EXHIBIT 10.27
________________________________________________________________________________
MASTER TRUST AGREEMENT
between
MERCURY GENERAL CORPORATION
and
BNY WESTERN TRUST COMPANY
Dated as of January 1, 1998
Account Number(s) ____________________
________________________________________________________________________________
TABLE OF CONTENTS
Page
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SECTION 1
ESTABLISHMENT OF MASTER TRUST
1.1 The Master Trust.......................................................... 2
1.2 Appointment of Master Custodian........................................... 2
1.3 Establishment of Separate Funds........................................... 2
1.4 Participating Plans....................................................... 3
1.5 Title to Assets........................................................... 3
1.6 Acceptance of Trust....................................................... 3
SECTION 2
INVESTMENT OF MASTER FUND
2.1 Appointment of Investment Managers and Investment Committee............... 4
2.2 Discretionary Funds....................................................... 4
2.3 Directed Funds............................................................ 5
2.4 Settlement of Securities Transactions..................................... 6
2.5 Cash Balances............................................................. 6
2.6 Appointment of Administrative Agent....................................... 7
2.7 Transfer Among Funds...................................................... 7
2.8 Transfers to Collective Trusts............................................ 7
2.9 Insurance Contracts....................................................... 8
SECTION 3
POWERS OF MASTER TRUSTEE
3.1 In General................................................................ 9
3.2 At Direction of Named Fiduciary........................................... 11
3.3 With Respect to Participant-Directed Funds................................ 11
3.4 Administrative Powers..................................................... 11
SECTION 4
REGISTRATION OF EMPLOYER STOCK
SECTION 5
ACCOUNTS TO BE MAINTAINED BY THE MASTER TRUSTEE; PAYMENTS FROM
THE MASTER TRUST
5.1 Accounts.................................................................. 13
5.2 No Separate Recordkeeping................................................. 14
5.3 Payments; Disputes........................................................ 14
5.4 Direct Deposit of Payments.............................................. 14
5.5 Administrative Committee's Responsibility............................... 14
5.6 Returned and Uncashed Payments.......................................... 15
5.7 No Liability for Contributions.......................................... 15
SECTION 6
VALUATION OF THE MASTER FUND
6.1 Valuation............................................................... 15
6.2 Units................................................................... 16
SECTION 7
ADMINISTRATIVE EXPENSES, TAXES AND MASTER TRUSTEE'S COMPENSATION
7.1 In General.............................................................. 16
7.2 Fees of Investment Managers............................................. 17
SECTION 8
MASTER TRUSTEE'S AND BNY (NEW YORK)'S LIABILITY; NO DUTY TO REVIEW;
INDEMNIFICATION
8.1 Liability of Master Trustee and BNY (New York).......................... 17
8.2 No Duty to Review....................................................... 18
8.3 Reliance on Certain Appraisals.......................................... 18
8.4 Indemnification of Master Trustee and BNY (New York).................... 18
8.5 Limitation of Indemnity................................................. 18
8.6 Indemnification of Successor Trustee.................................... 18
SECTION 9
SETTLEMENT OF MASTER TRUSTEE'S ACCOUNTS
9.1 Annual Accounting....................................................... 19
9.2 Other Accountings....................................................... 19
9.3 Settlement of Accounts.................................................. 19
9.4 Waiver of Rights........................................................ 20
SECTION 10
SEGREGATION OF PARTS OF THE MASTER TRUST
10.1 Segregation............................................................ 20
10.2 Segregated Property.................................................... 20
2
SECTION 11
RESIGNATION AND REMOVAL OF MASTER TRUSTEE; RESIGNATION AND REMOVAL OF BNY (NEW
YORK) AS INVESTMENT MANAGER
11.1 Resignation and Removal of Master Trustee........................................ 21
11.2 Resignation and Removal of BNY (New York) as Investment Manager.................. 21
SECTION 12
EVIDENCE OF ACTION BY COMPANY, INVESTMENT MANAGERS AND
INVESTMENT AND ADMINISTRATIVE COMMITTEES, AND OF APPOINTMENT OF NAMED FIDUCIARY,
INVESTMENT MANAGERS AND INVESTMENT AND ADMINISTRATIVE COMMITTEES
SECTION 13
AMENDMENT OF AGREEMENT, TERMINATION OF TRUST, TERMINATION OF PARTICIPATING PLAN
13.1 Amendment of Agreement........................................................... 23
13.2 Termination of Master Trust...................................................... 23
13.3 Termination of Participating Plan................................................ 23
13.4 Exclusive Benefit................................................................ 23
SECTION 14
INALIENABILITY OF BENEFITS AND INTERESTS
14.1 Of the Participants.............................................................. 24
14.2 Of the Participating Plans....................................................... 24
SECTION 15
NO MERGER, CONSOLIDATION OR TRANSFER OF PLAN ASSETS OR LIABILITIES............. 24
SECTION 16
SPECIAL PROVISIONS RELATING TO ESOP FEATURE
16.1 Employer Stock Fund.............................................................. 24
16.2 Acquisition Loan................................................................. 25
16.3 Suspense Account................................................................. 26
16.4 ESOP Contributions............................................................... 26
16.5 Tender for Employer Stock........................................................ 26
16.6 Voting Employer Stock; Options and Other Rights.................................. 28
SECTION 17
GOVERNING LAW
3
MASTER TRUST AGREEMENT
THIS AGREEMENT made as of January 1, l998 by and between MERCURY
GENERAL CORPORATION, a California corporation (hereinafter referred to as the
"Company"), and BNY WESTERN TRUST COMPANY, a trust company organized pursuant to
the laws of the State of California (the "Master Trustee");
W I T N E S S E T H:
WHEREAS, the Company and certain of its subsidiaries and affiliates
have heretofore adopted or may hereafter adopt various qualified deferred
compensation plans for the benefit of its or their employees, as set out in
Exhibit A hereto, as amended from time to time (each such plan is referred to
herein as a "Participating Plan", and the Company and any such subsidiary or
affiliate are referred to herein as the Participating Plan's "Employer"); and
WHEREAS, each Participating Plan set forth on Exhibit A hereto
provides, among other things, for the financing by means of a trust fund of all
or a part of the benefits to be paid pursuant to the Plan to certain employees
(herein called "Participants") of the Employer and their beneficiaries
(hereinafter called "Beneficiaries"); and
WHEREAS, one or more of the Participating Plans contains an employee
stock ownership plan feature(hereinafter referred to as the "ESOP Feature")
within the meaning of Section 4975(e)(7) of the Internal Revenue Code of 1986,
as amended (the "Code"), and Section 407(d)(6) of the Employee Retirement Income
Security Act of 1974, as amended (the "Act"), which allows the Participating
Plan to enter into loans guaranteed by the Company that are exempt from the
prohibited transaction rules pursuant to Section 4975(d)(6) of the Code and
Section 408(b)(3) of the Act (each an "Acquisition Loan") to purchase shares of
common and/or convertible preferred stock of the Company or any subsidiary or
affiliate thereof qualifying as "employer securities" within the meaning of
Section 409(l) of the Code and Section 407(d)(5) of the Act ("Employer Stock"),
and each Participating Plan is intended to qualify under Section 401(a) of the
Code; and
WHEREAS, the Company and the Master Trustee wish to establish a Master
Trust in which the assets of the Participating Plans may be pooled and
commingled, solely for investment purposes, to facilitate the investment of such
assets on a diversified basis and in accordance with the other requirements of
the Act; and
WHEREAS, the Master Trustee, with the consent of the Company, intends
to appoint the Master Trustee's New York affiliate, The Bank of New York ("BNY
(New York)") as Master Custodian of the assets of the Participating Plans
pursuant to the terms of the Master Custody Agreement submitted to the Company
herewith;
NOW, THEREFORE, the Company and the Master Trustee agree as follows:
SECTION 1
ESTABLISHMENT OF MASTER TRUST
1.1 The Master Trust. The Company hereby establishes with the Master
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Trustee, a trust (hereinafter referred to as the "Master Trust") which shall
comprise all of the funds and other assets delivered herewith to the Master
Trustee, together with such other sums of money and such property acceptable to
the Master Trustee as shall from time to time be paid or delivered to the Master
Trustee hereafter, all investments made therewith and proceeds thereof and the
earnings and profits thereon. All such funds and property, together with such
investments, proceeds and earnings and profits, less the payments or other
distributions which, at the time of reference, shall have been made by the
Master Trustee as authorized herein, are referred to as the "Master Funds." Each
Participating Plan shall constitute a part of the Master Trust.
1.2 Appointment of Master Custodian. The Company hereby authorizes
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the Master Trustee to appoint BNY (New York) as Master Custodian of the assets
of the Participating Plans in accordance with and pursuant to the terms of the
Master Custody Agreement submitted to the Company herewith. The Company also
hereby authorizes the Master Trustee to delegate to BNY (New York) such powers,
authorities, duties, obligations and responsibilities as the Master Trustee may
from time to time deem appropriate. By executing this Agreement, the Company
consents to such appointment. The Company or the Named Fiduciary (as defined in
Section 1.3) or the Administrative Committee or Investment Committee or anyone
acting pursuant to their instructions may communicate, as is necessary, directly
with BNY (New York).
1.3 Establishment of Separate Funds. The Master Fund shall consist
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initially of two funds: (1) a general fund consisting of all the assets of each
Participating Plan that are not attributable to an ESOP Feature and (2) an
Employer Stock Fund established pursuant to Section 16.1 consisting of the
assets of each Participating Plan held by the Master Trustee pursuant to an ESOP
Feature, which shall be invested and reinvested as provided in Section 16. At
any time and from time to time the Master Trustee shall, if so directed by the
Committee appointed by the Company's Board of Directors under the terms of each
of the Participating Plans to act as the named fiduciary with respect to control
or management of the operation and administration of the Participating Plans
(hereinafter referred to as the "Named Fiduciary"), establish within the general
fund one or more investment funds, each of which shall be invested or reinvested
as provided in Section 2. The term "Fund", as used herein, shall mean the
initial funds or any other investment fund so established, depending upon the
fund to which such provision is being applied at the time, and the term "Master
Fund" shall refer to all such funds in the aggregate. The functions of the Named
Fiduciary may be divided among more than one person or persons (in which case
the term "Named Fiduciary" shall refer to any such person or persons, as the
context requires), and the same person or persons may serve as the Named
Fiduciary and the Investment Committee and/or the Administrative Committee as
hereinafter defined. The Master Trustee shall hold, manage, administer, value,
make purchases and sales for, distribute, account for, and otherwise deal with
each Fund separately.
2
1.4 Participating Plans. As of the date of establishment of any Fund
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and as of any Valuation Date, as defined in Section 6 below, the Master Trustee
shall accept the transfer to such Fund of all or any portion of the assets of
any Participating Plan, provided that:
Either (i) a determination letter has been received from the Internal
-
Revenue Service stating that the Participating Plan meets the requirements of
Section 40l(a) of the Code, or (ii) a request for such a determination letter
--
has been filed and the Master Trustee believes such Plan to meet the
requirements of Section 40l(a) of the Code; and
In the case of the Participating Plan of a subsidiary or affiliate of
the Company, such subsidiary or affiliate has joined in and has become a party
to the Master Trust, and the Company has consented thereto, all by means of a
joinder agreement substantially in the form of Exhibit B hereto.
Each subsidiary or affiliate of the Company joining in and adopting
the Master Trust appoints the Company as its agent for purposes of this
Agreement and agrees that (i) it shall be bound by the decisions, actions and
-
directions of the Company, the Named Fiduciary, and any Investment Manager,
Investment Committee or Administrative Committee (as hereinafter defined) under
this Agreement, and BNY (New York) (if appointed as an investment manager as
provided below), (ii) the Company has the sole authority to enforce this
--
Agreement on behalf of such subsidiary or affiliate, and (iii) the Master
---
Trustee and any affiliate to whom it has delegated any responsibility pursuant
to Section 1.2 shall be fully protected in relying upon such decisions, actions
and direction and shall in no event be required to give notice to or otherwise
deal with such subsidiary or affiliate except by dealing with the Company as
agent of such subsidiary or affiliate.
The Master Trust shall, to the extent of each Participating Plan's
interest in any Fund, constitute a part of such Plan. The Master Trustee shall
be promptly notified by the Employer of each Participating Plan of any and all
amendments made to such Plan, and of any determination or other action taken by
the Internal Revenue Service with respect to its qualification under Section
40l(a) of the Code.
1.5 Title to Assets. No Participating Plan and no Participants or
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their Beneficiaries shall have any right, title or interest in or to any
specific assets of the Master Fund, but shall have an undivided beneficial
interest in the Master Fund valued in accordance with Section 6 hereof.
Ownership of all the individual assets of the Master Fund shall be by the Master
Trustee. The Master Trustee shall not issue any certificate or other
documentation representing any interest in the Master Fund or part thereof.
1.6 Acceptance of Trust. The Master Trustee hereby accepts the Master
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Trust created by this Agreement on the terms and conditions herein set forth.
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SECTION 2
INVESTMENT OF MASTER FUND
2.1 Appointment of Investment Managers and Investment Committee. At
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the time each Fund is established, and from time to time thereafter, the Company
shall determine and advise the Master Trustee and BNY (New York) whether the
investment of such Fund is to be managed (a) by BNY (New York) in its sole
-
discretion as an investment manager as defined in Section 3(38) of the Act, (b)
-
by an investment manager who (i) is duly appointed by the Named Fiduciary, and
-
(ii) qualifies as an investment manager under Section 3(38) of the Act (an
--
"Investment Manager"), or (c) by an Investment Committee appointed by the Named
-
Fiduciary (the "Investment Committee"). Any Fund that is managed by BNY (New
York) is hereinafter referred to as a "Discretionary Fund", and any Fund that is
managed by an Investment Manager or Investment Committee is hereinafter referred
to as a "Directed Fund". The term "Investment Manager" shall also refer to BNY
(New York) in its capacity as an investment manager hereunder. BNY (New York)'s
appointment as an investment manager shall not be effective unless and until (i)
it is duly appointed by the Named Fiduciary in writing and (ii) it provides the
Named Fiduciary with a written acceptance of such appointment and an
acknowledgement that it is a fiduciary for such Fund under Section 3(21) of the
Act.
In the event the Investment Manager of any Directed Fund resigns or is
removed, the Named Fiduciary shall promptly notify the Master Trustee of such
resignation or removal and of the appointment of a successor to such Investment
Manager. Upon resignation or removal of an Investment Manager neither the Master
Trustee nor BNY (New York) shall have or be deemed to have any responsibility to
manage and control any asset held in the Directed Fund of such former Investment
Manager, except as set out in the sentence immediately following. If an
Investment Committee has been appointed, the Master Trustee shall treat such
Fund as managed by the Investment Committee pending notification from the Named
Fiduciary of the appointment of a different successor to the former Investment
Manager; if no Investment Committee has been appointed and if no notification of
the appointment of such a successor is received within seven days of
notification to the Master Trustee of the former Investment Manager's
resignation or removal, BNY (New York) shall be deemed appointed as investment
manager and thereafter treat such Directed Fund as a Discretionary Fund unless
and until it receives other instructions from the Named Fiduciary as to the
investment of such Fund, and BNY (New York) shall be entitled to additional
compensation in accordance with its regular fee schedule for discretionary
accounts.
2.2 Discretionary Funds.
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(a) Permitted Investments. The Master Trustee shall invest and
---------------------
reinvest, as directed by BNY (New York), any Discretionary Fund, without
distinction between principal and income, in such property (real, personal or
mixed) as BNY (New York), in its sole discretion, shall deem suitable for such
Fund, including without limitation: any and all common stocks, preferred stocks,
bonds, debentures, mortgages on real or personal property wherever situated,
equipment trust certificates, notes or other evidence of indebtedness, or any
other securities, certificates of deposit, demand or time deposits (including
any such deposits, demand or time deposits with BNY Western Trust Company or The
Bank of New York), shares of investment
4
companies and mutual funds (irrespective of whether BNY Western Trust Company or
The Bank of New York is performing services therefor), interests in partnerships
and trusts, insurance policies and contracts, repurchase agreements, and any
other property or joint or other part interest in property (including, without
limitation, part interests in bonds and mortgages or notes and mortgages),
United States or foreign, whether situated within or outside the United States
(provided that, except as provided in Section 3.3 hereof, the indicia of
ownership thereof are not maintained outside the jurisdiction of the district
courts of the United States), and of any kind, class or character, and
irrespective in any case of whether BNY Western Trust Company or The Bank of New
York or another, individually or as trustee or agent, is acting as participator
of any part interest in property that may be acquired. Such investment and
reinvestment shall not be restricted to property authorized for investment by
trustees under any present or future law. A Discretionary Fund may be invested
and reinvested whether or not the property acquired is productive of income, is
marketable or constitutes a wasting asset. Without limiting the generality of
the foregoing, a Discretionary Fund may be invested in stocks of any
classification, bonds or other securities issued or guaranteed by the Company or
a subsidiary or affiliate thereof, including Employer Stock, or in real property
which is owned by or leased to the Company, or any subsidiary or affiliate
thereof. Nothing herein contained, however, shall be deemed to purport to
authorize any investment or reinvestment in violation of the requirements of the
Act. The Master Trustee shall have no power, duty or authority to invest any
Discretionary Fund, except pursuant to the direction of BNY (New York).
(b) Brokerage Commissions. In placing or directing securities
---------------------
transactions for a Discretionary Fund, the primary objective of BNY (New York)
will be to obtain the most favorable net results, taking into account such
factors as the best net price available, the size of and difficulty in executing
the order, and the reliability, efficiency and financial responsibility of the
broker or dealer. When it can be done consistently with this goal, BNY (New
York) may allocate orders to brokers or dealers who also provide brokerage or
research services (as defined in Section 28(e) of the Securities Exchange Act of
l934). The Company understands that such brokerage and research services may be
useful to other accounts managed by BNY (New York) and, similarly, research
generated through commissions paid by such other accounts may be useful in
connection with a Discretionary Fund.
(c) Funding Policy. The Named Fiduciary shall advise the Master
--------------
Trustee and BNY (New York) in writing of any funding policy and method or
investment guidelines which have been established to carry out the objectives of
each Participating Plan, and shall promptly advise the Master Trustee and BNY
(New York) of any changes therein.
2.3 Directed Funds.
--------------
(a) Permitted Investments. Each Directed Fund shall be invested and
---------------------
reinvested, without distinction between principal and income, in any property
authorized in Section 2.2(a) above as the Master Trustee may be directed by an
Investment Manager or the Investment Committee with respect to any Fund managed
by such Investment Manager or Investment Committee.
(b) Investment Instructions. An Investment Manager or the Investment
-----------------------
Committee at any time and from time to time may issue orders directly to a
broker for the
5
purchase or sale of securities for any Directed Fund that it manages. The
Investment Manager or Investment Committee will promptly give or cause to be
given to the Master Trustee or, if so advised in writing, to BNY (New York)
notice of the issuance of such order and the broker will confirm such order or
cause it to be confirmed to the Master Trustee or, as the case may be, BNY (New
York). Such notice and confirmation may be given in writing, by telecopy or by
any other electronic means using a code for the authentication of messages, and
may include Trade Reports issued by the Institutional Delivery System of
Depository Trust Company. Receipt of a matching notice and confirmation or of
such Trade Report shall be authority for the Master Trustee or, as the case may
be, BNY (New York) to settle such trade. The Master Trustee shall have no power,
duty or authority to invest any Directed Fund, except pursuant to the direction
of an Investment Manager or Investment Committee. Except as provided in Section
2.1, in the absence of directions or authorization from the Investment Manager
or Investment Committee, neither the Master Trustee nor BNY (New York) shall
have any power, duty or authority to invest any Directed Fund.
2.4 Settlement of Securities Transactions. When the Master Trustee or
-------------------------------------
BNY (New York), as the case may be, is instructed to deliver property against
payment, delivery of the property and receipt of payment may not be
simultaneous. The risk of non-receipt of payment shall be the Master Trust's and
neither the Master Trustee nor BNY (New York), as the case may be, shall have
any liability therefor. All credits to the Master Trust of the anticipated
proceeds of sales and redemptions of property and of anticipated income from
property shall be conditional upon receipt by the Master Trustee or BNY (New
York), as the case may be, of final payment and may be reversed to the extent
final payment is not received. At the discretion of the Master Trustee or BNY
(New York), as the case may be, the Master Trust may make use of such
conditional credits. To the extent such credits do not become unconditional by
receipt of final payment, the Master Trust shall reimburse the Master Trustee or
BNY (New York), as the case may be, upon demand for the amount of such
conditional credits so used. When the Master Trustee or BNY (New York), as the
case may be, is instructed to receive property, it is authorized to accept
documents in lieu of such property as long as such documents contain the
agreement of the issuer thereof to hold such property subject to the Master
Trustee's sole order. The Master Trustee or BNY (New York), as the case may be,
may, in its respective discretion, advance funds to the Master Trust to
facilitate the settlement of any trade. In the event of such an advance, the
Master Trust shall immediately, and in no event later than three (3) days after
the date of such advance, reimburse the Master Trustee or BNY (New York), as the
case may be, for the amount thereof.
2.5 Cash Balances. BNY (New York) may direct the investment of all or
-------------
any portion of any cash balances in any Discretionary Fund, and an Investment
Manager or the Investment Committee may, with the prior acceptance of BNY (New
York), by written authorization delegate to BNY (New York) authority to invest
all or any portion of any cash balances in any Directed Fund, in the discretion
of BNY (New York), including, without limitation, investments in part interests
in obligations, irrespective of whether BNY Western Trust Company, The Bank of
New York or another, individually or as trustee or agent, is acting as a
participator. The Master Trustee shall not be liable for interest on any cash
balances in any Discretionary Fund or Directed Fund that it holds uninvested
pending receipt of directions from BNY (New York), the Investment Manager or the
Investment Committee, as applicable. Neither the Master Trustee nor BNY (New
York) shall be liable for interest on any cash balances in any
6
Directed Fund that the Master Trustee holds uninvested pending receipt of
directions from the Investment Manager or Investment Committee in the absence of
authorization from the latter to invest the same at BNY (New York)'s direction
in its sole discretion, nor liable for interest on any cash balances it may be
authorized to direct the investment of in its sole discretion and may hold
uninvested as it deems to be in the best interests of the Master Fund.
2.6 Appointment of Administrative Agent. The Named Fiduciary shall
-----------------------------------
certify to the Master Trustee the name of any third party administrator (the
"Administrative Agent") appointed by it or the Company to receive, cumulate and
communicate investment and distribution directions with respect to Participant-
Directed Funds from Participants, and to whom the Named Fiduciary has delegated
such responsibility and authority as it shall communicate to the Master Trustee.
For the purposes of this Agreement, such Administrative Agent shall be a delegee
of the Named Fiduciary in accordance with Section 405(c)(1)(B) of the Act. The
Master Trustee may rely on such certification and delegation until notified in
writing to the contrary by the Named Fiduciary.
2.7 Transfer Among Funds. The Administrative Committee or the
--------------------
Administrative Agent shall direct the Master Trustee with respect to the
allocation of assets to the Funds and with respect to transfers among the Funds.
The Master Trustee or BNY (New York) shall have no duty to invest, and shall not
be liable for interest on, any such assets it holds uninvested pending receipt
of directions from the Administrative Committee or the Administrative Agent to
allocate contributions among the Funds.
2.8 Transfers to Collective Trusts. Notwithstanding any provision of
------------------------------
any Participating Plan or of this Agreement to the contrary, BNY (New York) may,
in its sole discretion with respect to any Discretionary Fund and, if authorized
or directed by the Investment Manager or Investment Committee of any Directed
Fund, with respect to such Directed Fund, transfer all or any part of the assets
of such Fund to, or withdraw the same from, any collective investment trust that
shall be or shall have been created and administered by The Bank of New York or
any of its affiliates, or if such Investment Manager is a bank, by such
Investment Manager, for the collective investment of the property of employee
benefit trusts of which The Bank of New York (or its affiliate) or such
Investment Manager is trustee or agent, provided that such trust is qualified
under the provisions of Section 40l(a) of the Code and exempt under the
provisions of Section 50l(a) of the Code. To that end, the Master Trustee and
BNY (New York) are each hereby expressly authorized to permit the commingling of
any or all of the assets of such Fund with the assets of other trusts eligible
to participate in such collective investment trust. BNY (New York) or any
Investment Manager holding such trust funds shall have with respect to such
funds the powers of the Master Trustee and BNY (New York) set forth in Sections
2.2(a), 3.1, 3.2 and 3.4. Neither the Master Trustee nor BNY (New York) shall
have any responsibility for the custody or safekeeping of assets transferred to
the collective investment trust of such an Investment Manager. To the extent
that property of the Master Fund is invested in any collective investment trust
as provided above, the declaration of trust pertaining thereto, as amended from
time to time, and the trust thereby created, shall be a part of this Agreement
and of each Participating Plan. The Master Trustee shall have, with respect to
the interest of such Fund in such collective investment trust, the powers
conferred by this Agreement to the extent that such powers are not inconsistent
with the provisions of such declaration of trust. For purposes of any valuation
of the Master Fund or any valuation of the
7
interest or of the account of any Participant or Beneficiary under any
Participating Plan, the interest of the Master Trust in such collective
investment trust shall be valued at the times and in the manner prescribed by
the declaration by which such trust was created. A copy of the declaration of
trust as presently in effect of any collective investment trust to which the
assets of any Participating Plan are transferred pursuant to this Section 2.8
shall be provided to the Named Fiduciary and copies of amendments thereto shall
be forwarded to the Named Fiduciary promptly after their adoption.
2.9 Insurance Contracts.
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(a) Procuring and Holding Contracts. The Master Trustee, upon written
-------------------------------
direction of the Named Fiduciary, shall pay from the Master Trust such sums to
such insurance company or companies as the Named Fiduciary may direct for the
purpose of procuring individual or group annuity contracts or other insurance
contracts (hereinafter referred to as "Contracts"). The Named Fiduciary shall
prepare, or cause to be prepared in such form as it shall prescribe, the
application for any Contract to be applied for. The Master Trustee shall receive
and hold in the Master Trust, subject to the provisions hereinafter set forth in
this Section, all Contracts obtained, the proceeds of any sale, assignment or
surrender of any such Contract, and any and all dividends and other payments of
any kind received with respect to any such Contract.
(b) Exercising Rights under Contracts. The Master Trustee shall be
---------------------------------
the complete and absolute owner of Contracts held in the Master Trust, provided
that the Named Fiduciary shall have power, without the consent of any other
person, to exercise any and all of the rights, options or privileges that belong
to the Master Trustee as such absolute owner or that are granted by the terms of
any such Contract or by the terms of this Agreement, and the Master Trustee
shall not exercise any of the foregoing powers or take any other action
permitted by any such Contract other than upon the written direction of the
Named Fiduciary. The Master Trustee shall have no duty to exercise any of such
powers or to take any such action unless and until it shall have received such
direction. The Master Trustee, upon the written direction of the Named
Fiduciary, shall deliver any Contract held in the Master Trust to such person or
persons as may be specified in the direction.
(c) Payment of Premiums. Upon the written direction of the Named
-------------------
Fiduciary, the Master Trustee shall pay from the Master Trust premiums,
assessments, dues, charges and interest, if any, upon any Contract held in the
Master Trust. The Master Trustee shall have no duty to make any such payment
unless and until it shall have received such direction.
(d) Payments under Contract. Any sums paid out by any insurance
-----------------------
company under the terms of a Contract held in the Master Trust either to the
Master Trustee, or, in accordance with its direction, to any other person or
persons designated as payees in such Contract shall be a full and complete
discharge of the liability to pay such sums, and the insurance company shall
have no obligation to look to the disposition of any sums so paid. No insurance
company shall be required to look into the terms of this Agreement, or to
question any action of the Master Trustee or to see that any action of the
Master Trustee is authorized by the terms of this Agreement.
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(e) Liability of Master Trustee; Indemnification. Anything contained
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herein to the contrary notwithstanding, to the extent permitted by law, neither
the Master Trustee nor BNY (New York) shall be liable for the refusal of any
insurance company to issue or change any Contract or to take any other action
requested by the Master Trustee; for any assets invested in a Contract at the
direction of the Named Fiduciary; for the form, terms, genuineness, validity,
sufficiency or effect of any Contract held in the Master Trust; for the act of
any person or persons that may render any such Contract null and void; for the
failure of any insurance company to pay the proceeds of any such Contract as and
when the same shall become due and payable; for any delay in payment resulting
from any provision contained in any such Contract nor for the fact that for any
reason whatsoever (other than the negligence or willful misconduct of the Master
Trustee or BNY (New York)) any Contract shall lapse or otherwise become
uncollectible. The Company hereby agrees to indemnify the Master Trustee and
BNY (New York), as the case may be, and to hold each harmless from and against
any claim, liability, loss, damage or expense that may be asserted against the
Master Trustee or BNY (New York) by reason of any action taken or omitted by the
Master Trustee or BNY (New York) in connection with any Contract at the
direction of the Named Fiduciary.
SECTION 3
POWERS OF MASTER TRUSTEE
3.1 In General. The Master Trustee is authorized and empowered, at
----------
the direction of BNY (New York) with respect to a Discretionary Fund, and at the
direction of an Investment Manager or the Investment Committee, with respect to
a Directed Fund managed by such Investment Manager or Committee, upon such
conditions, at such prices and in such manner, as BNY (New York) shall direct in
the case of a Discretionary Fund, and as the Investment Manager or Investment
Committee shall direct in the case of a Directed Fund, to:
(1) purchase or subscribe for any securities or other property,
including Employer Stock, and to retain in trust such securities or other
property;
(2) sell, exchange, convey, transfer or otherwise dispose of any
property, real or personal, at any time held by the Master Trustee, by private
contract or at public auction, for cash or on credit, and no person dealing with
the Master Trustee shall be bound to see to the application of the purchase
money or to inquire into the validity, expediency or propriety of any such sale
or other disposition; provided, however, that the Master Trustee shall have no
power to tender Employer Stock held by the Master Trustee in the Employer Stock
Fund (as defined in Section 16.1), except in accordance with Section 16.5;
(3) grant options to purchase securities held in the Fund ("covered
call options") and other property held in the Fund and options to sell
securities and other property to the Fund, as well as combinations of such
options to purchase and such options to sell; and to acquire options to purchase
securities and other property for the Fund and options to sell securities and
other property held in the Fund, as well as combinations of such options to
purchase and such options to sell;
9
(4) sell or exercise any conversion privileges, subscription rights,
warrants or other options and to make any payments incidental thereto, and to
consent to or otherwise participate in corporate reorganizations, mergers,
consolidations or other changes affecting corporate securities and to delegate
discretionary powers and to pay any assessments or charges in connection
therewith; but the Company understands that, where warrants, options, tenders or
other rights have fixed expiration dates, in order for the Master Trustee or,
xxxx xxxxxxxxxxx xx XXX (Xxx Xxxx) as Master Custodian, for BNY (New York) to
act with respect to a Directed Fund, it must receive instructions at its
offices, addressed as the Master Trustee or BNY (New York), as the case may be,
may from time to time request, by no later than noon (at the Master Trustee's
office or, if so notified by BNY (New York), at BNY (New York)'s office) at
least one business day prior to the last scheduled date to act with respect
thereto (or such earlier date or time as the Master Trustee or BNY (New York),
as the case may be, may direct); provided, however, that the Master Trustee
shall have no power to exercise such rights with respect to Employer Stock held
by the Master Trustee in the Employer Stock Fund, except in accordance with
Section 16.5;
(5) compromise, compound, settle or arbitrate any claim, debt or
obligation due to or from it as Master Trustee and to reduce the rate of
interest on, extend or otherwise modify, or to foreclose upon default or
otherwise enforce any such obligation; to bid in property on foreclosure or to
take a deed in lieu of foreclosure with or without paying consideration therefor
and in connection therewith to release the obligation on the bond secured by the
mortgage, and, in the case of a Discretionary Fund, to abandon any property
determined by BNY (New York) to be worthless;
(6) vote upon any stocks, bonds or other securities and to give
general or special proxies or powers of attorney with or without power of
substitution, and to enter into any voting trust or similar agreement; provided
that, in the case of a Directed Fund, unless the Master Trustee or BNY (New
York), as the case may be, is instructed otherwise, all proxies and proxy
materials relating to securities held in the Master Fund shall be signed by the
Master Trustee or BNY (New York), as the case may be, without indication of
voting preference, and forwarded to the Investment Manager or Investment
Committee for the making of all decisions with respect thereto; and provided
further that Employer Stock held by the Master Trustee in the Employer Stock
Fund shall be voted by the Master Trustee in the manner provided in Section
16.6;
(7) manage, administer, operate, lease for any period of years,
regardless of any restrictions on leases made by fiduciaries, develop, improve,
repair, alter, demolish, mortgage, pledge, grant options with respect to or
otherwise deal with any real property or interest therein at any time held by
it;
(8) for the purposes of the Master Trust, engage in transactions
involving financial futures, including but not limited to stock index futures,
and options on financial futures; and in carrying out such transactions to open
accounts to trade in and to make or take delivery of financial futures, to
provide original, variation, maintenance and other required margin in the form
of moneys, securities, or otherwise, and to exercise options; and
10
(9) generally exercise any of the powers of an owner with respect to
stocks, bonds, securities or other property held in any Fund; except as limited
under Sections 16.5 and 16.6 with respect to Employer Stock held by the Master
Trustee in the Employer Stock Fund.
3.2 At Direction of Named Fiduciary. The Master Trustee is authorized
-------------------------------
and empowered to, or to so authorize and empower BNY (New York) to, with the
approval of the Named Fiduciary with respect to any Fund:
(1) for the purposes of the Master Trust, borrow money from any
person or persons, including BNY Western Trust Company or The Bank of New York
(except that an Acquisition Loan shall not be obtained from BNY Western Trust
Company or The Bank of New York), to issue the Master Trust's promissory note or
notes therefor, and to secure the repayment thereof by pledging, mortgaging or
otherwise encumbering any property in its possession, including, with respect to
an Acquisition Loan, ESOP Stock (as defined in Section 16.3); and
(2) designate The Bank of New York to act on its behalf in lending
securities held in the Master Fund to brokers, dealers, banks or other financial
institutions, for such additional compensation as the Named Fiduciary and The
Bank of New York shall agree, all on such terms as are consistent with the Act.
3.3 With Respect to Participant-Directed Funds. The Master Trustee is
------------------------------------------
authorized and empowered, at the direction of the Administrative Committee, as
defined in Section 5.1, or the Administrative Agent (which direction may include
standing instructions) with respect to any Participant-Directed Fund, to sell,
or to purchase, any property held in such Funds, as appropriate to effectuate
transfers among Funds in accordance with Section 2.7, and/or distributions from
Funds in accordance with Section 5.3. If the Master Trustee is not able to
execute fully Participants' investment directions at a particular time, the
Master Trustee shall execute the instructions to the extent possible.
3.4 Administrative Powers. The Master Trustee is authorized and
---------------------
empowered to, or to so authorize and empower BNY (New York) to, in its sole
administrative discretion with respect to both Discretionary and Directed Funds,
to:
(1) determine the fair market value of Employer Stock; provided,
however, in the case of Employer Stock not readily tradable on an established
securities exchange, any valuation of such Employer Stock (including valuation
at the time of an initial public offering of Employer Stock) shall be provided
to the Master Trustee by the Named Fiduciary in accordance with the provisions
of Section 6;
(2) make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be necessary
or appropriate to carry out the powers granted herein;
(3) collect all interest, dividends and other income payable with
respect to property in the Master Fund, and to surrender securities at maturity
or when advised of earlier call for redemption, provided that neither the Master
Trustee nor BNY (New York) shall be liable for failure to surrender any security
in a Directed Fund for redemption prior to maturity or take other action if
notice of such redemption or other action was not provided to the Master
11
Trustee or BNY (New York), as the case may be, by the issuer, the Investment
Manager, the Investment Committee or one of the nationally recognized bond or
corporate action services to which the Master Trustee or BNY (New York)
subscribes;
(4) 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;
(5) hold property in its vaults, at a domestic or (to the extent
permitted by regulations issued by the Secretary of Labor under Section 404(b)
of the Act) foreign central depository or clearing corporation, in non-
certificated form with the issuer, on Federal Book Entry at the Federal Reserve
Bank of New York, with a custodian appointed pursuant to clause (6) below, or,
with the approval of the Named Fiduciary, at any other location;
(6) appoint another bank as custodian for any foreign securities or
other foreign assets constituting part of the Master Fund, and arrange for the
custody of such securities or assets and the indicia of ownership thereof to be
held outside the jurisdiction of the district courts of the United States by
such other bank and/or its agents, to the extent permitted by regulations issued
by the Secretary of Labor under Section 404(b) of the Act and pay the reasonable
expenses and compensation of such bank from the Master Fund;
(7) hold property of the Master Trust in its own name or in the name
of a nominee, including the nominee of any central depository, clearing
corporation, or custodian with which securities of the Master Trust may be
deposited (and the Company agrees to hold the Master Trustee or BNY (New York),
as the case may be, and any such nominee harmless from any liability as a holder
of record), and hold any investment in bearer form, but the books and records of
the Master Trustee or BNY (New York), as the case may be, shall at all times
show that all such investments are part of the Master Trust;
(8) form corporations and to create trusts under the laws of any
state for the purpose of acquiring and holding title to any securities or other
property, all on such terms and conditions as it deems advisable;
(9) employ suitable agents, including auditors and legal counsel (who
may be counsel to the Company or to the Master Trustee or BNY (New York) in its
corporate capacity) or other advisers, without liability for any loss occasioned
by any such agent selected with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character with like aims, and to pay their reasonable expenses and
compensation from the Master Fund; and
(10) take any action with respect to the Master Fund that it deems
necessary in carrying out the purposes of this Agreement.
12
SECTION 4
REGISTRATION OF EMPLOYER STOCK
In the event that the Master Trustee holds any Employer Stock which is
not registered under Section 12 of the Securities Exchange Act of 1934, then in
the event that the Master Trustee is required to dispose of any Employer Stock,
or certain other securities issued or issuable with respect to any Participating
Employer or other securities by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise, under circumstances which, in the opinion
of the Master Trustee, require registration of such securities under the
Securities Act of l933 and/or qualification of such securities under the Blue
Sky laws of any state or states, then the Company, at its own expense, will
promptly take or cause to be taken any and all action necessary or appropriate
to effect such registration and/or qualification; in such event, the Master
Trustee shall not be required to dispose of such securities until such
registration and qualification are complete and effective, and the Master
Trustee shall not be liable for any loss or depreciation of the Fund resulting
from any delay attributable thereto. The Company will indemnify and hold the
Master Trustee and its officers and directors harmless with respect to any
claim, liability, loss, damage or expense 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. The provisions of this section relating to the
Master Trustee shall also apply to BNY (New York) to the extent it holds any
Master Trust assets as Master Custodian.
SECTION 5
ACCOUNTS TO BE MAINTAINED BY THE MASTER TRUSTEE; PAYMENTS FROM THE MASTER TRUST
5.1 Accounts. The Master Trustee shall maintain separate accounts for
--------
each Participating Plan, which shall at all times reflect each Participating
Plan's equitable share in the Master Fund, to which shall be credited all
contributions received from such Plan's Employer and against which shall be
charged all payments made pursuant to the written directions of the named
fiduciary authorized to direct and make payments from the Participating Plans
(the "Administrative Committee"). The Master Trustee may maintain one or more
accounts for the purpose of making disbursements and such other purposes, if
any, as may be reasonably required for the convenient administration of any
Participating Plan or of the Master Trust. The Master Trustee may maintain any
such account at The Bank of New York or one of its affiliates. Disbursements and
payments of the Master Trust may be made by wire transfer or checks of the
Master Trustee or an affiliate of the Master Trustee acting as the agent of the
Master Trustee, and the parties acknowledge and agree that the Master Trust
shall not be credited with earnings on the amount required to make disbursements
or payments between the time such amount is transferred from the Master Trust at
the direction of the Administrative Committee to make such disbursement or
payment and the time the check is presented for payment (referred to as
"disbursement account earnings"). Any disbursement account earnings shall be
retained by and
13
constitute compensation to the Master Trustee and its affiliates in addition to
that listed at Exhibit C or Exhibit D, as applicable.
5.2 No Separate Recordkeeping. The Master Trustee shall not be
-------------------------
require to maintain any separate records or accounts with respect to the
Participants in any Participating Plan (or their Beneficiaries), and any such
records or accounts required to be maintained pursuant to the terms of any such
Plan shall be maintained by the Employer or by the named fiduciary authorized to
direct and make payments from each Participating Plan.
5.3 Payments; Disputes. The Master Trustee, from time to time, upon
------------------
receipt of an order from the Administrative Committee, shall make payments from
the Master Fund to such persons (including the Administrative Committee or any
member of such Committee), and in such amounts as the Committee shall direct,
and amounts paid pursuant to such direction thereafter no longer shall
constitute a part of the Master Trust. Each such order shall be in writing and
shall specify the Participating Plan to whose account the payment is to be
charged. Orders from the Administrative Committee need not specify the purpose
of the payments so ordered, and the Master Trustee shall not be responsible in
any way respecting the purpose or propriety of such payments or for the
administration of the Participating Plans. Any such order shall constitute a
certification that the payment directed is one which the Administrative
Committee is authorized to direct, and the Master Trustee need make no further
investigation. Payments by the Master Trustee may be made (i) by its check to
-
the order of the payee and mailed to the payee at the address last furnished to
the Master Trustee by the Administrative Committee or by the payee, or if no
such address has been so furnished, to the payee in care of the Company, or (ii)
--
by direct deposit to an account of the payee in accordance with Section 5.4. If
a dispute arises as to who is entitled to or should receive any benefit or
payment, the Master Trustee may withhold or cause to be withheld such payment
until the dispute has been resolved. Should it be necessary in order to comply
with any such distribution request by the Administrative Committee for the
Master Trustee to sell any Employer Stock held in the Employer Stock Fund
described in Section 16.1, the Master Trustee shall exercise its put rights, if
applicable, pursuant to the terms of Section 16.1. In exercising such put
rights, the Master Trustee shall be under no duty to perform its own valuation
of the Employer Stock or otherwise verify the accuracy of such determination
provided by the Administrative Committee pursuant to Section 6. The Company
shall indemnify and hold the Master Trustee harmless from and against any
actions, claims or losses resulting from any inaccuracies in the determination
of the fair market value of the Employer Stock as provided to the Master Trustee
by the Administrative Committee.
5.4 Direct Deposit of Payments. At the request of any Participant or
--------------------------
Beneficiary, the Master Trustee shall deposit periodic payments directly into
the bank account of such person, provided that such person and its depository
bank shall have entered into a depository agreement with the Master Trustee that
is satisfactory to the Master Trustee. The Company hereby agrees to indemnify
the Master Trustee and its affiliates and to hold them harmless from and against
any claim, liability, loss, damage or expense that may be asserted against them
as a result of making any such deposit.
5.5 Administrative Committee's Responsibility. In directing the Master
-----------------------------------------
Trustee to make payments out of the Master Trust, the Administrative Committee
shall follow
14
the provisions of each Participating Plan, so that it shall be impossible,
either during the existence or upon the discontinuance of such plan, for any
part of the Master Fund to be used for or diverted to purposes other than for
the exclusive benefit of the Participants in such Plan or their Beneficiaries,
at any time prior to the satisfaction of all liabilities with respect to such
Participants and Beneficiaries under such Plan, or for any part thereof to be
paid or applied to the use of any Employer except, upon the termination of a
Participating Plan, to the extent of any surplus resulting from an actuarial
error.
5.6 Returned and Uncashed Payments. In the event that any payment
------------------------------
ordered by the Administrative Committee shall be distributed by the Master
Trustee in accordance with Section 5.3 or Section 5.4 and (i) such payment shall
-
be returned to the Master Trustee because the payee or the payee's account
cannot be located at such address, or (ii) any check so mailed shall not be
--
presented for payment within six months of the date thereof, the Master Trustee
shall promptly notify the Committee of such return or failure to present. Upon
the expiration of 60 days after such notification such payment order shall
become void, and unless and until a further order of such Committee is received
by the Master Trustee with respect to such payment, the Master Trustee shall
return such payment to the Master Trust and continue to administer the Master
Trust and the account of such Plan as if such order had not been made. The
Master Trustee shall not be obligated to search for or ascertain the whereabouts
of any such person (or his duly appointed representative).
5.7 No Liability for Contributions. Neither the Master Trustee nor BNY
------------------------------
(New York), as the case may be, shall be under any duty to enforce payment of
any contribution and shall not be responsible for the adequacy of the Master
Trust to meet and discharge any liabilities under any Participating Plan.
SECTION 6
VALUATION OF THE MASTER FUND
6.1 Valuation. As of the inception of the Master Fund, as of the close
---------
of the last business day of each month thereafter, and as of such other time or
times as the Master Trustee may deem appropriate (the "Valuation Date"), the
Master Trustee shall determine the market value of the of the Master Fund and of
the interests of the various Participating Plans therein. For the purposes of
this Section, a business day shall mean a day on which securities are traded on
the New York Stock Exchange. Such determination may be made either by the Master
Trustee itself or by such person or persons believed by the Master Trustee to be
competent to make such determination as the Master Trustee may select, but in
accordance with a method consistently followed and uniformly applied. The Master
Trustee's determination of the value of the Master Fund and of the interest of
each Participating Plan therein shall be conclusive and binding upon all
Participating Plans and all Employers, the Named Fiduciary, the Administrative
Committee, and Participants in such Plans and their Beneficiaries. If Employer
Stock held in the Employer Stock Fund pursuant to an ESOP Feature is not readily
tradable on an established market within the meaning of Section 409(h) of the
Code, the Administrative Committee shall provide the Master Trustee with a
determination of the value of the Employer Stock prior to any such Valuation
Date. Such valuation shall be made by an independent appraiser that satisfies
the requirements of Section 401(a)(28)(C) of the Code. Such valuation shall be
deemed to be correct
15
by the Master Trustee, and the Master Trustee shall be under no duty to perform
its own valuation of the shares of Employer Stock or otherwise verify the
accuracy of such determination provided by the Administrative Committee. The
Company shall indemnify and hold the Master Trustee harmless from and against
any actions, claims or losses resulting from any inaccuracies in the
determination of the fair market value of the Employer Stock as provided to the
Master Trustee by the Administrative Committee .
6.2 Units. The interest of each Participating Plan in the Master Fund
-----
shall be represented by whole and fractional units which shall be equal
undivided interests in such Fund without priority or preference one over the
other. The original unit of participation upon the establishment of the Master
Fund shall be $l000, or such other amount as the Master Trustee may determine at
that time. As of any Valuation Date the Master Trustee may make a uniform change
in the size of all outstanding units of the Master Fund, by creating either a
larger number of smaller units or a smaller number of larger units. As of each
Valuation Date the Master Trustee shall determine the value per unit in the
Master Fund by dividing the value of the Master Fund as determined in accordance
with this Section by the number of existing units in the Fund. Transfers of cash
and/or property to or from the separate accounts of the various Participating
Plans shall be made only as of a Valuation Date and shall be based upon the
value of a unit as of such Valuation Date, and the number of units charged or
credited to the accounts of such Participating Plans shall be adjusted
accordingly.
SECTION 7
ADMINISTRATIVE EXPENSES, TAXES AND MASTER TRUSTEE'S COMPENSATION
7.1 In General.All brokerage costs and transfer taxes incurred in
----------
connection with the investment and reinvestment of any Fund, all income taxes or
other taxes of any kind whatsoever which may be levied or assessed under
existing or future laws upon or in respect of such Fund, all expenses incurred
in connection with the acquisition or holding of real or personal property, any
interest therein or mortgage thereon, all other administrative expenses incurred
by the Master Trustee or BNY (New York), as the case may be, in the performance
of their respective duties, including fees for legal services rendered to the
Master Trustee or BNY (New York), as the case may be, the compensation of the
Master Trustee set forth in Exhibit C attached hereto, as the same may be
amended from time to time as provided in this Section, and the investment
management fees of BNY (New York) (if any) set forth at Exhibit D attached
hereto, as the same may be amended from time to time, in respect of assets of a
Discretionary Fund or assets of a Directed Fund that are invested pursuant to
Sections 2.1 and 2.5 at the direction of BNY (New York), and all other proper
charges and disbursements of the Master Trustee or BNY (New York), as the case
may be, shall be paid by the Fund, and, until paid, shall constitute a charge
upon the Fund. Any amount paid from the Master Fund which is specifically
allocable to a particular Participating Plan shall be charged against the
separate account reflecting the equitable share of such Participating Plan. From
time to time the Master Trustee may provide the Company with written notice of
an amendment to Exhibit C or Exhibit D. Such amendment shall become effective on
the 60th day after the Master Trustee mails it to the Company unless the Company
shall have provided the Master Trustee with written notice of objection thereto.
16
7.2 Fees of Investment Managers. The Named Fiduciary may direct the
---------------------------
Master Trustee to pay from the Master Fund the fees of any Investment Manager
and the administrative expenses of any Participating Plan, including but not
limited to actuarial fees.
SECTION 8
MASTER TRUSTEE'S AND BNY (NEW YORK)'S LIABILITY; NO DUTY TO REVIEW;
INDEMNIFICATION
8.1 Liability of Master Trustee and BNY (New York). With respect to a
----------------------------------------------
Discretionary Fund, neither the Master Trustee nor BNY (New York) shall be
liable for any loss to or diminution of the Discretionary Fund resulting from
any action taken or omitted by the Master Trustee or BNY (New York), as the case
may be, except if due to any failure of the Master Trustee or BNY (New York) to
act in accordance with the requirements of Part 4 of Title I of the Act. With
respect to any Directed Fund hereunder and the Employer Stock Fund, neither the
Master Trustee nor BNY (New York) shall be liable for the making, retention or
sale of any investment or reinvestment made or received by it at the direction
of a Named Fiduciary (including an ESOP Feature Participant acting in the
capacity of a Named Fiduciary with respect to tender instructions under Section
16.5), an Investment Manager or the Investment Committee, as herein provided,
nor for any loss to or diminution of the Fund resulting from any action taken,
or from any act omitted, by the Master Trustee or BNY (New York) at the
direction of a Named Fiduciary, an Investment Manager or the Investment
Committee as herein provided. Neither the Master Trustee nor BNY (New York)
shall be liable for any loss to or diminution of the Fund resulting from any
action taken or omitted by the Master Trustee or BNY (New York), other than at
the direction of an Investment Manager or the Investment Committee, except if
due to any failure of the Master Trustee or BNY (New York) to act in accordance
with the requirements of Part 4 of Title I of the Act. Neither the Master
Trustee nor BNY (New York) shall be responsible for the adequacy of the funding
policy of any Participating Plan of which it is advised pursuant to Section
2.2(c) or the diversification of the investments of any Participating Plan.
Responsibility for monitoring adherence to funding policies and for investment
diversification, and for advising the Master Trustee or BNY (New York)
accordingly with respect to any Discretionary Fund and advising the Investment
Manager or Investment Committee accordingly with respect to any Directed Fund,
shall rest solely with the Named Fiduciary.
The Master Trustee and BNY (New York) may from time to time consult
with legal counsel, who may be counsel to the Company or to the Master Trustee
or to BNY (New York) in its corporate capacity, and shall be fully protected in
acting upon the advice of counsel.
To protect the Trust Fund from expenses which might otherwise be
incurred, the Company shall have sole authority to enforce this Agreement on
behalf of all persons claiming any interest in the Master Trust or under the
applicable Plan, and no other person may institute or maintain any action or
proceeding against the Master Trustee or BNY (New York) or the Master Trust in
the absence of written authority from the Company or a judgment of a court of
competent jurisdiction that in refusing authority the Company acted fraudulently
or in bad faith.
17
8.2 No Duty to Review. Supervision of Investment Managers and the
-----------------
Investment Committee shall be the exclusive responsibility of the Named
Fiduciary. Neither the Master Trustee nor BNY (New York) shall be under any duty
or obligation to review any investment or reinvestment made or received at the
direction of an Investment Manager or the Investment Committee nor to make any
recommendation as to the disposition or continued retention thereof. Without
limiting the generality of the foregoing, in the case of any transaction which
is both directed by and executed by or through an Investment Manager or the
Investment Committee, the Investment Manager or Investment Committee shall have
entire responsibility for assuring that the transaction does not violate the
prohibitions of any applicable state or federal law, including Sections 406 and
407 of the Act.
8.3 Reliance on Certain Appraisals. To the extent that the Master
------------------------------
Trustee or BNY (New York), as the case may be, shall be required to value the
assets of the Master Fund for any purpose, including without limitation any
valuation pursuant to Section 6, any accounting pursuant to Section 9 and any
segregation of assets pursuant to Section l0 hereof, the Master Trustee or BNY
(New York), as the case may be, may rely for all purposes of this Agreement upon
any certified appraisal or other form of valuation submitted to it by any
Investment Manager, the Administrative Committee or the Investment Committee
and, with respect to any insurance contract referred to in Section 2.9 hereof,
by the insurance company issuing such contract, and, with respect to an interest
in any venture capital organization, the manager of such organization.
8.4 Indemnification of Master Trustee and BNY (New York). The Company
---------------------------------------------------
recognizes that a burden of litigation may be imposed upon the Master Trustee or
BNY (New York) as the result of some act or transaction fo which it has no
responsibility or over which it has no control under this Agreement.
Accordingly, the Company hereby agrees to indemnify the Master Trustee,
individually and as Master Trustee under this Agreement, and BNY (New York),
individually and as Master Custodian under the Master Custody Agreement, and
their respective directors, officers and employees, and to hold them harmless
from and against any claim, liability, loss, damage or expense which may be
asserted against it or them by reason of any action taken or omitted by or on
behalf of the Master Trustee or BNY (New York) at the direction of any
Investment Manager or Investment Committee, the Named Fiduciary or the
Administrative Committee or by virtue of being the holder of the Master Trust.
8.5 Limitation of Indemnity. Nothing herein is intended to or shall be
-----------------------
construed to relieve the Master Trustee or BNY (New York) from any
responsibility or liability it may have under Part 4 of Title I of the Act.
8.6 Indemnification of Successor Trustee. If BNY Western Trust Company
------------------------------------
is at any time acting as a successor trustee or if either BNY Western Trust
Company or The Bank of New York succeeds to responsibilities hereunder for
management of plan assets with respect to the Master Fund (or any portion
thereof), the Company hereby agrees to hold BNY Western Trust Company and The
Bank of New York harmless from and against any tax, claim, liability, loss,
damage or expense incurred by or assessed against it as such successor, as a
direct or indirect result of any act or omission of a predecessor trustee or any
other person charged under any agreement affecting Master Fund assets with
investment responsibility with respect to such assets.
18
SECTION 9
SETTLEMENT OF MASTER TRUSTEE'S ACCOUNTS
9.1 Annual Accounting. The Master Trustee shall keep accurate and
-----------------
detailed accounts of all investments, receipts, disbursements and other
transactions hereunder, accounting separately for each Fund, and all accounts,
books and records relating thereto shall be open to inspection and audit at all
reasonable times by any person designated by the Company or the Named Fiduciary.
Within 90 days after the close of each fiscal year of the Master Trust (or such
other date as may be agreed upon in writing between the Company and the Master
Trustee), and within l20 days after the effective date of the removal or
resignation of the Master Trustee as provided in Section 11 hereof, the Master
Trustee shall file with the Company a written account, setting forth all
investments, receipts, disbursements and other transactions effected by it
during the year ending on such date (but not including any part of such year for
which such an account has previously been filed) and certified as to the
accuracy of the information set forth therein. Such account may incorporate by
reference any and all schedules and other statements setting forth investments,
receipts, disbursements and other transactions effected during the period for
which such account is rendered which the Master Trustee has furnished to the
Company prior to the filing of such account. Each account so filed (and copies
of any schedules and statements incorporated therein by reference as aforesaid)
shall be open to inspection at the offices of the Company and the Master Trustee
during their respective regular business hours by the Named Fiduciary and the
Employer of each Participating Plan to which it relates, by any person
designated by either of the foregoing, by Participants and Beneficiaries of each
such Plan, and by any Administrative Committee, Investment Manager or Investment
Committee affected thereby, for a period of 60 days immediately following the
date on which the account is filed with the Company. If for any reason an
account required of the Master Trustee hereunder shall not be filed within the
applicable time specified in the preceding sentence, such account may be filed
by the Master Trustee after the expiration of such time, provided such account
otherwise complies with the requirements of this Agreement, and such account so
filed shall be open to inspection as aforesaid by any of the parties
aforementioned for a period 90 days immediately following the date on which the
account is filed. In the event that any assets of the Fund have been transferred
to a collective investment trust pursuant to Section 2.8 hereof, such account
shall include a copy of the latest annual written account of such collective
investment trust.
9.2 Other Accountings. The Master Trustee shall provide to the Company
-----------------
from time to time such other reports as may be agreed upon between the Master
Trustee and the Company. The Company agrees to examine each such report promptly
and to file any exceptions thereto within 90 days of the date thereof.
9.3 Settlement of Accounts. Upon the expiration of the 60-day or 90-
----------------------
day period, as the case may be, referred to in Section 9.1 or 9.2, the Master
Trustee and BNY (New York) shall be forever released and discharged from all
liability and accountability to anyone with respect to the account or report,
including, without limitation, all acts and omissions of the Master Trustee or
BNY (New York) shown or reflected in such account or report, except with respect
to any acts or omissions as to which the Company, the Named Fiduciary or the
Administrative Committee shall have filed written objections with the Master
Trustee within such 60-day or 90-day period, as the case may be. Nothing herein
contained shall impair the
19
right of the Master Trustee to a judicial settlement of any account of
proceedings rendered by it. In any proceeding for such judicial settlement the
only necessary parties shall be the Master Trustee, the Company, the Named
Fiduciary, the Administrative Committee and any other party or parties whose
participation is required by law, and any judgment, decree or final order
entered therein shall be conclusive on all persons having or claiming an
interest in the Master Trust or any Participating Plan.
9.4 Waiver of Rights. The provisions of this Agreement set forth the
----------------
Company's rights to obtain and object to an accounting. The Company hereby
waives any other or different rights it may have under the laws of California,
New York and any other state where the Master Trust may be administered.
SECTION 10
SEGREGATION OF PARTS OF THE MASTER TRUST
10.1 Segregation. The equitable share of a Participating Plan in the
-----------
Master Trust shall be segregated and withdrawn from the Master Trust upon the
occurrence of any of the following events:
(a) Receipt by the Master Trustee of notice that such Participating
Plan has been held by the Internal Revenue Service or by any court of competent
jurisdiction not to qualify under Section 401(a) of the Code, or a successor
provision, or of other information giving the Master Trustee reason to believe
that such Plan may not be so qualified; or
(b) Receipt by the Master Trustee of notice from the Company that such
Participating Plan has been terminated or that the Employer of such
Participating Plan has terminated its joinder in the Master Trust.
The equitable share in the Master Trust of all or any part of a
Participating Plan or the proportionate share of any Participant or group of
Participants and their Beneficiaries may be segregated and withdrawn from the
Master Trust upon the direction of the Named Fiduciary setting forth the portion
of such Participating Plan's equitable share to be so treated or the
Participants and Beneficiaries for whose accounts such segregation and
withdrawal are to be carried out. The Master Trustee may condition its transfer
or distribution of any assets upon the Master Trustee's receiving assurances
satisfactory to it that the approval of appropriate governmental or other
authorities has been secured and that all notice and other procedures required
by applicable law have been complied with.
10.2 Segregated Property. Segregation and withdrawal of the equitable
-------------------
share of a Participating Plan or a Participant or group of Participants shall be
made as of the Valuation Date immediately following the date of the notice or
instruction referred to in Section 10.1, based upon the units in the Master
Trust credited to the Participating Plan's account as of such date. The
selection of the particular assets to be segregated pursuant to Section 10.1
shall be made by the Named Fiduciary. Such property shall be held as a separate
trust fund for the exclusive benefit of the Participants of the withdrawing Plan
(or of the withdrawing Participant
20
or group of Participants) and their Beneficiaries, under a separate agreement of
trust substantially identical to this Agreement.
SECTION 11
RESIGNATION AND REMOVAL OF MASTER TRUSTEE; RESIGNATION AND REMOVAL OF BNY (NEW
YORK) AS INVESTMENT MANAGER
11.1 Resignation and Removal of Master Trustee. The Master Trustee may
-----------------------------------------
resign at any time upon 60 days' notice in writing to the Company and the Named
Fiduciary. The Master Trustee may be removed by the Company at any time upon 60
days' notice in writing to the Master Trustee and the Named Fiduciary. If within
such 60-day period a successor to the Master Trustee shall not have been
appointed, the resigning or removed Master Trustee may apply to any court of
competent jurisdiction for the appointment of such successor. Any successor
master trustee shall have the same powers and duties as those conferred upon the
Master Trustee hereunder (other than those relating to the collective investment
trust of The Bank of New York) and subject to receipt by the Master Trustee of
written acceptance of such appointment by the successor master trustee, the
Master Trustee shall assign, transfer and pay over to such successor master
trustee the moneys and properties then constituting the Master Fund, withdrawing
any part of any Fund then held in The Bank of New York's collective investment
trust. The Master Trustee may reserve such sum of money as it may deem advisable
for payment of its and BNY (New York)'s reasonable fees and expenses in
connection with the settlement of their account or otherwise. Payment of such
fees and expenses may be withdrawn from such reserve. Any balance of such
reserve remaining after the payment of such fees and expenses shall be paid over
to the successor master trustee. If such reserve shall be insufficient to pay
such charges, such resigning or removed Master Trustee shall be entitled to
recover the amount of any deficiency from the Company or from the successor
master trustee or from both the Company and the successor master trustee. All
provisions of this Agreement shall apply to any successor master trustee
appointed as aforesaid with the same force and effect as if such successor had
been originally named herein as the Master Trustee.
11.2 Resignation and Removal of BNY (New York) as Investment Manager.
---------------------------------------------------------------
XXX (Xxx Xxxx) may resign as an investment manager to a Discretionary
Fund at any time upon 30 days' notice in writing to the Named Fiduciary. BNY
(New York) may be removed by the Named Fiduciary at any time upon 30 days'
notice in writing to BNY (New York) and the Master Trustee. In the event that
BNY (New York) is removed as investment manager of a Discretionary Fund, the
Named Fiduciary shall provide BNY (New York) and the Master Trustee with written
notice of the appointment of a successor investment manager. Upon the removal of
BNY (New York) as the investment manager of a Discretionary Fund, neither the
Master Trustee nor BNY (New York) shall be deemed to have any responsibility to
manage and control any asset held in the former Discretionary Fund, except as
set out in the following sentence. If an Investment Committee has been
appointed, the Master Trustee shall treat such Fund as managed by the Investment
Committee pending notification from the Named Fiduciary of the appointment of a
different successor to BNY (New York); if no Investment Committee has been
appointed and if no notification of the appointment of such a successor is
received within seven days of notification to the Master Trustee of BNY (New
York)'s removal, BNY (New
21
York) shall thereafter continue to treat such Fund as a Discretionary Fund
unless and until it receives other instructions from the Named Fiduciary as to
the investment of such Fund.
SECTION 12
EVIDENCE OF ACTION BY COMPANY, INVESTMENT MANAGERS AND INVESTMENT AND
ADMINISTRATIVE COMMITTEES, AND OF APPOINTMENT OF NAMED FIDUCIARY, INVESTMENT
MANAGERS AND INVESTMENT AND ADMINISTRATIVE COMMITTEES
Except as otherwise herein provided, any action by the Company or any
other Employer pursuant to any of the provisions of this Agreement shall be
evidenced by a resolution of its Board of Directors (which may include a
resolution authorizing one or more officers to act on such Employer's behalf)
certified by its Secretary or any Assistant Secretary, and the Master Trustee
and BNY (New York) shall be fully protected in acting in accordance with such
resolution so certified to it. The Company shall furnish the Master Trustee from
time to time with certified copies of resolutions of its Board of Directors or
of other corporate action appointing and terminating the office of the Named
Fiduciary and the Administrative Committee, and appointing and terminating any
Investment Committee, and appointing successors. The Named Fiduciary shall
furnish the Master Trustee with a copy of the instrument duly appointing and
terminating any Investment Committee, and appointing and terminating successors
thereto. The Named Fiduciary shall file with the Master Trustee a copy of the
instrument duly appointing each Investment Manager, who shall file with the
Master Trustee a copy of his written acceptance of his appointment and
acknowledgment that he is a "fiduciary" with respect to the Participating Plans
within the meaning of Section 3(21) of the Act and due evidence of his
qualification under Section 3(38) (B) of the Act, and a copy of the instrument,
if any, designating BNY (New York) as investment manager of a Discretionary Fund
in accordance with Section 2.1. Any such appointment shall continue to be
effective until receipt by the Master Trustee of written notice to the contrary
from the Named Fiduciary. Each Investment Manager and the Investment Committee
shall furnish the Master Trustee from time to time with a certificate setting
forth the name and specimen signature of each person authorized to act on its
behalf. Unless otherwise provided in a certificate from the Named Fiduciary, all
orders, requests and instructions to the Master Trustee from the Named Fiduciary
or the Administrative Committee shall be in writing or by telecopy signed by two
authorized persons, and all orders, requests and instructions to the Master
Trustee from an Investment Manager or the Investment Committee shall be in
writing, by telecopy or by any other electronic means using a code for the
authentication of messages, and signed or transmitted by an authorized
representative of the Investment Manager or Investment Committee, and the Master
Trustee and BNY (New York) shall be fully protected in acting in accordance with
any such order, request, or instruction. The Master Trustee and BNY (New York)
shall have the right to rely on and shall be fully protected in acting in
accordance with any resolution, order, request or instruction which it believes
to be genuine and which purports to have been signed or transmitted in
accordance with this section.
22
SECTION 13
AMENDMENT OF AGREEMENT, TERMINATION OF TRUST, TERMINATION OF PARTICIPATING PLAN
13.1 Amendment of Agreement. Subject to the restrictions set forth
----------------------
below, the Company reserves the right at any time and from time to time to
modify, amend or terminate, in whole or in part, any or all of the provisions of
this Agreement; provided, however, that no such modification or amendment which
affects the rights, duties or responsibilities of the Master Trustee or BNY (New
York) may be made without the written consent of the Master Trustee, for itself
or on behalf of BNY (New York), as applicable.
13.2 Termination of Master Trust. In the event of the termination of
---------------------------
the Master Trust, the Master Trustee shall continue to administer the Master
Trust as hereinabove provided until all of the purposes for which it has been
established have been accomplished or the Master Trustee has disposed of the
Master Fund after the payment of or other provision for all expenses incurred in
the administration of the Master Trust (including any compensation to which the
Master Trustee may be entitled), all in accordance with the written order of the
Company or any successor thereto. Until the final distribution of the Master
Fund, the Master Trustee shall continue to have and may exercise all of the
powers and discretion conferred upon it by this Agreement. Upon any such
termination, or the resignation or removal of the Master Trustee under Section
11 hereof, Section 7.1 and all indemnities herein, including without limitation
those set forth in Sections 2.9(e), 3.4(7), 4, 5.4, 6.1, 8.3, 8.4 and 8.6
hereof, shall remain in full force and effect.
13.3 Termination of Participating Plan. Upon receipt of notice from
---------------------------------
the Company that any Participating Plan is terminated in whole or in part, with
respect to all or any group of Participants and their Beneficiaries under the
Plan, the Master Fund, or the portion thereof with respect to which the Plan is
terminated, shall, subject to the provisions of Section 7 hereof, be segregated
in accordance with Section l0 and held and/or disposed of by the Master Trustee
in accordance with the written order of the Administrative Committee. The Master
Trustee may condition its delivery, transfer or distribution of any assets upon
the Master Trustee's receiving assurances satisfactory to it that the approval
of appropriate governmental or other authorities has been secured and that all
notice and other procedures required by applicable law have been complied with.
13.4 Exclusive Benefit. Anything in this Agreement to the contrary
-----------------
notwithstanding, at no time prior to the satisfaction of all liabilities with
respect to the Participants of any Participating Plan and their Beneficiaries
shall any part of the equitable share of such Participating Plan in the Master
Fund be used for or diverted to purposes other than for the exclusive benefit of
such Participants and their Beneficiaries, and defraying reasonable expenses of
administering the Participating Plans; provided, however, that nothing herein
contained shall preclude the return to an Employer of any contribution whose
return is permitted by Section 403(c) of the Act or successor legislation.
23
SECTION 14
INALIENABILITY OF BENEFITS AND INTERESTS
14.1 Of the Participants. No distribution or payment under this
-------------------
Agreement to any Participant or Beneficiary under any Participating Plan shall
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and
no attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge the same shall be valid or recognized by the Master Trustee, nor shall
any such distribution or payment be in any way liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person entitled to
such distribution or payment, except in the case of any voluntary and revocable
assignment of any benefit payment permitted by law or any "Qualified Domestic
Relations Order" as defined in Section 414(p) of the Code and except to such
extent as may otherwise be required by law. If the Master Trustee is notified by
the Administrative Committee that any such Participant or Beneficiary has been
adjudicated bankrupt or has purported to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any such distribution or payment, voluntarily
or involuntarily, the Master Trustee shall, if so directed by the Committee,
hold or apply such distribution or payment or any part thereof to or for the
benefit of such Participant or Beneficiary in such manner as the Committee shall
direct.
14.2 Of the Participating Plans. The equitable share of a
--------------------------
Participating Plan in the Master Fund shall not be subject in any manner to
anticipation, alienation, sale, transfer, pledge, encumbrance or charge whether
voluntary or involuntary, except to such extent as may otherwise be required by
law.
SECTION 15
NO MERGER, CONSOLIDATION OR TRANSFER OF PLAN ASSETS OR LIABILITIES
Anything herein to the contrary notwithstanding, the Master Trust
shall under no circumstances be so operated as to permit, and nothing herein
contained shall be deemed to authorize, any merger, consolidation, or transfer
of the assets or liabilities of a Participating Plan with or to any other
Participating Plan except in compliance with the provisions of the Act and the
Code which are applicable to such mergers, consolidations, or transfers,
including without limitation Sections 208 and 4043(B)(8) of the Act and Sections
40l(a)(l2), 4l4(l) and 6058(b) of the Code and Regulations promulgated pursuant
to the foregoing Sections.
SECTION 16
SPECIAL PROVISIONS RELATING TO ESOP FEATURE
16.1 Employer Stock Fund. The Named Fiduciary hereby directs the
-------------------
Master Trustee to establish and maintain a separate fund for purposes of the
ESOP Feature (the "Employer Stock Fund") that shall be invested primarily in
Employer Stock. For the purposes of exercising the powers granted to the Master
Trustee under Section 3.1, the Employer Stock Fund
24
shall be deemed to be a Directed Fund, subject to the provisions of this Section
16. The Investment Committee shall direct the Master Trustee to invest and
reinvest the assets of the Employer Stock Fund, without distinction between
principal and income, primarily in Employer Stock. The Master Trustee, at the
direction of the Investment Committee may retain appropriate cash or cash
equivalent reserves to cover liquidity needs. Notwithstanding any otherwise
applicable fiduciary standard relating to (i) diversification of Fund assets,
-
(ii) the income history provided by the Employer Stock or (iii) the possible
-- ---
volatility in the fair market value of Employer Stock, the Investment Committee
is expressly authorized to direct the Master Trustee to hold 100% of the assets
of the Employer Stock Fund in shares of Employer Stock. Subject to the
foregoing, the Master Trustee and the Investment Committee shall manage the
Employer Stock Fund in a manner consistent with the Act, the Code and applicable
securities laws. The Master Trustee shall have the right to require the Company
to purchase Employer Stock for its current fair market value (the "put right")
as described in this Section 16.1. This put right shall apply only to the extent
that the Employer Stock is not readily tradable on an established securities
market in accordance with federal and state securities laws and regulations. The
put right shall be exercisable by written notice to the Named Fiduciary during
the first 60 days of any calendar year or within 60 days of receipt of a
determination of the value of the Employer Stock from the Administrative
Committee as provided in Section 6.1. Prior to any sale or other transfer of
Employer Stock by the Master Trustee (if at the time of such sale or other
transfer the Employer Stock is not readily tradable on an established securities
market), the Master Trustee must first offer the Employer Stock to the Company
and the Administrative Committee at its current fair market value as determined
by an independent appraiser who meets the requirements of Section 401(a)(28)(C)
of the Code and is otherwise acceptable to the Master Trustee.
16.2 Acquisition Loan. The Master Trustee, if so directed by the
----------------
Company or the Named Fiduciary pursuant to directions that are consented to by
the Master Trustee (which consent shall not to be unreasonably withheld), may
enter into one or more Acquisition Loans with any lender (including a party in
interest as defined in Section 3(14) of the Act) to finance the acquisition of
Employer Stock, or to repay a prior Acquisition Loan. The Master Trustee shall
purchase and continue to hold such Employer Stock in the Employer Stock Fund for
the benefit of ESOP Feature Participants pursuant to the provisions of the ESOP
Feature until otherwise directed by the Named Fiduciary; subject, however, to
the requirements of the Code and the Act to the extent applicable to an ESOP.
The Master Trustee may refinance any Acquisition Loan and, in connection with
any such refinancing, shall repay any such Acquisition Loan; provided that such
refinancing or any change in the terms of an Acquisition Loan used to acquire
Employer Stock may be done only at the direction or with the consent of the
Company or the Named Fiduciary. The Master Trustee may secure an Acquisition
Loan by pledging the Employer Stock acquired with the proceeds of such Loan
("ESOP Stock"). No other assets of the Master Fund may be pledged by the Master
Trustee as collateral for an Acquisition Loan.
Pursuant to directions from the Named Fiduciary, Employer
contributions made pursuant to an ESOP Feature ("ESOP Contributions"), earnings
attributable to such ESOP Contributions and cash dividends on ESOP Stock shall
be used to amortize any outstanding Acquisition Loan, unless the Master Trustee
is directed to do otherwise by the Named Fiduciary. The Master Trustee shall
apply dividends on Employer Stock held in accounts other than in the Suspense
Account (as defined in Section 16.3) as directed by the Named Fiduciary;
provided, however, that no dividends on Employer Stock that is allocated to an
ESOP Feature Participant
25
may be used to repay an Acquisition Loan unless Employer Stock with a fair
market value not less than the amount of such dividends is allocated to such
ESOP Feature Participant pursuant to the terms of the ESOP Feature.
Notwithstanding the foregoing, if the Master Trustee is unable to pay any such
Acquisition Loan when due, the Master Trustee may sell unallocated shares of
ESOP Stock to repay the Acquisition Loan without the direction or consent of the
Named Fiduciary. Should it be necessary for the Master Trustee, at the direction
of the Investment Committee or otherwise, to sell any Employer Stock held in the
Employer Stock Fund to comply with any such repayment, the Master Trustee shall
exercise its put rights pursuant to the terms of Section 16.1.
16.3 Suspense Account. The Master Trustee shall hold ESOP Stock in a
----------------
separate account ("Suspense Account") until released from such Suspense Account
pursuant to directions from the Administrative Committee and the provisions of
the ESOP Feature and allocated to the individual accounts of ESOP Feature
Participants that are maintained by the Administrative Committee.
16.4 ESOP Contributions. To the extent that ESOP Contributions are
------------------
made in cash, the Master Trustee shall apply such contribution to amortize any
outstanding Acquisitions Loans to the extent directed to do so pursuant to
Section 16.2. Unless otherwise directed by the Named Fiduciary, the Master
Trustee shall use any cash ESOP Contribution that is not used to pay principal
or interest on an Acquisition Loan pursuant to Section 16.2 to purchase Employer
Stock either from other shareholders, on the open market, from the Company or
otherwise. Notwithstanding the preceding sentence, BNY (New York), if
authorized, may direct the Master Trustee to temporarily invest any such cash
ESOP Contribution in accordance with Section 2.5 pending its investment in
Employer Stock. To the extent that an ESOP Contribution is made in Employer
Stock, the Master Trustee shall retain such Employer Stock in the Employer Stock
Fund until otherwise directed by the Named Fiduciary.
16.5 Tender for Employer Stock. To the extent not otherwise
-------------------------
inconsistent with the Master Trustee's fiduciary duties under the Act, all
tender or exchange decisions with respect to Employer Stock held by the Master
Trustee in the Employer Stock Fund shall be made by ESOP Feature Participants,
acting as Named Fiduciaries with respect to both allocated and unallocated
shares of Employer Stock ("Shares"), in accordance with the provisions of this
Section 16.5:
(a) In the event the Master Trustee receives an offer (including a
tender offer for Shares subject to Section 14(d)(1) of the Securities Exchange
Act of 1934 (the "1934 Act")or subject to Rule 13e-4 promulgated under the 0000
Xxx) to purchase or exchange any Shares held by the Master Trustee in the
Employer Stock Fund, the Master Trustee will advise in writing each ESOP Feature
Participant who has Shares allocated to his individual account under the ESOP
Feature of the terms of the offer as soon as practicable after its commencement
and will furnish each such ESOP Feature Participant with a form by which he may
confidentially instruct the Master Trustee whether or not to tender or exchange
Shares allocated to his account and a proportionate amount of any unallocated
Shares. The materials furnished by the Master Trustee shall include (i) a
-
notice from the Master Trustee that the Master Trustee will not tender or
exchange any Shares (allocated or unallocated) for which timely instructions are
not received by the Master Trustee and (ii) such related documents that are
--
prepared by any person and provided
26
to shareholders of the Company pursuant to the 1934 Act. The Company and the
Named Fiduciary will cooperate with the Master Trustee to ensure that ESOP
Feature Participants receive the requisite information in a timely manner.
(b) The Master Trustee shall tender or not tender Shares, or exchange
Shares, allocated to any ESOP Participant's individual account (including
fractional Shares) only as and to the extent instructed by such Participant as a
Named Fiduciary. With respect to Shares allocated to a deceased Participant,
such Participant's Beneficiary, as a Named Fiduciary, shall be entitled to
direct the Master Trustee as if such Beneficiary were the Participant. If the
Master Trustee does not timely receive tender or exchange instructions for
allocated Shares, the Master Trustee shall treat non-receipt as a direction not
to tender or exchange such Shares. Any instructions received by the Master
Trustee from Participants or Beneficiaries shall be held by the Master Trustee
in strict confidence and shall not be divulged to any person, except as
otherwise required by law.
(c) Each ESOP Feature Participant who is entitled to direct the
Master Trustee whether or not to tender or exchange allocated Shares shall, as
Named Fiduciaries, separately direct the Master Trustee with respect to the
tender or exchange of a proportionate share of unallocated Shares. Such
direction (treating non-receipt of directions as a direction not to tender or
exchange) shall be made with respect to the aggregate number of unallocated
Shares attributed to the ESOP Feature of the applicable Participating Plan
multiplied by a fraction, the numerator of which is the number of Shares
allocated to the Participant's individual account under the ESOP Feature of the
Participating Plan and the denominator of which is the total number of Shares
allocated to the individual accounts of all ESOP Feature Participants in such
Participating Plan. Fractional Shares shall be rounded to the nearest 1/1000/th/
of a Share.
(d) In the event that, under the terms of a tender offer or
otherwise, any Shares tendered for sale, exchange or transfer pursuant to such
offer may be withdrawn from such offer, the Master Trustee shall follow such
instructions from Participants entitled to give instructions under this Section
16.5, as Named Fiduciaries, respecting the withdrawal of such Shares from such
offer.
(e) In the event that an offer for fewer than all of the Shares held
by the Master Trustee is received by the Master Trustee, each ESOP Feature
Participant who has been allocated any Shares subject to such offer shall be
entitled to direct the Master Trustee as to the acceptance or rejection of such
offer (as provided in paragraphs (a)-(d) of this Section 16.5) with respect to
the largest portion of such Employer Stock as may be possible given the total
number of Shares the Master Trustee may sell, exchange or transfer pursuant to
the offer based on instructions received by the Master Trustee from all other
Participants who shall timely instruct the Master Trustee pursuant to this
Section 16.5, each on a pro rata basis in accordance with the number of such
--------
Shares allocated to the Participants' accounts.
(f) In the event that an offer shall be received by the Master
Trustee and instructions shall be solicited from Participants pursuant to
paragraphs (a)-(d) of this Section 16.5 regarding such offer, and prior to
termination of such offer another offer is received by the Master Trustee for
the Shares subject to the first offer, the Master Trustee shall use its best
efforts under the circumstances to solicit instructions from the Participants
(i) with respect to
-
27
Shares tendered for sale, exchange or transfer pursuant to the first offer,
whether to withdraw such tender, if possible and, if withdrawn, whether to
tender any Shares so withdrawn for sale, exchange or transfer pursuant to the
second offer and (ii) with respect to securities not tendered pursuant to the
--
first offer, whether to tender or not to tender such securities pursuant to the
second offer.
(g) Funds received by the Master Trustee in exchange for tendered
Shares shall be credited to the account, including the Suspense Account, from
which such Shares were tendered. Unless the Named Fiduciary directs otherwise,
the Master Trustee shall invest such proceeds in Employer Stock as soon as
practicable. Notwithstanding the previous sentence, BNY (New York), if
authorized, may direct the Master Trustee to temporarily invest the proceeds of
any tender of unallocated Shares in accordance with Section 2.5 pending
investment in Employer Stock.
16.6 Voting Employer Stock; Options and Other Rights. To the extent
-----------------------------------------------
not otherwise inconsistent with the Master Trustee's fiduciary duties under the
Act, all voting rights on Shares held by the Master Trustee shall be exercised
by the Master Trustee in accordance with the following provisions of this
Section 16.6:
(a) As soon as practicable before each annual or special
shareholder's meeting of the Company (or an affiliate or subsidiary, if
applicable), the Master Trustee shall furnish to each ESOP Feature Participant a
copy of the proxy solicitation material sent generally to shareholders, together
with forms requesting confidential instructions on how the Shares allocated to
such Participant's account (including fractional Shares) are to be voted. The
Company and the Named Fiduciary shall cooperate with the Master Trustee to
ensure that Participants receive the requisite information in a timely manner.
The materials furnished to the Participants shall include a notice from the
Master Trustee that any allocated Shares for which timely instructions are not
received by the Master Trustee will be voted by the Master Trustee as directed
by the Named Fiduciary in its discretion. Upon timely receipt of such
instructions, the Master Trustee (after combining votes of fractional Shares to
give effect to the greatest extent to Participants' instructions) shall vote the
Shares as instructed. If voting instructions for Shares allocated to any
Participant's account are not timely received by the Master Trustee for a
particular shareholder's meeting, such Shares shall be voted by the Master
Trustee as directed by the Named Fiduciary in its discretion. The instructions
received by the Master Trustee from Participants or Beneficiaries shall be held
by the Master Trustee in strict confidence and shall not be divulged or released
to any person, except as otherwise required by law.
(b) With respect to all corporate matters submitted to shareholders.
all Shares allocated to Participants' accounts shall be voted only in accordance
with directions of such Participants as Named Fiduciaries. Each Participant
shall be entitled to direct the voting of Shares (including fractional Shares)
allocated to his account. With respect to shares allocated to the account of a
deceased Participant, such Participant's Beneficiary, as Named Fiduciary, shall
be entitled to direct the voting with respect to such allocated Shares as if
such Beneficiary were the Participant. If, however, voting instructions for
Shares allocated to any Participant's account are not timely received by the
Master Trustee for a particular shareholder's meeting, such Shares shall be
voted by the Master Trustee as directed by the Named Fiduciary in its
discretion.
28
(c) Shares that are unallocated to any Participant's account shall be
voted by the Master Trustee as directed by the Named Fiduciary in its
discretion.
SECTION 17
GOVERNING LAW
This Agreement shall be administered and construed according to the
internal substantive laws (and not the choice of law rules) of the State of
California, except as may otherwise be required by Section 5l4 of the Act. The
invalidity, illegality or unenforceability of any provision of this Agreement
shall in no way affect the validity, legality or enforceability of any other
provision. The Master Trust shall at all times be maintained as a domestic trust
in the United States.
IN WITNESS WHEREOF, this Agreement has been executed and made
effective as of the date first above written, by the duly authorized officers of
the Company and BNY Western Trust Company.
(Corporate Seal) MERCURY GENERAL CORPORATION
Attest:
By______________________________ By______________________________
Name: Name:
Title: Title:
(Corporate Seal) BNY WESTERN TRUST COMPANY
Attest:
By______________________________ By______________________________
Name: Name:
Title: Title:
29
STATE OF )
: ss.
COUNTY OF )
On _________________________, l997, before me, the undersigned, a Notary
Public for the State of California, personally appeared __________________ and
__________________ who declared to me that they are officers of MERCURY GENERAL
CORPORATION, referred to as the Company under the Master Trust Agreement; that
as officers they are duly authorized to execute Trust Agreements for the
Company; that they have read the foregoing Master Trust Agreement and know its
contents; and that they have executed said Agreement.
WITNESS my hand and official seal.
______________________________
Notary Public
(Seal)
STATE OF CALIFORNIA )
: ss.
COUNTY OF )
On _______________________, l997, before me, the undersigned, a Notary
Public for the State of California, personally appeared ___________________ and
_________________ who declared to me that they are officers, namely:
__________________ and _______________________, respectively, of BNY WESTERN
TRUST COMPANY, a California trust company, the Master Trustee under the Master
Trust Agreement; that as officers they are duly authorized to execute Trust
Agreements for BNY WESTERN TRUST COMPANY; that they have read the Master Trust
Agreement and know its contents; and that they have executed said Agreement.
WITNESS my hand and official seal.
________________________________
Notary Public
(Seal)
EXHIBIT A
---------
PARTICIPATING PLANS
-------------------
1. Mercury General Corporation Profit Sharing Plan
EXHIBIT B
---------
JOINDER AGREEMENT
AGREEMENT made this ______ day of ____________, l9__, by and among
[Name of Affiliate] (hereinafter called the "Employer"), a corporation organized
pursuant to the laws of ______________, BNY WESTERN TRUST COMPANY, a trust
company organized pursuant to the laws of the State of California, and MERCURY
GENERAL CORPORATION (the "Company"), a corporation organized pursuant to the
laws of California.
W I T N E S S E T H:
WHEREAS, the Employer is a subsidiary or affiliate of the Company and
has previously adopted a_____________________ Plan for the benefit of its
employees (hereinafter referred to as the "Plan"), which Plan as amended to date
and as currently in effect is set out in Exhibit A annexed hereto, and wishes
BNY Western Trust Company to serve as trustee of the trust that funds benefits
under the Plan; and
WHEREAS, BNY Western Trust Company is currently serving as trustee of
the trust for the plans of the Company, its Subsidiaries and Affiliates under
the Master Trust Agreement dated January 1, l998, (the "Master Trust");
NOW, THEREFORE, the parties hereto agree as follows:
The Employer hereby joins in and becomes a party to the Master Trust,
and adopts the same as part of the Plan. The Company hereby consents to such
joinder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and their corporate seals to be affixed hereto and attested as of
the day and year first above written.
[Name of Affiliate]
Attest:
By_______________________________ By_______________________________
Name: Name:
Title: Title:
BNY WESTERN TRUST COMPANY
Attest:
By_______________________________ By_______________________________
Name: Name:
Title: Title:
MERCURY GENERAL CORPORATION
Attest:
By_______________________________ By_______________________________
Name: Name:
Title: Title:
2
EXHIBIT C
---------
FEE SCHEDULE
------------
BNY WESTERN TRUST COMPANY
-------------------------
January 1, 1998
EXHIBIT D
---------
FEE SCHEDULE
------------
INVESTMENT MANAGEMENT FEES
--------------------------
THE BANK OF NEW YORK
--------------------
January 1, 1998
[Include management fees for Collective Trust, if applicable
