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RESOLUTION NO. 6277
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF ARCADIA, CALIFORNIA, ADOPTING THE AMENDED
AND RESTATED CITY OF ARCADIA DEFERRED
COMPENSATION PLAN AND TRUST
WHEREAS, the City of Arcadia (hereinafter referred to as "Employer") has
employees rendering valuable services; and
WHEREAS, the Employer has established a deferred compensation plan for
such employees that serves the interests of the Employer by enabling it to provide
reasonable retirement security for its employees, by providing increased flexibility
in its personnel management system, and by assisting in the attraction and retention
of competent personnel; and
WHEREAS, the Employer has determined that the continuance of the
deferred compensation plan will serve these objectives; and
WHEREAS, amendments to the Internal Revenue Code have been enacted
that require changes to the structure and allow enhancements of the benefits of the
deferred compensation plan.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, DOES HEREBY FIND, DETERMINE AND
RESOLVE AS FOLLOWS:
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6277
SECTION 1. The City of Arcadia hereby amends the City of Arcadia
Deferred Compensation Plan by adopting the amended and restated plan as set
forth in the attached Exhibit "A".
SECTION 2. That the City Clerk Shall certify to the adoption of this
Resolution.
Passed, approved and adopted this
18th
day of December
2001.
ATTEST:
~~~ 0f~~
Clerk \
APPROVED AS TO FORM:
,
~~.~
. City ttorney
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6277
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS:
CITY OF ARCADIA )
I, JUNE D. ALFORD, City Clerk of the City of Arcadia, hereby certifies that
the foregoing Resolution No. 6277 was passed and adopted by the City Council of the
City of Arcadia, signed by the Mayor and attested to by the City Clerk at a regular
meeting of said Council held on the 18th day of December, 2001 and that said
Resolution was adopted by the following vote, to wit:
AYES: Councilmember Chandler, Chang, Kovacic, Marshall and Segal
NOES: None
ABSENT: None
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6277
CITY OF ARCADIA
EMPLOYEES' DEFERRED COMPENSATION PLAN & TRUST
As amended and Restated Effective January 1, 2002
Section I. Purpose
The City of Arcadia hereby establishes the "City of Arcadia Employees' Deferred
Compensation Plan" hereinafter referred to as the "Plan." The Plan consists of the
provisions set forth in this document. The City of Arcadia i!? hereinafter referred to as the
"Employer."
The primary purpose of this Plan is to provide retirement income and other deferred benefits
to the employees of the Employer and the Employee's beneficiaries, in accordance with
Sections 53212-53214 of the Govemment Code of the State of California and the applicable
provisions of Section 457 of the Internal Revenue Code of 1986, as amended.
This Plan shall be an agreement solely between the Employer and the participating
Employees. The Plan and Trust forming a part hereof are established and shall be
maintained for the exclusive benefit of Participants and their Beneficiaries. No part of the
corpus or income of the Trust shall revert to the Employer or be used for or diverted to
purposes other than the exclusive benefit of Participants and their Beneficiaries.
Section II. Definitions
2.1 Account: The bookkeeping account maintained for each Participant reflecting the
cumulative amount of the Participant's Deferred Compensation, including any income, gains,
losses, or increases or decreases in market value attributable to the Employer's investment
of the Participant's Deferred Compensation, and further reflecting any distributions to the
Participant or the Participant's Beneficiary and any fees or expenses charged against such
Participant's Deferred Compensation.
2.2 Accounting Date: Each business day that the New York Stock Exchange is open for
trading, as provided in Section 6.6 for valuing the Trust's assets.
2.3 Administrator: The person or persons named to carry out certain nondiscretionary
administrative functions under the Plan, as herein described. The Employer may remove
any person as Administrator upon 60 days' advance notice in writing to such person, in which
case the Employer shall name another person or persons to act as Administrator. The
Administrator may resign upon 60 days' advance notice in writing to the Employer, in which
case the Employer shall name another person or persons to act as Administrator.
2.4 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 or
after January 1, 2002, "Automatic Distribution Date" means April 1 of the calendar year after
the Plan year the Participant attains age 70-1/2 or, if later, has a Severance Event.
2.5 Beneficiary: The person or persons designated by the Participant in his or her 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
EXHlBIT "A"
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. If a married Participant resides in a
community or marital property state, the Participant shall be responsible for obtaining consent
of his or her spouse in the event the Participant designates someone other than his or her
spouse as Beneficiary.
2.6 Deferred Compensation: The amount of Normal Compensation otherwise payable to
the Participant which the Participant and the Employer mutually agree to defer hereunder,
any amount credited to a Participant's Account by reason of a transfer under Section 6.8, a
rollover under Section 6.10, or any other amount which the Employer agrees to credit to a
Participant's Account.
2.7 Dollar Limitation: 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.
2.8 Employees: Any individual who provides services for the Employer and who has been
designated by the Employer as eligible to participate in the Plan.
2.9 Employer: City of Arcadia, which is a political subdivision of the State of California, within
the meaning of Section 414(d) of the Code and Section 3(32) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
2.10457 Catch-Up Dollar Limitation: Prior to January 1, 2002, "457 Catch-Up Dollar
Limitation" means $15,000. On or after January 1, 2002, "457 Catch-Up Dollar Limitation"
means twice the Dollar Limitation.
2.11 Includible Compensation: 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 as defined in Section 457(e)(5) of the Code; 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.
2.12 Joinder Agreement: An agreement entered into between an Employee and the
Employer; including any amendments or modifications thereof. Such agreement shall fix the
amount of Peferred Compensation, specify a preference among the investment altematives
designated by the Employer, designate the Employee's Beneficiary or Beneficiaries, and
incorporate the terms, conditions and provision of the Plan by reference.
2.13 Normal Compensation: The amount of Compensation which 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.
2.14 Normal Limitation: The maximum amount of Deferred Compensation for any
Participant for any taxable year (other than amounts referred to in Section 6.8 and 6.9).
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2.15 Normal Retirement Age: Age 70-1/2, 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 5.2 (b) hereunder.
Once a Participant has to any extent utilized the catch-up limitation of Section 5.2(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 the age of 70-1/2. If a Participant continues employment after
attaining age 70-1/2, not having previously elected alternate Normal Retirement Age, the
Participant's alternate Normal Retirement Age shall be not 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 70-1/2. .
2.16 Participant: Any Employee who has joined the Plan pursuant to the requirements of
Section IV.
2.17 Percentage Limitation: Prior to January 1, 2002, the Percentage Limitation mean 33
1/3 percent 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
percent of the Participant's Normal Compensation. After December 31, 2001, the Percentage
Limitation mean 100 percent 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 percent of the Participant's Normal Compensation.
2.18 Plan Year: The calendar year.
2.19 Retirement: The first date upon which both of the following shall have occurred with
respect to a Participant: Severance Event and attainment of age 50.
2.20 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 the
purposes of this Plan when, in accordance with the established practices of the Employer, the
employment relationship is considered to have actually terminated.
2.21 Trust: The Trust created under Section VI of the Plan which shall consist of all
compensation deferred under the Plan, plus any income and gains thereon, less any losses,
expenses and distributions to Participants and Beneficiaries.
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Section III. Administration
3.1 Duties of the Employer: The Employer shall have the authority to make all discretionary
decisions affecting the rights or benefits of Participants which may be required in the
administration of this Plan. The Employer's decisions shall be afforded the maximum
deference permitted by applicable law.
3.2 Duties 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.
Section IV. Participant in the Plan
4.1 Initial Participation: An Employee may become a Participant by entering into a Joinder
Agreement prior to the beginning of the calendar month in which the Joinder Agreement is to
become effective to defer compensation not yet earned, or such other date as may be
permitted under the Code.
4.2 Amendment of Joinder Agreement: A Participant may amend an executed Joinder
Agreement to change the amount of Normal Compensation not yet eamed which is to be
deferred (including the reduction of such future deferrals to zero). Except for cancellation, the
amendment shall take effect on the first paycheck of the following calendar month
commencing after the date the amendment is executed, or such other date as may be
permitted under the Code. A Participant may at any time amend his or her Joinder Agreement
to change the designated Beneficiary, and such amendment shall become effective
immediately.
Section V. Limitations on Deferrals
5.1 Normal Limitation: Except as provided in Section 5.2, 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.
5.2 Catch-Up Limitations:
(a) Catch-up Contributions for Participants Age 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 5.1, may enter into a Joinder Agreement to make
elective deferrals in addition to those permitted by the Normal Limitation in an
amount not to 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-Iiving in accordance
with Section 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 5.2(a). An additional contribution made
pursuant to this Section 5.2(a) shall not, with respect to the year in which the
contribution is made, be subject to any otherwise applicable limitation contained in
Section 5.1 above. or be taken into account in applying such limitation to other
contributions or benefits under the Plan or any other Plan. This Section 5.2(a) shall
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not apply in any year to which Section 5.2(b) applies. The Provisions of this
Section 5.2(a) of the Plan shall only apply on or 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.
5.3 Other Plans: Notwithstanding any provision of the Plan to the contrary, the amount
excludible 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
Section 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 5.3 shall be further reduced
by any amount excluded from gross income under Sections 401 (k), 402(e)(3), 402(h)(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.
Section VI. Trust and Investment of Accounts
6.1 Investment of Deferred Compensation: A trust is hereby created to hold all the assets
of the Plan for the exclusive benefit of Participants and their Beneficiaries, except that
expenses and taxes may be paid from the Trust as provided in Section 6.3. The trustee shall
be the Employer or such other person that agrees to act in that capacity hereunder.
6.2 Investment Powers: The trustee or the Administrator, acting as agent for the trustee,
shall have powers listed in this Section with respect to investment of Trust assets, except that
the investment of Trust assets is directed by Participants, pursuant to Section 6.5
(a) To invest and reinvest the Trust without distinction between principal and income in
common or preferred stock, shares of regulated investment companies and other
mutual.funds, bonds, loans, notes, debentures, certificates of deposit, 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. Assets of the Trust may be invested in securities
that involve a higher degree of risk than investments that have demonstrated their
investment performance over an extended period of time.
(b) To invest and reinvest all or part of the assets of the Trust 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
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declaration of trust of such commonly collective, or commingled trust fund shall
constitute a part of this Plan. .
(c) To invest and reinvest all or any part of the assets of the Trust 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 Administrator, or such custodian as the
Administrator may appoint, as agent and nominee for the Employer. During the
period that an investment through any such contract shall exist, to the extent of
participation of the Plan, the terms and conditions of such contract shall constitute a
part of the Plan.
(d) To hold cash awaiting investment and to keep such portion of the Trust in cash or
cash balances, without liability for interest, in such amounts as may from time to time
be deemed to be reasonable and necessary to meet obligations under the Plan or
otherwise to be in the best interests of the Plan.
(e) To hold, to authorize the holding of, and to register any investment to the Trust in the
name of the Plan, the Employer, or any nominee or agent of any of the foregoing
including the 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.
(f) Upon such terms as may be deemed advisable by the Employer or the Administrator,
as the case may be, with the approval of the Employer, 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 therefore, 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.
(g) To employ suitable consultants, depositories, agents, and legal counsel on behalf of
the Plan.
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(h) 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 Administrator, in
any bank or banks.
(I) To do any and all other acts that may be deemed necessary to carry out any of the
powers set forth herein.
6.3 Taxes and Expenses: All taxes of any and all kinds whatsoever that may be levied or
assessed under existing or future laws upon the Trust, or in respect to the Trust, or the income
thereof, and all commissions or acquisitions or dispositions of securities and similar expenses of
investment and reinvestment of the Trust, shall be paid from the Trust. Such reasonable
compensation of and reimbursement for reasonable expenses incurred by the Administrator in
performance of his or her duties hereunder (including but not limited to fees for legal,
accounting, investment, and custodial services), as may be agreed upon from time to time by
the Employer, shall be paid from the Trust.
6.4 Payment of Benefits: The payment of benefits from the Trust in accordance with the
terms of the Plan may be made by the Administrator at the direction of the Employer, or by any
custodian or other person so authorized by the Employer to make such disbursements. The
Administrator, custodian or other person shall not be liable with respect to 'any distribution of
Trust assets made at the direction of the Employer.
6.5 Investment Funds: In accordance with uniform and nondiscriminatory rules established by
the Employer, the participant may direct his or her accounts to be invested in one (1) or more
investment funds available under the Plan; provided, however, that the participant's investment
directions shall not violate any investment restrictions established by the Employer. Neither the
Employer, the Administrator, nor any other person shall be liable for any losses incurred by
virtue of following such directions or for any reasonable administrative delay in implementing
such directions.
6.6 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 incomes and
gains or losses for each fund shall be determined. Such investment income and gains or losses
shall be allocated proportionately among all Account balances on a fund-by-fund basis. The
allocation shall be in the proportion that each such Account balance as of the immediately
preceding Accounting date bears to the total of all such Account balances as of that Accounting
Date. For purposes of this Section, all Account balances include the Account balances of all
Participants and Beneficiaries.
6.7 Crediting of Accounts: The Participant's Account shall reflect the amount and value of
the investments or other property obtained by the Employer through the investment of the
Participant's Deferred Compensation pursuant to Sections 6.5 and 6.6. It is anticipated that
the Employer's investments with respect to a Participant will conform to the investment
preference specified in the Participant's Joinder Agreement, but nothing herein shall be
construed to require the Employer to make any particular investment of a Participant's
Deferred Compensation. Each Participant shall receive periodic reports, not less frequently
than quarterly, showing the then current value of his or her Account.
6.8 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
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Account under the Plan if (i) the Participant has had a Severance Event with that
employer and becomes 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 in accordance with Section 457(e)(10) of the Code, to confirm that such
plan is an eligible deferred compensation plan within the meaning of Section 457(b)
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 not be treated as a deferral subject to the
iimitations of Section V, except that, for the purposes of applying the limitations of
Section 5.1 and 5.2, 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) Outgoing Transfers: An amount may be transferred to an eligible deferred
compensation plan maintained by another employer, and charged to a Participant'
Account under this Plan, if (i) the Participant has a Severance Event with the
Employer and becomes 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
employers 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(b) 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 there under.
6.9 Eligible Rollover Distributions
(a) Effective Date: This Section 6.9 is effective January 1, 2002
(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 this Plan, if (i) the Participant has a Severance Event
with the Employer and becomes 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 employers 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 rollover
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
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(c) Outgoing 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 rollover distribution paid directly to an eligible retirement plan
specified by the distributee in an direct rollover.
(d) Definitions:
(1) Eligible 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's
designated beneficiary, or for a specified period of ten year or more; any
distribution to the extent such distribution is required under Section
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 account 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 or 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.
(4) Direct Rollover: A direct rollover is a payment by the plan to the eligible
retirement plan specified by the distributee.
6.10 Trustee-to-Transfers to Purchase Permissive Service Credit: All or a portion of a
Participant's Account may be transferred directly to the trustee of a defined benefit
governmental plan (as defined 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 I
subsection (k) (3) thereof, within the meaning of Section 457(e)(17) of the Code.
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6.11 Treatment of Distributions of Amounts Previously Rolled Over from 401 (a) and
403(b) Plans and IRAs: For the purposes of Section 72(t) of the Code, a distribution from
this Plan shall be treated as a distribution from a qualified plan described in Section4974(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).
6.12 Deemed IRAs: Effective for Plan Years beginning after December 31, 2002, the
Employer may elect to allow Employees to make voluntary employee contributions to a
separate account or annuity established under the Plan that complies with the requirements
of Code Section 408(q) and any regulations promulgated there under. Such accounts or
annuities shall meet the applicable requirements of Code Sections 408 and 408A and shall be
treated as an individual retirement plan that is not part of the Plan.
6..13 Employer Liability: In no event shall the Employer's liability to pay benefits to a
Participant under this Plan exceed the value of the amounts credited to the Participant's
account; neither the Employer nor the Administrator shall be liable for losses arising' from
depreciation or shrinkage in the value of any investments acquired under this Plan.
Section VII. Benefits
7.1 Retirement Benefits and Election on Severance Event:
(a) General Rule: Except as otherwise provided in this Section VII, 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 of
the payment options described in Section 7.2. Notwithstanding the foregoing, but
subject to the following paragraphs of this Section 7.1, 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 that April 1 of the year following the year of the Participant's Retirement or
attainment of age 70-1/2, 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 30 days prior to the date that the distribution of a Participant's
Account would otherwise commence.
(b) Additional Delay in Distribution: Prior to January 1, 2002, the Participant may elect
to defer commencement of distribution of benefits to a fixed determinable date later
than the date provided in Section 7.1 (a), but not later than April 1 of the year
following the year of the Participant's retirement or attainment of age 70-1/2,
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 30 days prior to the date the distribution of the
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 Section 7.1. 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.
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7.2 Payment Options: As provided in Sections 7.1,7.4 and 7.5, a Participant may elect to
have value of the Participant's Account distributed in accordance with one of the following
payment options, provided that such options are consistent with the limitations set forth in
Section 7.3.
(a) Equal monthly, quarterly, semi-annual or annual payments in an amount chosen by
the Participant, continuing until his Account is exhausted.
(b) One lump-sum payment.
(c) Approximately equal monthly, quarterly, semi-annual or annual payments,
calculated to continue for a certain period chosen by the Participant.
(d) Annual Payments equal to the minimum distributions 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 and his or her
Beneficiary.
(e) Payments equal to payments made by the issuer of a retirement annuity policy
acquired by the Employer.
(f) A split distribution under which payments under options (a), (b), (c) or (e)
commence or are made at the same time, as elected by the Participant under
Section 7.1, provided that all payments commence (or are made) by the latest
benefit commencement date under Section 7.1.
(g) Any other payment option elected by the Participant and agreed to by the Employer
and the Administrator.
A Participant's selection of a payment option made after December 31, 1995, under
Subsections (a), (e), 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 of All
Urban Consumers (CPI-U) from the third quarter of the last year in which a cost-of-living
increase was provided to the third quarter of the current year. Any increase will be made in
the periodic payment checks beginning the following January.
7.3 Post-Retirement Death Benefits:
(a) Should the Participant die after he or 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, providing 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 years from the first payment. The Beneficiary also
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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 the
period of ten 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 competed, 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.
7.4 Pre-Retirement Death Benefits:
(a) Should the Participant die before he or she has begun to receive the benefits
provided by Section 7.1, the value of the Participant's Account shall be payable to
the 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
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 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 the
period of ten 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 competed, 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.
7.5 Unforeseeable Emergencies:
(a) In the event an unforeseeable emergency occurs, a Participant may apply to the
Employer to receive that part of the value of his or her Account that is reasonably.
needed to satisfy the emergency need. If such application is approved by the
Employer, the Participant shall be paid only such amount as the Employer deems
necessary to meet the emergency need, but payment shall not be made to the
extent that the financial hardship may be relieved through cessation of deferral
under the Plan, insurance or other reimbursement, or liquidation of other assets to
the extent such liquidation would not itself cause severe financial hardship.
(b)An unforeseeable emergency shall be deemed to involve only circumstances of
severe financial hardship to the Participant resulting from a sudden unexpected
illness, accident, or disability of the Participant or of a dependent (as defined in
Section 152(a) of the Code) of the Participant, loss of the Participant's property due
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to casualty, or similar and extraordinary unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The need to send a
Participant's child to college or to purchase a new home shall not be considered
unforeseeable emergencies. The determination as the whether such an
unforeseeable emergency exists shall be based on the merits of each individual
case.
7.6 De Minimis Accounts: Notwithstanding the foregoing provisions of this Section, 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 2-year
period ending on the date of the distribution and (b) there has been no prior distribution under
the Plan to the Participant pursuant to this Section 7.6, 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 2-year period ending on the date of the
distribution and (b) there has been no prior distribution under the Plan to the
Participant pursuant to this Section 7.6. If the value of the Participant's Account is at
. least $1,000 but not more than 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 2-year period ending on the date of the distribution and (b) there has been no prior
distribution under the Plan to the Participant pursuant to this Section 7.6, the
Participant may elect to receive his or her entire Account. Such distribution shall be
made in a lump sum.
Section VIII. Non-Assignability
8.1 In General: Except as provided in Section VIII and Section 8.2, no Participant or
Beneficiary shall have any right to commute, sell, assign, pledge, transfer or otherwise convey
or encumber the right to receive any payments hereunder, which payments and rights are
expressly declared to be non-assignable and non-transferable.
8.2 Domestic Relations Orders (DRO)
(a) Allowance of Transfers: To the extent required under a final judgment, decree, or
order (including approval of a property settlement agreement) that (i) relates to the
provision of child support, alimony payments, or marital property rights, and (i1) is
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, child or
other dependent of the Participant. Where necessary to carry out the terms of such
an order, a separate Account shall be established with respect to the spouse, former
spouse, or child who shall be entitled to make investment selections with respect
thereto in the same manner as the Participant; any 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
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amount to be distributed under the Plan at a time or in a form that is not permitted
under Section 457(d) of the Code. Any payment made to a person pursuant to this
Section shall be reduced by any required income tax withholding.
(b) Release from Liability to Participant: The Employer's liability to pay benefits to a
Participant shall be reduced to the extent that amounts have been paid or set aside
for payment to a spouse, former spouse, or child pursuant to paragraph (a) of the
Section. No such transfer shall be effectuated unless the Employer or Administrator
has been provided with satisfactory evidence that the Employer and the
Administrator are released from any further claim by the Participant with respect to
such amounts. The Participant shall be deemed to have released the Employer and
the Administrator from any claim with respect to such amounts, in any case in which
(1) the Employer or Administrator has been served with legal process or otherwise
joined in a proceeding relating to such transfer, (ii) the Participant has been notified
of the pendency of such proceeding in a manner prescribed by the law of the
jurisdiction in which the proceeding is pending for service of process in such action
or by mail from the Employer or Administrator to the Participant's last known mailing
address, and (iii) the Participant fails to obtain an order of the court in the
proceeding relieving the Employer or Administrator from the obligation to comply
with the judgment, decree, or order.
(c) Participation in Legal Proceedings: The Employer and Administrator shall not be
obligated to defend 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, dependent or child (including the legal representatives of the
spouse, former spouse, dependent or child), or to a court.
Section IX. 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 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.
Section X. Amendment or Termination of Plan
The Employer may at any time amend this Plan provided that it transmits such amendment in
writing to the Administrator at least 30 days prior to the effective date of the amendment. The
consent of the Administrator shall not be required in order for such amendment to become
effective, but the Administrator shall be under no obligation to continue acting as Administrator
14
hereunder if it disapproves of such amendment The Employer may at any time terminate this
Plan.
The Administrator may at any time propose an amendment to the Plan by an instrument in
writing transmitted to the Employer at least 30 days before the effective date of the
amendment. Such amendment shall become effective unless, within such 30-day period, the
Employer notifies the Administrator in writing that it disapproves such amendment, in which
case such amendment shall not become effective. In the event of such disapproval, the
Administrator shall be under no obligation to continue acting as Administrator hereunder.
Except as may be required to maintain the status of the Plan as an eligible deferred
compensation plan under Section 457(b) of the Code or to comply with other applicable laws,
no amendment or termination of the Plan shall divest any Participant of any rights with respect
to compensation deferred before the date of the amendment or termination.
Section XI. Applicable Law
This Plan and Trust shall be construed under the laws of the State of California and is
established with the intent that it meet the requirements of an "eligible deferred compensation
plan" under Section 457(b) of the Code, as amended. The Provisions of this Plan and Trust
shall be interpreted wherever possible in conformity with the requirements of that Section of
the Code.
In addition, notwithstanding any provision of the Plan to the contrary, the Plan shall be
administered in compliance with the requirements of Code Section 414(u).
Section XII. Gender and Number
The masculine pronoun, wherever used herein, shall include the feminine pronoun, and the
singular shall include the plural, except where the context requires otherwise.
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