HomeMy WebLinkAboutRES NO 174-99RESOLUTION NO. I 74" 99
A RESOLUTION APPROVING AN AMENDED EMPLOYEES'
DEFERRED COMPENSATION PLAN, AUTHORIZING
IMPLEMENTATION OF THE PLAN AND INDEMNIFYING
THE CITY'S ADVISORY COMMITTEE
WHEREAS, the City of Bakersfield currently provides a Deferred Compensation
Plan pursuant to Internal Revenue Code section 457 for its employees choosing to
participate in the Plan; and
WHEREAS, employee assets in the Plan may be held in either a Trust or a
Custodial Account pursuant to current law, and the City of Bakersfield wishes to amend its
Plan to reflect this fact; and
WHEREAS, the City Council recognizes that the City of Bakersfield's Deferred
Compensation Plan is administered by an advisory committee acting within the scope and
course of their employment with the City and consisting of three employees: one member
each from Finance, Public Works and the Attorney's Office; and
WHEREAS, the Council wishes to indemnify the advisory committee for their actions
and decisions in the administration of the Plan.
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.
The City of Bakersfield's "Deferred Compensation Plan, Trust and Custodial
Account," attached hereto as Exhibit "A" and incorporated herein by
reference, is hereby adopted.
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.
This resolution shall not diminish any rights acquired by participants or
beneficiaries under any previously adopted Deferred Compensation Plans.
The City of Bakersfield shall indemnify, defend, and hold harmless the City's
advisory committee (described in the attached Plan document), whether
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collectively or individually, against any and all liability, claims, actions, causes
of action, or demands whatsoever against them, or any of them, before
administrative or judicial tribunals of any kind whatsoever, arising out of,
connected with, or caused by any actions or decisions whether past, present,
or future of any kind of the advisory committee in any way related to the
administration of the City of Bakersfield's Deferred Compensation Plan, Trust
and Custodial Account.
I HEREBY CERTIFY that the foregoing Resolution was passed and adopted bythe
Council of the City of Bakersfield at a regular meeting thereof held on DEC ! 5 199~J ,
by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
COUNCILMEMBER CARSON, DEMOND, MAGGARD, COUCH, ROWLES, SULLIVAN, SALVAGGIO
COUNCILMEMBER 1'~ ~ IN~ ~.-
COUNCILMEMBER ~ ob ~
COUNCILMEMBER ~ ~
CITY CLERK and E~-offi~"~lerk of the
Council of the City of Bakersfield
APPROVED DEC 1 5 1999
MAYOR of Bakersfield
APPROVED as to form:
CITY ATTORNEY'S OFFICE
By:
BART J. THILTGEN
City Attorney
RMS:Iaa
Attachment
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DEFERRED COMPENSATION PLAN, TRUST AND CUSTODIAL ACCOUNT
ARTICLE 1
GENERAL
Section 1.01 Name. The name of this Plan is the City of Bakersfield Deferred
Compensation Plan, Trust and Custodial Account (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, 155-92, and 99-97. All current participants in the Plan 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 Purpose. 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")
section 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 or will not 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 nor any Custodial Account 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,
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including any income, gains, losses, or increases or decreases in market value attributable
to the investment of the Participant's Deferred Compensation, and further reflecting any
distributions to the Participant or the Participant's Beneficiary and any fees or expenses
charged against such Participant's Deferred Compensation.
(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 or
Custodial Account'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. Spousal consent shall be required in order for a Participant to name as first
Beneficiary anyone other than the spouse.
(f) "City" shall 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 without regard to the effect of any pre-tax contributions.
(h) "Custodial Account" shall mean an account created and maintained
by a Custodian under Article 5 of the Plan which shall consist of all compensation deferred
under the Plan and not held in a Trust, plus any income and gains thereon, less any
losses, expenses and distributions to Participants and Beneficiaries whose accounts are
invested through investment fund assets held in the Custodial Account.
(i) "Custodian" shall mean any financial institution or other organization
with which the Employer has established a custodial account for the benefit for
Participants.
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(j) "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.
(k) "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.
(I) "Employee" shall mean any full-time, probationary or permanent
employee or elected official of the Employer.
(m) "Employer" shall mean the City of Bakersfield, California.
(n) "Includible 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 includible 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.
(o) "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 choice among the
investment alternatives provided by a Plan Administrator or Administrators, 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, any Custodian, Trustee, Advisory Committee, and Administrator 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 choices hereunder.
(p) "Normal Retirement Age" shall mean any range of ages ending no later
than age 70½ 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,
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and to receive immediate retirement benefits without actuarial or similar red uction because
of retirement before some later specified age in the Employer's 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
70½, 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.
(q) "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.
(r) "Plan Year" shall mean the calendar year in which the Plan becomes
effective, and each succeeding calendar year during the existence of this Plan.
(s) "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.
(t) "Trust" shall mean any Trust created under Article 5 of the Plan which
shall consist of all compensation deferred under the Plan and not held in a Custodial
Account, plus any income and gains thereon, less any losses, expenses and distributions
to Participants and Beneficiaries whose accounts are invested through investment fund
assets held in the Trust.
(u) "Trustee" shall mean any financial institution or organization which
administers any Trust.
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
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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, any Trustee, orany Custodian,
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.
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.
Section3.02 AmendmentofJoinderAgreement. 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 choices (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 not later
than the fifteenth (15~h) day of the calendar month after the date the designated Beneficiary
is so designated in writing.
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ARTICLE 4
LIMITATIONS ON DEFERRALS
Section 4.01 Normal 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 (a) the Normal Limitation for the taxable year, and (b) the Normal Limitation for
each prior taxable year of the Participant commencing affer 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 (a) 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 (b) compensation (if any) deferred under the Plan
(or such other plan) was subject to the deferral limitations set forth in Section 4.01.
Section4.03 OtherPlans. Theamountexcludablefroma 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(e)(3), 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, CUSTODIAL ACCOUNT AND INVESTMENT OF ACCOUNTS
Section 5.01
(a) Investment of Deferred Compensation in Trusts and Custodial
Accounts. Notwithstanding any contrary provision of this Plan, in accordance with
Section 457(g) of the Internal Revenue Code, all amounts of compensation deferred
pursuant to the Plan, all property and rights purchased with such amounts, and all income
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attributable to such amounts, property, or rights shall be held in a Trust or in a Custodial
Account for the exclusive benefit of Participants and Beneficiaries under the Plan.
A trust is hereby created to hold all the assets of the Plan that are not held
in a custodial account 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 or such other person or entity which hereafter agrees to act
in that capacity hereunder.
The Custodian of any Custodial Account created pursuant to the Plan must
be a bank, as described in Section 408(n) of the Internal Revenue Code, or a person who
meets the non-bank Trustee requirements of Paragraphs (2) - (6) of Section 1.408-2(e) of
the Income Tax Regulations relating to the use of non-bank Trustees.
All amounts of compensation deferred under the Plan shall be transferred to
a Trust or to a Custodial Account described in Section 401(f) of the Internal Revenue Code
within a period that is no longer than is reasonable for the proper administration of the
accounts of Participants. To comply with this requirement, all amounts of compensation
deferred under the Plan shall be transferred to a Trust established under this Plan or to a
Custodial Account described in Section 401(f) of the Internal Revenue Code not later than
fifteen (15) business days after the end of the month in which the compensation would
otherwise have been paid to the Employee.
(b) Current and Future Trust and Custodial Account Provisions.
Pursuant to subparagraph (a) above, the Employer is currently the Trustee for all amounts
of compensation deferred pursuant to the Plan, except for amounts contained in a
Custodial Account.
Currently, the City has contracted with National Deferred Compensation, Inc.
and (with regard to certain federally insured deposit products) Washington Mutual Bank,
FA, as Plan Administrators. All monies under the Plan which Participants have elected to
invest with National Deferred Compensation, Inc. or Washington Mutual Bank, FA are
maintained in Custodial Accounts for the exclusive benefit of Participants and
Beneficiaries.
Currently, the City also has contracted with the International City
Management Association Retirement Corporation (ICMA Retirement Corporation) as a
Plan Administrator to offer Employees another provider of investments options for deferred
compensation investments.
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In the future, the City may contract with additional Plan Administrators, or the
contracts with current Administrators may be amended or terminated. Such changes shall
not affect the validity of the Plan, nor shall such changes require an amendment to the
Plan.
(c) Investment Options. Any Custodian or Trustee shall maintain such
investment options for the investment of deferred payments by Participants and, where
applicable, their Beneficiaries as it may deem appropriate for offering under the Plan.
Participants may select from among the available options for
the investment of their Accounts.
(2)
In the event an investment option is deleted, the Trustee,
Custodian or Plan Administrator may require affected
Participants and, where applicable, Beneficiaries to select an
alternate investment option offered under the Plan. If any
Participant fails to act in response to any written transfer
notice, the Trustee, Custodian or Plan Administrator may
transfer funds from the deleted option to an alternative option.
(3)
In the event a Custodian, Trustee or Plan Administrator is
terminated, the successor Custodian, Trustee or Plan
Administrator designated by the City may require affected
Participants or Beneficiaries to select one or more alternative
investment options offered.
(4)
By exercising his/her right to select investment options, or by
failing to respond to a transfer notice (relating to the transfer of
funds between investment options), each Participant or
Beneficiary agrees that neither the Plan Administrator,
Advisory Committee, City, orany Custodian or Trustee shall be
liable for any investment losses (or lost investment opportunity
in a situation where funds are transferred by the Custodian,
Trustee or Plan Administrator) that may be experienced by the
Participants or Beneficiaries in any investment option that they
select (or that is selected for them if they fail to take
appropriate action with respect to a deleted option).
(d) Designation of Fiduciaries. The Plan Administrator, Custodian or
Trustee and any person they designate to carry out or assist in carrying out their fiduciary
duties or responsibilities (except the Advisory Committee) are fiduciaries under the Plan.
Each fiduciary has only those duties or responsibilities specifically assigned to him/her
under the Plan or agreement with any Custodian or Trustee or delegated to him/her by
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another fiduciary. Each fiduciary may assume that any direction, information or action of
any other fiduciary is proper and need not inquire into the propriety of any such action,
direction or information. Except as and to the extent provided by law, no fiduciary shall
be responsible for the malfeasance, misfeasance, or nonfeasance of any other fiduciary.
(e) Fiduciary Standards.
(1)
All fiduciaries identified in the preceding paragraph shall
discharge their duties with respect to the Plan solely in the
interest of the Participants and Beneficiaries. Such duties shall
be discharged for the exclusive purpose of providing benefits
to the Participants and Beneficiaries and defreying expenses
to the Plan.
(2)
All Plan fiduciaries shall discharge their duties with care, skill,
prudence and diligence under the circumstances then
prevailing that a prudent person acting in like capacity and
familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, and in
accordance with applicable California law.
(f) Powers and Duties. The Custodian's, Trustee's and Plan
Administrator's duties shall be those applicable under California law to persons holding
custody of public employees' deferred compensation funds in a fiduciary capacity.
Section 5.02 Investment Powers. The Trustee, Custodian, or a Plan
Administrator acting as agent for a Trustee or Custodian, shall have the powers listed in
this Section with respect to investment of Trust or Custodial assets, except to the extent
that the investment of Trust or Custodial assets is directed by Participants pursuant to
Section 5.05.
(a) To invest and reinvest the Trust or Custodial Account 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
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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 or Custodial Account 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.
(b) To invest and reinvest all or any part of the assets of the Trust or
Custodial Account in any common, collective or commingled 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 commingled
trust fund shall constitute a part of this Plan.
(c) To invest and reinvest all or any part of the assets of the Trust or
Custodial Account in any group annuity, deposit administration or guaranteed interest
contract issued by an insurance company or other financial institution on a commingled 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
or Custodial Account 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,
mot[gage, 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 or Custodial Account, 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.
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(g) To sell for cash or credit, redeem, exchange for other property,
convey, transfer, or otherwise dispose of any property held in the Trust or Custodial
Account 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.
(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 or Custodial Account.
(i) To vote or to refrain from voting any stocks, bonds, or other securities
held in the Trust or Custodial Account, to exercise any other right appurtenant to any
securities or other property held in the Trust or Custodial Account, 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 or Custodial Account 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 or Custodial Account, 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 or Custodial Account 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 or Custodial Account 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
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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 or Custodial Account.
(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 orfor
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 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 Custodial Account, or the income thereof, and all commissions or acquisitions or
dispositions of securities and similar expenses of investment and reinvestment of the Trust
or Custodial Account, shall be paid from the Trust or Custodial Account. 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 or Custodial Account.
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Section 5.04 Payment of Benefits. The payment of benefits from the Trust or
Custodial Account in accordance with the terms of the Plan may be made by the Plan
Administrator, Trustee, Custodian, or other person so authorized by the Employer to make
such disbursement. The Plan Administrator, Trustee, Custodian, Advisory Committee,
Employer or other person shall not be liable with respect to any distribution of Trust or
Custodial assets made at the direction of the Employer or Participant.
Section 5.05 Investment of Funds. In accordance with uniform and
nondiscriminatory rules established by the Employer and the Plan Administrator, the
Participant may direct his/her Account to be invested in one (1) or more investment funds
available under the Plan; previded, however, that the Participant's investment directions
shall not violate any investment restrictions established by the Employer. Neither the
Employer, the Administrator, Advisory Committee, 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.
It is the intent of this Section 5.05 to require that all Trustees and Custodians under
this Plan fully comply with all disclosure requirements under Section 404(c) of the Federal
ERISA law and California Government Code Section 53213.5.
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 preportionately 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. A Participant's Account shall reflect his/her
pre-rata allocable share of the amount and value of the investments or other preperty held
by the Trustee, Custodian or Plan Administrator as adjusted to reflect any investment
earnings and gains (or losses) resulting from the investment of the Participant's Deferred
Compensation pursuant to Sections 5.05 and 5.06. It is anticipated that the investments
with respect to a Participant will conform to the investment choices specified in the
Participant's Joinder Agreement, but nothing herein shall be construed to require the
Trustee, Custodian or Plan Administrator 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, and such
other information as is necessary or appropriate in order to ensure compliance with Federal
ERISA law Section 404(c) and Government Code Section 53213.5.
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Section 5.08 Transfers.
(a) Incomin.q 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.
(b) Outgoin.q 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.
Section 5.09 No Liability. In no event shall the Trustee's or Custodian'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, the Advisory Committee, the Administrator
nor any Trustee or Custodian shall be liable for losses arising from depreciation or
shrinkage in the value of any investments or choice(s) between funds made available
under this Plan.
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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 April 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
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 the 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.
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(e) Payments equal to payments made by the issuer of a retirement
annuity policy through which the Participant's account is invested.
(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 non-increasing 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 non-
increasing 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.
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(s) is not less than $1,200 per year,
without the inclusion of a cost-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 annual amount of any installment(s)
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 non-increasing amounts. Unless otherwise elected by the
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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 non-spouse 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 61st 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
subsection 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
commuted value of any remaining payments under the payment option shall be paid to the
estate in a lump sum.
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 91st 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 701/~.
(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 annual amount of any installment(s) is not less than
$1,200. A Beneficiary shall be treated as if he/she were a Participant for purposes of
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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
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 orthe 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.
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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 $5,000 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 Plan may distribute the Participant's entire Account without the consent
of the Participant. Any such distribution shall be made in a lump sum.
Section 6.09 Additional Deferral Election. If a Participant has elected, in
accordance with the Plan, to defer the commencement of distributions beyond the first
permissible payout date, then the Participant may make an additional election to further
defer the commencement of distributions, provided that the election is filed before
distributions actually begin and the later commencement date meets the required
distribution commencement date provisions of Sections 401(a)(9) and 457(d)(2) of the
Code. A Participant may not make more than one such additional deferral election after
the first permissible payout date. For purposes of this paragraph, the "first permissible
payout date" is the earliest date on which the Plan permits payments to begin after
separation from service, disregarding payments to a Participant who has an unforeseeable
emergency or attains age 70 1/2, or under the in-service distribution provisions of the Plan.
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 Account in
accordance with the Participant's payment option selected pursuant to Section 6.02. All
Participants shall be treated in the same manner. Nothing in this Plan shall be construed
as granting or creating in any Participant or Beneficiary any vested or contractual rights
under Federal or California law nor any right to the continued existence of the Plan in its
current or amended form.
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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.
Section7.03 Employment. ParticipationinthePlanshallnotbeconstrued 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 Finance Department 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 Gender. 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. Tothe extent required under final judgment,
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
choices with respect thereto in the same manner as the Participant; any 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
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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 Trustee's or Custodian'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 under subparagraph
(a) unless the Employer or Administrator has been provided with satisfactory evidence that
the Employer, Advisory Committee, Custodian, Trustee and Administrator are released
from any further claim by the Participant with respect to such amounts. The Participant
shall be deemed to have released all of the entities in this paragraph 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)
where applicable, 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, or (iii) the Participant fails to obtain an order of
the court in the proceeding relieving all of the entities in this paragraph 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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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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