HomeMy WebLinkAboutRES NO 008-07
RESOLUTION NO. --0....0 8 -= (l1
A RESOLUTION APPROVING ADOPTION
AGREEMENT ESTABLISHING AN IRREVOCABLE
TRUST FUND AND PLAN FOR FUTURE RETIREE
MEDICAL COSTS AS IT RELATES TO THE CITY'S
RETIREE MEDICAL SUBSIDY PROGRAM.
WHEREAS, the City is required to comply with Governmental Accounting
Standards Board (GASB) Pronouncements and Statements; and
WHEREAS, the City desires to begin funding the future liabilities of the City's
Retiree Medical Subsidy Program, which according to the GASB definitions is
considered an Other Post Employment Benefit (OPEB); and
WHEREAS, in accordance with GASB requirements, the City must establish an
irrevocable trust arrangement to hold deposits associated with the City's OPEB
liabilities; and
WHEREAS, the City has contracted with the Public Agency Retirement
Services (PARS) organization to assist the City with formation and administration of
the Plan and Trust; and
WHEREAS, the City is eligible to participate in the GASB 45 Funding Program, a
tax exempt trust and plan performing an essential governmental function within the
meaning of Section 115 of the Internal Revenue Code, as amended, and the
Regulations issued thereunder, and is a tax-exempt trust under the provisions of the
relevant statutory provisions of the state of California.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Bakersfield as
follows:
1. The above recitals are true and correct and incorporated herein by
reference; and
2. The City Council hereby approves the Adoption Agreement with PARS
and thereby adopts the PARS Post-Retirement Health Care Plan Trust Agreement,
the PARS Post-Retirement Health Care Plan Master Plan Document, and the
Investment Guidelines Document for assets held in the Trust; and
3. The City Council hereby appoints the City Manager, or his designee, as
the City's Plan Administrator for the GASB 45 Funding Program; and
4. The City's Plan Administrator is hereby authorized to take whatever
additional actions are required to administer and maintain compliance with the
City's Plan and the GASB 45 Funding Program. fQA/(~
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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 JAN 1 ? 20D7 ' by the
following vote:
~
NOES:
ABSTAIN:
ABSENT:
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COUNCIL MEMBER CARSON, BENHAM, WEIR, COUCH, HANSON, SULLIVAN, SCRIVNER
COUNCIL MEMBER
COUNCIL MEMBER
COUNCIL MEMBER
APPROVED
JItN 1 ., 20fJ1
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CITY CLERK AND EX OF CIO of the
Council of the City of Bakersfield
By
APPROVED AS TO FORM:
VIRGINIA GENNARO
City Attorney
BY~J}z.~
s:\finance\admin\admin\reso pars gasb 45.doc
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ADOPTION AGREEMENT
TO THE
PARS POST-RETIREMENT HEALTH CARE PLAN
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Introduction
By executing this Adoption Agreement, the Employer specified in Section II of this Adoption
Agreement adopts:
(1) the PARS Post-Retirement Health Care Plan Document (the "Plan") integrated with the
variable provisions contained within this Adoption Agreement, and
(2) the PARS Post-Retirement Health Care Plan Trust Agreement (the "Trust").
Defined terms shall have the meaning attributed to such terms in the Master Plan Document or the
Trust Agreement.
The Employer hereby selects the following Plan specifications:
Section I
Plan and Trust Information
AI.l FULL NAME OF TRUST: PARS Post-Retirement Health Care Plan Trust Agreement
A1.2 FULL NAME OF PLAN: The PARS Post-Retirement Health Care Plan, as adopted by
(name of Employer):
Al.3 EFFECTIVE DATE OF PLAN: If this is a restatement of an existing plan, the restatement
became effective:
Section II
Employer Information
A2.1 EMPLOYER INFORMATION: (See Section 2.1 of Master Plan Document):
NAME OF AGENCY:
ADDRESS: (Street):
(City, State Zipcode):
(Phone Number):
A2.2 EMPLOYER'S PLAN ADMINISTRATOR:
A.2.3 EMPLOYER' S TAX IDENTIFICATION NUMBER:
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A.2.4 EMPLOYER'S FISCAL YEAR means the 12 consecutive month period:
Commencing on (month, day)
and
Ending on (month, day)
Section III
Eligible Employees and Eligible Dependents
A.3.1 ELIGIBLE EMPLOYEE: The determination of Eligible Employees and Eligible Dependents
is finally and conclusively made by the Employer according to its applicable policies and
collective bargaining agreements, and without reference to this Plan.
Section IV
Investment
AA.l INVESTMENT APPROACH: (See Section 7.1 of the Plan): The Employer shall select
either a discretionary or a directed approach to investment.
a. Discretionary Investment Approach
If the Discretionary Investment Approach is selected, the Employer hereby directs the
Trustee to invest the Assets of the Employer's Agency Account pursuant to one of the
investment strategies described below (select one):
Strategy
a. HighMark u.S. Treasury Money Market
b. Conservative Diversified Portfolio
c. Moderately Conservative Diversified Portfolio
d. Moderate Diversified Portfolio
e. Balanced/Moderately Aggressive Diversified Portfolio
b. Directed Investment Approach
If the Directed Investment Approach is selected, the Employer must attach its investment
policy and retain its own Registered Investment Advisor. The Employer shall be permitted
to direct investments of its Agency Account pursuant to the terms of the Trust Agreement.
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Execution and Adoption of Plan and Related Documents
By executing this Adoption Agreement, the Employer hereby adopts and agrees to be bound
by the Plan and the Trust Agreement, pursuant to Section 2.4 of the Trust Agreement.
The Employer understands and agrees that the Trust Agreement may be amended from time
to time by a vote of the Employers as set forth in the Trust Agreement.
This Adoption Agreement is hereby executed this _ day of
,20_.
EMPLOYER (specify):
By
Plan Administrator
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APPENDIX A
ELIGIBLE EMPLOYEES AND ELIGIBLE DEPENDENTS OF EMPLOYER
(non-binding list set forth to facilitate administration)
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PARS POST-RETIREMENT HEALTH CARE PLAN
MASTER PLAN DOCUMENT
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INTRODUCTION
The Employer specified in the Adoption Agreement has adopted this qualified
governmental post-retirement health care plan ("Plan") for the benefit of its Eligible Employees.
The Plan document consists of this Basic Plan Document plus the Adoption Agreement. Assets
of the Plan are held under a trust (the "Trust") evidenced by a trust agreement (the "Trust
Agreement"). Each Employer's separate portion of the Trust is each Employer's "Agency
Trust." Capitalized terms that are not defmed herein shall have the meaning attributed to such
terms in the Trust Agreement.
It is intended that this plan and the trust established to hold the assets of the plan shall be
tax-exempt under Section 115 of the Internal Revenue Code of 1986, together with any
amendments thereto ("Code"), and that contrib:utions to the Plan shall be deemed contributions
pursuant to Government Accounting Standards Board Statement 45 ("GASH 45"). At any time
prior to the satisfaction of all liabilities with respect to Eligible Employees under the trust created
pursuant to this plan, the trust assets shall not be used for, or diverted to, purposes other than the
exclusive benefit of Eligible Employees.
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ARTICLE I
PLAN AND TRUST INFORMATION
1.1 Plan Name.
The name of the Plan adopted by the Employer is set forth in Section A.l.2 of the Adoption
Agreement.
1.2 Effective Date.
The Plan is effective as of the date set forth in Section A. 1.3 of the Adoption Agreement. If as
stated in the Adoption Agreement, this Plan is a restatement of an existing plan, the effective
date of the restatement is set forth in the Adoption Agreement.
ARTICLE II
EMPLOYER INFORMATION
2.1 Emolover.
The name and address of the Employer sponsoring this Plan (the "Employer") are as set forth in
Section A.2.1 of the Adoption Agreement. The Adoption Agreement can only be used by a
governmental agency to establish a plan.
ARTICLE III
ELIGIBLE EMPLOYEES
3.1 Elhrlble Emolovees
Each employee of the Employer who is or becomes eligible for post-retirement health care
benefits as specified in such Employer's applicable policies and/or applicable collective
bargaining agreements shall become an Eligible Employee hereunder. Dependants of an Eligible
Employee shall be entitled to benefits under the Plan (the "Eligible Dependants") to the extent so
provided in the applicable policies and/or collective bargaining agreement of the Employer.
3.2 Termination of Eli2ible Emolovee or Deoendent Status
An Eligible Employee or Eligible Dependent shall cease to be an Eligible Employee or Eligible
Dependent as specified in the Employer's applicable policies and/or applicable collective
bargaining agreements.
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ARTICLE IV
CONTRIBUTIONS
4.1 Amount of Member A2encv Contributions
Eligible Employees and Eligible Dependents are not permitted to make contributions to the
Trust, provided however, that nothing herein shall be deemed to (i) prevent the Employer from
imposing a charge (including, without limitation, a payroll deduction) for coverage under the
Plan, or (ii) prevent the Employer from depositing the proceeds of any such charge to the Trust
(provided that such deposit shall be considered an Employer contribution and shall not be
segregated within the Trust from any other Employer contributions). Each Employer shall from
time-to-time contribute to its Agency Trust an amount determined by such Employer in its sole
discretion. Such amount may, but need not, equal such Employer's "annual required
contribution" ("ARC") as determined in accordance with GASB45.
4.2 Administrative EXDenses
The Employer may make contributions to the Trust sufficient to defray all or part of the expenses
of administering the Plan or may pay such expenses directly.
4.3 Allocation of Administrative EXDenses
If the Employer chooses not to directly pay the expenses of administering this Plan, such
expenses shall be charged against the Agency Trust for such Employer.
4.4 Reversions
The Employer shall have the right to a return of contributions from this Plan only if the
conditions for such return set forth in the Trust Agreement are satisfied.
ARTICLE V
DISTRIBUTION OF BENEFITS
5.1 Pavment of Distribution
Distribution shall only be made to the insurers, third party administrators, health care and welfare
. providers or other entities providing Plan benefits or services as designated by the Employer or
to the Employer for the reimbursement of Plan benefits and expenses paid by the Employer. No
distributions shall be made directly to Eligible Employees. The Plan Administrator shall provide
instructions to the Trustee regarding how distributions and reimbursements are to be made.
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ARTICLE VI
TRUSTEE
6.1 Trustee
Except as provided below, by executing the Adoption Agreement, the Employer appoints the
Union Bank of California, N.A. as the Trustee of the Agency Trust of the Employer.
6.2 Alternate Trustee
If the adopting Employer is not a public agency of the State of California, the Employer appoints
the Trustee named in the Trust Agreement applicable to such Employer's state.
ARTICLE VII
FUNDING AND INVESTMENT
7.1 Fundin!! and Investment
The assets of the Plan shall be held in the Agency Trust of each Employer. In Section A.4.1 of
the Adoption Agreement, each Employer shall elect between a discretionary or directed
investment approach. If the Employer elects a discretionary investment approach, the Employer
shall further elect between the various investment strategies offered in Section A.4.1 of the
Adoption Agreement. If the Employer elects a directed investment approach, the Employer, in
accordance with the Trust Agreement, shall have absolute discretion over the investment of the
assets of the Agency Trust.
7.2 Tvoe and Nature of Plan and Trust
Neither the faith and credit nor the taxing power of each Employer is pledged to the distribution
of benefits hereunder. Except for contributions, earnings and other amounts held in the Trust, no
amounts are pledged to the distribution of benefits hereunder. Distributions of benefits are
neither general nor special obligations of the Employer, but are payable solely from
contributions, as more fully described herein. No employee of any Employer may compel the
exercise of the taxing power by the Employer. Distributions of benefits are not a debt of the
Employer within the meaning of any constitutional or statutory limitation or restriction.
Distributions are not a legal or equitable pledge, charge, lien or encumbrance, upon any of the
Employer's property, or upon any of its income, receipts or revenues.
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ARTICLE VIII
ADMINISTRATION, AMENDMENT AND TERMINATION OF PLAN
8.1 Desienation of Plan Administrator
In Section A.2.2 of the Adoption Agreement, the Employer shall provide the name of the Plan
Administrator that has been duly authorized and designated by the governing body of the
Employer to act on its behalf in all matters pertaining to the Plan and the Trust pursuant to
Section 3.4 of the Trust Agreement. If no name is provided, the Employer is the Plan
Administrator. In accordance with Section 3.6 of the Trust Agreement, the Employer may
designate a delegatee to perform those activities relating to the Plan as specified in the written
appointment of such delegatee. Except where the context requires otherwise, the term
"Employer" as used in this Article shall mean the Plan Administrator or delegatee where
responsibility for administration of the Plan has been given to such parties.
8.2 Rules and Reeulations
The Employer has full discretionary authority to supervise and control the operation of this Plan
in accordance with its terms and may make rules and regulations for the administration of this
Plan that are not inconsistent with the terms and provisions hereof. The Employer shall
determine any questions arising in connection with the interpretation, application or
administration of the Plan (including any question of fact relating to age, employment,
compensation or eligibility of Eligible Employees or Eligible Dependents) and its decisions or
actions in respect thereof shall be conclusive and binding upon all persons and parties.
The Employer shall have all powers necessary to accomplish its purposes, including, but not by
way of limitation, the following:
(a) To determine all questions relating to an Eligible Employee's or Eligible Dependent's
eligibility;
(b) To construe and interpret the terms and provisions of the Plan;
(c) To compute, certify to, and direct the Trustee with regard to the amount and kind of
benefits payable to health care providers;
(d) To authorize all disbursements by the Trustee from the Agency Trust;
(e) To maintain all records that may be necessary for the administration of the Plan other
than those maintained by the Trustee; and
(t) To appoint a plan administrator or, any other agent, and to delegate to them or to the
Trustee such powers and duties in connection with the administration of the Plan as it
may from time to time prescribe.
Expenses and fees in connection with the administration of the Plan and the Trust shall be paid
from the Trust assets to the fullest extent permitted by law, unless the Employer determines
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otherwise. The Employer may elect to make contributions to the Trust sufficient to defray the
expenses of administering the Plan or may pay such expenses directly.
8.3 Amendment and Termination
The Employer shall have the right to amend, modify or terminate this Plan at any time. If an
Employer terminates this Plan, the Assets held in its Agency Trust shall remain in the Agency
Trust to be used for payment of post-retirement health care benefits of Eligible Employees and
Eligible Dependents until the Assets are exhausted or until all such liabilities are satisfied as set
forth in the Trust Agreement.
8.4 Withdrawal of EmDlover from Plan and Trust
An Employer may elect to withdraw from this Plan and the Trust by giving at least ninety (90)
days prior written notice to the Trustee and the Trust Administrator. If an Employer so elects to
withdraw, Assets having a value equal to the funds held in such Employer's Agency Trust shall
be segregated by the Trustee and, as soon as practicable, shall be transferred to a trust established
by the Employer, provided that (i) such trust shall satisfy the requirements of Section 115 of the
Code, and (ii) all assets held by such trust shall qualify as "plan assets" within the meaning of
GASB Statement No. 45, in each case as reasonably determined by the Employer and certified in
writing by the Employer to the Trust Administrator. The Employer shall appoint a trustee for
such Employer's separate trust, and such appointment shall vest the successor trustee with title to
the transferred Assets upon the successor trustee's acceptance of such appointment.
ARTICLE IX
MISCELLANEOUS
9.1 Nonalienation
An Eligible Employee or Eligible Dependent does not have any interest in the Plan or the Assets
held in the Agency Trust. Accordingly, the Trust shall not in any way be liable to attachment,
garnishment, assignment or other process, or be seized, taken, appropriated or applied by any
legal or equitable process, to pay any debt or liability of an Eligible Employee, Eligible
Dependent or any other party.
9.2 Investment
All contributions, interest earned, and any assets of the Plan shall at all times be invested and
managed in accordance with the requirements of applicable law.
9.3 Parties to the Plan
Eligible Employees, Eligible Dependents and unions of each Employer are not parties to this
Plan. The Plan is only a funding source for such Employer's post-retirement health care benefits
and does not increase the rights of Eligible Employees of the Employer.
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9.4 Confidential Medical Information
Each Employer and its health care providers or other service providers shall not share
confidential medical information regarding employees of the Employer with the Plan, the
Trustee, or the Trust Administrator.
ARTICLE X
DEFINITIONS
Capitalized terms in this Plan that are not defmed below shall have the meaning attributed to
such terms in the OPEB Trust Agreement.
10.1 "Code" means the Internal Revenue Code of 1986, as amended from time to time.
10.2 "Effective Date" means the date this Plan is effective as set forth in the Adoption
Agreement with respect to an Employer.
10.3 "Eligible Dependent and Eligible Employee" mean the employees of the Employer and
their Dependents who are eligible to receive post-retirement health care benefits as specified in
such Employer's policies and/or applicable collective bargaining agreements.
10.4 "Plan" means this PARS Post-Retirement Health Care Benefits Plan, as adopted
separately by each Employer.
10.5 "Plan Year" means the consecutive twelve-month period beginning on January I and
ending on December 31.
10.6 "Plan Administrator" means the individual or position designated by the Employer to
act on behalf of the Employer in matters relating to this Plan.
10.7 "Trust" means the trust created pursuant to the PARS Post-Retirement Health Care
Benefits Plan.
10.8 "Trustee" means the trustee of the Trust.
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PARS POST-RETIREMENT HEALTH CARE PLAN
TRUST AGREEMENT
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ARTICLE I
DEFINITIONS
1.1 "Adoption Agreement" shall have the meaning given to such term in Section 2.4.
1.2 "Agency Trust" shall mean the legally separate and individual trust, whose
provisions are identical to those of this Trust Agreement, that is established by an
Employer when it adopts the Trust Program by executing an Adoption
Agreement. . .
1.3 "Agreement for Administrative Services" shall mean the agreement executed
between the Employer and the Trust Administrator which authorizes the Trust
Administrator to perform specific duties of administering the Agency Trust of the
Employer.
1.4 "Assets" shall mean all contributions and transfers of assets received by an
Agency Trust on behalf of an Employer, together with the income and earnings
from such contributions and transfers and any increments accruing to them.
1.5 "Code" shall mean the Internal Revenue Code of 1986 as amended from time to
time.
1.6 "Delegatee" shall mean an individual or entity, appointed by the Plan
Administrator or Employer to act in such matters as are specified in the
appointment
1.7 "Effective Date" shall mean, with respect to the Employer, the date on which the
Trustee received Plan Assets to be held in trust hereunder.
1.8 "Eligible Dependenf' and "Eligible Employee" shall mean the employees of the
Employer and their dependents who are entitled to post-employment health care
benefits pursuant to such Employer's policies and/or applicable collective
bargaining agreements.
1.9 "Employer" shall mean a public agency which adopts the provisions of this Trust
Agreement, provided that such agency is a state, a political subdivision of a state,
or an entity the income of which is excludible from gross income under Section
115 of the Code.
1.10 "GASB" shall mean the Governmental Accounting Standards Board.
1.11 "Omnibus Account" shall mean an account, established for record keeping
purposes only, to commingle the Assets of the Agency Trust.
1.12 "OPEB" shall mean "other post-employment benefits," such as medical, dental,
vision, life insurance, long-term care and other similar benefits provided to
retirees, other than pension benefits.
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1.13 "OPEB Obligation" shall mean an Employer's obligation to provide post-
employment health care and welfare benefits to its eligible employees as specified
in such Employer's policies and/or applicable collective bargaining agreements.
1.14 "Plan" shall mean the PARS Post-Retirement Health Care Plan, adopted by each
Employer as a separate Plan for that Employer upon the execution of an Adoption
Agreement and the satisfaction of certain other requirements contained herein.
1.15 "Plan Administrator" shall mean the individual designated by position of
employment at the Employer to act on its behalf in all matters relating to the
Employer's participation in the Trust Program and Agency Trust.
1.16 "Trust Administrator" shall mean Public Agency Retirement Services.
1.17 "Trust Agreement" shall mean this PARS Post-Retirement Health Care Plan
trust docwnent adopted by each Employer upon execution of an Adoption
Agreement, as amended from time to time.
1.18 ''Trust Program" shall mean the PARS Post-Retirement Health Care Plan trust
arrangement.
1.19 "Trust Program Effective Date" shall mean November 1, 2005, the date the
Trust Program was established.
1.20 "Trustee" shall mean the entity appointed as trustee of the Trust which shall also
serve as trustee of each Agency Trust established pursuant to the provisions of
this Trust Agreement.
ARTICLE II
THE TRUST
2.1 Multiple Employer Trust
The Trust Program is a multiple employer trust arrangement established to
provide economies of scale and efficiency of administration to public agencies
that adopt it to hold the assets used to fund its OPEB Obligation. The Trust
Program consists of the Agency Trusts adopted and not tenninated by Employer.
2.2 Purpose
The Trust Program is established with the intention that it qualify as a tax-exempt
trust perfonning an essential governmental function within the meaning of
Section 115 of the Code and the Regulations issued thereunder and as a tax-
exempt trust under the provisions of the relevant state's statutory provisions of
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each Employer. This Trust Agreement shall be construed and the Trust Program
shall be administered in a manner consistent with such intention. The
fundamental purpose of the Trust Program is to fund post-employment benefits
(other than pension benefits), such as medical, dental, vision, life insurance, long-
term care and similar benefits, offered by the Employer to its employees as
specified in each Employer's policies and/or applicable collective bargaining
agreements.
2.3 Date of Adoption
The date as of which each Employer adopts the Trust Program shall be the
"Effective Date" of the Trust Agreement and the Agency Trust, as defined in
Sections 2.4 and 2.5, as to that Employer.
2.4 Employers
Any public agency may, by action of its governing body in writing accepted by
the Trustee, adopt the provisions of the Trust Agreement. Executing an adoption
instrument for the Trust ("Adoption Agreement''), attached hereto as Exhibit
"AIt, shall constitute such adoption, unless the Trustee requires additional
evidence of adoption. In order for such adoption to be effective, the public
agency must also execute an Agreement for Administrative Services with Public
Agency Retirement Services, the Trust Administrator, pursuant to section 3.6 of
this Trust Agreement. Such adopting Employer shall then become an Employer of
the Trust Program.
Each such Employer shall, at a minimum, furnish the Trust Administrator with the
following documents to support its adoption of the Trust:
(a) a certified copy of the resolution(s) of the governing body of the
Employer authorizing the adoption of the Trust Agreement and the appointment
of an individual designated by position of employment at the Employer to act on
its behalf in all matters relating to the Employer's participation in this Trust
Program and Agency Trust ("Plan Administrator");
(b) an original of the Adoption Agreement executed by the Plan Administrator
or other duly authorized Employer employee;
(c) an original of the Agreement for Administrative Services with Public
Agency Retirement Services executed by the Plan Administrator or other duly
authorized Employer employee and Public Agency Retirement Services;
(d) an address notice; and
( e) such other documents as the Trustee may reasonable request.
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2.5 Agency Trust
By adopting the Trust Agreement, as provided in Section 2.4, an Employer shall
be deemed to have adopted a legally separate and individual Agency Trust whose
provisions are identical to those of this Trust Agreement. The Assets of an
Agency Trust shall only be available to pay post-employment health care and
welfare benefits of Eligible Employees of the Employer that created such Agency
Trust. The Agency Trust is created for the purpose of receiving contributions
made to fund each Employer's OPEB Obligation;. accumulating, managing and
investing those contributions; and providing payments to health care providers (or
reimbursing an Employer that has made payments to health care providers) on
account of each Employer's OPEB Obligation. Each Agency Trust shall be a
single trust, and no separate accounts shall be established for individual Eligible
Employees or Eligible Dependents.
2.6 Assets of Agency Trust
The Assets of the Agency Trust shall consist of all contributions and transfers
received by the Agency Trust on behalf of the Employer, together with the
income and earnings from such contributions and transfers, and any increments
accruing to them, net of any investment losses, benefits, expenses or other costs.
All contributions or transfers shall be received by the Trustee in cash or in other
property acceptable to the Trustee. The Trustee shall manage and administer the
Assets of the Agency Trust without distinction between principal and income.
The Trustee and the Trust Administrator shall have no duty to compute any
amount to be transferred or paid to the Agency Trust by the Employer and the
Trustee and the Trust Administrator shall not be responsible for the collection of
any contributions or transfers to the Agency Trust.
2.7 Commingling for Investment and Administration
The Assets of more than one Agency Trust may be commingled by the Trustee in
one or more Omnibus Accounts for investment and administrative purposes, to
provide economies of scale and efficiency of administration to the Agency Trusts.
The responsibility for Plan level accounting within this Omnibus Account(s) shall
be that of the Trust Administrator.
2.8 Trustee Accounting
The Trustee shall be responsible only for maintaining records and maintaining
accounts for the aggregate assets of the Trust Program. The responsibility for
Plan level accounting for each Agency Trust, based upon the Omnibus
Account(s), shall be that of the Trust Administrator.
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2.9 No Diversion of Assets
The Assets in each Agency Trust shall be held in trust for the exclusive purpose
of providing post-employment health care and welfare benefits to the Eligible
Employees of the Employer that created the Agency Trust and defraying the
reasonable administrative and actuarial expenses of such Agency Trust. The
Assets in each Agency Trust shall not be used for or diverted to, any other
purpose, including, but not limited to, the satisfaction of any other Employer's
OPEB Obligation.
2.10 Type and Nature of Trust
Neither the full faith and credit nor the taxing power of each Employer is pledged
to the distribution of benefits hereunder. Except for contributions and other
amounts hereunder, no other amounts are pledged to the distribution of benefits
hereunder. Distributions of benefits are neither general nor special obligations of
any Employer, but are payable solely from the Assets of each Agency Trust, as
more fully described herein. No employee of any Employer or beneficiary may
compel the exercise of the taxing power by any Employer.
Distributions of Assets under any Agency Trust are not debts of any Employer
within the meaning of any constitutional. or statutory limitation or restriction.
Such distributions are not legal or equitable pledges, charges, liens or
encumbrances, upon any of an Employer's property, or upon any of its income,
receipts, or revenues, except amounts in the accounts which are, under the terms
of each Plan and the Agency Trust set aside for distributions. Neither the
members of the legislative body of any Employer nor its officers, employees,
agents or volunteers are liable hereunder.
2.11 Loss of Tax-Exempt Status as to Any Employer
If any Employer participating in the Trust Program receives notice from the
Internal Revenue Service that the Trust Program as to such Employer fails to
satisfy the requirements of Section 115 of the Code, or if any Employer consents
to the Internal Revenue Service's determination that the Trust Program fails to
meet such requirements, Assets having a value equal to the funds held in such
Employer's Agency Trust shall be segregated and placed in a separate trust by the
Trustee for the exclusive benefit of such Employer's Eligible Employees within a
reasonable time after the Trust Administrator notifies the Trustee of the Internal
Revenue Service's determination. Each Employer participating in the Trust
Program agrees to immediately notify the Trust Administrator upon receiving
such notice or giving such consent. The separate trust provided for in this Section
2.11 shall thereafter be considered as a separate trust containing all of the
provisions of this Trust Agreement until tenninated as provided in this Trust
Agreement.
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ARTICLE III
ADMINISTRATIVE MATTERS
3.1 Appointment of Trustee
Two thirds or more of the Employers acting jointly, may by a two-thirds or
greater vote, act to appoint a bank, trust company, retirement board, insurer,
committee or such other entity as permitted by law, to serve as the trustee of this
Trust Program." Such action must be in writing. Upon the written acceptance of
such entity it shall become the Trustee of the Trust Program and, subject to the
provisions of Section 3.10, the trustee of each Agency Trust. By executing an
Adoption Agreement, the adopting Employer hereby appoints the Union Bank: of
California, N.A. as the Trustee as of the Effective Date.
3.2 Removal of Trustee
Two thirds or more of the Employers acting jointly, may by a vote of two-thirds
or greater, act to remove the Trustee. Such action must be in writing and
delivered to the Trustee and the Trust Administrator. Upon such removal from
this Trust Program the Trustee shall also be removed as trustee of each of the
Agency Trusts. The Plan Administrator may remove the Trustee as trustee of an
Agency Trust by giving at least ninety (90) days prior written notice to the
Trustee and the Trust Administrator and withdrawing from the Trust Program. If
the Plan Administrator so removes the Trustee, the Plan Administrator shall
appoint a successor trustee for its Agency Trust, and such appointment shall ve,st
the successor trustee with title to the Assets of the Agency Trust upon the
successor trustee's acceptance of such appointment. Assets having a value equal
to the funds held in the Agency Trust shall be segregated and placed in a separate
trust by the Trustee. As soon as practicable thereafter, such Assets shall be
transferred to a trust established by the Employer, provided that (i) such trust shall
satisfy the requirements of Section 115 of the Code, and (ii) all assets held by
such trust shall qualify as "plan assets" within the meaning of GASa Statement
No. 45, in each case as reasonably determined by the Employer and certified in
writing by the Employer to the Trust Administrator.
3.3 Resignation of Trustee
The Trustee may resign as trustee of this Trust Program at any time by giving at
least ninety (90) days prior written notice to the Trust Adminstrator and to the
Plan Administrator of each Employer that has adopted the Trust Agreement and
not tenninated its participation in the Trust Program. Such resignation shall also
be deemed a resignation as trustee of each of the Agency Trusts. The Trustee
may resign as trustee of an Agency Trust by giving at least ninety (90) days
written notice to the Plan Administrator of such Agency Trust and to the Trust
Administrator. The Employer's appointment of a successor trustee to the Agency
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Trust will vest the successor trustee with title to the Assets of its Agency Trust
upon the successor trustee's acceptance of such appointment.
If the Trustee resigns or is removed by the Employers from the Trust Program
pursuant to Section 3.2, two-thirds or more the Employers shall appoint a
successor trustee as provided in Section 3.1. The Trustee shall, upon the
appointment and acceptance of a successor trustee, transfer and deliver the Assets
and all records relating to the Trust Program to the successor, after reserving such
reasonable amount as it shall deem necessary to provide for its fees and expenses
and any sums chargeable against the Trust Program for which it may be liable.
The Trustee shall do all acts necessary to vest title of record in the successor
trustee.
3.4 The Plan Administrator
The governing body of each Employer shall have plenary authority for the
adininistration and investment of the Agency Trust pursuant to any applicable
state laws and applicable federal laws and regulations. Each Employer shall by
resolution designate a Plan Administrator. Unless otherwise specified in the
instrument the Plan Administrator shall be deemed to have authority to act on
behalf of the Employer in all matters pertaining to the Employer's participation in
this Trust Program and in regard to the Agency Trust of the Employer. Such
appointment of a Plan Administrator shall be effective upon receipt and
acknowledgment by the Trustee and the Trust Administrator and shall be effective
until the Trustee and the Trust Administrator are furnished with a resolution of the
Employer that the appointment has been modified or terminated.
3.5 Failure to Appoint Plan Administrator
If a Plan Administrator is not appointed, or such appointment lapses, the
Employer shall be deemed to be the Plan Administrator. As used in this
document Plan Administrator shall be deemed to mean Employer when a Plan
Administrator has not been appointed.
3.6 Delegatee
The Plan Administrator, acting on behalf of the Employer, may delegate certain
authority, powers and duties to a Delegatee to act in those matters specified in the
delegation. Any such delegation must be in writing that names and identifies the
Delegatee, states the effective date of the delegation, specifies the authority and
duties delegated, is executed by the Plan Administrator and is acknowledged in
writing by the Delegatee, the Trust Administrator (if not the Delegatee) and the
Trustee (which shall make such acknowledgement in a timely manner and which
shall not withhold such acknowledgement). Such delegation shall be effective
until the Trustee and the Trust Administrator are directed in writing by the Plan
Administrator that the delegation has been rescinded or modified.
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3.7 Certification to Trustee
The governing body of each Employer, or other duly authorized official, shall
certify in writing to the Trustee and the Trust Administrator the names and
specimen signatures of the Plan Administrator and Delegatee, if any, and all
others authorized to act on behalf of the Employer whose names and specimen
signatures shall be kept accurate by the Employer acting through a duly
authorized officer or governing body of the Employer. The Trustee and the Trust
Administrator shall have no liability if they act upon the direction of a Plan
Administrator or DClegatee that has been duly authorized, as provided in SeCtion
3.6, if that Plan Administrator or Delegatee is no longer authorized to act, unless
the Employer has informed the Trustee and the Trust Administrator of such
change.
3.8 Directions to Trustee
All directions to the Trustee from the Plan Administrator or Delegatee must be in
writing and must be signed by the Plan Administrator or Delegatee, as the case
may be. For all purposes of this Trust Agreement, direction shall include any
certification, notice, authorization, application or instruction of the Plan
Administrator, Delegatee or Trustee appropriately communicated. The above
notwithstanding direction may be implied if the Plan Administrator or Delegatee
has knowledge of the Trustee's intentions and fails to file written objection.
The Trustee shall have the power and duty to comply promptly with all proper
directions of the Plan Administrator or Delegatee, appointed in accordance with
the provisions of this Trust Agreement. In the case of any direction deemed by
the Trustee to be unclear or ambiguous the Trustee may seek written instructions
from the Plan Administrator, the Employer or the Delegatee on such matter and
await their written instructions without incurring any liability. If at any time the
Plan Administrator or the Delegatee should fail to give directions to the Trustee,
the Trustee may act in the manner that in its discretion seems advisable under the
circumstances for carrying out the purposes of the Trust and/or the Agency Trust
which may include not taking any action. The Trustee may request directions or
clarification of directions received and may delay acting until clarification is
received. In the absence of timely direction or clarification, or if the Trustee
considers any direction to be a violation of the Trust Agreement or any applicable
law, the Trustee shall in its sole discretion take appropriate action, or refuse to act
upon a direction.
3.9 Trust Administrator
The Employers have appointed Public Agency Retirement Services as the Trust
Administrator. The Trust Administrator has accepted its appointment subject to
each Employer's delegation of authority, to act as such, pursuant to Section 3.6 of
this Trust Agreement. The Trust Administrator's duties involve the performance
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of the following services pursuant to the provisions of this Trust Agreement and
the Agreement for Administrative Services:
(a) Perfonning periodic accounting of the Trust Agreement;
(b) Directing the Trustee to make distributions from the Agency Trust to
health care providers (or to the Employer for reimbursement of payments made to
health care providers) for post-employment health care and welfare benefits;
( c) Allocating contributions, earnings and expenses to each Agency Trust;
(d) Directing the Trustee to pay the fees of the Trust Administrator and to do
such other acts as shall be appropriate to carry out the intent of the Agency Trusts;
( e) Such other services as the Employer and the Trust Administrator
may agree in the Agreement for Administrative Services pursuant to Section 2.4.
The Trust Administrator shall be entitled to rely on, and shall be under no duty to
question, direction and/or data received from the Plan Administrator, or other
duly authorized entity, in order to perform its authorized duties under this trust
agreement. The Trust Administrator shall not have any duty to compute
contributions made to the Agency Trust, detennine or inquire whether
contributions made to the Agency Trust by the Plan Administrator or other duly
authorized entity are adequate to meet an Employer's OPEB Obligation as may be
determined under GASB Statement No. 45; or detennine or inquire whether
contributions made to the Agency Trust are in compliance with the Employer's
policies and/or applicable collective bargaining agreements; The Trust
Administrator shall not be liable for nonperfonnance of duties if such
nonperfonnance is directly caused by erroneous, and/or late delivery of, directions
or data from the Plan Administrator, or other duly authorized entity.
3.10 Additional Trust Administrator Services
The Plan Administrator may at any time retain the Trust Administrator as its
agent to perfonn any act, keep any records or accounts and make any
computations which are required of the Employer or the Plan Administrator by
this Trust Agreement or by the Employer's policies and/or applicable collective
bargaining agreements. The Trust Administrator shall be separately compensated
for such service and such services shall not be deemed to be contrary to the Trust
Agreement.
3.11 Trust Administrator's Compensation
As may be agreed upon from time to time by the Employer and Trust
Administrator, the Trust Administrator will be paid reasonable compensation for
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services rendered or reimbursed for expenses properly and actually incurred in the
performance of duties with respect to the Agency Trust and to the Trust Program.
3.12 Resignation or Removal of Trust Administrator
The Trust Administrator may resign at any time by giving at least one hundred
twenty (120) days written notice of such resignation to each Employer of the
Trust and to the Trustee. The Employers, by a two-thirds or greater vote, may
remove the Trust Administrator by delivering, at least one hundred twenty (120)
days prior to the effective date of such removal, written notice of such removal to.
the Trust Administrator and to the Trustee.
ARTICLE IV
THE TRUSTEE
4.1 Powers and Duties of the Trustee
Except as otherwise provided in Article V and subject to Article VI, the Trustee
shall have full power and authority with respect to property held in the Agency
Trust to do all such acts, take all proceedings, and exercise all such rights and
privileges, whether specifically referred to or not in this document, as could be
done, taken or exercised by the absolute owner, including, without limitation, the
following:
(a) To invest and reinvest the Assets or any part hereof in anyone or more
kind, type, class, item or parcel of property, real, personal or mixed, tangible or
intangible; or in anyone or more kind; type, class, item or issue of investment or
security; or in anyone or more kind, type, class or item of obligation, secured or
unsecured; or in any combination of them (including those issued by the Trustee
of any of its affiliates, to the extent pennitted by applicable law), and to retain the
property for the period of time that the Trustee deems appropriate;
(b) To acquire and sell options to buy securities ("call" options) and to acquire
and sell options to sell securities ("put" options);
(c) To buy, sell, assign, transfer, acquire, loan, lease (for any purpose,
including mineral leases), exchange and in any other manner to acquire, manage,
deal with and dispose of all or any part of the Agency Trust property, for cash or
credit and upon any reasonable terms and conditions;
(d) To make deposits, with any bank or savings and loan institution, including
any such facility of the Trustee or an affiliate thereof provided that the deposit
bears a reasonable rate of interest;
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(e) To invest and reinvest the Assets, or any part thereof in anyone or more
collective investment trust funds, including common and group trust funds that
consist exclusively of assets of exempt pension and profit sharing trusts and
individual retirement accounts qualified and tax exempt under the Code, that are
maintained by the Trustee or an affiliate thereof. The declaration of trust or plan
of operations for any such common or collective fund is hereby incorporated
herein and adopted into this Trust Agreement by this reference. The combining of
money and other assets of the Agency Trust with money and other assets of other
non-qualified trusts in. such fund or funds is. specifically authorized.
Notwithstanding anything to the contrary in this Trust Agreement, the Trustee
shall have full investment responsibility over assets of the trust invested in such
commingled funds. If the plan and trust for any reason lose their tax exempt
status, and the Assets have been commingled with assets of other tax exempt
trusts in Trustee's collective investment funds, the Trustee shall within 30 days of
notice of such loss of tax exempt status, liquidate the Agency Trust's units of the
collective investment fund(s) and invest the proceeds in a money market fund
pending investment or other instructions from the Plan Administrator. The
Trustee shall not be liable for any loss or gain or taxes, if any, resulting from said
liquidation;
(f) To place uninvested cash and cash awaiting distribution in one or more
mutual funds and/or commingled investment funds maintained by or made
available by the Trustee or any of its affiliates, and to receive compensation from
the sponsor of such fund(s) for services rendered, separate and apart from any
Trustee's fees hereunder. The Trustee or its affiliate may also be compensated for
providing investment advisory services to any mutual fund or commingled
investment funds;
(g) To borrow money for the purposes of the Agency Trust from any source
with or without giving security; to pay interest; to issue promissory notes and to
secure the repayment thereof by pledging all or any part of the Assets;
(h) To take all of the following actions: to vote proxies of any stocks, bonds
or other securities; to give general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto; to consent to
or otherwise participate in corporate reorganizations or other changes affecting
corporate securities and to delegate discretionary powers and to pay any
assessments or charges in connection therewith; and generally to exercise any of
the powers of an owner with respect to stocks, bonds, securities or other property
held in the Agency Trust;
(i) To make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be necessary
or appropriate to carry out the powers herein granted;
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PARS 115 Trost.
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G) To raze or move existing buildings; to make ordinary or extraordinary
repairs, alterations or additions in and to buildings; to construct buildings and
other structures and to install fixtures and equipment therein;
(k) To payor cause to be paid from the Agency Trust any and all real or
personal property taxes, income taxes or other taxes or assessments of any or all
kinds levied or assessed upon or with respect to the Agency Trust;
. (1) To exercise all the further rights, powers, option~ and privileges granted,
provided for, or vested in trustees generally under applicable federal or California
State laws, as amended from titne to time, it being intended that, except as herein
otherwise provided, the powers conferred upon the Trustee herein shall not be
construed as being in limitation of any authority conferred by law, but shall be
construed as consistent or in addition thereto.
4.2 Additional Trustee Powers
In addition to the other powers enumerated above, the Trustee in any and all
events is authorized and empowered:
(a) To invest funds pending required directions in any type of interest-bearing
account including without limitation, time certificates of deposit or interest-
bearing accounts issued by Union Bank of California, N.A., or any mutual fund or
short tenn investment fund ("Fund"), whether sponspred or advised by Union
Bank of California or any affiliate thereof; Union Bank of California, N.A. or its
affiliates may be compensated for providing such investment advice and
providing other service to such Fund, in addition to any Trustee's fees received
pursuant to this Trust Agreement;
(b) To cause all or any part of the Agency Trust to be held in the name of the
Trustee (which in such instance need not disclose its fiduciary capacity) or, as
permitted by law, in the name of any nominee, and to acquire for the Agency
Trust any investment in bearer form, but the books and records of the Agency
Trust shall at all times show that all such investments are a part of the Agency
Trust and the Trustee shall hold evidences of title to all such investments;
(c) To serve as custodian with respect to the Agency Trust Assets;
(d) To employ such custodians, agents and counsel as may be reasonably
necessary in managing and protecting the Assets and to pay them reasonable
compensation from the Agency Trust; to employ any broker-dealer or other agent,
including any broker-dealer or other agent affiliated with the Trustee, and pay to
such broker-dealer or other agent, at the expense of the Agency Trust, its standard
commissions or compensation; to settle, compromise or abandon all claims and
demands in favor of or against the Agency Trust; and to charge any premium on
bonds purchased at par value to the principal of the Agency Trust without
amortization from the Agency Trust, regardless of any law relating thereto;
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(e) In addition to the powers listed herein, to do all other acts necessary or
desirable for the proper administration of the Agency Trust, as though the
absolute owner thereof;
(f) To prosecute, compromise and defend lawsuits, but without obligation to
do so, all at the risk and expense of the Agency Trust; and to tender its defense to
the Employer in any legal proceeding where the interests of the Trustee and the
Employer are not adverse;
(g) To exercise and perform any and all of the other powers and duties
specified in this Trust Agreement or the Plan;
(h) To permit such inspections of documents at the principal office of the
Trustee as are required by law, subpoena or demand by a United States agency;
(i) To comply with all requirements imposed by applicable provisions oflaw;
(j) To seek written instructions from the Plan Administrator or other fiduciary
on any matter and await their written instructions without incurring any liability.
If at any time the Plan Administrator or the fiduciary should fail to give directions
to the Trustee, the Trustee may act in the manner that in its discretion seems
advisable under the circumstances for carrying out the purposes of the Agency
Trust;
(k) To compensate such executive, consultant, actuarial, accounting,
investment, appraisal, administrative, clerical, secretarial, medical, custodial,
depository and legal firms, personnel and other employees or assistants as are
engaged by the Plan Administrator in connection with the administration of the
Plan and to pay from the Agency Trust the necessary expenses of such finns,
personnel and assistants, to the extent not paid by the Plan Administrator;
(1) To act upon proper written directions of the Plan Administrator or
Delegatee, including directions given by photostatic transmissions using facsimile
signature, and such other forms of directions as the parties shall agree;
(m) To pay from the Agency Trust the expenses reasonably incurred in the
administration of the Agency Trust as provided in the Plan;
(n) To maintain insurance for such purposes, in such amounts and with such
companies as the Plan Administrator shall elect, including insurance to cover
liability or losses occurring by reason of the acts or omissions of fiduciaries but
only if such insurance permits recourse by the insurer against the fiduciary in the
case of a breach of a fiduciary obligation by such fiduciary.
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ARTICLE V
INVESTMENTS
5.1 Discretionary Versus Directed Investment
The Employer shall elect either a discretionary or directed investment approach.
If the Employer elects a discretionary investment approach, the Employer shall
further elect between the various investment strategies offered and the Trustee, in
accOrdance with Article IV, shall have absolute discretion over the investment of
the Assets held in the Agency Trust. If the Employer elects a directed investment
approach, the Trustee shall direct the investment of the Assets of the Agency
Trust in accordance with the direction provided by such Employer.
5.2 Trustee Fees
As may be agreed upon, in writing, between the Plan Administrator and Trustee,
the Trustee will be paid reasonable compensation for services rendered or
reimbursed for expenses properly and actually incurred in the performance of
duties with respect to the Agency Trust or the Trust Program.
5.3 Contributions
Eligible Employees are not pennitted to make contributions to the Trust Program.
The Plan Administrator shall, on behalf of the Employer, make all contributions
to the Trustee. Such contributions shall be in cash unless the Trustee agrees to
accept a contribution that is not in cash. All contributions shall be paid to the
Trustee for investment and reinvestment pursuant to the terms of this Trust
Agreement. The Trustee shall not have any duty to determine or inquire whether
any contributions to the Agency Trust made to the Trustee by any Plan
Administrator are in compliance with the Employer's policies and/or collective
bargaining agreements; nor shall the Trustee have any duty or authority to
compute any amount to be paid to the Trustee by any Plan Administrator; nor
shall the Trustee be responsible for the collection or adequacy of the contributions
to meet an Employer's OPEB Obligation, as may be determined under GASB
Statement No. 45. The contributions received by the Trustee from each Employer
shall be held and administered pursuant to the terms hereof without distinction
between income and principal.
5.4 Records
(a) The Trustee shall maintain accurate records and detailed accounts of all
investments, receipts, disbursements and other transactions hereunder at the Trust
level. Such records shall be available at all reasonable times for inspection by the
Trust Administrator. The Trustee shall, at the direction of the Trust
Administrator, submit such valuations, reports or other information as the Trust
Administrator may reasonably require.
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(b) The Assets of the Agency Trust shall be valued at their fair market value
on the date of valuation, as determined by the Trustee based upon such sources of
information as it may deem reliable; provided, however, that the Plan
Administrator shall instruct the Trustee as to valuation of assets which are not
readily detenninable on an established market. The Trustee may rely
conclusively on such valuations provided by the Plan Administrator and shall be
indemnified and held harmless by the Employer with respect to such reliance. If
the P~an Administrator faiis to provide such values, the Trustee may take
whatever action it deems reasonable, including employment of attorneys,
appraisers or other professionals, the expense of which will be an expense of
administration of the Agency Trust. Transactions in the account involving such
hard to value assets may be postponed until appropriate valuations have been
received and Trustee shall have no liability therefore.
5.5 Statements
(a) Periodically as specified, and within sixty days after December 31, or the
end of the Trust's fiscal year if different, Trustee shall render to the Trust
Administrator as directed, a written account showing in reasonable summary the
investments, receipts, disbursements and other transactions engaged in by the
Trustee during the preceding fiscal year or period with respect to the Trust. Such
account shall set forth the assets and liabilities of the Trust valued as of the end of
the accounting period.
(b) The Trust Administrator may approve such statements either by written
notice or by failure to express objections to such statements by written notice
delivered to the Trustee within 90 days from the date the statement is delivered to
the Trust Administrator. Upon approval, the Trustee shall be released and
discharged as to all matters and items set forth in such statement as if such
account had been settled and allowed by a decree from a court of competent
jurisdiction.
5.6 Wire Transfers
The Trustee shall follow the Plan Administrator's, Delegatee's, or Trust
Administrator's wire transfer instructions in compliance with the written security
procedures provided by the party providing the wire transfers. The Trustee shall
perform a telephonic verification to the Plan Administrator, Trust Administrator,
or Delegatee, or such other security procedure as selected by the party providing
wire transfer directions, prior to wiring funds or following facsimile directions as
Trustee may require. The Plan Administrator assumes the risk of delay of transfer
if Trustee is unable to reach the Plan Administrator, or in the event of delay as a
result of attempts to comply with any other security procedure selected by the
directing party.
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5.7 Exclusive Benefit
The Assets of the Agency Trust shall be held in trust for the exclusive purpose of
providing post-employment health care and welfare benefits to the Eligible
Employees of the Employer pursuant to the Employer's policies and/or applicable
collective bargaining agreements, and defraying the reasonable expenses
associated with the providing of such benefits, and shall not be used for or
diverted to any other purpose. No party shall have authority to use or divert the
Assets of an Agency Trust of an Employer for the payment of post-employment
health care and welfare benefits or expenses of any other Employer.
5.8 Delegation of Duties
The Plan Administrator, Delegatee, or Trust Administrator, may at any time retain
the Trustee as its agent to perform any act, keep any records or accounts and make
any computations that are required of the Plan Administrator, Delegatee or Trust
Administrator by this Trust Agreement or by the Plan. The Trustee may be
compensated for such retention and such retention shall not be deemed to be
contrary to this Trust Agreement.
5.9 Distributions
The Trustee shall, from time to time, upon the written direction of the Plan
Administrator or Delegatee, make distributions from the Assets of the Agency
Trust to the insurers, third party administrators, health care and welfare providers
or other entities providing Plan benefits or services, or to the Employer for
reimbursement of Plan benefits and expenses paid by the Employer in such
manner in such formes), in such amounts and for such purposes as may be
specified in such directions.
In no event shall the Trustee have any responsibility respecting the application of
such distributions, nor for determining or inquiring into whether such
distributions are in accordance with the Employer's policies and/or applicable
collective bargaining agreements.
ARTICLE VI
FIDUCIARY RESPONSffiILITIES
6.1 More Than One Fiduciary Capacity
Anyone or more of the fiduciaries with respect to the Trust Agreement or the
Agency Trust may, to the extent required thereby or as directed by the Plan
Administrator pursuant to this Trust Agreement, serve in more than one fiduciary
capacity with respect to the Trust Agreement and the Agency Trust.
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6.2 Fiduciary Discharge of Duties
Except as otherwise provided by applicable law, each fiduciary shall discharge
such fiduciary's duties with respect to the Trust Agreement and the Agency Trust:
(a) solely in the interest of the Eligible Employees and for the exclusive
purpose of providing post-employment health care and welfare benefits to
Eligible Employees, and defraying reasonable administrative and actuarial
expenses associated with providing such benefits; and
(b) with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of like character and with like
aims.
6.3 Limitations on Fiduciary Responsibility
To the extent allowed by the laws of the state of each Employer:
No fiduciary shall be liable with respect to a breach of fiduciary duty by any other
fiduciary if such breach was committed before such party became a fiduciary or
after such party ceased to be a fiduciary.
No fiduciary shall be liable for a breach by another fiduciary except as provided
by law.
No fiduciary shall be liable for carrying out a proper direction from another
fiduciary, including refraining from taking an action in the absence of a proper
direction from the other fiduciary possessing the authority and responsibility to
make such a direction, which direction the fiduciary in good faith believes to be
authorized and appropriate.
6.4 Indemnification of Trustee by Employer
The Trustee shall not be liable for, and Employer shall (to the extent allowed by
the laws of the state of each Employer) indemnify, defend (as set out in 6.8 of this
Trust Agreement), and hold the Trustee (including its officers, agents, employees
and attorneys) and other Employers harmless from and against any claims,
demands, loss, costs, expense or liability imposed on the indemnified party,
including reasonable attorneys' fees and costs incurred by the indemnified party,
arising as a result of Employer's active or passive negligent act or omission or
willful misconduct in the execution or performance of its duties under this Trust
Agreement.
PARS 115Tmst.
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6.5 Indemnification of Employer by Trustee
The Employer shall not be liable for, and Trustee shall (to the extent allowed by
the laws of the state of each Employer) indemnifY, defend (as set out in 6.8 of this
Trust Agreement), and hold the Employer (including its officers, agents,
employees and attorneys) and other Employers harmless from and against any
claims, demands, loss, costs, expense or liability imposed on the indemnified
party, including reasonable attorneys' fees and costs incurred by the indemnified
party, arising as a result of Trustee's active or passive negligent act or omission or
willful miscOnduct in the execution or performance of its duties under this Trust
Agreement.
6.6 Indemnification of Trustee by Trust Administrator
The Trustee shall not be liable for, and Trust Administrator shall (to the extent
allowed by the laws of the state of each Employer) indemnifY and hold the
Trustee (including its officers, agents, employees and attorneys) harmless from
and against any claims, demands, loss, costs, expense or liability imposed on the
indemnified party, including reasonable attorneys' fees and costs incurred by the
indemnified party, arising as a result of Trust Administrator's active or passive
negligent act or omission or willful misconduct in the execution or performance
of its duties under this Trust Agreement.
6.7 Indemnification of Trust Administrator by Trustee
The Trust Administrator shall not be liable for, and Trustee shall (to the extent
allowed by the laws of the state of each Employer) indemnifY and hold the Trust
Administrator (including its officers, agents, employees and attorneys) harmless
from and against any claims, demands, loss, costs, expense or liability imposed on
the indemnified party, including reasonable attorneys' fees and costs incurred by
the indemnified party, arising as a result of Trustee's active or passive negligent
act or omission or willful misconduct in the execution or performance of its duties
under this Trust Agreement.
6.8 Indemnification Procedures
Promptly after receipt by an indemnified party of notice or receipt of a claim. or
the commencement of any action for which indemnification may be sought, the
indemnified party will notifY the indemnifying party in writing of the receipt or
commencement thereof. When the indemnifying party has agreed to provide a
defense as set out above that party shall assume the defense of such action
(including the employment of counsel, who shall be counsel reasonably
satisfactory to such indemnitee) and the payment of expenses, insofar as such
action shall relate to any alleged liability in respect of which indemnity may be
sought against the indemnifying party. Any indemnified party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense of
PARS 115 Trust.
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the indemnifying party unless (i) the employment of such counsel has been
specifically authorized by the indemnifying party or (ii) the named parties to any
such action (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interest between them.
The indemnifying party shall not be liable to indemnify any person for any
settlement of any such action effected without the indemnifying party's consent.
6.9 No Joint and Several Liability
This document is not intended to and does not create any joint powers agreement
or any joint and several liability. No Employer shall be responsible for any
contributions, costs or distributions of any other Employer.
ARTICLE VII
AMENDMENT, TERMINATION AND MERGER
7.1 No Obligation to Continue Trust
Continuance of the Agency Trust, participation in the Trust Program and
continuation of the Employer's policies and/or applicable collective bargaining
agreements that provide post-employment health care and welfare benefits are not
assumed as a contractual obligation of the Employer.
7.2 Amendments
(a) This Trust Agreement may only be amended as provided herein. Two-
thirds majority or greater of the Employers shall have the right to amend this
Trust Agreement from time to time, and to similarly amend or cancel any
amendments. A copy of all amendments shall be delivered to the Trustee, the
Trust Administrator and Plan Administrators promptly as each is made. The
Trust Administrator (without the requirement of a vote of Employers) shall have
the right to amend this Trust Agreement from time to time for the purpose of
keeping the Trust Agreement in compliance with the Code and applicable state
law.
(b) Such amendments shall be set forth in an instrument in writing executed
by the amending party, the Trust Administrator and the Trustee. Any amendment
may be current, retroactive or prospective, provided, however, that no amendment
shall;
(1) Cause the Assets of any Agency Trust to be used for or diverted to
purposes other than for the exclusive benefit of Eligible Employees of the
PARS lIS Trust.
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Employer or for the purpose of defraying the reasonable expenses of
administering such Agency Trust.
(2) Have any retroactive effect so as to reduce the benefits of any
Eligible Employees as of the date the amendment is adopted, except that
such changes may be made as may be required to permit this Trust
Agreement to meet the requirements of applicable law.
(3) C~ange or modify the duties, powers or liabilities of the Trustee or
the Trust Administrator hereunder without its consent.
(4) Permit the Assets of any Agency Trust to be used for the benefit of
any other Employer unless the Employer agrees to such use.
7.3 Termination of Plan
A termination of the Employer's obligation to provide OPEB pursuant to its
policies and/or applicable collective bargaining agreements for which the Agency
Trust was established shall not, in itsel~ effect a termination of the Agency Trust.
Upon any termination of the Employer's obligation to provide OPEB pursuant to
its policies and/or applicable collective bargaining agreements, the Assets of the
Agency Trust shall be distributed by the Trustee when directed by the Plan
Administrator. From and after the date of such termination and until final
distribution of the Assets the Trustee shall continue to have all the powers
provided herein as are necessary or expedient for the orderly liquidation and
distribution of such assets, and the Agency Trust shall continue until the Assets
have been completely distributed in accordance with the Employer's policies
and/or applicable collective bargaining agreements to the extent that such
distribution constitutes the exercise of an "essential governmental function"
within the meaning of Section 115 of the Code. Any Assets remaining in the
Agency Trust after giving effect to the foregoing sentence shall be paid to the
Employer to the extent permitted by law and consistent with the requirements of
Section 115 of the Code.
7.4 Fund Recovery Based on Mistake of Fact
Except as hereinafter provided, the Assets of the Agency Trust shall never inure
to the benefit of the Employer. The Assets shall be held for the exclusive
purposes of providing post-employment health care and welfare benefits to
Eligible Employees and defraying reasonable expenses of administering the
Agency Trust. However, in the case of a contribution which is made by an
Employer because of a mistake of fact, that portion of the contribution relating to
the mistake of fact (exclusive of any earnings or losses attributable thereto) may
be returned to the Employer, provided such return. occurs within two (2) years
after discovery by the Employer of the mistake. If any repayment is payable to
the Employer, then, as a condition to such repayment, and only if requested by
PARS 115 Trust.
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Trustee, the Employer shall execute, acknowledge and deliver to the Trustee its
written undertaking, in a form satisfactory to the Trustee, to indemnify, defend
and hold the Trustee harmless from all claims, actions, demands or liabilities
arising in connection with such repayment.
7.S Termination
This Trust Agreement may be tenninated only by the Trust Administrator
(without the requirement of a vote of Employers), or by a unanimous agreeinent
of all Employers. Such action must be in writing and delivered to the Trustee and
Trust Administrator.
ARTICLE VIn
MISCELLANEOUS PROVISIONS
8.1 Nonalienation
Eligible Employees do not have an interest in the Agency Trust. Accordingly, the
Agency Trust shall not in any way be liable to attachment, garnishment,
assignment or other process, or be seized, taken, appropriated or applied by any
legal or equitable process, to pay any debt or liability of an Eligible Employee or
any other party. Agency Trust Assets shall not be subject to the claims of the
Employer or the claims of its creditors.
8.2 Saving Clause
In the event any provision of this Trust Agreement and each Agency Trust are
held illegal or invalid for any reason, said illegality or invalidity shall not affect
the remaining parts of the Trust Agreement and/or Agency Trust, but this
instrument shall be construed and enforced as if said provision had never been
included.
8.3 Applicable Law
This Trust Agreement and each Agency Trust shall be construed, administered
and governed under the Code and the law of the State of California. To the extent
any of the provisions of this Trust Agreement are inconsistent with the Code or
applicable state law, the provisions of the Code or state law shall control. In the
event, however, that any provision is susceptible to more than one interpretation,
such interpretation shall be given thereto as is consistent with the Trust
Agreement being a tax-exempt trust within the meaning of the Code.
PARS 115 TIust.
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8.4 Joinder of Parties
In any action or other judicial proceedings affecting this Trust Agreement, it shall
be necessary to join as parties only the Trustee, the Plan Administrator or
Delegatee. No participant or other persons having an interest in any Agency Trust
shall be entitled to any notice or service of process unless otherwise required by
law. Any judgment entered in such a proceeding or action shall be binding on all
persons claiming under this Trust Agreement; provided, however, that nothing.in
this Trust Agreement shall be construed as to deprive a participant of such
participant's right to seek adjudication of such participant's rights under applicable
law.
8.5 Employment of Counsel
The Trustee may consult with legal counsel (who may be counsel for the Trustee,
the Trust Administrator or any Employer) with respect to the interpretation of this
Agreement or the Trustee's duties hereunder or with respect to any legal
proceedings or any questions of law and shall be entitled to take action or not to
take action in good faith reliance on the advice of such counsel and charge the
Agency Trust.
8.6 Gender and Number
Words used in the masculine, feminine or neuter gender shall each be deemed to
refer to the other whenever the context so requires; and words used in the singular
or plural number shall each be deemed to refer to the other whenever the context
so reqUIres.
8.7 Headings
Headings used in this Trust Agreement are inserted for convenience of reference
only and any conflict between such headings and the text shall be resolved in
favor of the text.
8.8 Counterparts
The Adoption Agreement of this Trust Agreement may be executed in an original
and any number of counterparts by the Plan Administrator (executing an
Adoption Agreement), the Trust Administrator and the Trustee, each of which
shall be deemed to be an original of the one and the same instrument.
"'*"'''''''''''''''' Signature Page Follows "'***......**
PARS ll5 Trust.
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The Trustee and the Trust Administrator have executed this Trust Agreement by
their duly authorized agents on the dates set forth below their names, to be effective on
November 1, 2005.
The Employer has adopted this Trust Agreement by execution of the Adoption
Agreement by the Plan Administrator, who is the duly authorized agent of the Employer, .
to be effective on the date the Trustee receives Plan Assets to be held in trust hereunder.
UNION BANK OF CALIFORNIA
"Trustee"/~7 '\ / .
By: . rLV~
Signature JOHN FULTON
I/lel!' PRESIDENT &: TRUST nmcl:i'I
Typed or printed name
Its:
By: J/~ /}n~
Signature
Typed~=~=
Its: TRUST QFFfClR
Date:
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PARS liS Trust.
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PUBLIC AGENCY
RETIREMENT SERVICES
"Trust Administrator.'
By:
Date: November 3. 2005
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INVESTMENT GUIDELINES DOCUMENT
City of Bakersfield
City of Bakersfield Investment Guidelines
January 2007
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Investment Guidelines Document
Overview
In response to the Government Accounting Standards Board (GAS B)
Statement Number 45 new disclosure requirements for Other Post-
employment Benefit (OPE B) Plans, the City of Bakersfield has initiated a
retirement Plan that seeks to satisfy these Plan liabilities for certain eligible
employees. The City has created a Plan to recognize the obligation to
provide for future retiree healthcare benefits.
Executive Summary
Client Name:
City of Bakersfield
Type of Account:
Retirement Plan
Investment Authority: Full Investment Authority
Account Number(s): To be determined
Current Assets: $4,800,000 (Est. June 2007)
Risk Tolerance: Moderately Conservative
Time Horizon: Long-Term
Investment Objective: The primary objective is to maximize total Plan return,
subject to the risk and quality constraints set forth below. The Plan has selected the
Moderately Conservative Objective.
Strategic Ranges:
o - 20% Cash
50 - 80% Fixed Income
20 - 40% Equity
Communication Schedule:
Committee meetings at least annually.
Monthly statements.
HCM Portfolio Manager:
Andrew Brown, CF A 415-705-7605
Andrew. Brown(Q>.U boc.com
HCM Back up -Portfolio Manager:
Delbert Chang CFA 415-705-7603
Delbert. Chana(Q>.Uboc.com
John Fulton, 415-273-2508
John. Fulton(Q>.U boc.com
UBOC Administrative Officer:
The managing director for HighMark Capital Management is Kevin Rogers, he can be reached at 949-553-2580
City of Bakersfield Investment Guidelines
January 2007
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Portfolio Constraints
Income Needs/Cash Flow Required: Monthly liquidity needs are anticipated to be modest in
the initial years of the Plan.
Unique Needs and Circumstances: None
Client(s) Signature: Date:
HCM Portfolio Manager: Date:
USOC Administrative Officer: Date:
City of Bakersfield Investment Guidelines
January 2007
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Detailed Information for
Investment Guidelines Document
Overview
The purpose of this Investment Guidelines document (IGO) is to assist you and your Portfolio
Manager in effectively supervising, monitoring and evaluating the investment of your portfolio.
Your investment program is defined in the various sections of the IGO by:
1. Stating in a written document your attitudes, expectations, objectives and guidelines for
the investment of all assets.
2. Setting forth an investment structure for managing your portfolio. This structure includes
various asset classes, investment management styles, asset allocation and acceptable
ranges that, in total, are expected to produce an appropriate level of overall diversification
and total investment return over the investment time horizon.
3. Encouraging effective communications between you and your Portfolio Manager.
4. Complying with all applicable fiduciary, prudence and due diligence requirements
experienced investment professionals would utilize, and with all applicable laws, rules
and regulations from various local, state, and federal entities that may impact your assets
Diversification
Your Portfolio Manager is responsible for maintaining the balance between fixed income and
equity securities based on the asset allocation. The following parameters shall be adhered to in
managing the portfolio:
Fixed Income
. The long-term fixed income investments (greater than seven-years in maturity)
shall constitute no more than 30%, and as little as 0% of the total Plan assets.
. The intermediate-term fixed income investments (between three-seven years in
maturity) shall constitute no more than 60%, nor less than 20% of the total Plan
assets.
. The high-yield portion of the Plan shall constitute no more than 10%, and as little
as 0% of the total Plan assets.
. The convertible bond exposure shall constitute no more than 10%, and as little as
0% of the total Plan assets.
. The short-term fixed income investments (between one-three years in maturity)
shall constitute no more than 25%, and as little as 0% of the total Plan assets.
Equity
. The domestic large cap equity investments of the Plan shall constitute no more
than 30% nor less than 10% of the total Plan assets.
. The domestic mid-capitalization equity investments of the Plan shall constitute no
more than 10%, and as little as 0% of the total Plan assets.
. The domestic small capitalization equity investments of the Plan shall constitute no
more than 15% nor less than 0% of the total Plan assets.
January 2007
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City of Bakersfield Investment Guidelines
4
· The international equity investments of the Plan shall constitute no more than 15%
and as little as 0% of the total Plan assets.
· The real estate investments of the Plan shall constitute no more than 10% and as
little as 0% of the total Plan assets.
Permitted Asset Classes and Security Tv Des
The following asset classes and security types have been approved by HighMark for use in client
portfolios:
Asset Classes
. Fixed Income
o Domestic Bonds
o Non-U.S. Bonds
. Equities
o Domestic
o Non-U.S.
o Emerging Markets
o Real Estate Investment Trust (REITs)
. Cash and Cash Equivalents
Security Types
. Equity Securities
o Domestic listed and unlisted securities
o Equity and equity-related securities of non-US corporations, in the form of
American Depository Receipts ("ADRs")
. Equity Mutual Funds
o Large Cap Growth and Value
o Mid Cap Core
o Small Cap Growth and Value
o International and Emerging Markets
o REITs
. Exchange Traded Funds (ETFs)
. Fixed Income Securities
o Government/Agencies
o Mortgage Backed Bonds
o Corporate Bonds and Notes
o Unit Trusts
. Fixed Income Mutual Funds
o Corporate
o Government
o High Yield
o International and Emerging Market
o Convertible
o Preferred
. Closed end funds
. Cash and Cash Equivalents
o Money Market Mutual Fund
o Commercial Paper
o CDs and Bankers Acceptance
o Guaranteed Investment Contracts (GICs)
January 2007
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City of Bakersfield Investment Guidelines
5
Prohibited assets
· Precious metals
· Venture Capital
· Short sales
· Purchases of Letter Stock, Private Placements, or direct payments
· Leveraged Transactions
· Commodities Transactions Puts, calls, straddles, or other option strategies,
· Purchases of real estate, with the exception of REITs
· Derivatives, with exception of ETFs
Rebalancina Procedures
From time to time, market conditions may cause your asset allocation to vary from the
established target. To remain consistent with the asset allocation guidelines established by this
Investment Guidelines document, your Portfolio Manager will rebalance the portfolio on a
quarterly basis.
Performance obiectives
· The Plan targets the following blended benchmark: 65% lehman Brothers Intermediate
Government/Credit Index, 20% S&P500 Stock Index, 5% MSCI EAFE Index, 5% Russell
2000 Index, and 5% 91-day treasury bills.
Duties of ResDonsibilities of Portfolio Manaaer
Your portfolio manager is expected to manage your portfolio in a manner consistent with this
Investment Guidelines document and in accordance with State and Federal law and the Uniform
Prudent Investor Act. HighMark Capital Management is a registered investment advisor and shall
act as such until you decide otherwise.
Your portfolio manager shall be responsible for:
1. Designing, recommending and implementing an appropriate asset allocation
consistent with the investment objectives, time horizon, risk profile, guidelines and
constraints outlined in this statement.
2. Advising the committee about the selection of and the allocation of asset categories.
3. Identifying specific assets and investment managers within each asset category.
4. Monitoring the performance of all selected assets.
5. Recommending changes to any of the above.
6. Periodically reviewing the suitability of the investments, being available to meet with
the committee at least once each year, and being available at such other times within
reason at your request.
7. Preparing and presenting appropriate reports.
8. Informing the committee if changes occur in personnel that are responsible for
portfolio management or research.
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City of Bakersfield Investment Guidelines
January 2007
6
You shall be responsible for:
1. The oversight of the investment portfolio.
2. Providing your portfolio manager with all relevant information on the Plan, and shall
notify him or her promptly of any changes to this information.
3. Advising your portfolio manager of any change in the Plan's circumstances, such as
a change in the actuarial assumptions, which could possibly necessitate a change to
your overall risk tolerance, time horizon or liquidity requirements; and thus would
dictate a change to your overall investment objective and goals for the portfolio.
4. Monitoring performance by means of regular reviews to assure that objectives are
being met and that the policy and guidelines are being followed.
Communication
As a matter of course, your portfolio manager shall keep you apprised of any material changes in
HighMark Capital's outlook, recommended investment policy and tactics. In addition, your
portfolio manager shall meet with you no less than annually to review and explain the portfolio's
investment results and any related issues. Your portfolio manager shall also be available on a
reasonable basis for telephone communication when needed.
Any material event that affects the ownership of HighMark Capital Management or the
management of the portfolio must be reported immediately to you.
ReDortina
1. Union Bank of California shall provide you with a report each month that lists all
assets held, values for each asset, and all transactions affecting assets within the
portfolio, including additions and withdrawals.
Disclosures
Union Bank of California, N.A. and HighMark Capital Management, Inc. are wholly owned
subsidiaries of UnionBanCal Corporation. Investments are not deposits or bank obligations, are
not guaranteed by any government agency, and involve risk, including loss of principal. When
investing in mutual funds (including ETFs) please read the prospectuses carefully. Guaranteed
Investment Contracts (GICs) are insurance products and are regulated by state insurance
authorities.
City of Bakersfield Investment Guidelines
January 2007
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