Trustee, or, in accordance with its direction, to any other person or persons
designated as payees in such Contract shall be a full and complete discharge of
the liability to pay such sums, and the insurance company shall have no
obligation to look to the disposition of any sums so paid. No insurance company
shall be required to look into the terms of this Agreement, or to question any
action of the Master Trustee or to see that any action of the Master Trustee is
authorized by the terms of this Agreement.
(e) LIABILITY OF MASTER TRUSTEE; INDEMNIFICATION. Anything contained
herein to the contrary notwithstanding, to the extent permitted by law, the
Master Trustee shall not be liable for the refusal of any insurance company to
issue or change any Contract or take any other action requested by the Master
Trustee; for any assets invested in a Contract at the direction of the Named
Fiduciary or an Investment Manager; for the form, terms, genuineness, validity,
sufficiency or effect of any Contract held in the Master Trust; for the act of
any person or persons that may render any such Contract null and void; for the
failure of any insurance company to pay the proceeds of any such Contract as
and when the same shall become due and payable; for any delay in payment
resulting from any provision contained in any such Contract nor for the fact
that for any reason whatsoever (other than the Master Trustee's own negligence,
bad faith or
7
willful misconduct) any Contract shall lapse or otherwise become uncollectible.
The Company hereby agrees to indemnify the Master Trustee and to hold it
harmless from and against any claim, liability, loss, damage or expense that
may be asserted against the Master Trustee by reason of any action taken or
omitted by the Master Trustee in connection with any Contract at the direction
of the Named Fiduciary or an Investment Manager other than such claims,
liabilities, losses, damages or expenses that are attributable to the Master
Trustee's own negligence, bad faith or willful misconduct in performing duties
specifically undertaken herein.
2.10 LOANS TO PARTICIPANTS.
(a) On the direction of the TPA, the Master Trustee shall make loans
from the assets of the Trust Funds to Participants in the Plan. All promissory
notes evidencing such loans shall constitute assets of the trust estate, shall
be held in a separate Fund known as the "Loan Fund" and, except as otherwise
provided herein, shall be held by the Master Trustee. The Master Trustee shall
have no responsibility with respect to the holding, investment or
administration of the Loan Fund, except as specified in the written directions
of the TPA with respect thereto.
(b) Each such loan shall bear a reasonable rate of interest (within the
meaning of Regulation Section 2550.408(b)(1) promulgated by the Department of
Labor) as determined by the Investment Committee and shall be secured by the
Participant's account balance in the Trust Fund. Unless otherwise instructed in
writing by the Named Fiduciary, the Master Trustee shall not file a UCC-1 form
or take other action in order to perfect its security interest in the accounts
of a Participant to whom a loan is made.
(c) The Named Fiduciary or the TPA will provide the Master Trustee with
such information as may from time to time be required for the Master Trustee to
exercise its rights under the documents relating to plan loans including,
without limitation, the occurrence of events of default by Participants.
(d) The TPA (or, if the Named Fiduciary so directs, the Investment
Committee,) is hereby appointed as custodian for the Master Trustee of all
original promissory notes and security agreements which shall be held subject
to the order of the Master Trustee. In the event that the Master Trustee or the
TPA terminates such custodianship (which either may do on written notice to the
other), the Named Fiduciary shall retain the originals of all promissory notes
and security agreements as custodian for the Master Trustee.
(e) In addition to all other indemnities provided to the Master Trustee
in this Agreement, the Company hereby indemnifies the Master Trustee and its
directors, officers and employees, and holds it and them harmless from and
against any claim, liability, loss, damage or expense (including reasonable
attorneys' fees) which it may incur by reason of its not filing or otherwise
perfecting a security interest granted to the Master Trustee with respect to a
loan to a Participant and in connection with the TPA or Named Fiduciary acting
as custodian of promissory notes pursuant to paragraph (d) above.
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SECTION 3. POWERS OF MASTER TRUSTEE.
3.1 IN GENERAL. The Master Trustee is authorized and empowered, in its
discretion with respect to a Discretionary Fund, and at the direction of an
Investment Manager or the Investment Committee with respect to a Directed Fund
managed by such Investment Manager or Committee:
(1) to sell, exchange, convey, transfer or otherwise dispose of any
property, real or personal, at any time held by the Master Trustee, by private
contract or at public auction, for cash or on credit, (in the case of a
Directed Fund, upon such conditions, at such prices and in such manner as the
Investment Manager or Investment Committee shall direct), and no person dealing
with the Master Trustee shall be bound to see to the application of the
purchase money or to inquire into the validity, expediency or propriety of any
such sale or other disposition;
(2) to grant options to purchase securities held in the Fund ("covered
call options") and other property held in the Fund and options to sell
securities and other property to the Fund, as well as combinations of such
options to purchase and such options to sell; and to acquire options to
purchase securities and other property for the Fund and options to sell
securities and other property held in the Fund, as well as combinations of such
options to purchase and such options to sell;
(3) to sell or exercise any conversion privileges, subscription rights,
warrants or other options and to make any payments incidental thereto, and to
consent to or otherwise participate in corporate reorganizations, mergers,
consolidations or other changes affecting corporate securities and to delegate
discretionary powers and to pay any assessments or charges in connection
therewith; but the Company understands that, where warrants, options, tenders
or other rights have fixed expiration dates, in order for the Master Trustee to
act with respect to a Directed Fund, it must receive instructions at its
offices, addressed as the Master Trustee may from time to time request, by no
later than noon (Eastern Time) at least one business day prior to the last
scheduled date to act with respect thereto (or such earlier date or time as the
Master Trustee may direct);
(4) to compromise, compound, settle or arbitrate any claim, debt or
obligation due to or from it as Master Trustee and to reduce the rate of
interest on, extend or otherwise modify, or to foreclose upon default or
otherwise enforce any such obligation, and, in the case of a Discretionary
Fund, to abandon any property determined by it to be worthless;
(5) to vote upon any stocks, bonds or other securities and to give general
or special proxies or powers of attorney with or without power of substitution,
provided that, in the case of Company Securities (as defined in Section 4.1),
the provisions of Section 4.2 shall apply and, provided further that, in the
case of a Directed Fund (other than one holding Company Securities), unless the
Master Trustee is
9
instructed otherwise, all proxies and proxy materials relating to securities
held in the Master Fund shall be signed by the Master Trustee without
indication of voting preference, and forwarded to the Investment Manager or
Investment Committee for the making of all decisions with respect thereto; and
to enter into any voting trust or similar agreement;
(6) for the purposes of the Master Trust, to engage in transactions
involving financial futures, including but not limited to stock index futures,
and options on financial futures; and in carrying out such transactions to open
accounts to trade in and to make or take delivery of financial futures, to
provide original, variation, maintenance and other required margin in the form
of moneys, securities, or otherwise, and to exercise options; and
(7) generally to exercise any of the powers of an owner with respect to
stocks, bonds, securities or other property held in any Fund.
3.2 AT DIRECTION OF NAMED FIDUCIARY. The Master Trustee is authorized
and empowered, with the approval of the Named Fiduciary with respect to any
Fund:
(1) for the purposes of the Master Trust, to borrow money from any person
or persons, including the Master Trustee or an affiliate, to issue the Master
Trust's promissory note or notes therefor, and to secure the repayment thereof
by pledging,
mortgaging or otherwise encumbering any property in its possession;
(2) to designate the Master Trustee or an affiliate to act on its behalf
in lending securities held in the Master Fund to brokers, dealers, banks or
other financial institutions, on such terms as are consistent with the Act; and
(3) to transfer all or any portion of the Master Fund to another trustee
of the Plan which may include the Employer, and, following such transfer, the
Master Trustee shall have no responsibility whatsoever with respect to assets
so transferred.
3.3 WITH RESPECT TO PARTICIPANT-DIRECTED FUNDS. The Master Trustee is
authorized and empowered, at the direction of the TPA (which direction may
include standing instructions) with respect to any Participant-Directed Fund,
to sell, or to purchase, any property held in such Funds, as appropriate to
effectuate transfers among Funds in accordance with Section 2.7, and/or
distributions from Funds in accordance with Section 2.10 or 5.3.
3.4 ADMINISTRATIVE POWERS. The Master Trustee is authorized and
empowered in its sole administrative discretion with respect to both
Discretionary and Directed Funds:
(1) to make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be necessary
or appropriate to carry out the powers granted herein;
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(2) to collect all interest, dividends and other income payable with
respect to property in the Master Fund, and to surrender securities at maturity
or when advised of earlier call for redemption, provided that the Master
Trustee shall not be liable for failure to surrender any security in a Directed
Fund for redemption prior to maturity or take other action if notice of such
redemption or other action was not provided to the Master Trustee by the
issuer, the Investment Manager, the Investment Committee or one of the
nationally recognized bond or corporate action services to which the Master
Trustee subscribes;
(3) to exchange securities in temporary form for securities in definitive
form, and to effect an exchange of shares where the par value of stock is
changed;
(4) to hold property in its or an affiliate's vaults, at a domestic or (to
the extent permitted by regulations issued by the Secretary of Labor under
Section 404(b) of the Act) foreign central depository or clearing corporation,
in non-certificated form with the issuer, on Federal Book Entry at the Federal
Reserve Bank of New York, with a custodian appointed pursuant to clause (5)
below, or, with the approval of the Named Fiduciary, at any other location;
(5) to appoint another bank as custodian for any foreign securities or
other foreign assets constituting part of the Master Fund, and to arrange for
the custody of such securities or assets and the indicia of ownership thereof
to be held outside the jurisdiction of the district courts of the United States
by such other bank and/or its agents, to the extent permitted by regulations
issued by the Secretary of Labor under Section 404(b) of the Act, and to pay
the reasonable expenses and compensation of such bank from the Master Fund;
(6) to hold property of the Master Trust in its own name or in the name of
a nominee, including the nominee of any central depository (including an
affiliate of the Master Trustee), clearing corporation or custodian with which
securities of the Master Trust may be deposited (and the Company agrees to hold
the Master Trustee and any such nominee harmless from any liability as a holder
of record), and to hold any investment in bearer form, but the books and
records of the Master Trustee shall at all times show that all such investments
are part of the Master Trust;
(7) to form corporations and to create trusts under the laws of any state
for the purpose of acquiring and holding title to any securities or other
property, all on such terms and conditions as it deems advisable;
(8) to employ suitable agents, including auditors and legal counsel (who
may be counsel to the Company or to the Master Trustee in its corporate
capacity) or other advisers, without liability for any loss occasioned by any
such agent selected with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the
11
conduct of an enterprise of a like character with like aims, and to pay their
reasonable expenses and compensation from the Master Fund;
(9) to take any action with respect to the Master Fund that it deems
necessary in carrying out the purposes of this Agreement.
SECTION 4. COMPANY SECURITIES.
4.1 REGISTRATION OF COMPANY SECURITIES. In the event that the property
initially delivered to the Master Trustee hereunder includes any stocks of any
classification, bonds or other marketable obligations or securities issued or
guaranteed by the Company, or by any subsidiary or affiliate thereof ("Company
Securities"), or that the Master Trustee purchases for any Discretionary Fund
or an Investment Manager or the Investment Committee directs the purchase for
any Directed Fund of any such securities, and the Master Trustee should
thereafter determine (with respect to a Discretionary Fund) or the Investment
Manager or Investment Committee should thereafter direct the Master Trustee
(with respect to a Directed Fund) to dispose of any such securities under
circumstances which, in the opinion of the Master Trustee, require registration
of such securities under the Securities Act of 1933 and/or qualification of
such securities under the Blue Sky laws of any state or states, then the
Company, at its own expense, will promptly take or cause to be taken any and
all action necessary or appropriate to effect such registration and/or
qualification; in such event, the Master Trustee shall not be required to
dispose of such securities until such registration and/or qualification are
complete and effective, and the Master Trustee shall not be liable for any loss
or depreciation of the Fund resulting from any delay attributable thereto. The
Company will indemnify and hold the Master Trustee and its officers and
directors harmless with respect to any claim, liability, loss damage or expense
(except any such claims, liabilities, losses, damages or expenses that are
attributable to the Master Trustee's own negligence, bad faith or willful
misconduct with respect to any duties specifically undertaken herein) incurred
as a result of such registration or qualification or as a result of any
information in connection therewith furnished by the Company or as a result of
any failure by the Company to furnish any such information.
4.2 VOTING OF COMPANY SECURITIES. Notwithstanding any other provision
of this Agreement to the contrary, the Master Trustee will have no discretion
or authority to vote Company Securities held in the Master Trust by the Master
Trustee on any matter presented for a vote by stockholders of the Company
except in accordance with the timely directions received by the Master Trustee
from Participants who have Company Securities allocated to their individual
accounts under the Plan. Each Participant who has been allocated Company
Securities will, as a named fiduciary, direct the Master Trustee with respect
to the vote of Company Securities allocated to the Participant's individual
account. Such directions will be given by the Participants acting in their
capacity as named fiduciaries with respect to such Company Securities and, upon
timely receipt of such instructions, the Master Trustee will vote the Company
Securities held in the Master Trust, pursuant to the direction of Participants
giving instructions to the Master Trustee. The Master Trustee will vote any
Company Securities for
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which timely instructions are not received from Participants in proportion with
such instructions as are received on a timely basis.
The Company and the Master Trustee shall not improperly interfere in any
manner with the decision of any Participant regarding the directions of the
Participant with respect to the vote of Company Securities allocated to the
Participant's individual account, and the Master Trustee shall arrange for such
voting to take place on a confidential basis. The Master Trustee will
adequately communicate or cause to be communicated to all Participants the
provisions of this Agreement relating to the right of Participants to direct
the Master Trustee with respect to the voting of Company Securities allocated
to their individual accounts under the Plan. The Company will provide the
Trustee with such information and assistance as the Master Trustee may
reasonably request in connection with any communications or distributions to
Participants.
The Company will distribute or cause to be distributed to Participants
entitled to direct the Master Trustee as to the voting of any Company
Securities hereunder and all materials and communications which it provides to
other stockholders of the Company in connection with such vote. The Master
Trustee may rely on the Company for such distribution and will not be liable
for the Company's failure to provide such materials and communications to any
Participant.
4.3 TENDERS FOR COMPANY SECURITIES. Notwithstanding any other
provision of this Agreement to the contrary, in the event an offer to acquire
any shares of Company Securities held in the Master Trust (an "Offer") shall be
received by the Master Trustee, the Master Trustee will have no discretion or
authority to sell, exchange or transfer any shares of Company Securities held
by the Trustee in the Master Trust pursuant to such Offer except to the extent,
and only to the extent, that the Master Trustee is timely directed to do so in
writing by each Participant to whose individual account any of such Company
Securities is allocated, as named fiduciary.
Upon timely receipt of instructions, the Master Trustee will sell,
exchange or transfer pursuant to such Offer such shares, and only such shares,
as to which instructions were given. The failure of any Participant, as named
fiduciary, to provide in a timely manner instructions to the Master Trustee
with respect to Company Securities allocated to the Participant's individual
account will be deemed to constitute instructions to the Master Trustee not to
sell, transfer or exchange any of such Company Securities, and the Master
Trustee will communicate or cause to be communicated to each Participant the
consequences of any failure to provide timely instructions to the Master
Trustee.
In the event that, under the terms of an Offer to acquire Company
Securities or otherwise, any shares of Company Securities tendered for sale,
exchange or transfer pursuant to such Offer may be withdrawn from such Offer,
the Master Trustee will follow such instructions respecting the withdrawal of
such securities from such Offer in the same manner as shall be timely received
by the Master Trustee from the Participants entitled under this paragraph to
direct the Master Trustee as to the sale, exchange or transfer of securities
pursuant to such Offer.
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In the event that an Offer for fewer than all of the shares of Company
Securities held by the Master Trustee in the Master Trust shall be received by
the Master Trustee, each Participant who has allocated to an individual account
in the Plan Company Securities subject to such Offer shall be entitled to
direct the Master Trustee as to the acceptance or rejection of such Offer (as
provided above) with respect to the largest portion of such Company Securities
as may be possible given the total number or amount of shares of Company
Securities the Master Trustee may sell, exchange or transfer pursuant to the
Offer based upon the instructions received by the Master Trustee from all other
Participants who shall timely instruct the Master Trustee pursuant to this
Section to sell, exchange or transfer such shares pursuant to an Offer, each on
a pro rata basis in accordance with the number or amount of shares allocated to
their individual accounts.
In the event that an Offer shall be received by the Master Trustee and
instructions shall be solicited from Participants pursuant to this Section
regarding such Offer, and prior to the termination of such Offer, another Offer
is received by the Master Trustee for securities subject to the first Offer,
the Master Trustee shall, if practicable make a reasonable effort under the
circumstances to solicit instructions from the Participants to the Master
Trustee (i) with respect to securities tendered for sale, exchange or transfer
pursuant to the first Offer, whether to withdraw such tender, if possible, and,
if withdrawn, whether to tender any securities so withdrawn for sale, exchange
or transfer pursuant to the second Offer and (ii) with respect to securities
not tendered for sale, exchange, or transfer pursuant to the first Offer,
whether to tender or not to tender such securities for sale, exchange or
transfer pursuant to the second Offer. The Master Trustee will follow all
instructions received in a timely manner from Participants in the same manner
as provided in this Section 4.3 above. With respect to any Offer (including
successive Offers from one or more existing offers), the Master Trustee shall
act in the same manner described above.
In the event an Offer for any Company Securities held by the Master
Trustee in the Master Trust shall be received by the Master Trustee and the
Participants shall be entitled to determine to accept, reject or withdraw an
acceptance of such Offer pursuant to this Section 4.3, (i) the Company and the
Master Trustee shall not improperly interfere in any manner with the decision
of any Participant regarding the action of the Participant with respect to such
Offer (hereinafter referred to as the "Investment Decision"), and the Master
Trustee shall arrange for such Investment Decision to be made on a confidential
basis; and (ii) the Master Trustee will adequately communicate or cause to be
communicated to all Participants the provisions of this Agreement relating to
the rights of the Participants to direct the Master Trustee with respect to the
Company Securities subject to such Offer and the Master Trustee's obligation to
follow such directions. The Company will provide the Master Trustee with such
information and assistance as the Master Trustee may reasonably request in
connection with any communications or distributions to Participants.
The Company will distribute or cause to be distributed to Participants any
and all communications distributed to other stockholders of the Company in
connection with the Offer. The Master Trustee may rely on the Company for such
distribution and will not be liable
14
for the Company's failure to provide or cause to be provided such
communications to any Participants.
Notwithstanding anything elsewhere in this Agreement to the contrary,
unless otherwise directed by the Investment Committee, any proceeds received by
the Master Trustee as a result of the sale, exchange or transfer of Company
Securities pursuant to an Offer shall be reinvested in Company Securities the
Master Trustee if such security is available for purchase.
SECTION 5. ACCOUNTS TO BE MAINTAINED BY THE MASTER TRUSTEE: PAYMENTS FROM
THE MASTER TRUST.
5.1 ACCOUNTS. The Master Trustee may maintain one or more accounts for
the purpose of making disbursements at the direction of the TPA and such other
purposes, if any, as may be reasonably required for the convenient
administration of the Plan or of the Master Trust.
5.2 NO SEPARATE RECORDKEEPING. The Master Trustee shall not be
required to maintain any separate records or accounts with respect to the
Participants (or their Beneficiaries), and any such records or accounts
required to be maintained pursuant to the terms of the Plan shall be maintained
by the Employer or by the TPA.
5.3 PAYMENTS: DISPUTES. The Master Trustee, from time to time, upon
receipt of a written order from the TPA, shall make payments from the Master
Fund to such persons and in such amounts as the Investment Committee or the TPA
shall direct, and amounts paid pursuant to such direction thereafter no longer
shall constitute a part of the Master Trust. Orders from the TPA need not
specify the purpose of the payments so ordered, and the Master Trustee shall
not be responsible in any way respecting the purpose or propriety of such
payments or for the administration of the Plan. Any such order shall constitute
a certification that the payment directed is one which the TPA is authorized to
direct, and the Master Trustee need make no further investigation. Payments by
the Master Trustee may be made (i) by its check to the order of the payee and
mailed to the payee at the address last furnished to the Master Trustee by the
TPA or by the payee, or if no such address has been so furnished, to the payee
in care of the Company, or (ii) by direct deposit to an account of the payee in
accordance with Section 5.4. If a dispute arises as to who is entitled to or
should receive any benefit or payment, the Master Trustee may withhold or cause
to be withheld such payment until the dispute has been resolved.
5.4 DIRECT DEPOSIT OF PAYMENTS. At the request of any Participant or
Beneficiary, the Master Trustee shall deposit periodic payments directly into
the bank account of such person, provided that such person and its depository
bank shall have entered into a depository agreement with the Master Trustee
that is satisfactory to the Master Trustee. The Company hereby agrees to
indemnify the Master Trustee and to hold it harmless from and against any
claim, liability, loss, damage or expense that may be asserted against it as a
result of making any such deposit other than any such claims, liabilities,
losses, damages or expenses that are attributable to the Master Trustee's own
negligence, bad faith or willful misconduct.
15
5.5 RESPONSIBILITY OF TPA. In directing the Master Trustee to make
payments out of the Master Trust, the TPA shall follow the provisions of the
Plan, so that it shall be impossible, either during the existence or upon the
discontinuance of the Plan, for any part of the Master Fund to be used for or
diverted to purposes other than for the exclusive benefit of the Participants
or their Beneficiaries, at any time prior to the satisfaction of all
liabilities with respect to the Participants and their Beneficiaries, or for
any part thereof to be paid or applied to the use of any Employer except, upon
the termination of the Plan, to the extent of any surplus resulting from an
actuarial error.
5.6 RETURNED AND UNCASHED PAYMENTS. In the event that any payment
ordered by the TPA shall be distributed by the Master Trustee in accordance
with Section 5.3 or Section 5.4 and (i) such payment shall be returned to the
Master Trustee because the payee or the payee's account cannot be located at
such address, or (ii) any check so mailed shall not be presented for payment
within six months of the date thereof, the Master Trustee shall promptly notify
the TPA of such return or failure to present. Upon the expiration of 60 days
after such notification such payment order shall become void, and unless and
until a further order of such TPA is received by the Master Trustee with
respect to such payment, the Master Trustee shall return such payment to the
Master Trust and continue to administer the Master Trust as if such order had
not been made. The Master Trustee shall not be obligated to search for or
ascertain the whereabouts of any such person (or his duly appointed
representative).
5.7 NO LIABILITY FOR CONTRIBUTIONS. The Master Trustee shall be under
no duty to enforce payment of any contribution and shall not be responsible for
the adequacy of the Master Trust to meet and discharge any liabilities under
the Plan.
SECTION 6. VALUATION OF THE MASTER FUND.
6. l VALUATION. As of the inception of the Master Fund, as of the
close of the last business day of each month thereafter, and as of such other
time or times as the Master Trustee may deem appropriate (the "Valuation
Date"), the Master Trustee shall determine the market value of the Master Fund.
Such determination may be made either by the Master Trustee itself or by such
person or persons believed by the Master Trustee to be competent to make such
determination as the Master Trustee may select, but in accordance with a method
consistently followed and uniformly applied. The Master Trustee's determination
of the value of the Master Fund shall be conclusive and binding upon the Plan,
each Employer, the Named Fiduciary, the Investment Committee, the TPA, and the
Participants and their Beneficiaries.
6.2 UNITS. At the direction of the TPA, the Master Trustee shall
express the market value of any Fund in whole and fractional units which shall
be equal undivided interests in such Fund without priority or preference one
over the other. The original unit of participation in a Fund shall be specified
by the TPA at the inception of the Fund. As of each Valuation Date the Master
Trustee shall determine the value per unit in the Fund by dividing the value of
the Fund as determined in accordance with this Section by the number of
existing units in the Fund. Transfers of cash and/or property to or from a Fund
shall be made only as of a Valuation Date
16
and shall be based upon the value of a unit as of such Date, and the number of
units charged or credited to a Fund shall be adjusted accordingly.
SECTION 7. ADMINISTRATIVE EXPENSES. TAXES AND MASTER TRUSTEE'S COMPENSATION.
7. l IN GENERAL. All brokerage costs and transfer taxes incurred in
connection with the investment and reinvestment of any Fund, all income taxes
or other taxes of any kind whatsoever which may be levied or assessed under
existing or future laws upon or in respect of such Fund, all expenses incurred
in connection with the acquisition or holding of property, any interest therein
or mortgage thereon, all other administrative expenses incurred by the Master
Trustee in the performance of its duties, including fees for legal services and
third party appraisal services rendered to the Master Trustee and fees incurred
in the solicitation of directions with respect to voting and tendering Company
Securities, and all other proper charges and disbursements of the Master
Trustee, shall be paid by the Fund, and, until paid, shall constitute a charge
upon the Fund.
7.2 FEES OF INVESTMENT MANAGERS. The Named Fiduciary may direct the
Master Trustee to pay from the Master Fund the fees of any Investment Manager
and the administrative expenses of the Plan, including but not limited to
actuarial fees.
SECTION 8. MASTER TRUSTEE'S LIABILITY: NO DUTY TO REVIEW;
INDEMNIFICATION.
8. l LIABILITY OF MASTER TRUSTEE. With respect to a Discretionary
Fund, the Master Trustee shall not be liable for any loss to or diminution of
the Discretionary Fund resulting from any action taken or omitted by the Master
Trustee except if due to any failure of the Master Trustee to act in accordance
with the requirements of Part 4 of Title I of ERISA or if due to the Master
Trustee's own negligence, bad faith or willful misconduct. With respect to any
Directed Fund hereunder, the Master Trustee shall not be liable for the making,
retention or sale of any investment or reinvestment made or received by it at
the direction of an Investment Manager, the Investment Committee or the TPA, as
herein provided, nor for any loss to or diminution of the Fund resulting from
any action taken, or from any act omitted, by the Master Trustee at the
direction of an Investment Manager, the Investment Committee or the TPA as
herein provided, except if due to the Master Trustee's negligence, bad faith or
willful misconduct. The Master Trustee shall not be liable for any loss to or
diminution of the Fund resulting from any action taken or omitted by the Master
Trustee, other than at the direction of an Investment Manager, the Investment
Committee or the TPA, except if due to any failure of the Master Trustee to act
in accordance with the requirements of Part 4 of Title I of ERISA or if due to
the Master Trustee's own negligence, bad faith or willful misconduct. The
Master Trustee shall not be responsible for the adequacy of any funding policy
of the Plan of which it is advised pursuant to Section 2.2(c) or the
diversification of the investments of the Plan. Responsibility for monitoring
adherence to funding policies and for investment diversification, and for
advising the Master Trustee accordingly with respect to any Discretionary Fund
and advising the Investment Manager or
17
Investment Committee accordingly with respect to any Directed Fund, shall rest
solely with the Named Fiduciary.
The Master Trustee may from time to time consult with legal counsel, who
may be counsel to the Company or to the Master Trustee in its corporate
capacity, and shall be fully protected in acting upon the advice of counsel.
To protect the Master Trust from expenses which might otherwise be
incurred, the Company shall have sole authority to enforce this Agreement on
behalf of all persons claiming any interest in the Master Trust or under the
Plan, and no other person may institute or maintain any action or proceeding
against the Master Trustee or the Master Trust in the absence of written
authority from the Company or a judgment of a court of competent jurisdiction
that in refusing authority the Company acted fraudulently or in bad faith.
8.2 NO DUTY TO REVIEW. Supervision of Investment Managers and the
Investment Committee shall be the exclusive responsibility of the Named
Fiduciary. The Master Trustee shall be under no duty or obligation to review
any investment or reinvestment made or received at the direction of an
Investment Manager or the Investment Committee nor to make any recommendation
as to the disposition or continued retention thereof. Without limiting the
generality of the foregoing, in the case of any transaction which is both
directed by and executed by or through an Investment Manager or the Investment
Committee, the Investment Manager or Investment Committee shall have entire
responsibility for assuring that the transaction does not violate the
prohibitions of any applicable state or federal law, including Sections 406 and
407 or ERISA.
8.3 RELIANCE ON CERTAIN APPRAISALS. To the extent that the Master Trustee
shall be required to value the assets of the Master Fund for any purpose,
including without limitation any valuation pursuant to Section 6, any
accounting pursuant to Section 9 and any segregation of assets pursuant to
Section 10 hereof, the Master Trustee may rely for all purposes of this
Agreement upon any certified appraisal or other form of valuation submitted to
it by any Investment Manager, the Investment Committee or the TPA and, with
respect to any insurance contract referred to in Section 2.9 hereof, by the
insurance company issuing such contract, and with respect to an interest in any
venture capital organization, by the manager of such organization and, with
respect to any mutual funds held in the Master Fund, by the servicing agent of
such mutual fund, and, with respect to an interest of the Master Trust in any
collective investment trust (other than a collective investment trust
established and maintained by Mellon Bank, N.A. or an affiliate), by the
trustee or investment manager of such collective investment trust.
8.4 INDEMNIFICATION OF MASTER TRUSTEE. The Company recognizes that a
burden of litigation may be imposed upon the Master Trustee, as the result of
some act or transaction for which it has no responsibility or over which it has
no control under this Agreement. Accordingly, the Company hereby agrees to
indemnify the Master Trustee, individually and as Master Trustee under this
Agreement, and its directors, officers and employees, and to hold it and them
harmless from and against any claim, liability, loss, damage or expense which
may be
18
asserted against it or them by reason of any action taken or omitted by or on
behalf of the Master Trustee at the direction of any Investment Manager or
Investment Committee, the Named Fiduciary, the TPA, or by virtue of being the
holder of the Master Trust except for such claims, liabilities, losses, damages
or expenses attributable to the Master Trustee's own negligence, bad faith or
willful misconduct.
8.5 LIMITATION OF INDEMNITY. Nothing herein is intended to or shall be
construed to relieve the Master Trustee from any responsibility or liability it
may have under Part 4 of Title I of ERISA.
8.6 INDEMNIFICATION OF SUCCESSOR TRUSTEE. If Mellon Bank, N.A. is acting
as a successor trustee or succeeds to responsibilities hereunder for management
of plan assets with respect to the Master Fund (or any portion thereof), the
Company hereby agrees to hold Mellon Bank, N.A. harmless from and against any
tax, claim, liability, loss, damage or expense incurred by or assessed against
it as such successor as a direct or indirect result of any act or omission of a
predecessor trustee or any other person charged under any agreement affecting
Master Fund assets with investment responsibility with respect to such assets,
except for such taxes, claims, liabilities, losses, damages or expenses
attributable to the negligence, bad faith or willful misconduct of Mellon Bank,
N.A. or its affiliates.
SECTION 9. SETTLEMENT OF MASTER TRUSTEE'S ACCOUNTS.
9.1 ANNUAL ACCOUNTING. The Master Trustee shall keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions hereunder, accounting separately for each Fund (in a manner
mutually agreeable to Pentegra and the Master Trustee), and all accounts, books
and records relating thereto shall be open to inspection and audit at all
reasonable times by any person designated by the Company or the Named
Fiduciary. Within 90 days after the close of each fiscal year of the Master
Trust (or such other date as may be agreed upon in writing between the Company
and the Master Trustee), and within 120 days after the effective date of the
removal or resignation of the Master Trustee as provided in Section 11 hereof,
the Master Trustee shall file with the Company a written account, setting forth
all investments, receipts, disbursements and other transactions effected by it
during the year ending on such date (but not including any part of such year
for which such an account has previously been filed) and certified as to the
accuracy of the information set forth therein. Such account may incorporate by
reference any and all schedules and other statements setting forth investments,
receipts disbursements and other transactions effected during the period for
which such account is rendered which the Master Trustee has furnished to the
Company prior to the filing of such account. Each account so filed (and copies
of any schedules and statements incorporated therein be reference as
aforesaid)shall be open to inspection at the offices of the Company during its
regular business hours by the Named Fiduciary, by any person designated by the
Company or the Named Fiduciary, by Participants and Beneficiaries of the Plan,
by the TPA or Investment Committee, or by any Investment Manager affected
thereby, for a period of 60 days immediately following the date on which the
account is filed with the Company. If for any reason an account required of
the Master Trustee hereunder shall not be filed within the
19
applicable time specified in the preceding sentence, such account may be filed
by the Master Trustee after the expiration of such time, provided such account
otherwise complies with the requirements of this Agreement, and such account so
filed shall be open to inspection as aforesaid by any of the parties
aforementioned for a period of 90 days immediately following the date on which
the account is filed. In the event that any assets of the Fund have been
transferred to a collective investment trust pursuant to Section 2.8 hereof,
such account shall include a copy of the latest annual written account of such
collective investment trust.
9.2 OTHER ACCOUNTINGS. The Master Trustee shall provide to the Company
from time to time such other reports as may be agreed upon between the Master
Trustee and the Company. The Company agrees to examine each such report
promptly and to file any exceptions thereto within 90 days of the date thereof.
9.3 SETTLEMENT OF ACCOUNTS. Upon the expiration of the 60-day or 90-day
period, as the case may be, referred to in Section 9.1 or 9.2, the Master
Trustee shall be forever released and discharged from all liability and
accountability to anyone with respect to the account or report, including,
without limitation, all acts and omissions of the Master Trustee shown or
reflected in such account or report, except with respect to any acts or
omissions as to which the Company, the Named Fiduciary or the TPA shall have
filed written objections with the Master Trustee within such 60-day or 90-day
period, as the case may be. Nothing herein contained shall impair the right of
the Master Trustee to a judicial settlement of any account of proceedings
rendered by it. In any proceeding for such judicial settlement the only
necessary parties shall be the Master Trustee, the Company, the Named Fiduciary
and any other party or parties whose participation is required by law, and any
judgment, decree or final order entered therein shall be conclusive on all
persons having or claiming an interest in the Master Trust or the Plan.
SECTION 10. SEGREGATION OF PARTS OF THE MASTER TRUST.
10.1 SEGREGATION. The equitable share in the Master Trust of any part of
the Plan or the proportionate share of any Participant or group of Participants
and their Beneficiaries may be segregated and withdrawn from the Master Trust
upon the direction of the Named Fiduciary setting forth the portion of the
Plan's equitable share to be so treated or the Participants and Beneficiaries
for whose accounts such segregation and withdrawal are to be carried out. The
Master Trustee may condition its transfer or distribution of any assets upon
the Master Trustee's receiving assurances satisfactory to it that the approval
of appropriate governmental or other authorities has been secured and that all
notice and other procedures required by applicable law have been complied with.
Unless otherwise directed by the Named Fiduciary pursuant to the preceding
paragraph, the Master Trustee shall hold, invest and administer the Master
Trust as a single fund without identification of any part of the Master Fund
with or allocation of any part of the Master Fund to the Company or to any
subsidiary or affiliate of the Company designated by it as a participating
company under the Plan or to any Participant or group of Participants or their
Beneficiaries.
20
10.2 SEGREGATED PROPERTY. Segregation and withdrawal of the equitable share of
a Participant or group of Participants shall be made as of the Valuation Date
immediately following the date of the notice or instruction referred to in
Section 10.1. The selection of the particular assets to be segregated pursuant
to Section 10.1 shall be made by the Named Fiduciary. Such property shall be
held as a separate trust fund for the exclusive benefit of the withdrawing
Participant or group of Participants and their Beneficiaries, under a separate
agreement of trust substantially identical to this Agreement.
SECTION 11. RESIGNATION AND REMOVAL OF MASTER TRUSTEE.
The Master Trustee may resign at any time upon 60 days' notice in writing
to the Company and the Named Fiduciary. The Master Trustee may be removed by
the Company at any time upon 60 days' notice in writing to the Master Trustee
and the Named Fiduciary. If within such 60-day period a successor to the Master
Trustee shall not have been appointed, the resigning or removed Master Trustee
may apply to any court of competent jurisdiction for the appointment of such
successor. Any successor trustee shall have the same powers and duties as
those conferred upon the Master Trustee hereunder (other than those relating to
any collective investment trust of Mellon Bank, N.A. or an affiliate) and
subject to receipt by the Master Trustee of written acceptance of such
appointment by the successor trustee, the Master Trustee shall assign, transfer
and pay over to such successor trustee the moneys and properties then
constituting the Master Fund, withdrawing any part of any Fund then held in any
collective investment trust of Mellon Bank, N.A. or an affiliate. The Master
Trustee may reserve such sum of money as it may deem advisable for payment of
its reasonable fees and expenses in connection with the settlement of its
account or otherwise. Payment of such fees and expenses may be withdrawn from
such reserve. Any balance of such reserve remaining after the payment of such
fees and expenses shall be paid over to the successor trustee. If such reserve
shall be insufficient to pay such changes, such resigning or removed Master
Trustee shall be entitled to recover the amount of any deficiency from the
Company or from the successor trustee or from both the Company and the
successor trustee. All provisions of this Agreement shall apply to any
successor trustee appointed as aforesaid with the same force and effect as if
such successor had been originally named herein as the Master Trustee.
SECTION 12. EVIDENCE OF ACTION BY COMPANY, INVESTMENT MANAGERS,
INVESTMENT COMMITTEE AND TPA, AND OF APPOINTMENT OF NAMED FIDUCIARY, INVESTMENT
MANAGERS, INVESTMENT AND COMMITTEE AND TPA.
Except as otherwise herein provided, any action by the Company pursuant to
any of the provisions of this Agreement shall be evidenced by a resolution of
its Board of Directors (which may include a resolution authorizing one or more
officers to act on its behalf) certified by the Secretary or any Assistant
Secretary of the Company, and the Master Trustee shall be fully protected in
acting in accordance with such resolution so certified to it. The Company shall
furnish the Master Trustee from time to time with certified copies of
resolutions of its Board of
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Directors or of other corporate action appointing and terminating the office of
the Named Fiduciary, and appointing and terminating any Investment Committee,
and appointing successors. The Named Fiduciary shall furnish the Master
Trustee with a copy of the instrument duly appointing and terminating the TPA,
and appointing and terminating successors thereto and shall certify to the
Master Trustee the responsibilities and authorities which the Named Fiduciary
has delegated to such TPA. The Named Fiduciary shall furnish the Master
Trustee with a copy of the instrument duly appointing and terminating any
Investment Committee, and appointing and terminating successors thereto. The
Named Fiduciary shall file with the Master Trustee a copy of each Investment
Manager's written acceptance of his appointment and acknowledgement that he is
a "fiduciary" with respect to the Plan within the meaning of Section 3(21) of
ERISA. Any such appointment shall continue to be effective until receipt by
the Master Trustee of written notice to the contrary from the Named Fiduciary.
Each Investment Manager and the TPA and the Investment Committee shall furnish
the Master Trustee from time to time with a certificate setting forth the name
and specimen signature of each person authorized to act on its behalf. Unless
otherwise provided in a certificate from the Named Fiduciary, all orders,
requests and instructions to the Master Trustee from the Named Fiduciary shall
be in writing or by telecopy signed by two authorized persons, and all orders,
requests and instructions to the Master Trustee from an Investment Manager, the
TPA, or the Investment Committee shall be in writing, by telecopy or by any
other electronic means using a code for the authentication of messages, and
signed or transmitted by an authorized representative of the Investment
Manager, TPA, or Investment Committee, and the Master Trustee shall be fully
protected in acting in accordance with any such order, request, or instruction.
The Master Trustee shall have the right to rely on and shall be fully protected
in acting in accordance with any resolution, order, request or instruction
which it believes to be genuine and which purports to have been signed or
transmitted in accordance with this section.
SECTION 13. AMENDMENT OF AGREEMENT, TERMINATION OF TRUST, TERMINATION
OF PLAN
13.1 AMENDMENT OF AGREEMENT. Subject to the restrictions set forth
below, the Company and the Master Trustee may mutually agree at any time and
from time to time to modify, amend or terminate, in whole or in part, any or
all of the provisions of this Agreement.
13.2 TERMINATION OF MASTER TRUST. In the event of the termination of the
Master Trust, the Master Trustee shall continue to administer the Master Trust
as hereinabove provided until all of the purposes for which is has been
established have been accomplished or the Master Trustee has disposed of the
Master Fund after the payment of or other provision for all expenses incurred
in the administration of the Master Trust (including any compensation to which
the Master Trustee may be entitled), all in accordance with the written order
of the Company or any successor thereto. Until the final distribution of the
Master Fund, the Master Trustee shall continue to have and may exercise all of
the powers and discretion conferred upon it by this Agreement. Upon any such
termination, or the resignation or removal of the Master Trustee under Section
11 hereof, Section 7.1 and all indemnities herein, including without limitation
those set forth in Sections 2.9(e), 2.10(e), 3.4(6), 4, 5.4, 8.3, 8.4 and 8.6
hereof, shall remain in full force and effect.
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13.3 TERMINATION OF THE PLAN. Upon receipt of notice from the Company that
the Plan is terminated in whole or in part, with respect to all or any group of
Participants and their Beneficiaries, the Master Fund, or the portion thereof
with respect to which the Plan is terminated, shall, subject to the provisions
of Section 7 hereof, be segregated in accordance with Section 10 and held
and/or disposed of by the Master Trustee in accordance with the written order
of the Named Fiduciary. The Master Trustee may condition its delivery,
transfer or distribution of any assets upon the Master Trustee's receiving
assurances satisfactory to it that the approval of appropriate governmental or
other authorities has been secured and that all notice and other procedures
required by applicable law have been complied with.
13.4 EXCLUSIVE BENEFIT. Anything in this Agreement to the contrary
notwithstanding, at no time prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries shall any part of the
Master Fund be used for or diverted to purposes other than for the exclusive
benefit of the Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan; provided, however, that nothing herein
contained shall preclude the return to an Employer of any contribution whose
return is permitted by Section 403(c) of the Act or successor legislation.
SECTION 14. INALIENABILITY OF BENEFITS AND INTERESTS
No distribution or payment under this Agreement to any Participant or
Beneficiary shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, whether voluntary or
involuntary, and no attempt so to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same shall be valid or recognized by the Master
Trustee, nor shall any such distribution or payment be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any
person entitled to such distribution or payment, except in the case of any
voluntary and revocable assignment of any benefit payment permitted by law and
except to such extent as may otherwise be required by law. If the Master
Trustee is notified by the Named Fiduciary that any such Participant or
Beneficiary has been adjudicated bankrupt or has purported to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge any such
distribution or payment, voluntarily or involuntarily, the Master Trustee
shall, if so directed by the TPA, hold or apply such distribution or payment or
any part thereof to or for the benefit of such Participant or Beneficiary in
such manner as the TPA shall direct.
SECTION 15. NO MERGER CONSOLIDATION OR TRANSFER OF PLAN ASSETS OR
LIABILITIES
Anything herein to the contrary notwithstanding, the Master Trust shall
under no circumstances be so operated as to permit, and nothing herein
contained shall be deemed to authorize, any merger, consolidation, or transfer
of the assets or liabilities or the Plan with or to any other plan except in
compliance with the provisions of the Act and the Code which are applicable to
such mergers, consolidations, or transfers, including without limitation
Sections
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208 and 4043(b)(8) of the Act and Sections 401(a)(12), 414(1), and 6058(b) of
the Code, and Regulations promulgated pursuant to the foregoing Sections.
SECTION 16. GOVERNING LAW.
This Agreement shall be administered and construed according to the
internal substantive laws (and not the choice of law provisions) of the
Commonwealth of Pennsylvania, except as may otherwise be required by Section
514 of ERISA. The invalidity, illegality or lack of enforceability of any
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision. The Master Trust shall at all times be
maintained as a domestic trust in the United States.
IN WITNESS WHEREOF, this Agreement has been executed, attested and sealed,
as of the date first above written, by the duly authorized officers of the
Company and Mellon Bank, N.A..
HOME FEDERAL SAVINGS BANK
By: /s/ Roger P. Weise
Name: Roger P. Weise
Title: President
MELLON BANK, N.A.
By: /s/ D. C. Crawford
Name: David C. Crawford
Title: FVP
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