Exhibit D
CARDINAL INVESTMENT COMPANY, INC.
POOLED INVESTMENT TRUST
[As Amended and Restated as of January 1, 1989]
Declaration of Trust
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THIS AGREEMENT, executed this 1st day of November, 1991, and effective as
of January 1, 1989, by and between Cardinal Investment Company, Inc., a
corporation organized under the Texas Business Corporation Act, having its
principal office in Dallas, Texas (hereinafter referred to as the "Company"),
and Xxxxxx X. Xxxx III (hereinafter referred to as the "Trustee").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company adopted the Cardinal
Investment Company, Inc. Pooled Investment Trust (the "Pooled Trust") effective
as of August 1, 1988 which was intended to establish a pooled investment trust
that would qualify under the Internal Revenue Code; and
WHEREAS, the Company and the Trustee desire to amend and restate the Pooled
Trust to allow the funds from qualified employee benefit plans, whether or not
sponsored by the Company, to be held in the Pooled Trust; and
WHEREAS, the Company and other Employers, as defined below, will or have
established one or more employee benefit plans and related trusts which are
intended to be qualified under Sections 401(a) and 501(a) of the Internal
Revenue Code and desire to invest jointly all or a portion of the assets of such
plans; and
WHEREAS, the Board of Directors of the Company has duly authorized the
execution of this Agreement which is intended to amend, restate and continue the
Pooled Trust as a qualified trust under the Internal Revenue Code; and
WHEREAS, the Trustee is willing to act as Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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Unless by the context hereof a different meaning is clearly indicated,
wherever used in this Agreement, the following words shall have the meanings
hereinafter set forth:
Sec. 1.1 "Company" shall mean Cardinal Investment Company, Inc. or any
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successor entity which may be substituted for the Company.
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Sec. 1.2 "Employer" shall mean the Company and any other employer on
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behalf of whose employees a Participating Trust has been established and which
is approved by the Trustee as an Employer hereunder.
Sec. 1.3 "Trustee" shall mean Xxxxxx X. Xxxx III, or any successor
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trustee or trustees appointed pursuant to the provisions of Section 6.12.
Sec. 1.4 "Pooled Trust" shall mean the Cardinal Investment Company, Inc.
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Pooled Investment Trust and all assets of whatsoever kind and nature from time
to time held by the Trustee under this Agreement without distinction as to
income or principal.
Sec. 1.5 "Participating Trust" shall mean a trust pursuant to an employee
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benefit plan established by an Employer and participating in the Pooled Trust
pursuant to Article II.
Sec. 1.6 "Trustee of a Participating Trust" shall mean a trustee or
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trustees appointed to act under a Participating Trust, who have authority to
direct the payment of assets held in a Participating Trust or otherwise have
administrative authority under a Participating Trust.
Sec. 1.7 "Fiscal Year" shall mean the twelve month period beginning
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January 1 and ending December 31 of each year.
Sec. 1.8 "Valuation Date" shall mean the last business day of the Fiscal
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Year, and any other valuation date established by the Trustee pursuant to
Section 4.3.
Sec. 1.9 "Investment Unit" shall mean a unit of participation in the
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Pooled Trust, as described in Article III.
Sec. 1.10 "Unit Value" shall mean the monetary value of an Investment
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Unit in the Pooled Trust, as described in Section 3.3.
Sec. 1.11 "Agreement" shall mean this Declaration of Trust and all
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amendments or supplements hereto, creating and describing the Pooled Trust.
Sec. 1.12 "Code" shall mean the Internal Revenue Code of 1986, as amended.
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Reference to a section of the Code shall include that section and any comparable
section of any future legislation that amends, supplements, or supersedes said
section.
Sec. 1.13 Gender and Number. Except as otherwise indicated by the
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context, any masculine terminology used herein also includes the feminine and
neuter, and vice versa, and the definition of any term herein in the singular
shall also include the plural, and vice versa.
ARTICLE II
REQUIREMENTS FOR PARTICIPATION
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Sec. 2.1 Eligibility. A trust is eligible to participate if the
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following requirements are satisfied:
(a) The trust is a qualified pension or profit sharing trust
under Section 401(a) of the Code, and is exempt from taxation under Section
501(a) of the Code and has received a letter of
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determination to that effect from the appropriate District Director of
Internal Revenue. If a request for a letter of determination is pending,
the Trustee may in his discretion determine that the trust is eligible.
(b) The governing instrument of the trust expressly permits
investment of the trust's assets in the Pooled Trust.
(c) An Employer has established the trust.
Sec. 2.2 Participation. An eligible trust will become a Participating
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Trust after the following:
(a) The trustee of the eligible trust delivers to the Trustee a
written statement that the eligible trust desires to participate, and
transfers assets to the Pooled Trust.
(b) The Trustee has approved the participation of the applying
eligible trust. Acceptance of assets shall constitute approval by the
Trustee.
Sec. 2.3 Additional Investments. A Participating Trust, through its
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trustee, may invest additional assets in the Pooled Trust by transferring the
assets to the Trustee.
Sec. 2.4 Interests Non-Transferable. Units of participation and other
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interests in the Pooled Trust may not be transferred or conveyed by any
Participating Trust except by virtue of a succession of trustees for a
Participating Trust.
ARTICLE III
VALUATION AND ALLOCATION
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Sec. 3.1 Accounts. The Trustee shall maintain accounts for each
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Participating Trust and shall reflect their respective interests in the Pooled
Trust by showing the number of Investment Units which have been allocated to the
account of each Participating Trust.
Sec. 3.2 Allocation of Contributions. As of the first Valuation Date
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following a transfer of assets of a Participating Trust to the Pooled Trust
pursuant to Section 2.2 or 2.3, the Trustee shall allocate to the Participating
Trust's account a number of Investment Units to be determined by dividing the
value of the transferred assets by the Unit Value as of the Valuation Date.
Sec. 3.3 Valuation of Pooled Trust; Unit Value. Within ten business days
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after each Valuation Date, the Trustee shall value the assets of the Pooled
Trust as of the Valuation Date by determining the fair market value of the
Pooled Trust before any additions or withdrawals, following the valuation
criteria set forth in Section 3.5, after allowing for all accrued expenses. The
Trustee shall then determine the Unit Value of an Investment Unit by dividing
the value of the Pooled Trust determined according to the previous sentence by
the total number of Investment Units which have been allocated to all accounts.
The initial Unit Values, determined before there are any Participating Trusts,
shall be set by the Trustee. The Trustee shall retain in the Pooled Trust all
income received on the assets thereof.
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Sec. 3.4 Changing Unit Value. The Trustee may from time to time increase
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or decrease the value of an Investment Unit and make corresponding adjustments
to the number of Investment Units allocated to each Participating Trust's
account so that the total value of the Investment Units allocated to each
account is not changed by the adjustments.
Sec. 3.5 Valuation Criteria. The Trustee shall utilize the following
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criteria in valuing the Pooled Trust:
(a) The value of an equity or debt security listed on a
national securities exchange is the reported price of the last sale made on
the Valuation Date. If no sales on the Valuation Date are reported, the
value is the last reported sales price on the last day prior to the
Valuation Date on which there was a sale.
(b) The value of a security not described in paragraph (a) is
the mean between the last bid and asked prices in the over-the-counter
market on the Valuation Date. If no bid and asked prices on the Valuation
Date are available, the last bid and asked prices available for the last
day prior to the Valuation Date for which bid and asked prices are
available shall be used. The Trustee may obtain bid and asked prices from
published sources or from a broker, dealer, investment banker, or quotation
service. If no bid and asked prices are available, or if the Trustee
determines that bid and asked prices do not fairly represent the value of
the security involved, the securities shall be valued pursuant to paragraph
(d).
(c) The value of a United States Savings Bond is the amount
for which it may be redeemed on the Valuation Date.
(d) The value of any other asset is its fair market value on
the Valuation Date, taking into account unrealized appreciation or
depreciation and accrued, potential or other expenses. In determining fair
market value, the Trustee may consult with such persons and consider such
factors as the Trustee deems appropriate.
The Trustee's valuation of the Pooled Trust shall be conclusive.
ARTICLE IV
ACCOUNTING
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Sec. 4.1 Audit of Pooled Trust and Report. Each year, as of the end of
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the Fiscal Year or more frequently if authorized pursuant to Section 4.3, the
Trustee shall effect an internal audit of the Pooled Trust and prepare a report
thereon. The Trustee shall make copies of the report or of a summarized version
of the report available to Participating Trusts and other appropriate persons as
provided in Section 6.1. After the expiration of 90 days from its delivery to a
Participating Trust, the report will be conclusive upon such trust and all
persons with an interest in the Participating Trust unless the Trustee has
received an objection to the report during that period.
Sec. 4.2 Order of Valuation Date Procedures. Calculations,
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determinations, and actions which this Agreement requires of the Trustee as of a
Valuation Date shall be performed with respect to the assets of the Pooled Trust
in the following order:
(a) Determine the value of the Pooled Trust and the Unit Value
pursuant to Section 3.3.
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(b) Change the Unit Value and the number of Investment Units of
each Participating Trust pursuant to Section 3.4.
(c) Effect withdrawals pursuant to Section 7.1.
(d) Effect withdrawals pursuant to Section 7.2.
(e) Give effect to amendments adopted pursuant to Section 9.1.
(f) Change account balances to reflect contributions pursuant
to Section 3.2.
Sec. 4.3 Additional Valuation Dates. The Trustee may designate such
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additional Valuation Dates as it may determine to be in the best interests of
the Participating Trusts.
ARTICLE V
INVESTMENTS
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Sec. 5.1 Investments Allowed. Subject to the provisions of this Article,
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the Trustee shall receive, hold and manage the assets in the Pooled Trust and
shall invest and reinvest the principal and income of the Pooled Trust and shall
keep such assets invested, without distinction between principal and income, in
investments the Trustee determines to be in the best interest of the Pooled
Trust. The Trustee may, directly or through investment managers and in its sole
discretion, make investments of the funds in the Pooled Trust in property of any
kind, real, personal or mixed, and whether tangible or intangible, and the
decision of the Trustee as to whether or not any particular investment is of a
type suitable for purchase by the Pooled Trust shall be conclusive on all
persons. The Trustee may hold any portion of the Pooled Trust in cash and
uninvested whenever it deems such holding necessary or advisable.
Sec. 5.2 Investment Restraints Imposed. The Trustee may not make an
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investment which would if made by the Participating Trust result in loss of
qualification of the Participating Trust for exemption from taxation under
Section 501(a) of the Code or constitute a prohibited transaction under Section
4975 of the Code. The Trustee may not make an investment prohibited by Sections
10 through 14 of the Texas Trust Act.
ARTICLE VI
THE TRUSTEE
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Sec. 6.1 Accounting. The Trustee shall maintain adequate books and
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records reflecting all transactions affecting the Pooled Trust, which books and
records shall be open at all reasonable times to the inspection of the trustee
of a Participating Trust or its authorized representatives and any Employer.
Furthermore, the Trustee shall furnish the trustee of a Participating Trust, at
least annually, statements showing the assets then held in the Pooled Trust on
behalf of such Participating Trust and showing all transactions in the Pooled
Trust since the last preceding statement for the benefit of such Participating
Trust.
Sec. 6.2 Removal and Resignation. The Company may remove any person or
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corporation acting as Trustee at any time by sixty (60) days' written notice to
the Trustee unless the Trustee waives the requirement of notice, and the Trustee
may resign at any time by sixty (60) days' written notice to the Company unless
the Company waives the requirement of notice. In event of the removal or
resignation of
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the Trustee, the Company shall appoint a successor Trustee, effective
concurrently with the effective date of such removal or resignation, and such
successor Trustee shall furnish to the Company written acceptance of his
appointment.
Sec. 6.3 Successor Trustee and Transfer of Title. Neither removal nor
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resignation of the Trustee shall constitute termination of the Pooled Trust.
Title to all property and such records or true copies of records as are
necessary to the management of the assets of the Pooled Trust held by the former
Trustee shall vest in any successor Trustee, without the execution or filing of
any further instrument. A resigning or removed Trustee shall execute all such
instruments and do all such acts as are necessary to vest title in any successor
Trustee. A successor Trustee shall have, exercise and enjoy all the powers and
authority herein conferred upon its predecessor. No successor Trustee shall be
obligated to examine the accounts, records and acts of any previous Trustee or
Trustees, and no successor Trustee will in any way be responsible for any action
or omission to act on the part of any previous Trustee. A corporation resulting
from a merger or consolidation to which any corporate Trustee is a party, or
succeeding to the trust business of any corporate Trustee, or to which
substantially all of the trust assets of any corporate Trustee are transferred,
will succeed to the interests of the Trustee under this Agreement without any
further act or formality, and without the requirement of any notice.
Sec. 6.4 Reliance by Trustee. The Trustee may rely upon any notice,
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certificate, letter, telegram, or other paper or document believed by it to be
genuine or upon any evidence believed by it to be sufficient, in making any
payment or in taking any action whatsoever hereunder.
Sec. 6.5 Bonding. The Trustee shall not be required to furnish any bond
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or security for the performance of its powers and duties hereunder unless a bond
is a requirement of law which cannot be waived.
Sec. 6.6 Compensation. The Trustee shall receive reimbursement for its
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reasonable expenses incurred in connection with the administration, management
and investment of the Pooled Trust but shall receive no compensation for its
services as Trustee if the Trustee is a full-time employee of the Company or any
Employer. Any Trustee who is not a full-time employee of the Company or any
Employer may be paid reasonable compensation commensurate with the services and
responsibilities involved hereunder from time to time.
Sec. 6.7 Expenses. The Trustee may employ counsel, brokers or agents and
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may pay for their services and any other reasonable expenses incurred by the
Trustee from the Pooled Trust. In the event the Pooled Trust incurs any
expenses which in the Trustee's determination should fairly be charged to the
Investment Units allocated to a Participating Trust and not to the Participating
Trusts as a group, the Trustee shall reduce the Investment Units allocated to
such Participating Trust valued as of the Valuation Date which next follows the
date such expenses were paid, by the number of Investment Units equivalent in
value to the amount of the expenses, and shall not include such expenses in
determinations of value pursuant to Article III.
Sec. 6.8 Ancillary Trustee. Whenever and as often as the Trustee deems
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such action desirable, it may by written instrument appoint any person or
corporation in any state of the United States to act as ancillary trustee with
respect to any portion of the Pooled Trust assets then held or about to be
acquired on behalf of the Pooled Trust. Each ancillary trustee shall have such
rights, powers, duties and discretions as are delegated to it by the Trustee,
but shall exercise the same subject to the limitations or further directions of
the Trustee as shall be specified in the instrument evidencing its appointment.
The ancillary trustee may resign or may be removed by the Trustee, as to all or
any portion of the assets so held at any time or from
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time to time, by written instrument delivered one to the other, and the Trustee
may thereupon appoint another ancillary trustee or successor to whom the assets
shall be transferred, or may itself receive such assets in termination of the
ancillary trusteeship to that extent. Such ancillary trustee shall be
accountable solely to the Trustee and shall be entitled to reasonable
compensation.
Sec. 6.9 Trustee's Powers. In addition to powers granted to the Trustee
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by law and those granted elsewhere in this Agreement, the Trustee shall have the
following powers:
(a) With respect to securities held hereunder, the Trustee may
vote the same in person or by proxy, may join in any merger,
reorganization, or capital adjustment, may exercise or sell any conversion,
subscription or similar rights, and may hold any assets hereunder in the
name of its nominee or unregistered.
(b) The Trustee may sell, convey, exchange, encumber, lease,
and otherwise deal with and dispose of the assets of the Pooled Trust upon
such terms and conditions as it deems for the best interest of those
interested in the Pooled Trust.
(c) The Trustee may execute any and all deeds, conveyances,
leases, transfers, proxies and other documents which it believes necessary
or advisable in the administration of the Pooled Trust.
(d) The Trustee may pay or contest any tax or other
governmental charge involving any assets held hereunder or the income
therefrom and may pay the taxes and expenses thus incurred as an expense of
the Pooled Trust.
(e) The Trustee may enforce rights, obligations or claims and
in general may protect in any way the interest of the Pooled Trust either
before or after default. The Trustee may abstain from enforcement of
rights, obligations or claims and may abandon property held by it, if the
Trustee considers such action to be in the best interest of the Pooled
Trust.
(f) The Trustee may continue to exercise its powers as
Trustee for a reasonable time after the termination of the Pooled Trust
pursuant to Section 8.1.
Sec. 6.10 Applicable Law. Although it is intended that the foregoing
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powers of the Trustee be applicable hereunder, it is also intended that all
provisions of the Texas Trust Act, and any amendments thereto, not inconsistent
with the above enumerated powers or other provisions of this Agreement, shall be
applicable in the administration of the Pooled Trust.
Sec. 6.11 Reliance on Trustee and Others. Persons dealing with the
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Trustee and any ancillary trustee are not required to inquire into the authority
of such persons or the propriety of the decisions thereof, and are not required
to investigate the application of assets delivered to the Trustee or ancillary
trustee.
Sec. 6.12 Number and Appointment of Trustees. The Board of Directors of
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the Company shall appoint the Trustee. The number may be increased or decreased
at any time, and a new Trustee may be appointed to succeed a prior Trustee, or
to increase the number of Trustees, at any time by the Board of Directors of the
Company.
Sec. 6.13 Procedure for Action. If more than one Trustee be appointed,
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such Trustees shall establish their own rules of procedure and may delegate
authority to act to one or more of such Trustees. A copy of
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a resolution or action taken by the Trustees certified by any one of the
Trustees may be relied upon by any person dealing with the Pooled Trust.
ARTICLE VII
WITHDRAWALS
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Sec. 7.1 Voluntary Withdrawal. A Participating Trust may withdraw all
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or a part of its account balance from the Pooled Trust. The withdrawal will be
effective as of the first Valuation Date which is more than five days after
receipt by the Trustee of written notice from the trustee of the Participating
Trust. The notice shall specify the amount of the Participating Trust's account
balance to be withdrawn, which may be stated in terms of Investment Units,
percentage of account balance, or a fixed dollar amount. The notice shall by its
terms be irrevocable. As of the effective date of the withdrawal, the Trustee
shall decrease the Participating Trust's account by the amount withdrawn. As
soon as practicable after the effective date of the withdrawal, the Trustee
shall distribute the amount withdrawn to the Participating Trust pursuant to
Section 7.3.
Sec. 7.2 Withdrawal If No Longer Eligible. The entire account of a
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Participating Trust shall be withdrawn and the Participating Trust's
participation terminated effective as of the first Valuation Date following the
date the Trustee determines that the Participating Trust no longer satisfies the
eligibility requirements set forth in Section 2.1. As soon as practicable after
the effective date of the withdrawal, the Trustee shall distribute to the
withdrawing Participating Trust the full amount of the Participating Trust's
account pursuant to Section 7.3.
Sec. 7.3 Procedure Upon Withdrawal. When the Trustee is required to
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distribute an amount to a Participating Trust pursuant to Section 7.1, 7.2, or
8.1, the Trustee may make the distribution in money or in other property, in its
discretion. For the purpose of determining the amount distributed, property
other than money shall be valued at its fair market value on the date of the
distribution as determined by the Trustee following the valuation criteria set
forth in Section 3.5.
ARTICLE VIII
TERMINATION
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Sec. 8.1 Termination by the Company. The Board of Directors of the
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Company may terminate the Pooled Trust at any time. Upon termination, the
Trustee shall value the assets of the Pooled Trust in accordance with Sec. 3.5,
and distribute the assets of the Pooled Trust, less amounts retained to meet
liabilities, to the Participating Trusts in proportion to their account
balances. Amounts retained to meet liabilities which are not ultimately used in
satisfaction of liabilities of the Pooled Trust shall be distributed in the same
proportion when the Trustee determines that the Pooled Trust no longer has
liabilities.
Sec. 8.2 Rule Against Perpetuities. If the Pooled Trust does not
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terminate sooner according to the provision of this Agreement, it will terminate
upon the expiration of the maximum duration allowed a trust of this kind under
Texas law.
ARTICLE IX
AMENDMENT
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Sec. 9.1 Amendment. This Agreement may be amended or modified by the
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Board of Directors of the Company. An amendment will take effect on the first
Valuation Date after receipt by the Trustee of a copy of the amendment, unless
the Trustee agrees to a different effective date. No amendment may directly or
indirectly operate to reduce the interest of a Participating Trust in the Pooled
Trust.
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ARTICLE X
MISCELLANEOUS
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Sec. 10.1 No Diversion. The Pooled Trust is being established for the
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exclusive benefit of employees of an Employer, and except to the extent
permitted hereunder or under the applicable Participating Trusts at no time may
any part of the assets of the Pooled Trust which belong to any Participating
Trust ever be used for or diverted to purposes other than for the exclusive
benefit of the employees or their beneficiaries who are entitled to benefits
under such Participating Trust.
Sec. 10.1 Assignment Prohibition. No Trustee of a Participating Trust
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shall have the right to assign or transfer any part of its equity or interest in
the Pooled Trust.
Sec. 10.3 Texas Law Governs. This Agreement will be interpreted and
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enforced according to the laws of Texas and is maintained at all times as a
domestic trust in the United States.
IN WITNESS WHEREOF, the instrument has been executed as of the day and year
specified above.
CARDINAL INVESTMENT COMPANY, INC.
By:------------------------------
Xxxxxx X. Xxxx III, President
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Xxxxxx X. Xxxx III, Trustee
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