Exhibit 10.3
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TRUST AGREEMENT
by and between
HOME FEDERAL SAVINGS BANK
and
THE BANK OF NEW YORK
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TABLE OF CONTENTS
Page
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SECTION 1 - GENERAL . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . 1
1.2 Compliance With Law . . . . . . . . . . . . . . . 2
SECTION 2 - ESTABLISHMENT OF TRUST . . . . . . . . . . . . 2
2.1 Appointment and Acceptance of Trustee . . . . . . 2
2.2 Trustee Responsibilities . . . . . . . . . . . . 3
2.3 Contribution . . . . . . . . . . . . . . . . . . 3
2.4 Exclusive Benefit . . . . . . . . . . . . . . . . 3
2.5 Return of Contributions . . . . . . . . . . . . . 3
2.6 Distributions . . . . . . . . . . . . . . . . . . 4
SECTION 3 - AUTHORITIES . . . . . . . . . . . . . . . . . . 5
3.1 Authorized Parties . . . . . . . . . . . . . . . 5
3.2 Authorized Instructions . . . . . . . . . . . . . 5
SECTION 4 - INVESTMENT AND ADMINISTRATION OF THE FUND . . . 5
4.1 Investment Funds . . . . . . . . . . . . . . . . 5
4.2 Discretionary Powers and Duties of Trustee . . . 6
4.3 Directed Powers of Trustee . . . . . . . . . . . 8
4.4 Employer Stock . . . . . . . . . . . . . . . . . 10
4.5 Standard of Care . . . . . . . . . . . . . . . . 12
4.6 Force Majeure . . . . . . . . . . . . . . . . . . 12
SECTION 5 - APPOINTMENT AND AUTHORITY OF PENTEGRA . . . . . 12
5.1 Appointment and Delegation . . . . . . . . . . . 12
5.2 Allocation and Investment Directions to . . . . . 12
5.3 Custody of Participant Loan Documents . . . . . . 13
5.4 Designation for Authorized Instructions . . . . . 13
5.5 Resignation or Removal of Pentegra . . . . . . . 13
SECTION 6 - REPORTING AND RECORDKEEPING . . . . . . . . . . 13
6.1 Records and Accounts . . . . . . . . . . . . . . 13
6.2 Non-Fund Assets . . . . . . . . . . . . . . . . . 14
SECTION 7 - COMPENSATION, EXPENSES, TAXES, INDEMNIFICATION 14
7.1 Compensation and Expenses . . . . . . . . . . . . 14
7.2 Tax Obligations . . . . . . . . . . . . . . . . . 15
7.3 Indemnification . . . . . . . . . . . . . . . . . 15
SECTION 8 - AMENDMENT, TERMINATION, RESIGNATION, REMOVAL 16
8.1 Amendment . . . . . . . . . . . . . . . . . . . . 16
8.2 Removal or Resignation of Trustee . . . . . . . . 16
8.3 Property Not Transferred . . . . . . . . . . . . 16
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SECTION 9 - ADDITIONAL PROVISIONS . . . . . . . . . . . . . 17
9.1 No Merger, Consolidation or Transfer of Plan
Assets or Liabilities . . . . . . . . . . . . . . 17
9.2 Assignment or Alienation . . . . . . . . . . . . 17
9.3 Successors and Assigns . . . . . . . . . . . . . 17
9.4 Governing Law . . . . . . . . . . . . . . . . . . 17
9.5 Necessary Parties . . . . . . . . . . . . . . . . 17
9.6 No Third Party Beneficiaries . . . . . . . . . . 18
9.7 Execution in Counterparts . . . . . . . . . . . . 18
9.8 No Additional Rights . . . . . . . . . . . . . . 18
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TRUST AGREEMENT
THIS TRUST AGREEMENT, effective as of June 17, 1997 by
and between HOME FEDERAL SAVINGS BANK (the "Company") and THE
BANK OF NEW YORK (the "Trustee").
W I T N E S S E T H:
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WHEREAS, pursuant to an Adoption Agreement, the Company
has adopted a qualified retirement plan for the benefit of its
employees and the employees of certain of the Company's
affiliates which have heretofore or may hereafter adopt such plan
(such plan, as amended from time to time, is referred to herein
as the "Plan");
WHEREAS, the Company has established or desires to
establish a trust constituting a part of the Plan, pursuant to
which assets will be held to provide for the funding of, and
payment of benefits under, the Plan (the "Trust");
WHEREAS, the Company desires to appoint the Trustee as
trustee of the Trust and the Trustee is willing to accept such
appointment; and
WHEREAS, the Plan provides for one or more fiduciaries
named in the Plan having the power to manage and control the
assets of the Plan (the "Named Fiduciary");
NOW, THEREFORE, the Company and the Trustee, each
intending to be legally bound, agree as follows:
SECTION 1
GENERAL
1.1 DEFINITIONS. The terms used herein shall have the
following meanings:
(a) "AGREEMENT" means this instrument. including all
amendments thereto.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended.
(c) "EMPLOYER" means the Company and any affiliate of
the Company which has heretofore adopted, or may hereafter adopt,
the Plan. Each 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 and the Named Fiduciary under this
Agreement and that the 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 affiliate except by dealing with the Company as agent of
such affiliate.
(d) "EMPLOYER STOCK" shall mean securities of the
Employer which constitute "qualifying employer securities" with
respect to the Plan within the meaning of Section 407 of ERISA.
(e) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(f) "FUND" means the assets held pursuant to this
Agreement as such assets shall exist from time to time.
(g) "TAX OBLIGATIONS" means the responsibility for
payment of taxes, withholding, certification and reporting
requirements, claims for exemptions or refund, interest,
penalties and other related expenses of the Fund.
1.2 COMPLIANCE WITH LAW. The Plan and Trust are
intended to comply with ERISA and to be tax-exempt under Section
501(a) of the Code. The Company assumes full responsibility to
establish and maintain the Plan as a plan meeting the
qualification requirements of Section 401(a) of the Code and
shall immediately notify the Trustee if the Plan ceases to be
qualified.
SECTION 2
ESTABLISHMENT OF TRUST
2.1 APPOINTMENT AND ACCEPTANCE OF TRUSTEE. The
Company hereby appoints THE BANK OF NEW YORK as Trustee of the
Trust with respect to the Fund. The Company shall provide to
Trustee a resolution of its Board of Directors (which may include
a resolution authorizing one or more officers authorized to act
on its behalf) certified by the Secretary or any Assistant
Secretary of the Company ("Certified Resolutions") appointing The
Bank of New York as Trustee hereunder. The Fund shall consist of
all monies and other property acceptable to the Trustee in its
sole discretion as may be paid or delivered to the Trustee from
time to time, together with any and all increments thereto,
proceeds and reinvestments thereof, and income thereon, less
payments and distributions therefrom. The Fund shall be held by
the Trustee in trust and dealt with in accordance with the
provisions of this Agreement without distinction between
principal and income. The Trustee hereby accepts its appointment
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as trustee, acknowledges that it assumes the duties established
by this Agreement and agrees to be bound by the terms contained
herein.
2.2 TRUSTEE RESPONSIBILITIES. The Trustee shall hold
the assets of, and collect the income and make payments from the
Fund, all as hereinafter provided. Except to the extent that
assets of the Fund have been deposited in a collective investment
fund maintained by the Trustee, the Trustee shall not be
responsible, directly or indirectly, for the investment or
reinvestment of the assets of the Fund, which shall be the sole
responsibility of the Named Fiduciary. The Trustee is not a
party to, and has no duties or responsibilities under, the Plan
other than those that may be expressly contained in this
Agreement. As to the responsibilities of the Trustee, in any
case in which a provision of this Agreement conflicts with any
provision in the Plan, this Agreement shall control. The Trustee
shall have no duties, responsibilities or liability with respect
to the acts or omissions of any prior trustee.
2.3 CONTRIBUTIONS. The Trustee shall have no
authority or duty to determine the adequacy of or enforce the
collection of contributions under the Plan, shall not be
responsible for the adequacy of the Trust to meet and discharge
any liabilities under the Plan and shall have no responsibility
for any property until such cash or property is received and
accepted by the Trustee. The Employer and the Named Fiduciary
shall have the sole duty and responsibility for ensuring the
adequacy of the Trust to discharge the liabilities under the
Plan, determining the adequacy of the contributions to be made
under the Plan, transmitting the contributions to the Trustee and
ensuring compliance with any statute, regulation or rule
applicable to contributions.
2.4 EXCLUSIVE BENEFIT. Except as may be permitted by
law or by the terms of the Plan or this Agreement, at no time
prior to the satisfaction of all liabilities with respect to
participants and their beneficiaries under the Plan shall any
part of the Trust be used for or diverted to any purpose other
than for the exclusive benefit of the participants and their
beneficiaries. The assets of the Trust shall be held for the
exclusive purposes of providing benefits to participants of the
Plan and their beneficiaries and defraying the reasonable
expenses of administering the Plan and the Trust.
2.5 RETURN OF CONTRIBUTIONS. Notwithstanding any
other provision of this Agreement: (i) if a contribution is
conditioned upon a favorable determination as to the qualified
status of the Plan under Code Section 401 and the Plan receives
an adverse determination with respect to its initial
qualification, then any such contribution may be returned to the
Employer within one year after the date of determination; (ii) a
contribution made by the Employer based upon mistake of fact may
be returned to the Employer within one year after the date of
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such contribution; and (iii) if a contribution to the Plan is
conditioned upon its deductibility under the Code and a deduction
for such a contribution is disallowed, such contribution may be
returned to the Employer within one year after the date of the
disallowance of such deduction.
In the case of the return of a contribution *ue to
mistake of fact or the disallowance of a deduction, the amount
which may be returned is the excess of the amount contributed
over the amount that would have been contributed had there not
been a mistake or disallowance. Earnings attributable to the
excess contributions may not be returned to the Employer but
losses attributable thereto must reduce the amount to be so
returned. Any return of contribution made by the Trustee
pursuant to this Section shall be made only upon the direction
the Named Fiduciary, which shall have exclusive responsibility
for determining whether the conditions of such return have been
satisfied and for the amount to be returned.
2.6 DISTRIBUTIONS. The Trustee shall make
distributions and payments out of the Fund as directed by the
Named Fiduciary and amounts distributed or paid pursuant to such
direction thereafter no longer shall constitute a part of the
Fund. The Named Fiduciary may direct such distributions and
payments to be made to any person, including the Named Fiduciary
or an Employer, or to any paying agent designated by the Named
Fiduciary, in such amounts and in such form (including, without
limitation, shares of Employer Stock) and for such purposes as
the Named Fiduciary shall direct. Any such order shall
constitute a certification that the payment is one the Named
Fiduciary is authorized to direct. The Named Fiduciary shall
have the exclusive responsibility, and the Trustee shall not have
any responsibility or duty under this Agreement, for ensuring
that any payment made from the Fund at the direction of the Named
Fiduciary does not constitute a diversion of the assets of the
Fund and for determining that any such distribution is in
accordance with the terms of the Plan and applicable law,
including, without limitation, determining the amount, timing or
method of payment and the identity of each person to whom such
payments shall be made. The Trustee shall have no responsibility
or duty to determine the tax effect of any payment or to see to
the application of any payment. The Trustee shall not be
required to make any payment from the Fund in excess of the net
realizable value of the assets of the Fund or to make any payment
in cash unless there is sufficient cash in the Fund or the Named
Fiduciary has provided written instructions as to the assets to
be converted to cash for the purpose of making the distribution.
If a dispute arises as to who is entitled to or should receive
any benefit or payment, the Trustee may withhold or cause to be
withheld such payment until the dispute is resolved.
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SECTION 3
AUTHORITIES
3.1 AUTHORIZED PARTIES. The Company shall identify
the Named Fiduciary to the Trustee and shall furnish the Trustee
with a written list of the names, signatures and extent of
authority of all persons authorized to direct the Trustee and
otherwise act on behalf of the Company under the terms of this
Agreement. The Named Fiduciary will provide the Trustee with a
written list of the names, signatures and extent of authority of
all persons authorized to act on behalf of the Named Fiduciary.
The Trustee shall be entitled to rely on and shall be fully
protected in acting upon direction from an authorized party until
notified in writing by the Company or the Named Fiduciary, as
appropriate, of a change of the identity of an authorized party.
3.2 AUTHORIZED INSTRUCTIONS. All directions and
instructions to the Trustee from a party who has been authorized
to act on behalf of the Company or the Named Fiduciary pursuant
to Section 3.1 or from Pentegra (as provided for in Section 5.4)
shall be in writing, transmitted by mail or by facsimile or shall
be an electronic transmission, provided the Trustee may, in its
discretion, accept oral directions and instructions and may
require confirmation in writing of any such oral directions and
instructions. The Trustee shall be entitled to rely on and shall
be fully protected in acting in accordance with all such
directions and instructions which the Trustee reasonably believes
to have been given by a party who has been authorized to ___ _
behalf of the Company or the Named Fiduciary pursuant to Section
3.1 or by Pentegra (pursuant to Section 5.4) and in failing to
act in the absence thereof.
SECTION 4
INVESTMENT AND ADMINISTRATION OF THE FUND
4.1 INVESTMENT FUNDS. The Named Fiduciary, from time
to time and in accordance with the provisions of the Plan, shall
direct the Trustee to establish one or more separate investment
accounts under the Trust (each such separate account hereinafter
referred to as an "Investment Fund"). The Trustee shall transfer
to each such Investment Fund such portion of the assets of the
Fund as the Named Fiduciary directs. The assets which have been
allocated to an Investment Fund shall be invested and reinvested
in accordance with the instructions of the Named Fiduciary, which
shall have exclusive responsibility therefor. The Trustee shall
be under no duty to question, and shall not incur any liability
on account of following, the instructions of the Named Fiduciary,
with respect to any Investment Fund or the investment or
reinvestment of any assets of the Fund or any Investment Fund,
nor to make suggestions to the Named Fiduciary in connection
therewith or to determine the compliance of such instructions
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with the Plan or applicable law, including, without limitation,
the requirements of Sections 406 and 407 of ERISA. The Trustee
shall not be liable for any losses, costs or expenses (including,
without limitation, any opportunity costs) resulting from any
investment directions given or omitted by the named Fiduciary and
the Trustee shall not be liable for any losses, cost or expenses
associated with the investment decisions of the Named Fiduciary,
including, without limitation, any losses, costs or expenses
associated with the selection of investments by the Named
Fiduciary, actual investments directed by the Named Fiduciary and
the market risks associated with such selections and directions.
If the Trustee is directed to deliver property against payment,
the Trustee shall have no liability for non-receipt of such
payment.
Unless the Trustee is otherwise directed by the Named
Fiduciary, all interest, dividends and other income received with
respect to, and all proceeds received from the sale or other
disposition of, assets of an Investment Fund shall be credited to
and reinvested in such Investment Fund, and all expenses of the
Fund which are properly allocable to a particular Investment Fund
shall be so allocated and charged. Subject to the provisions of
the Plan, the Named Fiduciary may direct the Trustee to eliminate
an Investment Fund or Funds, and the Trustee thereupon shall
dispose of the assets of such Investment Fund or Funds and
reinvest the proceeds thereof in accordance with the instructions
of the Named Fiduciary.
4.2 DISCRETIONARY POWERS AND DUTIES OF TRUSTEE.
Subject to the provisions and limitations contained elsewhere
herein, in administering the Trust, the Trustee shall be
specifically authorized in its sole administrative discretion to:
(a) Appoint subtrustees or depositories, domestic or
foreign (including affiliates of the Trustee), as to part or all
of the Fund, except that the indicia of ownership of any asset of
the Fund shall not be held outside the jurisdiction of the
district courts of the United States unless in compliance with
Section 404(b) of ERISA and regulations thereunder;
(b) Appoint one or more individuals or corporations as
a custodian of any property of the Fund and, as part of its
reimbursable expenses under this Agreement, to pay the reasonable
compensation and expenses of any such custodian;
(c) Hold property in nominee name, in bearer form, or
in book entry form, in a clearinghouse corporation or in a
depository (including an affiliate of the Trustee), so long
the Trustee's records clearly indicate that the assets held
part of the Fund;
(d) Collect income payable to and distributions due to
the Fund and sign on behalf of the Trust any declarations,
affidavits, certificates of ownership and other documents
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required to collect income and principal payments, including but
not limited to, tax reclamations, rebates and other withheld
amounts;
(e) Collect proceeds from securities, certificates of
deposit or other investments which may mature or be called and
surrender such securities at maturity or when called; provided,
however, that the Trustee shall not be liable for failure to
surrender any security for redemption prior to maturity or take
other action if notice of such redemption or other action was not
provided to the Trustee by the issuer, the Named Fiduciary or one
of the nationally recognized bond or corporate action services to
which the Master Trustee subscribes;
(f) 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;
(g) Submit or cause to be submitted to the Named
Fiduciary, on a best efforts basis, all information received by
the Trustee regarding ownership rights pertaining to property
held in the Fund;
(h) Attend to involuntary corporate actions;
(i) Determine, or cause to be determined, the fair
market value of the Fund daily, or for such other period as may
be mutually agreed upon, in accordance with methods consistently
followed and uniformly applied;
(j) Render periodic statements for property held
hereunder;
(k) Commence or defend suits or legal proceedings and
represent the Fund in all suits or legal proceedings in any court
or before any other body or tribunal as the Trustee shall deem
necessary to protect the Fund (provided, however, that the
Trustee shall have no obligation to take any legal action for the
benefit of the Fund unless it shall first be indemnified for all
expenses in connection therewith, including without limitation
counsel fees);
(l) Employ suitable agents and legal counsel, who may
be counsel for an Employer, and, as a part of its reimbursable
expenses under this Agreement, to pay their reasonable
compensation and expenses. The Trustee shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall
be without liability for any action reasonably taken or omitted
pursuant to such advice;
(m) Subject to the requirements of applicable law,
take all action necessary to settle authorized transactions;
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(n) Form corporations and 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 the Trustee deems advisable;
(o) Make, execute and deliver any and all documents,
agreements or other instruments in writing as are necessary or
desirable for the accomplishment of any of the powers and duties
in this Agreement; and
(p) Generally take all action, whether or not
expressly authorized, which the Trustee may deem necessary or
desirable for the fulfillment of its duties hereunder.
4.3 DIRECTED POWERS OF TRUSTEE. In addition to the
powers enumerated in Section 4.2, the Trustee shall have the
following powers and authority in the administration of the Fund
to be exercised solely as directed by the Named Fiduciary:
(a) Invest and reinvest in any securities or other
property including Employer Stock, provided that in no case
without the consent of the Trustee will the assets of the Fund be
invested in assets other than Employer Stock or units of
collective investment funds;
(b) Settle purchases and sales and engage in other
transactions, including free receipts and deliveries, exchanges
and other voluntary corporate actions, with respect to securities
or other property received by the Trustee;
(c) Redeem, transfer or exchange securities of the
Fund; sell, exchange, convey, transfer or otherwise dispose of
any other property of the Fund; and make, execute and deliver to
the purchasers thereof good and sufficient legal documents of
conveyance therefor, and all assignments, transfers and other
legal instruments, either necessary or convenient for passing the
title and ownership of such securities and other property, and no
person dealing with the 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
disposition;
(d) Deliver notices, prospectuses and proxy statements
to the Named Fiduciary, and, subject to Section 4.4, vote in
person or by proxy with respect to any securities held by the
Trust Fund in accordance with the written directions of the Named
Fiduciary; and in accordance with such power, exercise
subscription, conversion and other rights and options and make
payments incidental thereto and take action or refrain from
taking any action with respect to any reorganization,
consolidation, merger, dissolution or other recapitalization or
refinancing and pay any assessments or charges in connection
therewith and delegate discretionary powers with respect thereto;
but the Company understands that, where options, tenders or other
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rights have fixed expiration dates, in order for the Trustee to
act, it must receive instructions at its offices, addressed as
the Trustee may from time to time request, by no later than noon
(N.Y. City 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 Trustee may direct);
(e) Hold any part of the Fund in cash or cash balances
and the Trustee shall not be responsible for the payment of
interest on such balances;
(f) Make loans from the Fund to participants in the
Plan, which shall be secured by the participants account balance;
however, the Named Fiduciary shall have full and exclusive
responsibility for loans made to participants, including, without
limitation, full and exclusive responsibility for the following:
development of procedures and documentation for such loans;
acceptance of loan applications; approval of loan applications;
disclosure of interest rate information required by Regulation Z
of the Federal Reserve Board promulgated pursuant to the Truth in
Lending Act, 15 U.S.C. Section 1601 et seq.; ensuring that such loans
shall bear a reasonable rate of interest (within the meaning of
Regulation Section 2550.408(b)(1) promulgated by the Department of
Labor); acting as agent of the Trustee for the physical custody
and safekeeping of the promissory notes and other -loan documents;
performing necessary and appropriate recordkeeping and accounting
functions with respect to loan transactions; enforcement of
promissory note terms, including, but not limited to, directing
the Trustee to take specified actions to enforce its rights under
the documents relating to plan loans, including, without
limitation, the occurrence of events of default and maintenance
of accounts and records regarding interest and principal payments
von notes. The Trustee shall not in any way be responsible for
holding or reviewing such documents, records and procedures and
shall be entitled to rely upon such information as is provided by
the Named Fiduciary or its own sub-agent or recordkeeper without
any requirement or responsibility to inquire as to the
completeness or accuracy thereof, but may from time to time
examine such documents, records and procedures as it deems
appropriate. Unless otherwise instructed in writing by the Named
Fiduciary, the Trustee shall have no duty or responsibility to
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. The Company shall indemnify and hold the Trustee and
its directors, officers and employees harmless from all claims,
liabilities, losses, damages, costs and expenses, including
reasonable attorneys' fees, arising out of any action or inaction
of the Named Fiduciary with respect to its agency
responsibilities described herein with respect to participant
loans and this indemnification shall survive the termination of
this Agreement;
(g) Execute proxies for any securities held in the
Fund;
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(h) Deposit cash in interest bearing accounts in the
banking department of the Trustee, the Company (provided that the
Company meets the requirements of S 408(b)(4) of ERISA) or in
affiliated banking organization of the Trustee or the Company;
(i) Compromise, compound, settle or arbitrate any
claim, debt or obligation due to or from the 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 to abandon any property determined by the Named Fiduciary to
be worthless;
(j) Invest in any collective investment fund,
including any collective investment fund maintained by the
Trustee or an affiliate. The Trustee shall have no
responsibility for the custody or safekeeping of assets
transferred to any collective investment trust not maintained by
the Trustee. To the extent that any investment is made in any
such collective investment fund, the terms of the collective
trust indenture shall solely govern the investment duties,
responsibilities and powers of the trustee of such collective
investment fund and, to the extent required by law or by such
indenture, such terms, responsibilities and powers shall be
incorporated herein by reference and shall be a part of this
Agreement. For purposes of valuation, the value of the interest
maintained by the Fund in any such collective investment fund
shall be the fair market value of the collective investment fund
units held, determined in accordance with generally recognized
valuation procedures. The Company 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 from the borrowers for the lending of
securities that is separate from any compensation of the Trustee
hereunder, or any compensation of the collective investment fund
trustee for the management of such fund; and
(k) For the purposes of the Fund, to borrow money from
any person or persons, including The Bank of New York, to issue
the Fund's promissory note or notes therefor, and to secure the
repayment thereof by pledging, mortgaging or otherwise
encumbering any property in its possession.
4.4 EMPLOYER STOCK.
(a) The Named Fiduciary may direct that all or a
portion of the Fund or any Investment Fund be invested in
Employer Stock and the Trustee shall act in accordance with any
such directions. Except as otherwise required under ERISA, the
Trustee shall have no discretionary authority or responsibility
to exercise voting rights, or rights in the event of a tender
offer, with respect to such Employer Stock but instead shall be
subject to the directions of the Named Fiduciary in the exercise
of such rights.
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To the extent that the Plan provides for the voting or
tendering of Employer Securities by Plan participants, the Named
Fiduciary shall not improperly interfere in any manner regarding
the decisions by or directions of any participant with respect to
the vote of or response to a tender offer for Employer Securities
allocated to the participant's account, and the Named Fiduciary
shall arrange for such voting or participant's decision regarding
the participant's action with respect to an offer to take place
on a confidential basis. The Named Fiduciary will adequately
communicate or cause to be communicated to all participants the
provisions of the Plan and this Agreement relating to the right
of participants with respect to Employer Stock under the Plan.
The Company will provide the Named Fiduciary with such
information and assistance as the Named Fiduciary 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 Named Fiduciary with
respect to Employer Stock, all materials and communications which
it provides to other stockholders of the Company in connection
with such vote. The 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 such
participant.
(b) In the event that the Trustee is directed to
dispose of any Employer Stock under circumstances which, in the
opinion of the 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
Trustee shall not be required to dispose of such securities until
such registration and/or qualification are complete and
effective, and the 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 Trustee and its
officers, directors and employees 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 Trustee's own gross 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. This
indemnification shall survive termination of this Agreement.
Unless otherwise directed by the Named Fiduciary, any proceeds
received by the Trustee as a result of the sale, exchange or
transfer of Employer Stock pursuant to a tender offer shall be
reinvested in Employer Stock by the Trustee if such security is
available for purchase.
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4.5 STANDARD OF CARE. The Trustee shall discharge its
duties under this Agreement with the care and skill required
under ERISA with respect to its duties. The Trustee shall not be
responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, direction, instruction, consent,
certification or other instrument believed by it to be genuine
and delivered by the proper party or parties. The duties of the
Trustee shall only be those specifically undertaken pursuant to
this Agreement or by separate written agreement.
4.6 FORCE MAJEURE. The Trustee shall not be
responsible or liable for any losses to the Fund resulting from
nationalization, expropriation, devaluation, seizure, or similar
action by any governmental authority,
DE FACTO or DE NURE; or
enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange
controls, levies or other charges affecting the Fund's property;
or acts of war, terrorism, insurrection or revolution; or acts of
God; or any other similar event beyond the control of the Trustee
or its agents. This Section shall survive the termination of
this Agreement.
SECTION 5
APPOINTMENT AND AUTHORITY OF PENTEGRA
5.1 APPOINTMENT AND DELEGATION. The Company hereby
certifies to the Trustee that Pentegra Services, Inc.
("Pentegra") is the third party administrator appointed by the
Named Fiduciary or the Company to receive, cumulate and
communicate investment and distribution directions of the
participants and beneficiaries of the Plan with respect to the
Fund or the Investment Funds, and the Named Fiduciary has
delegated such responsibility and authority exclusively to
Pentegra. For purposes of this Agreement, Pentegra shall be a
delegee of the Named Fiduciary in accordance with Section
405(c)(1)(B) of ERISA. Except as provided in Section 5.5, the
Trustee shall act solely on the directions and instructions
communicated to the Trustee by Pentegra and the Trustee shall not
be liable for any failure to act on any direction or instruction .
of any other party.
5.2 ALLOCATION AND INVESTMENT DIRECTIONS TO TRUSTEE.
Pentegra shall direct the Trustee with respect to the allocation -
of assets to the Investment Funds, transfers among the Investment
Funds and investment and reinvestment of the assets of the Fund
and each Investment Fund. The Trustee shall have no duty to
invest, and shall not be liable for any interest on, any such
assets it holds uninvested pending receipt of directions from
Pentegra to invest or reinvest assets of the Fund.
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5.3 CUSTODY OF PARTICIPANT LOAN DOCUMENTS. Pentegra
is further authorized and is hereby appointed by the Named
Fiduciary and the Company to act as custodian for the Trustee of
all original promissory notes and security agreements which shall
be held subject to the order of the Trustee. In the event that
such custodianship is terminated by Pentegra, the Named Fiduciary
or the Trustee, the Named Fiduciary shall retain the originals of
all promissory notes and security agreements as custodian for the
Trustee.
5.4 DESIGNATION FOR AUTHORIZED INSTRUCTIONS. Pentegra
shall furnish the Trustee with a written list of the names,
signatures and extent of authority of all persons authorized to
act on behalf of Pentegra. The Trustee shall be entitled to rely
on and shall be fully protected in acting upon direction
reasonably believed by it to be from an authorized party (or
omitting to act in the absence of direction) until notified in
writing by Pentegra, of a change in the identity of an authorized
party. Directions of an authorized party shall be governed by
Section 3.2 of this Agreement.
5.5 RESIGNATION OR REMOVAL OF PENTEGRA. In the event
Pentegra resigns or is removed as third party administrator under
the Plan, or Pentegra's authority is circumscribed in any manner,
the Company shall promptly notify the Trustee of such
resignation, removal or circumscription of authority and shall
furnish the Trustee with Certified Resolutions identifying the
Named Fiduciary and any other persons authorized to assume the
duties and responsibilities of Pentegra with respect to the Plan.
The Trustee shall not have or be deemed to have any
responsibility to assume the functions and duties of Pentegra,
shall have no duty or responsibility to invest or reinvest the
assets of the Fund and shall not be liable for any losses to the
Fund (including any opportunity costs) as a result of its failure
to act prior to receiving the foregoing Certified Resolution.
SECTION 6
REPORTING AND RECORDKEEPING
6.1 RECORDS AND ACCOUNTS. The Trustee shall keep full
and accurate records of all receipts, investments, disbursements,
and other transactions hereunder, including such specific records
as may be agreed upon in writing between the Company and the
Trustee. Within ninety (90) days after the end of each fiscal
year of the Trust or within ninety (90) days after its removal or
resignation or the termination of this Agreement, the Trustee
shall file with the Company a written account of the
administration of the Fund showing all transactions effected by
the Trustee and all property held by the Fund at its fair market
value for the accounting period. If, within ninety (90) days
after the Trustee mails such account to the Company, the Company
has not given the Trustee written notice of any exception or
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objection thereto, the statement shall be deemed to have been
approved, and in such case, the Trustee shall not be liable for
any matters in such statements. Upon prior written notice, the
Company or its agent shall have the right at its own expense to
inspect the Trustee's books and records directly relating to the
Fund during normal business hours. If for any reason the Trustee
fails to file an account required of the Trustee within the
applicable times specified hereunder, such account shall be filed
by the Trustee after the expiration of such time as soon as is
reasonably practicable. To the extent that the Trustee shall be
required to value the assets of the Fund, the Trustee may rely
for all purposes of this Agreement upon any certified appraisal
or other form of valuation submitted by the Named Fiduciary,
Pentegra, any investment manager or other third party appointed
by the Named Fiduciary. Nothing in this Section shall impair
Trustee's right to judicial settlement of any account rendered by
it. In any such proceeding the only necessary parties shall be
the Trustee, the Company and any other party whose participation
is required by law, and any judgment, decree or final order
entered shall be conclusive on all persons having an interest in
the trust.
The fiscal year of the Trust shall be the plan year as
established under the terms of the Plan.
6.2 NON-FUND ASSETS. The duties of the Trustee shall
be limited to the assets held in the Fund, and the Trustee shall
have no duties with respect to assets held by any other person
including, without limitation, any other trustee for the Plan
unless otherwise agreed in writing. The Company hereby agrees
that the Trustee shall not serve as, and shall not be deemed to
be, a co-trustee under any circumstances. The Named Fiduciary
may request the Trustee to perform a recordkeeping service with
respect to property held by others and not otherwise subject to
the terms of this Agreement. To the extent the Trustee shall
agree to perform this service, its sole responsibility shall be
to accurately reflect information on its books which it has
received from the Named Fiduciary.
SECTION 7
COMPENSATION, EXPENSES, TAXES, INDEMNIFICATION
7.1 COMPENSATION AND EXPENSES. The Trustee shall be
entitled to compensation for services under this Agreement as
mutually agreed by the Company and the Trustee. The Trustee
shall also be entitled to reimbursement for reasonable expenses
incurred by it in the discharge of its duties under this
Agreement. The Trustee is authorized to charge ar,d collect from
the Fund any and all such fees and expenses to the extent such
fees and expenses are not paid directly by the Company, another
Employer or by Pentegra (acting on behalf of the Company or such
other Employer).
All amounts (including taxes) paid from the Fund which
are allocable to an Investment Fund shall be charged to such
Investment Fund in accordance with Section 4.1 of this Agreement.
All such expenses which are not so allocable shall be charged
against each of the Investment Funds in the same proportion as
the value of the total assets held in such Investment Fund bears
to the value of the total assets in the Fund.
To the extent the Trustee advances funds to the Fund
for disbursements or to effect the settlement of purchase
transactions, the Trustee shall be entitled to collect from the
Fund an amount equal to what would have been earned on the sums
advanced (an amount approximating the "federal funds" interest
rate).
7.2 TAX OBLIGATIONS. To the extent that the Company
or Named Fiduciary has provided necessary information to the
Trustee, the Trustee shall use reasonable efforts to assist the
Company or the Named Fiduciary with respect to any Tax
Obligations. The Company or Named Fiduciary shall notify the
Trustee of any Tax Obligations. Notwithstanding the foregoing,
the Trustee shall have no responsibility or liability for any Tax
Obligations now or hereafter imposed on any Employer or the Fund
by any taxing authorities, domestic or foreign, except as
provided by applicable law.
To the extent the Trustee is responsible under any
applicable law for any Tax Obligation, the Company or the Named
Fiduciary shall inform the Trustee of all Tax Obligations, shall
direct the Trustee with respect to the performance of such Tax
Obligations, and shall provide the Trustee with all information
required by the Trustee to meet such Tax Obligations. All such
tax Obligations shall be paid from the Fund unless paid by the
Company or another Employer.
7.3 INDEMNIFICATION. The Company shall indemnify and
hold harmless the Trustee and its directors, officers and
employees from all claims, liabilities, losses, damages and
expenses, including reasonable attorneys' fees and expenses,
incurred by the Trustee in connection with this Agreement, except
those resulting from the Trustee's gross negligence, bad faith or
willful misconduct. This indemnification (as well as any other
indemnification in this Agreement) shall survive the termination
of this Agreement. If the Trustee is acting as a successor
trustee or succeeds to responsibilities hereunder for trusteeship
of plan assets with respect to the Fund (or any portion thereof),
the Company hereby agrees to hold the Trustee 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
Fund assets with investment responsibility with respect to such
assets, except for such taxes, claims, liabilities, losses,
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damages or expenses attributable to the Trustee's own gross
negligence, bad faith or willful misconduct.
SECTION 8
AMENDMENT, TERMINATION, RESIGNATION, REMOVAL
8.1 AMENDMENT. This Agreement may be amended by
written agreement signed by the Company and the Trustee. This
Agreement may be terminated at any time by the Company by written
instrument delivered to the Trustee. Thereafter, the Trustee
shall distribute all assets of the Fund, less any fees and
expenses payable from the Fund with respect to the Plan, pursuant
to instructions of the Named Fiduciary. The Trustee may
condition its delivery, transfer or distribution of any assets
upon the Trustee's receiving assurances reasonably satisfactory
to it that the approval of appropriate governmental or other
authorities has been secured and that all notices and other
procedures required by applicable law have been complied with.
The Trustee shall be entitled to assume that such distributions
are in full compliance with and not in violation of the terms of
the Plan or any applicable law.
8.2 REMOVAL OR RESIGNATION OF TRUSTEE. The Trustee
may be removed with respect to all or part of the Fund upon
receipt of sixty (60) days' written notice (unless a shorter or
longer period is agreed upon) from the Company. The Trustee may
resign as Trustee hereunder upon sixty (60) days' written notice
(unless a shorter or longer period is agreed upon) delivered to
the Company. In the event of such removal or resignation, a
successor trustee will be appointed and the retiring Trustee
shall transfer the Fund, less such amounts as may be reasonable
and necessary to cover its compensation and expenses. In the
event the Company fails to appoint a successor trustee within
sixty (60) days of receipt of written notice of resignation, the
Trustee reserves the right to seek the appointment of a successor
trustee from a court of competent jurisdiction. The Trustee
shall have no duties, responsibilities or liability with respect
to the acts or omissions of any successor :
8.3 PROPERTY NOT TRANSFERRED. The Trustee reserves
the right to retain such property as is not suitable for
distribution or transfer at the time of the termination of a Plan
or this Agreement and shall hold such property for the benefit of
those persons or other entities entitled to such property until
such time as the Trustee is able to make distribution. Upon the .
appointment and acceptance of a successor trustee, the Trustee's
sole duties shall be those of a custodian with respect to any
property not transferred to the successor trustee.
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SECTION 9
ADDITIONAL PROVISIONS
9.1 NO MERGER, CONSOLIDATION OR TRANSFER OF PLAN
ASSETS OR LIABILITIES. Notwithstanding anything to the contrary
contained herein, no merger, consolidation or transfer of the
assets or liabilities of the Plan with or to any other plan shall
be permitted, except in compliance with the provisions of ERISA
and the Code which are applicable to such mergers, consolidations
or transfers, including, without limitation, Sections 208 and
4043(b)(8) of ERISA and-Sections 401(a)-(12), 414(1) and 6058(b)
of the Code, and the regulations thereunder.
9.2 ASSIGNMENT OR ALIENATION. Except as may be
required by law or permitted by the Plan, the Fund shall not be
subject to any form of attachment, garnishment, seauestration or
other actions of collection afforded creditors of the Employer,
participants or beneficiaries under the Plan. The Trustee shall
not recognize any permitted assignment or alienation of benefits
unless directed to do so by the Named Fiduciary or required to do
so by applicable law.
9.3 SUCCESSORS AND ASSIGNS. Neither the Company nor
the Trustee may assign this Agreement without the prior written
consent of the other, except that the Trustee may assign its
rights and delegate its duties hereunder to any corporation or
entity which directly or indirectly is controlled by, or is under
common control with, the Trustee. This Agreement shall be
binding upon, and inure to the benefit of, the Company and the
Trustee and their respective successors and permitted assigns.
Any entity which shall by merger, consolidation, purchase, or
'otherwise, succeed to substantially all the trust business of the
Trustee shall, upon such succession and without any appointment
or other action by the Company, be and become successor trustee
hereunder, upon notification to the Company.
9.4 GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the laws of the State of New
York (without giving effect to conflict of law principles
thereof) to the extent not preempted by Federal law.
9.5 NECESSARY PARTIES. The Trustee reserves the right
to seek a judicial or administrative determination as to its
proper course of action under this Agreement. Nothing contained
herein will be construed or interpreted to deny the Trustee or
the Company the right to have the Trustee's account judicially
determined. To the extent permitted by law, only the Trustee and
the Company shall be necessary parties in any application to the
courts for an interpretation of this Agreement or for an
accounting by the Trustee, and no participant or beneficiary
under the Plan or other person having an interest in the Fund
shall be entitled to any notice or service of process. Any final
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judgment entered in such an action or proceeding shall, to the
extent permitted by law, be conclusive upon all persons.
9.6 NO THIRD PARTY BENEFICIARIES. The provisions of
this Agreement are intended to benefit only the parties hereto,
their respective successors and assigns, and participants and
their beneficiaries under the Plan. There are no other third
party beneficiaries.
9.7 EXECUTION LN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed an original, and-said counterparts shall constitute but
one and the same instrument and may be sufficiently evidenced by
one counterpart.
9.8 NO ADDITIONAL RIGHTS. Neither the establishment
of the Fund nor this Agreement shall be considered as giving any
Plan participant or any other person any legal or equitable
rights against the Employer, the Named Fiduciary, the Trustee or
the assets, whether corpus or income, of the Fund unless such
right is specifically provided for in this Agreement or the Plan,
nor shall it be considered as giving any Plan participant or
other employee of the Employer the right to continue in the
service of the Employer in any capacity.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the effective date set forth above.
Authorized Signer of:
HOME FEDERAL SAVINGS BANK THE BANK OF NEW YORK
By: /s/ Roger P. Weise By: /s/ Betty A. Good
Name: Roger P. Weise Name: Betty A. Good
Title: President/CEO Title: Vice President
Date: 5/28/97
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