Midland-Guardian Co. Salaried Employees 401(k) Savings
Plan and Trust
Employer Stock Fund Investment Policy and Agreement
To facilitate the investment in certain employer securities by participants in
the Midland-Guardian Co. Salaried Employees 401(k) Savings Plan and Trust
("Plan") in a manner which is consistent with the Plan, Participant
self-direction, and the applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and Department of Labor Regulations,
Midland-Guardian Co., the Plan Sponsor, and Key Trust Company of Ohio, National
Association, Plan Trustee, hereby adopt the administrative policies described in
this Employer Stock Fund Investment Policy and Agreement ("Agreement") for such
mutual consideration as is described herein. The Midland-Guardian Co.
("Company") and Key Trust Company of Ohio, National Association ("Trustee")
intend to establish certain administrative procedures that the Trustee may use
in its role as a directed, nondiscretionary trustee to effectuate certain Plan
transactions involving the investment in (or divestment of) Employer Stock in a
Plan Investment Fund which consists primarily (or exclusively, as the case may
be from time to time) of the common stock of the Company, and a percentage of
cash or cash equivalents. In consideration of the Trustee's acceptance of an
Employer Stock Fund the Company adopts the policies described herein. In
consideration of the representations and warranties of the Company, the Trustee
agrees to process Plan transactions involving Employer Stock and the Employer
Stock Fund in accordance with this policy and agreement.
1. Purpose: Midland-Guardian Co. desires to provide Participants (and
Beneficiaries as described in the Plan) with an opportunity to invest in an
investment fund which consists primarily of Employer Stock. From time to time,
it is possible that the Employer Stock Fund may consist exclusively of Employer
Stock. In addition to Midland-Guardian Co. common stock, the Employer Stock
Fund also contains a cash component. As a fiduciary of the Plan the Company
determined that an Employer Stock Fund is in the best interests of the Plan, its
Participants (or Beneficiaries), and is consistent with the purposes of the
Plan, in its sole determination, and after considering (i) the investment policy
and philosophy of the Company developed pursuant to Section 404 of ERISA; (ii)
the ability of Participants (or Beneficiaries) to diversify the investment of
Plan assets held for their benefit; and, (iii) the ability of Participants to
structure an investment portfolio within their respective Plan accounts with
risk and return characteristics within the normal range of risk and return
characteristics for individuals with similar investment backgrounds, experience
and expectations.
2. Definitions: The following terms shall have the meanings set forth
below. To the extent that a capitalized term or phrase is not defined herein,
it shall have the meaning ascribed to it in the underlying qualified plan or
trust document(s).
(A) "Closing Price" shall mean the final price at which Employer Stock
has traded on the New York Stock Exchange (or such other exchange on
which Employer Stock is traded) as may be reported to the Trustee
using any service for the reporting of final prices as may be
reasonable. The Closing Price shall be the price utilized in the
valuation of the Employer Stock Fund for all purposes contained in
this policy, without regard to whether the Closing Price is the
actual final price at which Employer Stock purchases and sales are
transacted on any exchange on the Trading Day;
(B) "Company" shall mean the Plan Sponsor and issuer of Employer Stock
as described in this policy;
(C) "Employer Stock" shall mean the common stock issued by the Company;
(D) "Employer Stock Fund" or "Fund" shall mean an Investment Fund, the
assets of which shall be primarily invested in Employer Stock;
(E) "Trading Day" shall mean any day on which the Trustee and the New
York Stock Exchange ("NYSE") (or any other exchange on which
Employer Stock is traded) are open for business, and are able to
transact trades involving Employer Stock as a Plan investment. The
close of the Trading Day shall be the time of the close of the NYSE.
In the event that either the Trustee or the NYSE is incapable of
processing trades involving Employer Stock for any reason
whatsoever, or in the event trading in Employer Stock is suspended
for any reason whatsoever, the close of the Trading Day shall be the
last time by which transactions involving Employer Stock may be
processed on any such day.
(F) "Treasury Shares" shall mean common stock issued and reacquired
(purchased) by the Company.
3. Employer Stock Fund Selection: In connection with offering the Employer
Stock Fund as an Investment Fund in the Plan, the Company makes the following
representations and warranties:
(A) All securities that must be registered under the Securities Act of
1933, including the Employer Stock and any other securities or
interests offered in connection with the Plan, have been or will be
duly registered under rules promulgated by the Securities and
Exchange Commission and may be offered for sale in all jurisdictions
within the United States in which offers may be made under the Plan;
(B) The Employer Stock is listed on a nationally recognized public
exchange for trading, and the Company knows of no pending or
threatened action which would cause the suspension of trading on any
exchange on which the Employer Stock is listed;
(C) The Company has made all appropriate disclosures regarding the
Employer Stock Fund to Plan Participants (and Beneficiaries) in
summary plan descriptions, prospectuses and other Plan and Employer
Stock literature, including but not limited to information relating
to voting rights and unitization, investment and trading rights, and
actions that may be taken pursuant to Section 4 of this Policy and
Agreement, if any;
(D) In accordance with applicable federal securities laws and
regulations, the Company has determined which, if any, of its
employees are "insiders" as defined in Section 16 of the Securities
Exchange Act of 1934, and has identified such individuals on
Schedule A to this Agreement. The Company will update and/or revise
the attached Schedule A to reflect any additions or deletions
thereto. In addition, the Company has identified a representative
who, on behalf of the Company, is authorized to communicate in
writing such revisions and/or deletions to Schedule A to the
Trustee, and who may receive any and all information as may be
contemplated under Section 4(d)(i) of this Agreement.
The Trustee will have no responsibility to review or revise Schedule
A based upon applicable federal securities laws. Nor will the
Trustee have any responsibility to prepare or file any reports,
disclosures or other documents with the Securities and Exchange
Commission in accordance with such securities laws. The Company has
sole responsibility for preparing and filing any and all reports,
disclosures or other documents as may be required under applicable
federal securities laws;
(E) There are no pending transactions which would result in the Company
being acquired by, or merged into another company or other entity,
or other corporate transaction which would result in a significant
change in the capital structure of the Company, the number of issued
or outstanding shares of Employer Stock, or could result in trading
volume or price fluctuations materially different from the average
trading volume or price fluctuations.
(F) The Company has consulted with legal counsel familiar with federal
securities and ERISA matters, as necessary, to review all issues
associated with offering Employer Stock in the Plan.
(G) The Company will register additional shares of Employer Stock as
necessary, and it will be the Company's continuing obligation to
review the amount of Employer Stock traded into or out of the Plan
in order to meet applicable Securities and Exchange Commission rules
and regulations.
(H) In the event that the trading of Employer Stock is suspended for
any reason other than as described in Section 4 of this Agreement,
the Company will notify the Trustee as soon as possible.
These representations and warranties shall be a continuing obligation upon the
Company, and the Company shall have an on-going affirmative obligation to
inform the Trustee of any event which would cause these representations or
warranties to no longer be true and accurate, provided, however, that with
regard to paragraph (E) above, the Company will not be obligated to inform the
Trustee of any such transaction prior to its public disclosure.
The Company has sole responsibility for complying with any and all federal and
state regulatory requirements applicable to, or incident to the investment of
Plan assets in Employer Stock or the Fund, including but not limited to
registration, filing, reporting, prospectus preparation and delivery, and
"Blue Sky" requirements. The Company has sole responsibility for preparing,
delivering and filing any and all disclosures as may be necessary to comply with
federal and state securities laws, including but not limited to a Form S-8
Registration Statement, prospectuses, and annual filings (including, but not
limited to, any Form 11-K that may be required).
4. Investment Fund Management/Processing:
(A) It is understood and acknowledged by the Company that the Employer
Stock Fund will be an Investment Fund, the assets of which will be
invested primarily in Employer Stock, and a portion of the assets of
the Employer Stock Fund will be invested in cash or cash
equivalents (including a money market fund which may be managed by a
subsidiary or affiliate of the Trustee).
(B) The transfer agent will hold shares of Employer Stock which have
been allocated to the Employer Stock Fund. The Plan's position on
the transfer agent's books will be reflective of the number of
shares held by the Plan in the Employer Stock Fund. The Trustee is
not the transfer agent and will not have responsibility for holding
shares of Employer Stock on behalf of the Plan. The transfer agent
will be instructed by the Trustee to move Treasury Shares between
the Plan's position and the Company's position as needed to execute
stock transactions involving the Fund.
(C) Unitized Fund: The Fund will be divided into units, each
representing a proportionate share of Employer Stock and cash (or
cash equivalents) held within the Fund. Participants who have
directed that assets held within the Plan for their benefit to be
invested in the Fund (or who have received an allocation of a
contribution which pursuant to the terms of the Plan has been
invested in the Fund) will be allocated units in the Fund,
representing the value of the each such Participant's interest in
the Fund.
(D) Valuation: Each Valuation Date, the Trustee shall value the total
assets held within the Employer Stock Fund (including the value of
the Employer Stock and cash (or cash equivalent) portion of the Fund
including declared but not yet payable dividends or earnings) at the
Fund's fair market value. The fair market value of the Employer
Stock Fund shall be determined by using the Closing Price of the
Employer Stock for the Trading Day coinciding with, or immediately
preceding the Valuation Date. The Trustee shall determine a per
unit value ("NAV") by dividing the total value of the Fund by the
total number of units held by Plan Participants. The Trustee shall
use the NAV in processing Plan transactions, including but not
limited to Investment Fund transfers, Participant loans, and
distributions.
(E) Trading Activities: In order to process Participant directed
investments involving the Employer Stock Fund (whether involving
purchases, sales, or a combination of both) that are received by the
Trustee prior to the close of the Trading Day, the Trustee will take
the following steps:
(i) The Trustee shall aggregate all Participant directions
resulting in a purchase of, or investment in, units of the
Fund, and shall aggregate all Participant directions resulting
in a sale of or divestment of units of the Employer Stock Fund,
and then shall net together the aggregated purchases and sales
to arrive at a net purchase or sale of units of the Fund.
Notwithstanding the foregoing, Participant directions received
from a Participant identified as an "insider" on Schedule A
shall not be processed unless they are accompanied with the
Company's approval of such transaction. Such approval must
be in writing and authorized by a designated Company
representative. If agreed to between the Company and Trustee,
and specifically described on Schedule B to this Agreement, the
Trustee shall notify a designated Company representative of
transactions requested by insiders. In addition to the
processing described in this Subsection 4(d)(ii), any other
processing procedures relating to insiders that are established
between the Company and Trustee shall be described in
Appendix B to this Agreement.
(ii) If a net sale of units is required after all the aggregated
purchases and sales have been netted, the Trustee shall
determine the total value of the net sale, using the NAV
determined as of the close of the Trading Day, and shall
withdraw from the Fund sufficient cash or cash equivalents to
reflect the total value of the net sale. The cash withdrawn
shall then be applied for such purposes as may be required to
complete the Participant directions received that Trading Day.
(iii) If a net purchase of units is required after all the aggregated
purchases and sales have been netted, the Trustee shall deposit
in the Fund such cash as represents the total value of the net
purchase, and shall account for the deposited cash in
ascertaining the Fund NAV as of the close of the next Trading
Day.
(iv) In the event there is insufficient cash or cash equivalents in
the Fund to process the net sale, the Trustee shall notify the
Company and take the steps described below:
(a) The Trustee will submit a request to the Company for cash
to cover the deficiency and restore the cash position to a
level described in Section 4(E). At the same time, the
Trustee will issue a notice to the transfer agent, with
instructions to move requisite Treasury Shares from the
Plan's position to the Company's position. The number of
Treasury Shares, to provide sufficient cash to process the
net sale, will be based on the Closing Price for the
Trading Day.
(b) The Trustee may suspend all transactions involving the
Employer Stock Fund and request cash from the Company as
described in "(a)" above to raise sufficient cash to
process the net sale as soon as practicable. When the
required cash is received from the Company, the Trustee
shall process those transactions which have been suspended,
at the then current NAV (and market prices).
Notwithstanding the steps described above, the Company may
instruct the Trustee to take other actions. However, the
Trustee shall only follow those instructions which are proper
and consistent with the Trustee's standard operating
procedures, and proper and consistent with ERISA and any other
applicable laws.
(F) Cash Position: The Trustee shall monitor the amount of cash
contained within the Employer Stock Fund and provide information to
the Company. The Company shall determine the amount of cash which
is necessary to provide sufficient liquidity for the Trustee to
process Plan transactions. In order to accomplish this, the Trustee
shall:
(i) Report the proportion of cash to Employer Stock held within
the Fund at least once each quarter;
(ii) In the event the cash portion of the Fund is less than 1% of
the total value of the Fund, the Trustee shall request a
sufficient amount of cash from the Company as may be necessary
to bring the cash portion of the Fund to between 1% and 3% of
the total value of the Fund, and the Trustee will
simultaneously notify the transfer agent to move an equivalent
amount of shares from the Plan's stock position to the
Company's stock position;
(iii) In the event the cash portion of the Fund is greater than 3%
of the total value of Fund, the Trustee shall forward a
sufficient amount of cash as may be necessary to bring the cash
portion of the Fund to between 1% and 3% of the total value of
the Fund, and the Trustee will simultaneously notify the
transfer agent to move an equivalent amount of shares from the
Company's stock position to the Plan's stock position.
(iv) Notwithstanding the actions described in this subsection, as a
Plan Fiduciary, the Company shall annually review the cash
position of the Employer Stock Fund to confirm its
appropriateness based on Plan transactions and activities. In
the event that the Company wants to modify the cash position,
the Trustee must consent to such modification after the parties
have determined that such position is appropriate based on
overall Plan activity and the Trustee's standard operating
procedures.
The Trustee shall use its best efforts to effectuate trades involving
Employer Stock in an efficient manner which is consistent with its
obligations under ERISA.
(G) Suspension of Sales: In addition to the possible suspension of
transactions in the Employer Stock Fund as described in
Section 4(D)(iv), the Trustee will also be permitted to suspend
transactions within the Employer Stock Fund in the following
scenarios:
(1) Transfers between the Company's and the Plan's stock
position at the transfer agent cannot be executed and/or
the Company is unable or unwilling to purchase Employer
Stock from the Plan.
(2) The Company files for any protection under the Federal
Bankruptcy Code, as amended, or any successor statute
thereto, or any state insolvency statute ("Bankruptcy
Code"), or in the event that any involuntary bankruptcy
petition or other appropriate filing is filed against the
Employer under the Bankruptcy Code.
(3) The Company is notified by the New York Stock Exchange,
NASDAQ or any other exchange or interdealer quotation
system on which the Employer Stock is listed or traded that
such exchange or system is considering delisting or
deregistering the Employer Stock.
5. Indemnification: The Company hereby agrees to indemnify and hold the
Trustee or its nominee harmless from any and all actions, claims, demands,
liabilities, losses, damages or reasonable expenses of whatsoever kind suffered
in connection with the operation of the Employer Stock Fund in conformity with
the provisions of this policy, the Plan (and Trust), the applicable provisions
of ERISA, or other applicable law unless such loss is the result of the gross
negligence of the Trustee or a breach of its fiduciary duties (as defined by
applicable law) and determined by a court of competent jurisdiction in a final,
nonappealable judicial decree or judgment.
This Employer Stock Fund Investment Policy and Agreement is adopted and executed
by the duly authorized officers of the Company and the Trustee this 31st day of
December, 1998.
Company: Midland-Guardian Co.
By:/s/Xxxxxx X. Xxxxxxx
Title:Assistant Treasurer
Trustee: Key Trust Company of Ohio, National Association
By:/s/Xxxx Xxxx
Title:Vice President
Schedule A
In accordance with applicable federal securities laws and regulations, the
Company has identified the following employees as "insiders" as defined in
Section 16 of the Securities Exchange Act of 1934.
Xxxxxxx X. Xxxxxxx ###-##-####
X. X. Xxxxxx, Xx. ###-##-####
X. X. Xxxxxx, III ###-##-####
Xxxx X. Xxxxxx ###-##-####
Xxxxxx X. Xxxxxx ###-##-####
Xxxx X. XxXxx ###-##-####
Xxxx X. XxxXxxxxx ###-##-####
Xxxx X. Xxxxxxxxxx ###-##-####
Xxxx X. Xxxxxxxxxxxx ###-##-####
X. Xxxx Xxxx ###-##-####
Schedule B
The Company has identified the following representative who, on behalf of the
Company is authorized to communicate in writing such revisions and/or deletions
of Schedule A to the Trustee, and who may receive any and all information as may
be contemplated under Section 4(D)(i) of this agreement.
Xxxxxx X. Xxxxxxx
There are no windows or restrictions on the time of year an "insider" can make
transfers into or out of the Employer Stock Fund. There are SEC restrictions
and reporting requirements that must be complied with for trading within the
Plan, open market transactions and other trades related to various executive
compensation programs. "Insiders" are made aware of these restrictions in a
letter which is updated and distributed periodically.
All Employer Stock Fund transfers involving "insiders" must be reported by the
Trustee to the Company representative on a monthly basis. A report must be
issued regardless of "insider" activity in the preceding month.
