TRUST AGREEMENT
Establishing
the
M.D.C. HOLDINGS, INC. 401(K) SAVINGS PLAN TRUST
by and between
M.D.C. HOLDINGS, INC.
and
CG Trust Company
TABLE OF CONTENTS
PAGE
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Section 1 Establishment of Trust 1
Section 2 General Duties of the Employer; Indemnification 1
Section 3 General Duties of Trustee 2
Section 4 Power and Duties of Trustee with Respect to Trust Fund 3
Section 5 Payment of Taxes 3
Section 6 Disbursement of Trust Funds 4
Section 7 Expenses and Compensation of Trustee 4
Section 8 Expense of the Plan and Trust Fund 4
Section 9 Accounts of Trustee 4
Section 10 Resignation, Removal and Substitution of Trustee 5
Section 11 Amendment and Termination of Trust 5
Section 12 Miscellaneous Provisions 6
Exhibit A Schedule of Trust Assets 8
THIS TRUST AGREEMENT, by and between M.D.C. Holdings, Inc., (hereinafter
called the "Employer"), and CG TRUST COMPANY, a trust company organized under
the laws of the State of Illinois with its principal office and place of
business in the City of Chicago, Illinois (hereinafter called the "Trustee").
WITNESSETH:
WHEREAS, the Employer has established or adopted for its eligible
employees the M.D.C. Holdings, Inc. 401(k) Savings Plan (hereinafter called
the "Plan") and serves as the Plan administrator and named fiduciary; and
WHEREAS, the Employer desires the Trustee to hold Plan funds and the
Trustee is willing to hold such funds pursuant to the terms of this Trust
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto do hereby mutually declare and agree as
follows:
Section 1: ESTABLISHMENT OF TRUST.
(a) In order to carry out the purposes of the Plan, the Employer hereby
creates and establishes a trust to be known as the M.D.C. Holdings, Inc. 401(k)
Savings Plan Trust (hereinafter called the "Trust" or "Trust Fund"). The
Trustee accepts this Trust and agrees to act as Trustee hereunder, but only on
the terms and conditions set forth in this Trust Agreement. Subject to the
terms and conditions of this Trust Agreement, all right, title and interest in
and to the estate of the Trust Fund shall be vested exclusively in the Trustee.
This Trust shall be effective on October 1, 1993 or, if later, the date executed
on behalf of the Trustee.
(b) The Trust Fund shall include only those assets which the Trustee
accepts and which are identified on Exhibit A. Only assets actually received by
the Trustee will become part of the Trust Fund. The Employer acknowledges and
agrees that it is responsible for effectuating the transfer of any assets held
by a prior trustee or custodian to the Trustee. All assets so received,
together with the income therefrom and any other increment thereon, shall be
held by the Trustee pursuant to the terms of this Trust Agreement without
distinction between principal and income and without liability for the payment
of interest thereon.
Section 2: GENERAL DUTIES OF THE EMPLOYER; INDEMNIFICATION.
(a) The Employer shall control and manage the operation of the Plan. The
Employer shall be responsible for determining benefit rights under the Plan,
instructing the Trustee in the disbursement of benefits, investment management,
soliciting stock voting instructions from participants, directing the Trustee in
voting proxies and performing those plan administration functions specified in
the Plan.
(b) The Employer shall act as custodian with respect to promissory notes,
mortgages and related documents given in connection with Plan loans, if any, and
the Employer shall hold in safekeeping all such promissory notes, mortgages and
related documents.
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(c) The Trustee shall be fully protected and shall incur no liability in
acting in reliance upon the instructions or directions of the Employer, or any
delegate of the Employer. In addition, the Trustee shall be entitled to rely on
directions given by a Plan participant, where the Plan provisions permit such
direction. The participant shall be regarded as the delegate of the Employer
for purposes of this Agreement and any reference herein to directions or
instructions from the Employer shall include directions or instructions from any
delegate of the Employer including Plan participants.
(d) The Employer shall indemnify and hold harmless the Trustee from and
against any and all claims, losses, damages, expenses (including reasonable
counsel fees) and liability to which the Trustee may be subject by reason of any
act done or omitted to be done, except where the same is finally adjudicated to
be due to the gross negligence or willful misconduct of the Trustee.
(e) In addition to and in no way in limitation of the indemnification of
paragraph (d), the Employer hereby agrees to indemnify and hold harmless the
Trustee from and against any claims, losses, damages, expenses (including
reasonable counsel fees) and liability to which the Trustee may be subject by
reason of any act or omission of any prior, subsequent or existing trustee of
the Plan.
Section 3: GENERAL DUTIES OF TRUSTEE.
(a) The Trustee shall receive, hold, manage, invest and reinvest the Trust
Fund pursuant to the provisions of this Section and Section 4 in accordance with
the directions of the Employer. The Trustee shall take no action except
pursuant to directions received by it from the Employer, and shall have no duty
to determine any facts or the propriety of any action taken or omitted by it in
good faith pursuant to instructions from such persons.
(b) The Trustee shall be responsible only for such assets as are actually
received by it as Trustee hereunder. The Trustee shall have no duty or
authority to ascertain whether any contributions should be made to it pursuant
to the Plan or to bring any action to enforce any obligation to make any such
contribution, nor shall it have any responsibility concerning the amount of any
contribution or the application of the Plan's contribution formula.
(c) The duties and obligations of the Trustee hereunder shall be limited
to those expressly imposed upon it by this Trust Agreement notwithstanding any
reference herein to the Plan, and no further duties or obligations of the
Trustee, such as a duty to value Plan investments, determine the prudence of any
Plan investment, or diversify Plan investments, shall be implied. The Trustee
shall not be liable in discharging its duties hereunder if it acts in good faith
and in accordance with the terms of this Trust Agreement and in accordance with
applicable Federal or state laws, rules and regulations.
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Section 4: POWER AND DUTIES OF TRUSTEE WITH RESPECT TO TRUST FUND. The
Trustee shall have the following powers and duties regarding the Trust Fund:
(a) To hold title to the assets of the Trust Fund, which may include
entering into depository arrangements for the safekeeping of records relevant to
the ownership of such assets with any bank or banks as the Trustee may choose.
Without limiting the generality of the foregoing, the Employer specifically
directs the Trustee to appoint, and the Trustee hereby appoints the Employer to
act as custodian with respect to promissory notes, mortgages and related
documents given in connection with Plan loans, if any.
(b) To invest the assets of the Trust Fund in such investment vehicles as
directed by the Employer, including Plan loans made to participants, and annuity
or insurance contracts issued by affiliates of the Trustee, in accordance with
directions received from the Employer, and to agree to amendments to such
annuity or insurance contracts, as directed by the Employer. The Trust Fund may
also include qualifying Employer securities as defined by the Employee
Retirement Income Security Act of 1974 as amended from time to time. However,
in no event shall the Employer direct the Trustee to purchase Employer
securities if the fair market value of all qualifying Employer securities
exceeds 100% of the fair market value of all Plan assets. The Trustee shall
have no duty or responsibility to determine the appropriateness of any plan
investment, or to cause such investments to be changed. Notwithstanding any
other provision of this Agreement, all notices, proposed contract amendments,
rate or fee changes or other communications regarding all group annuity
contracts that are assets of the Plan, including any group annuity contract
issued by Connecticut General Life Insurance Company, will be sent directly by
the issuer of the contract to the Employer or forwarded by the Trustee to the
Employer, and the Trustee shall act on behalf of the Plan with respect to any
such notice, proposed amendment, change or other communication only in
accordance with the written direction of the Employer. Any rights of a
contractholder under any such group annuity contract to discontinue, amend or
otherwise modify the contract shall be exercised only upon the specific written
direction of the Employer to the issuer of the contract or by the Trustee at the
Employer's specific written direction.
(c) To make transfers among investment vehicles or disbursements from the
Trust Fund as directed by the Employer or, if applicable, Plan participants.
The Trustee shall be entitled to rely on such direction, and shall have no
responsibility to ascertain whether the Plan permits such a transfer or
disbursement.
(d) To delegate to third parties, including affiliates of the Trustee, any
or all of its duties hereunder, including recordkeeping and reporting. Also,
the Trustee may utilize the services of outside custodians to hold on the
Trustee's behalf any Plan assets invested in securities.
(e) To vote securities proxies as directed by the Employer.
(f) To review proposed Plan amendment(s) for the sole purpose of
determining whether such amendment(s) is consistent with and thus, acceptable,
under the terms of this Trust Agreement. All Plan amendment(s) must be mutually
agreed to in writing by the Trustee, or a delegate of the Trustee, and the
Employer. In the event a proposed Plan amendment(s) is not received by the
Trustee or mutually agreed upon by the parties and there is a conflict between
such amendment(s) and this Trust Agreement, this Trust Agreement shall
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prevail.
Section 5: PAYMENT OF TAXES. The Trustee shall pay out of the Trust Fund
income taxes and other taxes of any and all kinds levied or assessed under
existing or future laws against the Trust Fund, or against any person with an
interest in the Trust Fund.
Section 6: DISBURSEMENT OF TRUST FUNDS.
(a) Upon receipt of written direction of the Employer, the Trustee shall
make payments from the Trust Fund to such persons or direct Connecticut General
Life Insurance Company to make such payments from an annuity contract listed on
Exhibit A, in such manner and in such amounts as the Employer shall direct in
writing, and amounts paid pursuant to such direction shall no longer constitute
a part of the Trust Fund. Notwithstanding the foregoing, the Employer expressly
reserves the right to provide direction directly to Connecticut General Life
Insurance Company regarding payments of Plan benefits or other disbursements.
(b) At no time prior to the satisfaction of all liabilities with respect
to participants and beneficiaries under this Trust shall any part of the corpus
or income of the Trust Fund be used for, or diverted to, purposes other than for
the exclusive benefit of plan participants or beneficiaries. Except as provided
in the Plan, the assets of the Trust Fund shall never inure to the benefit of
the Employer and shall be held for the exclusive purpose of providing benefits
to participants in the Plan and their beneficiaries, and defraying reasonable
expenses of administering the Plan.
Section 7: EXPENSES AND COMPENSATION OF TRUSTEE. The Trustee shall be
compensated in accordance with the fee schedule provided to the Employer. In
addition the Trustee shall be paid its reasonable expenses, including reasonable
expenses of counsel and other agents employed by the Trustee, incurred in
conjunction with the administration of the Trust Fund. If the Trustee proposes
an amended fee schedule and the Employer fails to object thereto within ninety
(90) days of its receipt, the amended fee schedule shall be deemed accepted by
the Employer.
Section 8: EXPENSES OF THE PLAN AND TRUST FUND. The Employer shall pay,
or, if not paid by the Employer and the Plan so permits, the Employer shall
direct the Trustee to pay from the Trust Fund, the reasonable expenses relating
to the Plan and Trust Fund. Such expenses shall include, without limitation,
actuarial, investment management, accounting, legal and Trust expenses.
Section 9: ACCOUNTS OF THE TRUSTEE. The Trustee has accepted this Trust
on the condition that the Employer has entered or is entering into a service
agreement with Connecticut General Life Insurance Company whereby Connecticut
General Life Insurance Company will provide recordkeeping services for all Plan
assets held pursuant to this Trust Agreement. The Trustee shall be required to
forward to the Employer, or require Connecticut General Life Insurance Company
to forward to the Employer, the recordkeeping reports and related financial
information provided by Connecticut General Life Insurance Company, but
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the Trustee shall not otherwise be required to provide Trust accounts.
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Section 10: RESIGNATION, REMOVAL AND SUBSTITUTION OF TRUSTEE.
(a) The Trustee may resign at any time by giving at least 30 days' written
notice to the Employer (unless the Employer deems notice of a shorter duration
to be adequate). The Employer may remove the Trustee at any time by giving at
least 30 days' written notice to the Trustee (unless the Trustee deems notice
of a shorter duration to be adequate).
(b) The Trustee's service pursuant to this Agreement is conditioned upon
the existence of one or more contracts between the Employer or the Plan (or the
Trustee on behalf of the Employer or the Plan) and Connecticut General Life
Insurance Company providing a funding medium for the Plan and providing for full
Plan recordkeeping services. In the event the contract providing a funding
medium or providing for recordkeeping services is discontinued or terminated,
this Agreement shall be terminated as well with no further notice from either
party to the other as of the date of discontinuance or termination of the
contract providing a funding medium or providing for recordkeeping services.
(c) Any successor trustee hereunder may be either a corporation authorized
and empowered to exercise trust powers or may be one or more individuals.
(d) Upon the appointment of a successor trustee, the resigning or removed
Trustee shall execute, acknowledge and deliver all documents and written
instruments necessary to transfer and deliver the Trust Fund and all rights and
privileges therein to the successor trustee. Upon the appointment of a
successor trustee, the resigning and removed Trustee shall be discharged from
further accountability for the Trust Fund, and shall be under no further duty,
obligation or responsibility for the disposition by such successor trustee of
the Trust Fund or any part thereof.
Section 11: AMENDMENT AND TERMINATION OF TRUST.
(a) The Employer and the Trustee may mutually agree at any time to amend
this Trust Agreement and the Trust created hereby to any extent deemed
advisable. No amendment to this Trust Agreement shall be effective unless
mutually agreed to in writing by the Employer and the Trustee; provided,
however, that Trustee's fee schedule may be amended as provided in Section 7.
(b) The Employer may at any time revoke this Trust Agreement and terminate
the Trust hereby created. Such revocation and termination shall become
effective upon receipt by the Trustee or its delegate of a written instrument of
such revocation and termination executed by the Employer. Upon such
termination, disposition of the assets of the Trust Fund shall be governed by
the terms of the Plan; provided, however, that the Trustee shall not distribute
any portion of the Trust Fund after such termination unless the Employer first
obtains a determination from the Internal Revenue Service that such termination
will not affect adversely the qualified status of the Plan and, if required,
approval of the Pension Benefit Guaranty Corporation of such termination and
distribution of assets. In lieu of an Internal Revenue Service determination,
assets of the Trust Fund may be distributed if the Employer agrees in writing
with the Trustee to indemnify the Trust Fund for any taxes or other penalties
which may be assessed against it as a result of such termination or agrees to
provide a bond to secure payment of any such taxes or penalties.
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Section 12: MISCELLANEOUS PROVISIONS.
(a) Trust Agreement and the Trust hereby created shall be governed,
construed, administered and regulated in all respects under the law of the
United States and the State of Illinois.
(b) The titles of the Sections in this Trust Agreement are for convenience
of reference only and in case of any conflict, the text of this instrument,
rather than such titles, shall control.
(c) In case any provisions of this Trust Agreement shall be held illegal
or invalid for any reason, their illegality or invalidity shall not affect the
remaining parts of this Trust Agreement, and this Trust Agreement shall be
construed and enforced as if the illegal and invalid provisions had never been a
part of the Trust Agreement.
(d) This Trust Agreement may be executed in any number of counterparts,
each of which shall be deemed an original. The counterparts shall constitute
one and the same instrument and may be sufficiently evidenced by any one
counterpart.
(e) This Trust Agreement shall be binding upon the respective successors
and assigns of the Employer and the Trustee.
(f) Neither the gender nor the number (singular or plural) of any word
shall be construed to exclude another gender or number when a different gender
or number would be appropriate.
(g) Communications to the Trustee shall be sent to the Trustee's principal
offices or such addresss as the Trustee may specify in writing. No
communication shall be binding upon the Trustee until it is received by the
Trustee or its delegate. Communications to the Employer shall be sent to the
Employer's principal offices or such address as the Employer may specify in
writing.
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IN WITNESS WHEREOF, this Trust Agreement has been executed on the dates
indicated below. The persons executing this Trust Agreement represent that they
are duly authorized to do so.
Attest: Employer
By
------------------------------------- ------------------------------------
Its
Date
----------------------------------
Attest: CG TRUST COMPANY
By
------------------------------------- ------------------------------------
Its
Date
----------------------------------
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DCTRUST.AGR
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EXHIBIT A
SCHEDULE OF TRUST ASSETS
1. Group Annuity contract GA-36104, issued by Connecticut General Life
Insurance Company.
2. Promissory notes given in connection with loans to Plan participants and
beneficiaries.
3. M.D.C. Holdings, Inc. Common Stock.
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