HomeMy WebLinkAboutRES NO 99-97 99-97
RESOLUTION NO.
A RESOLUTION APPROVING AN AMENDED EMPLOYEES'
DEFERRED COMPENSATION PLAN AND AUTHORIZING
ITS IMPLEMENTATION.
WHEREAS, federal law regarding deferred compensation plans has recently been
amended; and
WHEREAS, the City of Bakersfield's Deferred Compensation Plan should be
modified to reflect the recent changes in federal law.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
BAKERSFIELD AS FOLLOWS:
The above-recitals are true and correct and are incorporated herein by
reference.
2.
The City of Bakersfield's "Deferred Compensation Plan and Trust," attached
hereto as Exhibit A and incorporated herein by reference, is hereby adopted.
3. The City Manager is authorized to implement said plan, and the City of
Bakersfield consents to the plan and assumes the obligations to be performed on its part
as set forth in said plan.
4. This resolution shall not diminish any rights acquired by participants or
beneficiaries under any previously adopted Deferred Compensation Plans.
ORIGINAL
I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by the
Council of the City of Bakersfield at a regular meeting thereof held on JUN ~ Ii 1997, by
the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
COUNCILMEMBER CARSON, DEMOND, SMITH, MCDERMOTT, ROWLES, SULLIVAN, SALVAGGIO
COUNCILMEMBER ~A ~
COUNCiLMEMBER
COUNCILMEMBER ~..~ J"VL-~ -
APPROVED JUt~ 2 5 1~7
CITY CLERK and Ex Officio Clf~oe of the
Council of the City of Bakersfield
APPROVED AS TO FORM:
JUDY K. SKOUSEN
CITY ATTORNEY
Chief Assistant City Attorney
COUNTERSIGNED:
By:.,~~O
RMS/meg
Exhibit A
S:~COUNCIL~RES~DEFE RRED.COM
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-2-
DEFERRED COMPENSATION PLAN AND TRUST
ARTICLE 1
GENERAL
Section 1.01 Name. The name of this Plan is the City of Bakersfield Deferred
Compensation Plan and Trust (hereinafter referred to as the "Plan"). This Plan amends in
its entirety any and all City of Bakersfield Deferred Compensation Plans previously
adopted including, but not limited to, the Plan adopted on March 18, 1974 pursuant to
Resolution No. 21-74, and subsequently amended by Resolutions 91-81, 29-85, 51-88,
and 155-92. All participants in the originally adopted Plan and the subsequent
amendments will be participants in this Plan. This Plan shall not diminish any rights
acquired by Participants or their Beneficiaries in any previously adopted City of Bakersfield
Deferred Compensation Plan or amendments thereto.
Section 1.02 Puroose. The purpose of this Plan is to extend to Employees of
the Employer certain benefits which ordinarily accrue from participation in a Deferred
Compensation Plan, and to conform with Internal Revenue Code (hereinafter "Code")
§ 457. The Plan will permit Employees to provide for deferring current income until death,
disability, retirement or other termination of employment with the City of Bakersfield. The
Employer does not and cannot represent or guarantee that any particular federal or state
income, payroll or other tax consequence will occur by reason of an Employee's
participation in this Plan. An Employee wishing to participate in the Plan should consult
his or her own attorney or other representative regarding all tax or other consequences of
participation in this Plan.
This Plan shall be an agreement solely between the Employer and
participating Employees. The Plan and Trust forming a part hereof are established and
shall be maintained for the exclusive benefit of eligible Employees and their Beneficiaries.
No part of the corpus or income of the Trust shall revert to the Employer or be used for or
diverted to purposes other than the exclusive benefit of Participating Employees and their
Beneficiaries.
Section 1.03 Definitions.
For the purpose of this Plan, certain words or phrases used herein shall have
the following meanings:
(a) "Account" shall mean the bookkeeping account maintained for each
Participant reflecting the cumulative amount of the Participant's Deferred Compensation,
including any income, gains, losses, or increases or decreases in market value attributable
to the Employer's investment of the Participant's Deferred Compensation, and further
reflecting any distributions to the Participant or the Participant's Beneficiary and any fee~<
or expenses charged against such Participant's Deferred Compensation.
ORIGINAL
(b) "Accounting Date" shall mean each business day that the New York
Stock Exchange is open for trading, as provided in Section 5.06 for valuing the Trust's
assets.
(c) "Administrator" or "Plan Administrator" shall mean any financial
institution or other organization authorized by law to carry out certain nondiscretionary
administrative functions under the Plan.
(d) "Advisory Committee" shall mean a committee consisting of three (3)
members appointed by the City Manager, Such committee shall operate according to the
guidelines specified in Section 2.01 of this Plan.
(e) "Beneficiary" shall mean the person or persons designated by the
Participant in his Joinder Agreement who shall receive any benefits payable hereunder in
the event of the Participant's death. In the event that the Participant names two or more
Beneficiaries, each Beneficiary shall be entitled to equal shares of the benefits payable
at the Participant's death, unless otherwise provided in the Participant's Joinder
Agreement. If no beneficiary is designated in the Joinder Agreement, if the Designated
Beneficiary predeceases the Participant, or if the designated Beneficiary does not survive
the Participant for a period of fifteen (15) days, then the estate of the Participant shall be
the Beneficiary.
(f) "City" shale mean the City of Bakersfield, California.
(g) "Compensation" or "Normal Compensation" shall mean all wages or
salaries or other forms of income to be paid by Employer to an Employee for services
rendered.
(h) "Deferred Compensation" shall mean that portion of an Employee's
Compensation which said Employee has elected to defer in accordance with the provisions
of this Plan or which the Employee and the City mutually agree shall be deferred in
accordance with the provisions of this Plan.
(i) "Disability" shall mean the inability of a Participant to engage in his or
her usual occupation by reason of a medically determinable physical or mental impairment
as determined by the Employer on the basis of advice from a competent physician or
physicians.
(j) "Employee" shall mean any full-time, probationary or permanent
employee or elected official of the Employer.
(k) "Employer" shall mean the City of Bakersfield, California.
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OR~GIAIAL b
(I) "lncludible Compensation" shall mean the amount of an Employee's
compensation from the Employer for a taxable year that is attributable to services
performed for the Employer and that is inctudible in the Employee's gross income for the
taxable year for federal income tax purposes. Such term does not include any amount
excludable from gross income under this Plan or any other plan described in Section
457(b) of the Code or any other amount excludable from gross income for federal income
tax purposes. Includible Compensation shall be determined without regard to any
community property laws.
(m) "Joinder Agreement" shall mean an agreement entered into between
an Employee and the Employer, including any amendments or modifications thereof. Such
agreement shall fix the amount of Deferred Compensation, specify a preference among
the investment alternatives designated by the Employer, designate the Employee's
Beneficiary or Beneficiaries, and incorporate the terms, conditions, and provisions of the
Plan by reference.
Such Joinder Agreement shall also include an acknowledgment by the
Participant that his salary, wage or other compensation is as set forth in any salary
schedule adopted by resolution or otherwise, without deductions for amounts deferred
under the provisions of this Plan. Such Joinder Agreement shall also include a provision
whereby the Participant, together with his heirs, successors and assigns, holds harmless
the Employer from any liability hereunder for all acts performed in good faith, including
acts relating to the investment of deferred amounts and/or the Employee's investment
preference hereunder.
(n) "Normal Retirement Age" shall mean any range of ages ending no
later than age 701/~ and beginning no earlier than the earliest age at which the Participant
has the right to retire under the Employer's basic pension plan without consent of the
Employer, and to receive immediate retirement benefits without actuarial or similar
reduction because of retirement before some later specified age in the Employeds basic
pension plan. (For public safety employees, this age is currently set at 50, while the age
for miscellaneous employees is 55.) For a Participant who continues in the service of the
Employer after age 70~, normal retirement age shall be the age at which the Participant
separates from service with the Employer. A Participant's normal retirement age
determines the period during which a Participant may utilize the catch-up limitation of
Section 4.02 hereunder. Once a Participant has to any extent utilized the catch-up
limitation of Section 4.02 his normal retirement age may not be changed.
(o) "Participant" shall mean any Employee who voluntarily elects to
participate in this Plan by filing a duly executed Joinder Agreement with the Employer or
who previously participated in the City of Bakersfield Deferred Compensation Plan adopted
on March 18, 1974 and subsequently amended.
DEFERRED COMPENSATION PLAN AND TRUST
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O~IGINA c~
(p) "Participation Account" shall mean the book account to which are
credited the Participant's Deferred Compensation, together with any interest, dividends,
gains, losses or the like thereon.
(q) "Plan Year~ shall mean the calendar year in which the Plan becomes
effective, and each succeeding calendar year during the existence of this Plan.
(r) "Separation From Service" or "Termination of Employment" shall mean
severance of the Participant's employment with the Employer which constitutes a
"separation from service" within the meaning of Section 402(d)(4)(A)(iii) of the Code. In
general, a Participant shall be deemed to have severed his employment with the Employer
for purposes of this Plan when, in accordance with the established practices of the
Employer, the employment relationship is considered to have actually terminated.
(s) "Trust" shall mean the Trust created under Article 5 of the Plan which
shall consist of all compensation deferred under the Plan, plus any income and gains
thereon, less any losses, expenses and distributions to Participants and Beneficiaries.
ARTICLE 2
ADMINISTRATION OF THE PLAN
Section 2.01 Role of Advisory Committee. The Plan shall be governed by an
Advisory Committee which shall select the Plan Administrator or Administrators
(hereinafter referred to in the singular) and shall rule on all questions arising out of the
administration, interpretation and the application of the Plan, which determination shall be
conclusive and binding on all Participants. Members of the Advisory Committee may
participate in the Plan, but no member of the Advisory Committee shall be entitled to make
decisions solely with respect to his or her own participation. Under no circumstances shall
any member of the Advisory Committee be personally liable for anything done or omitted
to be done by the Advisory Committee, any Plan Administrator, the Employer or anyone
else arising out of or connected with the terms and provisions of this Plan or its
administration.
Section 2.02 Role of the Administrator. The Administrator, as agent for the
Employer, shall perform nondiscretionary administrative functions in connection with the
Plan, including the maintenance of Participant's Accounts, the provision of periodic reports
of the status of each Account, and the disbursement of benefits on behalf of the Employer
in accordance with the provisions of this Plan.
DEFERRED COMPENSATION PLAN .AND TRUST
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ARTICLE 3
PARTICIPATION IN THE PLAN
Section 3.01 Initial Participation. An Employee may become a Participant
by entering into a Joinder Agreement prior to the beginning of the calendar month in which
the Joinder Agreement is to become effective to defer compensation not yet earned.
Section 3.02 Amendment of Joinder Agreement. A Participant may amend an
executed Joinder Agreement to change the amount of compensation not yet earned which
is to be deferred (including the reduction of such future deferrals to zero) or to change his
or her investment preference (subject to such restrictions as may result from the nature of
terms of any investment made by the Employer). Such amendment shall become effective
not later than the fifteenth (15th) day of the calendar month commencing after the date the
amendment is executed. A Participant may at any time amend his Joinder Agreement to
change the designated Beneficiary, and such amendment shall become effective
immediately.
ARTICLE 4
LIMITATIONS ON DEFERRALS
Section 4.01 Non~al Limitation. Except as provided in Section 4.02, the
maximum amount of Deferred Compensation for any Participant for any taxable year shall
not exceed the lesser of $7,500.00, as adjusted for the cost-of-living in accordance with
Code section 457(e)(15) for taxable years beginning after December 31, 1996 (the "dollar
limitation"), or 33-1/3 percent of the Participant's Includible Compensation for the taxable
year. This limitation will ordinarily be equivalent to the lesser of the dollar limitation in
effect for the taxable year or 25 percent of the Participant's Normal Compensation. The
minimum amount deferred shall be at least twelve dollars ($12.00) per pay period.
Section 4.02 Catch-Up Limitation. For each of the last three (3) taxable years
of a Participant ending before his attainment of Normal Retirement Age, the maximum
amount of Deferred Compensation shall be the lesser of: (1) $15,000 per year or (2) the
sum of (i) the Normal Limitation for the taxable year, and (ii) the Normal Limitation for each
prior taxable year of the Participant commencing after 1978 less the amount of the
Participant's Deferred Compensation for such prior taxable years. A prior taxable year
shall be taken into account under the preceding sentence only if (i) the Participant was
eligible to participate in the Plan for such year (or in any other eligible deferred
compensation plan established under Section 457 of the Code which is properly taken into
account pursuant to regulations under section 457), and (ii) compensation (if any) deferred
under the Plan (or such other plan) was subject to the deferral limitations set forth in
Section 4.01.
DEFERRED COMPENSAT~N PLAN AND TRUST
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OR;G~NA£
Section 4.03 Other Plans. The amount excludable from a Participant's gross
income under this Plan or any other eligible deferred compensation plan under section 457
of the Code shall not exceed $7,500.00 (or such greater amount allowed under Section
4.01 or 4.02 of the Plan), less any amount excluded from gross income under section
403(b), 402(a)(8), or 402(h)(1)(B) of the Code, or any amount with respect to which a
deduction is allowable by reason of a contribution to an organization described in section
501 (c)(18) of the Code.
ARTICLE 5
TRUST ANDINVESTMENT OF ACCOUNTS
Section 5.01 Investment of Deferred Compensation. A Trust is hereby
created to hold all the assets of the Plan for the exclusive benefit of Participants and
Beneficiaries, except that expenses and taxes may be paid from the Trust as provided in
Section 5.03. The trustee shall be the Employer.
Section 5.02 Investment Powers. The trustee or the Plan Administrator,
acting as agent for the trustee, shall have the powers listed in this Section with respect to
investment of Trust assets, except to the extent that the investment of Trust assets is
directed by Participants pursuant to Section 5.05.
(a) To invest and reinvest the Trust without distinction between principal
and income in any form of tangible or intangible property, real, personal, or mixed, and
wherever situated, including, but not by way of limitation, common or preferred stocks,
shares of regulated investment companies and other mutual funds, bonds, loans, notes,
debentures, mortgages, certificates of deposit, interest, or participation, equipment trust
certificates, commercial paper including but not limited to participation in pooled
commercial paper accounts, contracts with insurance companies including but not limited
to insurance, individual or group annuity, deposit administration, and guaranteed interest
contracts, deposits at reasonable rates of interest at banking institutions including but not
limited to savings accounts and certificates of deposit, and other forms of securities or
investments of any kind, class, or character whatsoever and representing interests in any
form of enterprise, wherever it may be located, organized or operated within or without the
United States of America, whether such investments are income producing or not, without
being limited in any respect by statute or court rule or decision of any jurisdiction now or
hereafter in force purporting to limit or otherwise affect such investments. Assets of the
Trust may be invested in securities or new ventures that involve a higher degree of risk
than investments that have demonstrated their investment performance over an extended
period of time.
DEFERRED COMPENSAT~3N PLAN AND TRUST
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ORiGiNAl_ ~
(b) To invest and reinvest all or any part of the assets of the Trust in any
common, collective or cornmingled trust fund that is maintained by a bank or other
institution and that is available to Employee plans described under sections 457 or 401 of
the Code, or any successor provisions thereto, and during the period of time that an
investment through any such medium shall exist, to the extent of participation of the Plan,
the declaration of trust of such common, collective, or cornmingled trust fund shall
constitute a part of this Plan.
(c) To invest and reinvest all or any part of the assets of the Trust in any
group annuity, deposit administration or guaranteed interest contract issued by an
insurance company or other financial institution on a cornmingled or collective basis with
the assets of any other 457 plan or trust qualified under section 401 (a) of the Code or any
other plan described in section 401(a)(24) of the Code, and such contract may be held or
issued in the name of the Plan Administrator, or such custodian as the Plan Administrator
may appoint, as agent and nominee for the Employer. During the period that an investment
through any such contract shall exist, to the extent of participation of the Plan, the terms
and conditions of such contract shall constitute a part of the Plan.
(d) To purchase part interests in real property or in mortgages on real
property, wherever such real property may be situated, and to delegate to a property
manager or the holder or holders of a majority interest in such real property or mortgage
on real property the management and operation of any part interest in such real property
or mortgages.
(e) To hold cash awaiting investment and to keep such portion of the
Trust in cash or cash balances, without liability for interest, in such amounts as may from
time to time be deemed to be reasonable and necessary to meet obligations under the
Plan or otherwise to be in the best interests of the Plan.
(f) To retain, manage, operate, administer, divide, subdivide, partition,
mortgage, pledge, improve, alter, demolish, remodel, repair, and develop in any manner
any property, or any part of or partial interest in any property, real or personal, held in the
Trust, to lease such property for any period of time, and to grant options to sell, exchange,
lease, or otherwise dispose of any such property, without regard to restrictions applicable
to fiduciaries or others and without the approval of any court.
(g) To sell for cash or credit, redeem, exchange for other property,
convey, transfer, or otherwise dispose of any property held in the Trust in any manner and
at any time, by private contract or at public auction or otherwise, and no other person 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.
DEFERRED COMPENSATION PLAN AND TRUST
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m
OR'GlObAL ~J
(h) To enter into contracts for or to make commitments either alone or in
company with others to purchase or sell at any future date any property acquired for the
Trust.
(i) To vote or to refrain from voting any stocks, bonds, or otl~er securities
held in the Trust, to exercise any other right appurtenant to any securities or other property
held in the Trust, to give general or special proxies or powers of attorney with or without
power of substitution with respect to such securities and other property, to exercise any
conversion privileges, subscription rights, or other options or privileges with respect to
such securities and other property and make any payments incidental thereto, and
generally to exercise, personally or by general or limited power of attorney, any of the
powers of an owner with respect to stocks, bonds, securities, or other property held in the
Trust at any time.
(j) To oppose or to consent to and participate in any organization,
reorganization, consolidation, merger, combination, readjustment of finances, or similar
arrangement with respect to any corporation, company, or association, any of the
securities of which are held in the Trust, to do any act with reference thereto, including the
exercise of options, the making of agreements or subscriptions and the payment of
expenses, assessments, or subscriptions that may be deemed necessary or advisable in
connection therewith, and to accept, hold, and retain any securities or other property that
may be so acquired.
(k) To deposit any property held in the Trust with any protective,
reorganization, or similar committee, and to delegate discretionary power thereto and to
pay and agree to pay part of its expenses and compensation and any assessments levied
with respect to any such property so deposited.
(I) To hold, to authorize the holding of, and to register any investment to
the Trust in the name of the Plan, the Employer, or any nominee or agent of any of the
foregoing, including the Plan Administrator, or in bearer form, to deposit or arrange for the
deposit of securities in a qualified central depository even though, when so deposited,
such securities may be merged and held in bulk in the name of the nominee of such
depository with other securities deposited therein by any other person, and to organize
corporations or trusts under the laws of any jurisdiction for the purpose of acquiring or
holding title to any property for the Trust, all with or without the addition of words or other
action to indicate that property is held in a fiduciary or representative capacity but the
books and records of the Plan shall at all times show that all such investments are part of
the Trust.
(m) Upon such terms as may be deemed advisable by the Employer or the
Plan Administrator, as the case may be, for the protection of the interests of the Plan or
for the preservation of the value of an investment, to exercise and enforce by suit for legal
or equitable remedies or by other action, or to waive any right or claim on behalf of the
Plan or any default in any obligation owing to the Plan, to renew, extend the time for
DEFERRED COMPENSATION PLAN AND TRUST
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OR;G~NAL
payment of, agree to a reduction in the rate of interest on, or agree to any other
modification or change in the terms of any obligation owing to the Plan, to settle,
compromise, adjust, or submit to arbitration any claim or right in favor of or against the
Plan, to exercise and enforce any and all rights of foreclosure, bid for property in
foreclosure, and take a deed in lieu of foreclosure with or without paying consideration
therefor, to commence or defend suits or other legal proceedings whenever any interest
of the Plan requires it, and to represent the Plan in all suits or legal proceedings in any
court of law or equity or before any body or tribunal.
(n) To employ suitable consultants, depositories, agents, and legal
counsel on behalf of the Plan.
(o) To make, execute, acknowledge, and deliver any and all deeds,
leases, mortgages, conveyances, contracts, waivers, releases, or other instruments in
writing necessary or proper for the accomplishment of any of the foregoing powers.
(p) To open and maintain any bank account or accounts in the name of
the Plan, the Employer, or any nominee or agent of the foregoing, including the Plan
Administrator, in any bank or banks.
(q) To do any and all other acts that may be deemed necessary to carry
out any of the powers set forth herein.
Section 5.03 Taxes and Expenses. All taxes of any and all kinds whatsoever
that may be levied or assessed under existing or future laws upon, or in respect to the
Trust, or the income thereof, and all commissions or acquisitions or dispositions of
securities and similar expenses of investment and reinvestment of the Trust, shall be paid
from the Trust. Such reasonable compensation of the Plan Administrator, as may be
agreed upon from time to time by the Employer and the Plan Administrator, and
reimbursement for reasonable expenses incurred by the Plan Administrator in performance
of its duties hereunder (including but not limited to fees for legal, accounting, investment
and custodial services) shall also be paid from the Trust.
Section 5.04 Payment of Benefits. The payment of benefits from the Trust in
accordance with the terms of the Plan may be made by the Plan Administrator, or by any
custodian or other person so authorized by the Employer to make such disbursement. The
Plan Administrator, custodian or other person shall not be liable with respect to any
distribution of Trust assets made at the direction of the Employer.
Section 5.05 Investment Funds. In accordance with uniform and
nondiscriminatory rules established by the Employer and the Plan Administrator, the
Participant may direct his/her Accounts to be invested in one (1) or more investment funds
available under the Plan; provided, however, that the Participant's investment directions
shall not violate any investment restrictions established by the Employer. Neither the
DEFERRED COMPENSATION PLAN AND TRUST
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Employer, the Administrator, nor any other person shall be liable for any losses incurred
by virtue of following such directions or with any reasonable administrative delay in
implementing such directions.
Section 5.06 Valuation of Accounts. As of each Accounting Date, the Plan
assets held in each investment fund offered shall be valued at fair market value and the
investment income and gains or losses for each fund shall be determined. Such investment
income and gains or losses shall be allocated proportionately among all Account balances
on a fund-by-fund basis. The allocation shall be in the proportion that each such Account
balance as of the immediately preceding Accounting Date bears to the total of all such
Account balances as of that Accounting Date. For purposes of this Article, all Account
balances include the Account balances of all Participants and Beneficiaries.
Section 5.07 Crediting of Accounts. The Participant's Account shall reflect the
amount and value of the investments or other property obtained by the Employer through
the investment of the Participant's Deferred Compensation pursuant to Sections 5.05 and
5.06. It is anticipated that the Employer's investments with respect to a Participant will
conform to the investment preference specified in the Participant's Joinder Agreement, but
nothing herein shall be construed to require the Employer to make any particular
investment of a Participant's Deferred Compensation. Each Participant shall receive
periodic reports, not less frequently than annually, showing the then current value of
his/her Account.
Section 5.08 Transfers.
(a) Incoming Transfers. A transfer may be accepted from an eligible
deferred compensation plan maintained by another employer and credited to a
Participant's Account under the Plan if (i) the Participant has separated from service with
that employer and become an Employee of the Employer, and (ii) the other employer's
plan provides that such transfer will be made. The Employer may require such
documentation from the predecessor plan as it deems necessary to effectuate the transfer,
to confirm that such plan is an eligible deferred compensation plan within the meaning of
Section 457 of the Code, and to assure that transfers are provided for under such plan.
The Employer may refuse to accept a transfer in the form of assets other than cash, unless
the Employer and the Administrator agree to hold such other assets under the Plan. Any
such transferred amount shall be treated as a deferral subject to the limitations of Article 4,
except that, for purposes of applying the limitations of Sections 4.01 and 4.02, an amount
deferred during any taxable year under the plan from which the transfer is accepted shall
be treated as if it has been deferred under this Plan during such taxable year and
compensation paid by the transferor employer shall be treated as if it had been paid by the
Employer.
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(b) Outgoing Transfers. An amount may be transferred to an eligible
deferred compensation plan maintained by another employer, and charged to a
Participant's Account under this Plan, if (i) the Participant has separated from service with
the Employer and become an employee of the other employer, (ii) the other employer's
plan provides that such transfer will be accepted, and (iii) the Participant and the employer
have signed such agreements as are necessary to assure that the Employer's liability to
pay benefits to the Participant has been discharged and assumed by the other employer.
The Employer may require such documentation from the other plan as it deems necessary
to effectuate the transfer, to confirm that such plan is an eligible deferred compensation
plan within the meaning of section 457 of the Code, and to assure that transfers are
provided for under such plan. Such transfers shall be made only under such circumstances
as are permitted under section 457 of the Code and the regulations thereunder.
5.09 Employer Liability. In no event shall the Employer's liability to pay
benefits to a Participant under this Plan exceed the value of the amounts credited to the
Participant's Account; neither the Employer nor the Advisory Committee nor the
Administrator shall be liable for losses arising from depreciation or shrinkage in the value
of any investments acquired under this Plan.
ARTICLE 6
BENEFITS
Section 6.01 Retirement Benefits and Election on Separation from Service.
Except as otherwise provided in this Article 6, the distribution of a Participant's Account
shall commence as of April 1 of the calendar year after the Plan Year of the Participant's
Retirement, and the distribution of such Retirement benefits shall be made in accordance
with one of the payment options described in Section 6.02. Notwithstanding the foregoing,
but subject to the following paragraph of this Section 6.01, the Participant may irrevocably
elect within 60 days following Separation from Service to have the distribution of benefits
commence on a fixed determinable date other than that described in the preceding
sentence which is at least 61 days after Separation from Service, but not later than April 1
of the year following the year of the Participant's Retirement or attainment of age 70~,
whichever is later.
Effective on or after January 1, 1997, the Participant may elect to defer the
commencement of distribution of benefits to a fixed determinable date later than the date
described above, but not later than Apdl 1 of the year following the year of the Participant's
retirement or attainment of age 70%, whichever is later, provided (a) such election is made
after the 61st day following Separation from Service and before commencement of
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distributions and (b) the Participant may make only one (1) such election. Notwithstanding
the foregoing, the Administrator, in order to ensure the orderly administration of this
provision, may establish a deadline after which such election to defer the commencement
of distribution of benefits shall not be allowed.
Section 6.02 Payment Options. As provided in Sections 6.01, 6.04 and 6.05, a
Participant or Beneficiary may elect to have value of the Participant's Account distributed
in accordance with one of the following payment options, provided that such option is
consistent with the limitations set forth in Section 6.03.
(a) Equal monthly, quarterly, semi-annual or annual payments in an
amount chosen by the Participant, continuing until his/her Account is exhausted;
(b) One lump-sum payment;
(c) Approximately equal monthly, quarterly, semi-annual or annual
payments, calculated to continue for a period certain chosen by the Participant.
(d) Annual Payments equal to the minimum distribution required under
Section 401(a)(9) of the Code over the life expectancy of the Participant or over the life
expectancies of the Participant and his Beneficiary.
(e) Payments equal to payments made by the issuer of a retirement
annuity policy acquired by the Employer.
(f) A split distribution under which payments under options (a), (b), (c) or
(e) commence or are made at the same time, as elected by the Participant under Section
6.01, provided that all payments commence (or are made) by the latest benefit
commencement date under Section 6.01 and that once a payment is made subsequent
payments will be made in substantially nonincreasing amounts.
(g) Any payment option elected by the Participant and agreed to by the
Employer and Administrator, provided that such option must provide for substantially
nonincreasing payments for any period after the benefit commencement date under
Section 6.01.
A Participant's or Beneficiary's selection of a payment option made after
December 31, 1995, under Subsections (a), (c), or (g) above may include the selection of
an automatic annual cost-of-living increase. Such increase will be based on the rise in the
Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of the last
year in which a cost-of-living increase was provided to the third quarter of the current year.
Any increase will be made in periodic payment checks beginning the following January.
The first cost-of-living increase will be based on the rise in the CPI-U from the third quarter
of 1995 to the third quarter of 1996, and will be applied to amounts paid beginning January
1997.
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OR~G~tVAL ~
A Participant's or Beneficiary's election of a payment option must be made
at least 30 days before the payment of benefits is to commence. If a Participant or
Beneficiary fails to make a timely election of a payment option, benefits shall be paid
monthly under option (c) above for a period of five years or such shorter period of time
necessary to ensure that the amount of any installment is not less than $1,200 per year,
without the inclusion of a cest-of-living increase.
Section 6.03 Limitation on Options. No payment option may be selected by a
Participant under subsection 6.02(a) or (c) unless the amount of any installment is not less
than $1,200 per year. No payment option may be selected by a Participant or Beneficiary
under Sections 6.02, 6.04, or 6.05 unless it satisfies the requirements of Sections
401(a)(9) and 457(d)(2) of the Code, including that payments commencing before the
death of the Participant shall satisfy the incidental death benefits requirement under
sections 457(d)(2)(B)(i)(1 ). A cost-of-living increase included as part of a payment option
selected under Section 6.02 shall not be considered to fail to satisfy the requirement under
section 457(d)(2)(b) that any distribution made over a period of more than one (1) year can
only be made in substantially nonincreasing amounts. Unless otherwise elected by the
Participant (or spouse, in the case of distributions described in Section 6.05 below) by the
time distributions are required to begin, life expectancies shall be recalculated annually.
Such election shall be irrevocable as to the Participant (or spouse) and shall apply to all
subsequent years. The life expectancy of a nonspouse Beneficiary may not be
recalculated.
Section 6.04 Post-retirement Death Benefits.
(a) Should the Participant die after he/she has begun to receive benefits
under a payment option, the remaining payments, if any, under the payment option shall
be payable to the Participant's Beneficiary within the thirty (30) day period commencing
with the 61 st day after the Participant's death, unless the Beneficiary elects payment under
a different payment option that is available under Section 6.02 within sixty (60) days of the
Participant's death. Any different payment option elected by a Beneficiary under this
section must provide for payments at a rate that is at least as rapid under the payment
option that was applicable to the Participant. In no event shall the Employer, Advisory
Committee or Administrator be liable to the Beneficiary for the amount of any payment
made in the name of the Participant before the Administrator receives proof of death of the
Participant.
(b) If the designated Beneficiary does not continue to live for the
remaining period of payments under the payment option, then the commuted value of any
remaining payments under the payment option shall be paid in a lump sum to the estate
of the Beneficiary. In the event that the Participant's estate is the Beneficiary, the
cemmuted value of any remaining payments under the payment option shall be paid to the
estate in a lump sum.
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Section 6.05 Pre-retirement Death Benefits.
(a) Should the Participant die before he has begun to receive the benefits
provided by Section 6.01, the value of the Participant's Account shall be payable to the
Beneficiary commencing within the thirty (30) day period commencing on the 91 st day after
the Participant's death, unless the Beneficiary elects a different fixed or determinable
benefit commencement date within ninety (90) days of the Participant's death. Such benefit
commencement date shall be not later than the later of (i) December 31 of the year
following the year of the Participant's death, or (ii) if the Beneficiary is the Participant's
spouse, December 31 of the year in which the Participant would have attained age 70%.
(b) Unless a Beneficiary elects a different payment option prior to the
benefit commencement date, death benefits under this Section shall be paid in
approximately equal annual installments over five years, or over such shorter period as
may be necessary to assure that the amount of any annual installment is not less than
$3,500. A Beneficiary shall be treated as if he/she were a Participant for purposes of
determining the payment options available under Section 6.02, provided, however, that the
payment option chosen by the Beneficiary must provide for payments to the Beneficiary
over a period no longer than the life expectancy of the Beneficiary, and provided that such
period may not exceed fifteen (15) years if the Beneficiary is not the Participant's spouse.
(c) In the event that the Beneficiary dies before the payment of death
benefits has commenced or been completed, the remaining value of the Participant's
Account shall be paid to the estate of the Beneficiary in a lump sum. In the event that the
Participant's estate is the Beneficiary, payment shall be made to the estate in a lump sum.
Section 6.06 Unforeseeable Emergencies,
(a) In the event an unforeseeable emergency occurs, a Participant may
apply to the Employer to receive that part of the value of his/her Account that is reasonably
needed to satisfy the emergency need. If such an application is approved by the Employer,
the Participant shall be paid only such amount as the Employer deems necessary to meet
the emergency need, but payment shall not be made to the extent that the financial
hardship may be relieved through cessation of deferral under the Plan, insurance or other
reimbursement, or liquidation of other assets to the extent such liquidation would not itself
cause severe financial hardship.
(b) An unforeseeable emergency shall be deemed to involve only
circumstances of severe financial hardship to the Participant resulting from a sudden
unexpected illness, accident, or disability of the Participant or of a dependent (as defined
in section 152(a) of the Code) of the Participant, loss of the Participant's property due to
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casualty, or other similar and extraordinary unforeseeable circumstances arising as a
result of events beyond the control of the Participant. Foreseeable personal expenses
normally budgetable such as the need to send a Participant's child to college or the
purchase of an automobile or down payment on a home shall not be considered
unforeseeable emergencies. The determination as to whether an unforeseeable
emergency exists shall be based on the merits of each individual case.
(c) Notwithstanding any other provision herein, for "unforeseeable
emergencies" a Participant shall apply to the Advisory Committee to withdraw, in whole or
in part, from the Plan prior to retirement or any other termination of his employment with
the Employer. If the application for withdrawal is approved by the Advisory Committee, the
withdrawal shall be effected at the time designated by the Advisory Committee. The
Advisory Committee will require a written request for the withdrawal, stating the nature of
the emergency and any applicable circumstances that will be of benefit to the Committee's
decision-making process. At its discretion, the Advisory Committee may require additional
financial information. The decision of the Advisory Committee concerning "unforeseeable
emergencies" shall be final as to all Participants.
Section 6.07 Transitional Rule for Pre-1989 Benefit Elections. In the event that,
prior to January 1, 1989, a Participant or Beneficiary has commenced receiving benefits
under a payment option or has irrevocably elected a payment option or benefit
commencement date, then that payment option or election shall remain in effect
notwithstanding any other provision of the Plan.
Section 6.08 De Minimis Accounts. Notwithstanding the foregoing provisions
of this Article, if the value of a Participant's Account does not exceed $3,500 and (a) no
amount has been deferred under the Plan with respect to the Participant during the 2-year
period ending on the date of the distribution and (b) there has been no prior distribution
under the Plan to the Participant pursuant to this Section 6.08, the Participant may elect
to receive or the Employer may distribute the Participant's entire Account without the
consent of the Participant. Such distribution shall be made in a lump sum.
ARTICLE 7
MISCELLANEOUS
Section 7.01 Amendment or Termination of Plan. This Plan may be modified,
amended or terminated in whole or in part (including retroactive amendments) by the
Employer at any time. No amendment or termination of the Plan shall reduce or impair the
rights of any Participant or his Beneficiary which have already accrued. Upon termination
of the Plan, the Employer shall distribute all amounts credited to each Participation
Account in accordance with the Participant's payment option selected pursuant to Section
6.02. All Participants shall be treated in the same manner.
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Section 7.02 Creditors. A Participant may not assign, transfer, sell, hypothecate,
or otherwise dispose of any or all of his investment account or any right which he may
have under the Plan, and any attempt to do so shall be void.
Section 7.03 Employment. Participation in the Plan shall not be construed
as giving any Participant any right to continue his employment with the Employer.
Section 7.04 Non-Assignability Clause. It is agreed that neither a Participant
nor a beneficiary, nor any other designee, shall have any right to commute, sell, assign,
transfer, or otherwise convey the right to receive any payments hereunder, which
payments and right thereto are expressly declared to be nonassignable and
nontransferable, and in the event of any attempted assignment or transfer, the Employer
and the Advisory Committee shall have no further liability hereunder nor shall any
payments be transferable by operation of law in event of bankruptcy or insolvency, except
to the extent otherwise provided by law, notwithstanding the above clause.
Section 7.05 Written Notice. Any notice or other communication required or
permitted under the Plan shall be in writing, and if directed to the Employer, shall be sent
to the designated officer of the Employer, and, if directed to a Participant or to a
Beneficiary, shall be sent to such Participant or Beneficiary at either his last known
address as it appears on the Employer~s record or to his work site, at the Employer's
option.
Section 7.06 Total Agreement. This Plan and the Joinder Agreement, and any
subsequently adopted amendment thereof, shall constitute the total agreement or contract
between the Employer and the Participant regarding the Plan. No oral statement regarding
the Plan may be relied upon by the Participant.
Section 7.07 (~ender. As used herein, the masculine shall include the neuter
and the feminine where appropriate.
Section 7.08 Controlling Law. This Plan is created and shall be interpreted
under the laws of the State of California as the same shall be at the time any dispute or
issue is raised.
Section 7.09 Domestic Relations Orders.
(a) Allowance of Transfers. Totheextentrequiredunderfinaljudgment,
decree, or order (including approval of a property settlement agreement) made pursuant
to a state domestic relations law, any portion of a Participant's Account may be paid or set
aside for payment to a spouse, former spouse, or child of the Participant. Where
necessary to carry out the terms of such an order, a separate Account shall be established
with respect to the spouse, former spouse, or child who shall be entitled to make
investment selections with respect thereto in the same manner as the Participant; any
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ORIGINAL
amount so set aside for a spouse, former spouse, or child shall be paid out in a lump sum
at the earliest date that benefits may be paid to the Participant, unless the order directs
a different time or form of payment. Nothing in this Section shall be construed to authorize
any amount to be distributed under the Plan at a time or in a form that is not permitted
under Section 457 of the Code. Any Payment made to a person other than the Participant
pursuant to this Section shall be reduced by required income tax withholding; the fact that
payment is made to a person other than the Participant may not prevent such payment
from being includible in the gross income of the Participant for withholding and income tax
reporting purposes.
(b) Release from Liability to Participant. The Employer~s liability to pay
benefits to a Participant shall be reduced to the extent that amounts have been paid or set
aside for payment to a spouse, former spouse, or child pursuant to paragraph (a) of this
Section. No such transfer shall be effectuated unless the Employer or Administrator has
been provided with satisfactory evidence that the Employer and the Administrator are
released from any further claim by the Participant with respect to such amounts. The
Participant shall be deemed to have released the Employer and the Administrator from any
claim with respect to such amounts, in any case in which (i) the Employer or Administrator
has been served with legal process or otherwise joined in a proceeding relating to such
transfer, (ii) the Participant has been notified of the pendency of such proceeding in the
manner prescribed by the law of the jurisdiction in which the proceeding is pending for
service of process in such action or by mail from the Employer or Administrator to the
Participant's last known mailing address, and (iii) the Participant fails to obtain an order
of the court in the proceeding relieving the Employer or Administrator from the obligation
to comply with the judgment, decree or order.
(c) Participation in Legal Proceedings. The Employer and Administrator
shall not be obligated to defend against or set aside any judgment, decree or order
described in paragraph (a) or any legal order relating to the garnishment of a Participant's
benefits, unless the full expense of such legal action is borne by the Participant. In the
event that the Participant's action (or inaction) nonetheless causes the Employer or
Administrator to incur such expense, the amount of the expense may be charged against
the Participant's Account and thereby reduce the Employer~s obligation to pay benefits to
the Participant. In the course of any proceeding relating to divorce, separation, or child
support, the Employer and Administrator shall be authorized to disclose information
relating to the Participant's Account to the Participant's spouse, former spouse, or child
(including the legal representatives of the spouse, former spouse, or child), or to a court.
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ORIGINAL
ARTICLE 8
RELATIONSHIP TO OTHER PLANS AND EMPLOYMENT AGREEMENTS
This Plan serves in addition to any other retirement, pension, or benefit plan or
system presently in existence or hereinafter established for the benefit of the Employer's
employees, and participation hereunder shall not affect benefits receivable under any such
plan or system. Nothing contained in this Plan shall be deemed to constitute an
employment contract or agreement between any Participant and the Employer or to give
any Participant the right to be retained in the employ of the Employer. Nor shall anything
herein be construed to modify the terms of any employment contract or agreement
between a Participant and the Employer.
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