HomeMy WebLinkAboutRES NO 190-01 190-01,
RESOLUTION NO..
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, the City wishes to implement recently passed changes to the laws
governing section 457 Deferred Compensation Plan as part of the Economic Growth and
Tax Relief Reconciliation Act of 2001 (EGTRRA); and
WHEREAS, this Council is approving the increased contribution amounts allowed
in the attached amended Deferred Compensation Plan contingent on the State of
California approving the necessary legislation to implement those provisions of EGTRRA;
and
WHEREAS, the City Council recognizes that the City of Bakersfieid'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 Bakersfieid'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.
Page 1 of 3
o
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
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.
Page 2 of 3
I HEREBY CERTIFY that the foregoing Resolution was passed an~l~opted by the
Council of the City of Bakersfield at a regular meeting thereof held on 12 2001 ,
by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
COUNCIL MEMBER CARSON, HANSEN, MAGGARD, COUCH, BENHAM, SULLIVAN, SALVAGGIO
COUNCIL MEMBER ~
COUNCIL MEMBER ~.Y~C'~2.~
COUNCIL MEMBER ~.~F'~ ~
APPROVED DEC 12 Z001
MAYOR of Bakersfield
CITY CLERK and Ex Officio ~erk of the
Council of the City of Bakersfield
APPROVED as to form:
CITY ATTORNEY'S OFFICE
ROBERT M. SHERFY
Assistant City Attorney
RMS:dlr
Attachment
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Page 3 of 3
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
Mamh 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,
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.
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December 3, 2(X)l -- Page 1 of 22 Pages --
(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.
(¢) "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) "Automatic Distribution Date": Prior to January 1, 2002, "Automatic
Distribution Date" means the 60th day of the calendar year after the Plan Year of the
Participant's retirement or any other date permitted under the regulations promulgated
under Code Section 457. On and after January 1, 2002, "Automatic Distribution Date"
means April l~t of the calendar year after the Plan Year the Participant attains age 70½ or,
if later, has a Severance Event.
(f) "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.
(g) "City" shall mean the City of Bakersfield, California.
(h) "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.
(i) "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.
(j) "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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(k) "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. "Deferred Compensation" also means any
amount credited to a Participant's Account by reason of a transfer under Section 5.08, a
rollover under Section 5.10, or any other amount which the Employer agrees to credit to
a Participant's Account.
(I) "Disability" shall mean the inability of a Participant to engage in his or
her usual occupation by reason of a medically determinable physical or mental impairment
as determined by the Employer on the basis of advice from a competent physician or
physicians.
(m) "Dollar Limitation" shall mean the applicable dollar amount within the
meaning of Section 457(b)(2)(A) of the Code, as adjusted for the cost-of-living in
accordance with Section 457(e)(15) of the Code.
(n) "Employee" shall mean any full-time, probationary or permanent
employee or elected official of the Employer.
(o) "Employer" shall mean the City of Bakersfield, California.
(p) "457 Catch-Up Dollar Limitation": Prior to January 1,2002, "457 Catch-
Up Dollar Limitation means Fifteen Thousand Dollars ($15,000). On and after January 1,
2002, "457 Catch-Up Dollar Limitation" means twice the Dollar Limitation.
(q) "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.
(r) "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
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Decernber 3, 2001 -- Page 3 of 22 Pages --
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.
(s) "Normal Compensation" shall mean the amount of Compensation that
would be payable to a Participant by the Employer for a taxable year if no Joinder
Agreement were in effect to defer compensation under this Plan.
(t) "Normal Limitation" shall mean the maximum amount of Deferred
Compensation for any Participant for any taxable year (other than the amounts referred to
in Sections 5.08 and 5.10).
(u) "Normal Retirement Age" shall mean age 70%, unless the Participant
has elected an alternate Normal Retirement Age by written instrument delivered to the
Administrator prior to a Severance Event. A Participant's Normal Retirement Age
determines the period during which a Participant may utilize the 457 Catch-Up Dollar
Limitation of Section 4.02 hereunder. Once a Participant has to any extent utilized the
catch-up limitation of Section 4.02(b), his Normal Retirement Age may not be changed.
A Participant's alternate Normal Retirement Age may not be
earlier than the earliest date that the Participant will become eligible to retire and receive
unreduced retirement benefits under the Employer's Basic Retirement Plan covering the
Participant and may not be later than the date the Participant will attain age 70%. If a
Participant continues employment after attaining age 70%, not having previously elected
alternate Normal Retirement Age, the Participant's alternate Normal Retirement Age shall
not be later than the mandatory retirement age, if any, established by the Employer, or the
age at which the Participant actually has a Severance Event if the Employer has no
mandatory retirement age. If the Participant will not become eligible to receive benefits
under a Basic Retirement Plan maintained by the Employer, the Participant's alternate
Normal Retirement Age may not be earlier than age 55 and may not be later than age 70%.
(v) "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 Mamh 18, 1974 and subsequently amended.
(w) "Pementage Limitation": Prior to January 1, 2002, the Percentage
Limitation means 33 1/3% of the Participant's Includible Compensation for the taxable
year, which will ordinarily be equivalent to the lesser of the Dollar Limitation in effect for the
taxable year or 25% of the Participant's Normal Compensation. After December 31,2001,
the Pementage Limitation means 100% of the Participant's Includible Compensation for
the taxable year which will ordinarily be equivalent to the lesser of the Dollar Limitation in
effect for the taxable year or 50% of the Participant's Normal Compensation.
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December 3, 2001
(x) "Plan Year" shall mean the calendar year in which the Plan becomes
effective, and each succeeding calendar year during the existence of this Plan.
(y) "Retirement" shall mean the first date upon which both of the following
shall have occurred with respect to a Participant: Severance Event and attainment of age
65.
(z) "Severance Event": Prior to January 1, 2002, severance of the
Participant's employment with the Employer that constitutes a "Separation from Service"
within the meaning of Section 402(e)(4)(D)(iii) of the Code. After December 31,2001, a
Severance Event means a severance of the Participant's employment with the Employer
within the meaning of Section 457(d)(1)(A)(ii) of the Code.
In general, a Participant shall be deemed to have experienced a
Severance Event for purposes of this Plan when, in accordance with the established
practices of the Employer, the employment relationship is considered to have actually
terminated. In the case of a Participant who is an independent contractor of the Employer,
a Severance Event shall be deemed to have occurred when the Participant's contract
under which services are performed has completely expired and terminated, there is no
foreseeable possibility that the Employer will renew the contract or enter into a new
contract for the Participant's services, and it is not anticipated that the Participant will
become an Employee of the Employer, or such other events as may be permitted under
the Code.
(aa) "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.
(bb) "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
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 cimumstances 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, or any Custodian,
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Decernber3. 2001 -- Page 5 of 22 Pages --
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 Particioation. An Employee may become a Participant by
entering into a Joinder Agreement prior to the beginning of the calendar month in which
the Joinder Agreement is to become effective to defer compensation not yet earned.
Section 3.02 Amendment of Joinder Agreement. A Participant may amend an
executed Joinder Agreement to change the amount of compensation not yet earned which
is to be deferred (including the reduction of such future deferrals to zero) or to change his
or her investment 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 (15th) day of the calendar month after the date the designated Beneficiary
is so designated in writing.
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 the Dollar Limitation or the Percentage Limitation. The minimum
amount deferred shall be at least Twelve Dollars ($12.00) per pay period.
Section 4.02 Catch-Up Limitation.
(a) Catch-Up Contributions for Participants ARe 50 and Over. A
Participant who has attained the age of 50 before the close of the Plan Year, and with
respect to whom no other elective deferrals may be made to the Plan for the Plan Year by
reason of the Normal Limitation of Section 4.01, may enter into a Joinder Agreement to
make elective deferrals in addition to those permitted by the Normal Limitation in an
amount not exceed the lesser of (1) the applicable dollar amount as defined in Section
414(v)(2)(B) of the Code, as adjusted for the cost-of-living in accordance with Secti~[~
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December 3, 2001
414(v)(2)(C) of the Code, or (2) the excess (if any) of (i) the Participant's compensation (as
defined in Section 415(c)(3) of the Code) for the year, over (ii) any other elective deferrals
of the Participant for such year which are made without regard to this Section 4.02(a). An
additional contribution made pursuant to this Section 4.02(a) shall not, with respect to the
year in which the contribution is made, be subject to any otherwise applicable limitation
contained in Section 4.01 above, or be taken into account in applying such limitation to
other contributions or benefits under the Plan or any other plan. This Section 4.02(a) shall
not apply to any year in which Section 4.02(b) applies. The provisions of this Section
4.02(a) of the Plan shall only apply on and after January 1, 2002.
(b) Last Three Years Catch-Up Contribution. For each of the last three
(3) taxable years for a Participant ending before his or her attainment of Normal Retirement
Age, the maximum amount of Deferred Compensation shall be the lesser of: (1) the 457
Catch-Up Dollar Limitation, or (2) the sum of (i) the Normal Limitation for the taxable year,
and (ii) the Normal Limitation for each prior taxable year of the Participant commencing
after 1978 less the amount of the Participant's Deferred Compensation for such prior
taxable years. A prior taxable year shall be taken into account under the preceding
sentence only if (x) the Participant was eligible to participate in the Plan for such year (or
in any other eligible Deferred Compensation Plan established under Section 457(b) of the
Code which is properly taken into account pursuant to regulations under Section 457), and
(y) compensation (if any) deferred under the Plan (or such other plan) was subject to the
Normal Limitation.
Section 4.03 Other Plans. Notwithstanding any provision of the Plan to the
contrary, the amount excludable from a Participant's gross income under this Plan or any
other eligible deferred compensation plan under Section 457(b) of the Code shall not
exceed the limits set forth in Sections 457(b) and 414(v) of the Code. Prior to January 1,
2002, the limits under Section 457(b) of the Code described in the first sentence of this
Section 4.03 shall be further reduced by any amount excluded from gross income under
Sections 401(k), 402(e)(3), 402(h)(1)(B) and 403(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 ANDINVESTMENT 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
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.
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December3, 2001 --
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.
In the future, the City may contract with additional Plan Administrators,
orthe 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.
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December3, 2001 --
(1) 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, or any 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
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.
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(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
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 ail 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.
(¢) 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. ~'~'~:~'
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(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,
mortgage, pledge, improve, alter, demolish, remodel, repair, and develop in any manner
any property, or any part of or partial interest in any property, real or personal, held in the
Trust 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.
(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, anyofthe 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.
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Decernber 3,2001 -- Page 1 1 of 22 Pages --
(k) To deposit any properbj 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
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 or
for the preservation of the value of an investment, to exercise and enforce by suit for legal
or equitable remedies or by other action, or to waive any right or claim on behalf of the Plan
or any default in any obligation owing to the Plan, to renew, extend the time for 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.
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December 3, 2001
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.
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; provided, 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 proportionately among all Account balances
on a fund-by-fund basis. The allocation shall be in the proportion that each such Account
balance as of the immediately preceding Accounting Date beam 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 Creditinu of Accounts. A Participant's Account shall reflect his/her
pre-rata allocable share of the amount and value of the investments or other property 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 t~,
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December 3, 2001 '~
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.
Section 5.08 Transfers.
(a) Incoming Transfers. A transfer may be accepted from an eligible
deferred compensation plan maintained by another employer and credited to a
Participant's Account under the Plan if (i) the Participant has had a Severance Event 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) Out~ 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 had a Severance Event 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
Left Intentionally Blank
Section 5.10 Eligible Rollover Distributions.
(a) Effective Date: This Section 5.10 is effective January 1,2002.
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(b) Incoming Rollovers: An eligible rollover distribution may be accepted
from an eligible retirement plan maintained by another employer and credited to a
Participant's Account under the Plan. The Employer may require such documentation from
the distributing plan as it deems necessary to effectuate the mllover in accordance with
Section 402 of the Code and to confirm that such plan is an eligible retirement plan within
the meaning of Section 402(c)(8)(B) of the Code. The Plan shall separately account for
eligible rollover distributions from any eligible retirement plan that is not an eligible deferred
compensation plan described in Section 457(b) of the Code maintained by an eligible
governmental employer described in Section 457(e)(1)(A) of the Code.
(c) Out~ Rollovers: Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the Administrator, to
have any portion of an eligible rellover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(d) Definitions:
(1) Eli{3ible Rollover Distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the
distributee and the d istributee's designated beneficiary, or for a specified period of ten(10)
years or more; any distribution to the extent such distribution is required under Sections
401(a)(9) and 457(d)(2) of the Code; and any distribution made as a result of an
unforeseeable emergency of the Employee. For purposes of distributions from other
eligible retirement plans rolled over into this Plan, the term eligible rollover distribution shall
not include the portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(2) Eligible Retirement Plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity plan described in
Sections 403(a) or 403(b) of the Code, a qualified trust described in Section 401(a) of the
Code, or an eligible deferred compensation plan described in Section 457(b) of the Code
which is maintained by an eligible governmental employer described in Section
457(e)(1)(A) of the Code, that accepts the distributee's eligible rollover distribution.
(3) Distributee: A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving spouse and the
Employee's for former Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former spouse.
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(4) Direct Rollover: A direct mllover is a payment by the plan to
the eligible retirement plan specified by the distributee.
Section 5.11 Trustee-to-Trustee Transfers to purchase Permissive Service
Credit: Ail or a portion of a Participant's Account may be transferred directlyto the trustee
or custodian of a defined benefit governmental plan (as defined and modified in Section
414(d) of the Code) if such transfer is (A) for the purchase of permissive service credit (as
defined in Section 415(n)(3)(A) of the Code) under such plan, or (B) a repayment to which
Section 415 of the Code does not apply by reason of subsection (k)(3) thereof, within the
meaning of Section 457(e)(17) of the Code.
Section 5.12 Treatment of Distributions of Amounts Previously Rolled Over
from 401(a) and 403(b) Plans and IRAs: For purposes of Section 72(t) of the Code, a
distribution from this Plan shall be treated as a distribution from a qualified retirement plan
described in Section 4974(c)(1) of the Code to the extent that such distribution is
attributable to an amount transferred to an eligible deferred compensation plan from a
qualified retirement plan (as defined in Section 4974(c) of the Code).
Section 5.13 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.
ARTICLE 6
BENEFITS
Section 6.01 Retirement Benefits and Election on Severance Event:
(a) General Rule: Except as otherwise proved in this Article 6, the
distribution of a Participant's Account shall commence as of a Participant's Automatic
Distribution Date, and the distribution of such benefits shall be made in accordance with
one ofthe payment options described in Section 6.02. Notwithstanding the foregoing, but
subject to the following paragraphs of this Section 6.01, the Participant may elect following
a Severance Event to have the distribution of benefits commence on a fixed determinable
date other than that described in the preceding sentence, but not later than April 1st of the
year following the year of the Participant's Retirement or attainment of age 70%, whichever
is later. Prior to January 1, 2002, an election made pursuant to the preceding sentence
shall not be valid unless such election is made not less than thirty (30) days prior the date
that the distribution of a Participant's Account would otherwise commence.
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(b) Additional Delay in Distribution: Prior to January 1, 2002, the
Participant may elect to defer the commencement of distribution of benefits to a fixed
determinable date later than the date provided in Section 6.01(a), but not later than April
1st of the year following the year of the Participant's retirement or attainment of age 70%,
whichever is later, provided, however, that (a) such election is made after the 61st day
following the Participant's Severance Event and before commencement of distributions,
(b) the Participant may make only one (1) such election, and (c) such election is made not
less than thirty (30) days prior to the date the distribution of a Participant's Account would
otherwise commence. On or after January 1, 2002, the Participant's right to change his
or her election with respect to commencement of the distribution of benefits shall not be
restrained by this Section 6.01. 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, including the incidental death benefit requirements of
Section 401(a)(9)(G), over the life expectancy of the Participant or over the life
expectancies of the Participant and his Beneficiary.
(e) Payments equal to payments made by the issuer of a retirement
annuity policy 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.
(g) Any payment option elected by the Participant and agreed to by the
Employer and Administrator.
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 thi[d?~:~,~
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December 3, 2001 -- Page 17 of 22 Pages --
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. If, prior to January 1, 2002, a Participant made a timely election of a
payment date but failed to specify a payment option or failed to make a timely election of
both payment date and option, and as a result, either was defaulted to benefit
commencement at age 65, or such other date as the Participant may have specified,
benefits shall be paid annually in the amount of $100 per year commencing at age 65 or
the dates specified by the Participant until the Participant reaches age 70¼. When the
Participant reaches age 70~, payments shall be made in accordance with Code Section
401(a)(9) and the regulations thereunder.
Section 6.03 Limitation on Options. No payment option may be selected by a
Participant under subsections 6.02(a) or (c) unless the amount of any installment is not
less than $100. No payment option may be selected by a Participant under Section 6.02,
6.04, or 6.05 unless it satisfies the requirements of Section 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 benefit requirements under Section 401(a)(9)(G).
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
continue until the Administrator receives notice of the Participant's death. Upon notification
of the Participant's death, benefits shall be payable to the Participant's Beneficiary
commencing not later than December 31 of the year following the year of the Participant's
death, provided that the Beneficiary may elect to begin benefits earlier than that date.
(b) If the Beneficiary has not attained age 80 at the time payments
commence, he or she may elect to receive payments in a single lump-sum payment or in
equal or approximately equal monthly, quarterly, semi-annual or annual payments
continuing over a period not to exceed ten (10) years from the first payment. The
Beneficiary also may elect to receive a partial lump-sum payment followed by monthly,
quarterly, semi-annual or annual installments, provided that all payments are made within
a period of ten (10) years from the initial payment. In the event that the Beneficiary is age
80 or over, the remaining balance in the Participant's account will be paid to the Beneficiary
in a single lump sum.
(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 6.05 Pre-Retirement Death Benefits.
(a) Should the Participant die before he or she 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 not later than December 31 of the year following the ye~r~
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December 3, 2001
of the Participant's death, provided that the Beneficiary may elect to begin benefits earlier
than that date.
(b) If the Beneficiary has not attained age 80 at the time payments
commence, he or she may elect to receive payments in a single lump-sum payment or in
equal or approximately equal monthly, quarterly, semi-annual or annual payments
continuing over a period not to exceed ten (10) years from the first payment. The
Beneficiary also may elect to receive a partial lump-sum payment followed by monthly,
quarterly, semi-annual or annual installments, provided that all payments are made within
a period of ten (10) years from the initial payment. In the event that the Beneficiary is age
80 or over, the remaining balance in the Participant's Account will be paid to the
Beneficiary in a single lump sum.
(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 Emeraencies.
(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 1 52(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 or the purchase of an
automobile or down payment on a home shall not be considered unforeseeable
emergencies. The determination as to whether an unforeseeable emergency exists shall
be based on the merits of each individual case.
(c) Notwithstanding any other provision herein, for "unforeseeable
emergencies" a Participant shall apply to the Advisory Committee to withdraw, in whole or
in part, from the Plan prior to retirement or any other termination of his employment with
the Employer. If the application for withdrawal is approved by the Advisory Committee, the
withdrawal shall be effected at the time designated by the Advisory Committee. The
Advisory Committee will require a written request for the withdrawal, stating the nature of
the emergency and any applicable circumstances that will be of benefit to the Committee's
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decision-making process. At its discretion, the Advisory Committee may require additional
financial information. The decision of the Advisory Committee concerning "unforeseeable
emergencies" shall be final as to all Participants.
Section 6.07 Transitional Rule for Pre-1989 Benefit Elections. In the event that,
prior to January 1, 1989, a Participant or Beneficiary has commenced receiving benefits
under a payment option or has irrevocably elected a payment option or benefit
commencement date, then that payment option or election shall remain in effect
notwithstanding any other provision of the Plan.
Section 6.08 De Minimis Accounts. Notwithstanding the foregoing provisions
of this Article, prior to January 1, 2002, if the value of a Participant's Account does not
exceed the dollar limit under Section 411(a)(11 )(A) of the Code as described in Section
457(e)(9)(A) of the Code and (a) no amount has been deferred under the Plan with respect
to the Participant during the two-year period ending on the date of the distribution and (b)
there has been no prior distribution under the Plan to the Participant pursuant to this
Section 6.08, the Participant may elect to receive or the Employer may involuntarily
distribute the Participant's entire Account without the consent of the Participant. Such
distribution shall be made in a lump sum.
On or after January 1, 2002, if the value of a Participant's Account is less
than $1,000, the Participant's Account shall be paid to the Participant in a single lump sum
distribution, provided that (a) no amount has been deferred under the Plan with respect to
the Participant during the two-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. Ifthe value ofthe Participant's Account is at least $1,000, but not morethan
the dollar limit under Code Section 411(a)(11)(A) and (a) no amount has been deferred
under the Plan with respect to the Participant during the two-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 his or her
entire Account. Such distribution shall be made in a lump sum.
ARTICLE 7
MISCELLANEOUS
Section 7.0t 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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December 3, 2001 " '~ :~" ~ '
SectionT.02 Creditors. AParticipantmaynotassign, transfer, sell, hypothecate,
or otherwise dispose of any or all of his investment account or any right which he may have
under the Plan, and any attempt to do so shall be void.
Section 7.03 Employment. Participation in the Plan shall not be construed as
giving any Participant any right to continue his employment with the Employer.
Section 7.04 Non-AssignabilityClause. Itisagreed that neither a Participant
nor a Beneficiary, nor any other designee, shall have any right to commute, sell, assign,
transfer, or otherwise conveythe 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 Aareement. 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. To the 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
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
December 3, 2001 -- Page 21 of 22 Pages ...... ,~ ~,.:1~.
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 Liabilityto 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, and (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.
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.
DEFERRED COMPENSATION PLAN, TRUST AND CUSTODIAL ACCOUNT
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