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HomeMy WebLinkAbout6092 " \"....... RESOLUTION NO. 6092 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, AMENDING THE CITY OF ARCADIA DEFERRED COMPENSATION PLANS WHEREAS, the City of Arcadia (hereinafter referred to as "Employer") has employees rendering valuable services; and WHEREAS, the Employer has established deferred compensation plans for such employees that serves the interest 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 plans will serve these objectives; and WHEREAS, amendments to the Internal Revenue Code have been enacted that require changes to the structure of 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: SECTION 1. The City of Arcadia hereby amends the City of Arcadia Deferred Compensation Plans by adopting those plans as set forth in the attached Exhibits "A" and liB". 1 6092 , SECTION 2, That the City Clerk shall certify to the adoption of this Resolution. Passed, approved and adopted this 15th day of December, 1998. ~4.~ Mayo f the of Arcadia ATTEST: ~J~~2<1 APPROVED AS TO FORM: l!J~ IIIJ~ City Attorney 2 6092 . STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS: CITY OF ARCADIA ) I, JUNE D. ALFORD, City Clerk of the City of Arcadia, hereby certify that the foregoing Resolution No. 6092 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 15th day of December, 1998 and that said Resolution was adopted by the following vote, to wit: A YES: Councilmember Chandler, Harbicht, Marshall, Roncelli and Kovacic NOES: None ABSENT: None ,.Ji"L.(../~ 3 6092 " .~ , CITY OF ARCADIA DEFERRED COMPENSATION PLAN AND TRUST The purpose of this Deferred Compensation Plan and Trust, herein referred to as the "Plan," is to provide deferred compensation to employees of the City of Arcadia, herein referred to as the "City." This Plan is intended to constitute an "eligible deferred compensation plan" within the meaning of Section 457 of the Federal Internal Revenue Code. The Plan and Trust forming a part hereof are established and shall be maintained for the exclusive benefit of eligible employees and their beneficiaries. No part of the corpus or income of the Trust shall revert to the City or be used for or diverted to purposes other than the exclusive benefit of participants and their beneficiaries. ARTICLE 1- DEFINITIONS 1.1 Account The bookkeeping account maintained for each participant reflecting the value ofthe participant's deferred compensation, including the participant's deferrals, the earnings or losses attributable to any increase or decrease (net of fees or expenses) in the value of the investment portfolios that corresponds with the investment option(s) selected by the participant, any transfers for the participant's benefit, and any distributions made to the participant or the participant's beneficiary. 1.2 Accounting Date The last business day of the month or any other date determined by the Trustee, as provided in Section 5.2 for valuing the Trust's assets. 1.3 Beneficiary May be any person, trust, corporation or firm, or the estate of a participant, or any combination of the foregoing designated by a participant to receive benefits under the Plan. Designation shall be in writing and executed by the participant nnless otherwise provided. Beneficiary may be singular or plural, primary or contingent. 1.4 Code The Federal Internal Revenue Code of 1986, as amended from time to time. I.S Compensation The total annual remuneration which would be payable to a participant by the City for the performance of services for a taxable year if this Plan was not established to enable participants to defer their compensation. 1.6 Deferred Compensation The amount of a participant's compensation credited to a participant's account which the participant elects to defer into the Plan as set forth in the Participation Agreement. 11/1198 1 6092 , 1.7 Eligible Deferred Compensation Plan A plan maintained by any employer that constitutes an "eligible deferred compensation plan" pursuant to Section 457 of the Code. 1.8 Employee Any individual who provides services for the City either as an employee who has been designated by the City to be eligible to participate in the Plan. 1.9 Includible Compensation A participant's compensation from the City for a calendar year that is currently includible in gross income for federal income tax pwposes (as reported on Form W -2). It does not include any deferred compensation excluded from gross income under this Plan, any amount excludable from gross income described in Section 457(a), 403(b), 401(k), or 125 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. 1.10 Investment Option One of the available alternatives for crediting investment eamings to a participant's account, which is based upon performance of one or a combination of the investment portfolios maintained under the Plan. 1.11 Normal Retirement Age The age used to determine the three year period during which a participant may utilize the catch-up limitations provided in Section 4.2. A participant may elect, in writing to the Plan Administer, any age within the range of ages between age 50 and age 70Y:. as his or her normal retirement age, provided that the age selected is not earlier than the earliest year in which the participant would be eligible to retire without actuarial or similar reduction of retirement benefits because of retirement before some later specified age. This age is used to determine the three year period during which a participant may utilize the catch-up limitations provided in Section 4.2. Once a participant has utilized the provisions of the catch-up limitations, the participant's normal retirement age may not thereafter be changed. The participant is not, however, required to retire on attaining his or her previously elected normal retirement age. 1.12 Participant Any employee who is eligible to defer compensation under this plan or former employee who has deferred a portion of their compensation to an account maintained by the Plan and retains the right to receive benefits under the Plan, 1.13 Participation Agreement The written agreement between a participant and the City to defer receipt of compensation by the participant by electing to become a participant under the Plan. 1.14 Plan Administrator The City and/or other parties appointed by the City to administer the Plan. 11/1/98 2 '. 1.15 Separation from Service The cessation of an employee's active employment with the City as defined by Section 402(d)(4)(A)(iii) of the Code. A participant shall be deemed to have severed his or her employment with the City, for purposes of this Plan, when the employment relationship is considered to have actually terminated. 1.16 Transfer An amount debited from one eligible deferred compensation plan and credited to a participant's account in another eligible deferred compensation plan. 1.17 Trust The Trust created under Article 5 of the Plan which shall consist of all compensation deferred under the Plan, plus any gains thereon, less any losses, expenses and distributions to participants and beneficiaries, 1.18 Trustee The Trustee shall be the City or such other person(s) designated by the City to act in that capacity. 1.19 Unforeseeable Emergency A condition of severe financial hardship for a participant (or beneficiary after the death of the participant) resulting from a sudden and unexpected illness or accident of the 'participant (or beneficiary, if applicable) or of a dependent (as defined in Section l52(a) of the Code), loss of property due to a casualty, or other similar extraordinary or unforeseeable circumstances arising from events beyond the control of the participant (or beneficiary, if applicable). Payment may not be made to the extent that such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise; by liquidation of the participant's (or beneficiary, if applicable) assets, to the extent that the Iiquidation would not itself cause severe financiaI hardship; or by cessation of deferrals under the Plan. Section 7.9 gives a detailed explanation of what is and what is not considered to be an unforeseeable emergency signifying the eligibility for early withdrawal from a participant's account. ARTICLE 2 - ADMINISTRATION OF THE PLAN 2.1 Plan Administrator The Plan shall he administered by the City or by the person or persons designated by the City, and such Plan Administrator shall be responsible for the operation of the Plan in accordance with the terms and conditions set forth in the Code and in this Plan Document. The Plan Administrator will perform in an advisory capacity and act as the custodian and recordkeeper for all participant accounts. The Plan Administrator will also be responsible for carrying out various administrative duties under the Plan. These duties include, but are not limited to, processing and ensuring compliance with the Code and the Plan Document with respect to domestic relation orders and unforeseeable emergency withdrawal requests. The City may remove any person as Plan Administrator upon 60 days advance notice in writing to such person, and the Plan Administrator 1111/98 3 '\ may resign upon 60 days advance notice in writing to the City. If either of these two situations occur, the City may name another person or persons to act as Plan Administrator. 2.2 Authority The City shall have the authority to make all discretionary decisions affecting the rights or benefits of participants which may be required in the administration of the Plan. The City's decisions shall be afforded the maximwn deference permitted by applicable law. The administration of the Plan shall be handled by the appointed Plan Administrator under the direction of the City. The Plan Administrator shall determine all questions arising out of the administration, interpretation, and application of the Plan. Upon agreement by the City, all such determinations shall be conclusive and binding. 2.3 Reporting A Plan provider shall furnish the following reports: (a) At least quarterly, the City shall be furnished with written reports showing the fair market value and/or current balances of the amounts invested and any interest or dividends accrued. The amounts shown in each report shall be reflected in each participant's account. (b) At least quarterly, each participant shall be furnished with a statement showing transactions, earnings, and the current balance of the amount invested from his or her account. ARTICLE 3 - P ARTICIP A TION IN THE PLAN 3.1 Election to Participate Any employee designated by the City to be eligible, may elect to become a participant in the Plan by executing and filing a Participation Agreement with the City. An election by the employee to participate in the Plan shall take effect during the calendar month following the date of the participant's completion of the Participation Agreement. At this time, the participant's gross salary or wages shalI be reduced by the amount specified by the participant in the Participation Agreement. A Participation Agreement shall remain in full force and effect from month to month unless modified, revoked, or superseded by a new Participation Agreement. 3.2 Amendment ofthe Participation Agreement A participant may amend or revoke his or her Participation Agreement at any time. However, no change in the amount of a participant's deferred compensation will become effective until the calendar month following the month in which the Participation Agreement was amended. 3.3 Impact of Taxes Subject to the limitations of Article 4 of this Plan, deferred compensation shall not be subject to Federal or the State of California income tax withholding and shall not be reported as gross income on the participant's annual wage statement (Form W-2) until such amounts are distributed or made available to the participant. Deferred compensation shall be subject to FICA taxation when earned. 1l/l/98 4 \ , 3.4 Investment Options Upon enrollment, the participant shall designate the investment option(s) to which his or her deferred compensation is to be allocated. A participant may thereafter re-allocate his or her account balances among the available investment options. The minimum amounts or percentages that may be allocated among the investment options, timing and frequency of re-allocations, shall be subject to the limitations and procedures set forth by the Plan Administrator and approved by the City. 3.5 Beneficiary Designation Upon enrollment, the participant shall designate a beneficiary to receive distributions from the participant's account in the event of the participant's death. A participant many designate any person or persons as beneficiaries. Unless otherwise provided on the form to designate a beneficiary, each designated beneficiary shall be entitled to equal shares of the benefits payable after the participant's death. If a participant fails to designate a beneficiary or if the designated beneficiary does not survive the participant for a period of fifteen (15) days, then the participant's estate becomes the beneficiary. A participant may change his or her designated beneficiary at any time, but the amended beneficiary designation shall not take effect until the participant signs the form and it is delivered to the Plan Administrator (or post-marked for delivery) prior to the participant's death. Notwithstanding the foregoing, a participant's beneficiary designation shall not be given effect and shall be overridden to the extent that such a designation impairs the rights of any surviving spouse under applicable law. 3.6 Leave of Absence An approved leave of absence with pay shall not affect agreements to participate in the Plan, An approved leave of absence withont pay shall be considered to be a temporary suspension of participation in the Plan. Participation shall be automatically reinstated as of the first day of the next pay period subsequent to the termination of such leave of absence status. In the event of a non- permitted Ieave of absence without pay, the City, at its discretion, may deem such absence a revocation ofthe Participation Agreement. 3.7 Additional Deferrals The City may make additional investments on behalf of any employee resulting in additional credits to the account of such employee. Any such credits shall be treated as deferred compensation for all purposes of the Plan. Each employee for whom the City defers compensation must complete a Participation Agreement, regardless of whether the employee elects to defer any additional compensation. ARTICLE 4 - DEFERRED COMPENSATION LIMITATIONS 4.1 General Limitation Except as provided in Section 4,2, a participant's deferred compensation shall not exceed the lesser of: (a) $7,500 in a calendar year (or such greater dollar amount adjusted for the cost-of- living in accordance with Section 457 of the Code for calendar years beginning after December 31, 1996), or 11/1/98 5 \ (b) 33-1/3% of the participant's includible compensation for the calendar year. A $5.00 minimum deferral amount per payday will be required from participants. 4.2 Catch-Up Limitation For each of the last consecutive three (3) calendar years ending prior to the calendar year that the participant has designated as his or her normal retirement age, the annual limit on deferred compensation is increased to the lesser of: (a) $15,000 in a calendar year(or such greater dollar amount as may be in effect under Section 457 of the Code); or (b) The limitation under Section 4.1 for the current year, plus the portion of the general limitation under Section 4.1 that was not used by the participant in a prior year commencing after I978. A prior year shall be taken into account under this paragraph only if the participant was eligible in that year to participate in this Plan or in any other eligible deferred compensation plan. 4.3 Other Plans The amount excludable from a participant's gross income under this Plan or any other eligible deferred compensation plan under Section 457 of the Code shall not exceed $7,500 (or such greater amount allowed under Sections 4.1 or 4.2 of the Plan), less any amount excluded from gross income under Section 402 (a)(8), 402(h)(I)(B), or 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)(I8) of the Code. ARTICLE 5 - TRUST AND INVESTMENTS OF ACCOUNTS 5.1 Property Rights A Trust is hereby created to hold all the assets of the Plan for the exclusive benefit of participants and beneficiaries, except that expenses and taxes may be paid from the Trust as provided in Section 5.4. The Trustee shall be the City or such other person(s) designated by the City to act in that capacity hereunder, 5.2 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 account date bears to the total of all such account balances as of that accounting date. For purposes of this Article, all account balances include the account balances of all participants and beneficiaries. Participant account(s) shall be based on the investment option(s) selected by the participant and shall be made pursuant to written instruction from the City, All amounts deferred and/or transferred by a participant shall be invested as soon as practicable after Illl/98 6 \ such amounts are withheld from the participant's salary or wages or are available from the transferor plan, as applicable. 5.3 Investment Powers The Trustee or the Plan Administrator, acting as agent for the Trustee, shall have the powers listed in this Section with respect to investment of Trust assets. (a) (b) (c) (d) 11/1/98 To invest and reinvest the Trust without distinction between principal and income in any form oftangible or intangible property, real, personal, or mixed, and wherever situated, including, but not by way oflimitation, common or preferred stock, 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 insnrance, individual or group annuity, deposit administration, and guaranteed interest contracts, deposits at reasonable rates of interest at banking institutions including but not limited to savings accounts and certificates of deposit, and other forms of securities or investments of any kind, class, or character whatsoever and representing interests in any form of enterprise, wherever it may be located, organized or operated within or without the United States of America, whether such investments are income producing or not, without being limited in any respect by statute or court rule or decision of any jurisdiction now or hereafter in force purporting to limit or otherwise affect such investments. Assets of the Trust may be invested in securities or new ventures that involve a higher degree of risk than investments that have demonstrated their investment performance over an extended period of time. 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 qualified 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 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 40l(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 City. 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. 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 7 , 1111/98 (e) (f) (g) (h) (i) G) (k) (I) property the management and operation of any part interest in such real property or mortgages. 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. To retain, manage, operate, administer, divide, subdivide, partition, mortgage, pledge, improve, alter, demolish, remodel, repair, and develop in any manner any property, or any part of or partial interest in any property, real or personal, held in the Trust, to lease such property for any period of time, and to grant options to sell, exchange, lease, or otherwise dispose of any such property, without regard to restrictions applicable to fiduciaries or others and without the approval of any court. To sell for cash or credit, redeem, exchange for other property, convey, transfer, or otherwise dispose of any property held in the Trust in any manner and at any time, by private contract or at public auction or otherwise, and no other person shall be bound to see to the application of the purchase money or to inquire into the validity, expediency, or propriety of any such sale or other disposition. 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. To vote or to refrain from voting any stocks, bonds, or other securities held in the Trust, to exercise any other right appurtenant to any securities or other property held in the Trust, to give general or special proxies or powers of attorney with or without power of substitution with respect to such securities and other property, to exercise any conversion privileges, subscription rights, or other options or privileges with respect to such securities and other property and make any payments incidental thereto, and generally to exercise, personally or by general or limited power of attorney, any of the powers of an owner with respect to stocks, bonds, securities, or other property held in the Trust at any time. To oppose or to consent to and participate in any organization, reorganization, consolidation, merger, combination, readjustment of finances, or similar arrangement with respect to any corporation, company, or association, any of the securities of which are held in the Trust, to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions and the payment of expenses, assessments, or subscriptions that may be deemed necessary or advisable in connection therewith, and to accept, hold, and retain any securities or other property that may be so acquired. To deposit any property held in the Trust with any protective, reorganization, or similar committee, and to delegate discretionary power thereto and to pay and agree to pay part of its expenses and compensation and any assessments levied with respect to any such property so deposited. To hold, to authorize the holding of, and to register any investment to the Trust in the name of the Plan, the City, 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 8 securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, and to organize corporations or trusts under the laws of any jurisdiction for the purpose of acquiring or holding title to any property for the Trust, all with or without the addition of words or other action to indicate that property is held in a fiduciary or representative capacity but the books and records of the Plan shall at all times show that all such investments are part of the Trust. (m) Upon such terms as may be deemed advisable by the City or the Plan Administrator, with the approval of the City, 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 the 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. (0) To make, execute, acknowledge, and deliver any and all deeds, leases, mortgages, conveyances, contracts, waivers, releases, or other instrwnents 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 City, 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. 5.4 Taxes and Expenses All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon, or in respect to the Trust, or the income thereof, and all commissions or acquisitions or dispositions of securities and similar expenses of investment and reinvestment of the Trust, shall be paid from the Trust. Such reasonable compensation of and reimbursement for reasonable expenses incurred by the Plan 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 City, shall be paid from the Trust. 5.5 Payment of Benefits The payment of benefits from the Trust in accordance with the terms of the Plan may be made by the Plan Administrator at the direction of the City, or by any custodian or other person so authorized by the City to make snch disbursements. 11/1/98 9 5.6 Investment Funds In accordance with uniform and nondiscriminatory rules established by the City, 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 City. Neither the City, the Plan 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. 5.7 Employer Liability In no event shall the City'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 City nor the Plan Administrator shall be liable for losses arising from depreciation or shrinkage in the value of any investments acquired under this Plan. 5.8 Statements Each participant shall receive periodic statements, at least quarterly, reflecting his or her current value of his or her account. ARTICLE 6 - TRANSFERS 6.1 Transfers to the Plan A transfer from an eligible deferred compensation plan maintained by another employer will be accepted and credited to a participant's account under the following conditions: (a) The participant has separated from service from the other employer plan and has become an employee of the City; and (b) The other employer's deferred compensation plan allows such transfers to be made. If amounts being transferred from another plan are subject to an irrevocable election, the transfer into the City's Plan shall render that election null and void. In addition, the City may refuse to accept a transfer in the form of assets other than cash, unless the City agrees to hold such other assets under the Plan. Any amount transferred shall be subject to the limitations of Article 4, except that, for purposes of applying the limitations of Sections 4.1 and 4.2, 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 City. 6.2 Transfers from the Plan If a participant separates from service prior to normal retirement age and becomes a participant in an eligible deferred compensation plan of another employer, such participant may request a distribution of his account to the eligible deferred compensation plan of the other employer. Requests for such transfer must be made in writing to the Plan Administrator and shall be granted at the discretion of the City. If an amount is to be transferred pursuant to this Section, the Plan 11/1/98 10 Administrator shall transfer such amount directly to the eligible deferred compensation plan of the other employer. 6.3 Conditions of Transfers The City reserves the right to limit the terms and conditions under which a transfer will be accepted from or made to other eligible deferred compensation plans, including such terms and conditions as are necessary to comply with this Plan and the regulations or other pronouncements under Section 457 of the Code and to assure that any transferor or transferee plan constitutes an eligible deferred compensation plan as defined by Section 457 of the Code. ARTICLE 7 - DISTRIBUTIONS 7.1 Conditions for Distributions No distribntions from the Plan to the participant or beneficiary shall be made prior to one or more of the following events: (a) The participant's separation from service; or (b) The participant's attainment of age 70'i2; or (c) The participant's unforeseeable emergency that has been approved by the City as meeting the conditions outlined in Section 7,9; or (d) The participant's death. Except as provided in Section 7.9 (reIating to unforeseeable emergencies), no amount will be distribnted from a participant's account prior to the sixty-first (6Ist) day following the events outlined in subsection (a) and (c) of this Section. 7.2 Separation from Service Upon a participant's separation from service with the City, the participant may either elect to receive distributions in one of the forms described in Section 7.3 or may elect to defer the commencement date of their distributions pursuant to the guidelines in Section 7.4. If a participant fails to elect one of these methods of distribution within sixty (60) days of his or her separation from service, distributions will be made according to the default distribution option discussed in Section 7.5. 7.3 Payment Options A participant's election of a payment option must be made at least thirty (30) days prior to the date that the payment of benefits is to commence. No payment option in the forms described in this Section 7.3 may be made or changed after the commencement date for such distribution form. If a participant fails to make a timely election of a payment option, benefits may be paid in accordance with Section 7.5. A participant may elect to have his or her account distributed in accordance with one of the following payment options: (a) (b) A single Iwnp-swn payment; Substantially nonincreasing installment payments for a period of years (payable on a monthly, quarterly, semi-annual, or annual basis) which extends no longer than the 11/1/98 II life expectancy ofthe participant or such longer period as permitted under Section 7.10; (c) Partial lump-sum payment of a designated amount, with the balance payable in substantially nonincreasing installment payments for a period of years, as described in subsection (b); (d) Annuity payments (payable on a monthly, quarterly, or annual basis) for the lifetime ofthe participant or for the lifetimes of the participant and beneficiary if permitted under Section 7.10; or (e) Such other forms of substantially nonincreasing installment payments as may be approved by the City consistent with the limitations of Section 7.10. Any Plan provider may chose to offer participants the option of an automatic cost-of-living increase for payout options made after December 31,1995, under subsection (b), (c), or (e) above. Such increase will be based on the rise in the Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of the last year in which a cost-of-living increase was provided to the third quarter of the current year. Any increase will be made in periodic payment checks beginning the following January. Thus, the first cost-of-living increase will be based on the rise in the CPI-U from the third quarter of 1995 to the third quarter of 1996, and will be applied to amounts paid beginning January 1997. 7.4 Deferred Commencement Date No later than sixty (60) days following the date of the participant's separation from service, the participant may elect a deferred commencement date for all or a portion of the participant's account balance. Such date may not be later than April 1st of the year following the year of a participant's attainment of age 70\1, or separation from service, whichever is later. Unless a payment option is elected before the deferred commencement date, the participant's account shall be distributed under the default distribution option described in Section 7.5. A participant's election of a deferred commencement date shall be irrevocable except as otherwise provided in this Section. Effective on or after January I, 1997, the participant may make an additional election to defer the commencement of distribution of benefits to a fixed determinable date later than the initially elected deferred commencement date but not later than April I of the year following the year of the participant's retirement or attainment of age 70\1" whichever is later, provided that: (a) Such election is made on or after the 61st day following participant's separation from servIce; (b) Such election is made before commencement of distributions; and (c) The participant may make only one (I) such election. 7.S Default Distribution Option For purposes of this Article 7, if participants fail to make a timely election of a payment option, the participant's benefits shall be paid in equal monthly installments over a period of 5 years without the inclusion of a cost-of-living increase. Payments shall commence as soon after the 61 st day following the participant's separation from service as is administratively feasible, but no later than the 91 st day following the participant's separation from service. 11/1/98 12 7.6 Funds with More than One Provider If a participant is separating from service and has funds with more than one Plan provider, the participant will be required to reallocate his or her entire funds under the Plan into an account with a single provider. This reallocation of funds must take place within 60 days of the participant's separation from service. Subsequent to the 61 st day of the participant's separation from service and for as long as the participant maintains an account balance in the Plan, he or she may continually reallocate all of his or her funds under the Plan into an account with another provider as long as the following conditions are met: (a) The participant never has funds with more than one provider (i.e., the participant must transfer his or her entire account balance to the desired provider); (b) The participant does not have restricted investments that limit the participant's ability to transfer his or her entire account balance to another provider; (c) The participant has not chosen an annuity as a payment option; and (d) The deferred commencement date and the payment option elected by the participant are forwarded and adhered to by the newly selected provider. Investment restrictions will not apply to a participant who is separating from service and is transferring all of his or her funds to a single provider within the initial 60 days from his or her separation from service. However, after this initial selection of a provider, a participant will be subject to the investment restrictions placed on his or her investment options by the Plan provider. 7.7 Cash-Outs and Combined Payments The City reserves the right to adopt guidelines, which shall be uniformly applied to all participants and beneficiaries, under which account balances below a pre-determined level may be distributed in a single lump-sum amount upon separation from service or at a deferred commencement date. In addition, installment payments below a specified amount may be combined and paid at less frequent intervals (but not less frequently than annually). 7.8 Annuities In the event that a participant or beneficiary elects to receive distributions in the form of a life annuity or another annuity form, the portion of the participant's account balance allocable to that form of distribution shall be used to purchase a commercial annuity contract under which that form of annuity is provided. The amount of the annuity payments to the participant or beneficiary shall eqnal the amount payable under such annuity contract. 7.9 Unforeseeable Emergencies In the event of an unforeseeable emergency prior to or after the commencement of distributions, a participant (or beneficiary after the death of a participant) may apply to receive only the value of his or her account balance, including any income tax resulting from the distribution, that is reasonably needed to satisfy the emergency need. The determination of need will be made by the Plan Administrator and approved by the City. However, the following events are not considered to be unforeseeable emergencies as defined by the IRC: 11/1/98 13 (a) Enrollment of a child in college (b) Purchase of a house (c) Purchase or repair of an automobile (d) Repayment of loans (e) Payment of income taxes, back taxes, or fines associated with back taxes (f) Unpaid expenses including rent, utility bills, mortgage payments, or medical bills (g) Marital separation or divorce (h) Bankruptcy except when resulting directly and solely from illness or casualty loss Payment will not be made to the extent that the financial hardship may be satisfied through cessation of deferrals, insurance or other reimbursement, loans, or a liquidation of other assets to the extent that such liquidation would not itself cause severe financial hardship. After a participant receives an wUoreseeable emergency distribution, the participant will be required to stop all future deferrals for a period of twelve (12) months beginning from the date of distribution. If a participant wishes to begin deferring money after this twelve (12) month period, he or she must write a letter of explanation outlining the reasons that he or she should be allowed to resume deferring his or her money. If the City or Plan Administrator determines that this letter supports the participant's financial ability to defer a portion of his or her money, the participant will be granted the right to resume defetting his or her money. 7.10 Death Benefits Upon the participant's death, the participant's remaining account balance shall be payable to the beneficiary commencing on the sixty-first (61st) day after the date of the participant's death, unless, within the sixty (60) days of the participant's death, the beneficiary irrevocably elects a deferred commencement date that is consistent with the limitations set forth below. Prior to the beneficiary's commencement date, the beneficiary may irrevocably elect to receive the participant's remaining account balance under any of the payment options described in Section 7.3 consistent with the limitations set forth below. If a beneficiary fails to make a timely election of a payment form, then death benefits shall be paid under the default distribution option described in Section 7.5 or over such shorter period as set forth below: (a) If the participant dies prior to April 1st of the year following the year of his or her attainment of age 70Yz or separation of service, whichever is later and: (I) The surviving spouse is the sole Beneficiary: (i) The commencement date shall be no later than the last day of the calendar year in which the participant would have attained age 70Yz (or, if later, the calendar year immediately following the year of the participant's death); and (ii) Distribution shall be made over a period that does not exceed the life expectancy of the surviving spouse. (2) The surviving spouse is not the sole Beneficiary: 11/1/98 14 (i) The entire account balance shall be distributed no later than the last day of the calendar year which includes the fifth (5th) anniversary of the participant's death; or (ii) If distributions to the beneficiary commence by the last of the calendar year immediately following the year of the participant's death, the entire account balance shall be distributed no later than the last day of the calendar year which includes the fifteenth (15th) anniversary of the participant's death. (b) If the participant dies after April I st of the year following the year of his or her attainment of age 70Y2 or separation of service, whichever is later, or after the commencement of distributions in the form of an annuity: (I) The beneficiary may not elect to defer the commencement of death benefits; and (2) The participant's remaining account shall be distributed at least as rapidly as under the method selected by the participant. (c) If there are two or more beneficiaries, the provisions of this Section 7.10 and Section 7. I 1 shalI be appIied to each beneficiary separately with respect to each beneficiary's share in the participant's account. (d) If the beneficiary dies before all payments from the participant's account have been depleted, the remaining account balance shall be paid to the estate of the beneficiary in a lump sum. (e) Under no circumstances, shall the City be liable to the beneficiary for the amount of any payment made in the name of the participant before a Plan Administrator receives proof of the participant's death. 7.11 Limitations on Distribution Options No distribution option may be selected by a participant or beneficiary under this Article 7 unless it satisfies the requirements of Section 401 (a)(9) and Section 457( d)(2) of the Code, including that installment payments be made in substantially nonincreasing amounts and that payments commencing before the death of the participant satisfy the incidental death benefits requirement of Section 457, A cost-of-living increase included as part of a payment option selected under Section 7.3 shall not violate the requirement under Section 457 of the Code that any distribution made over a period of more than one (I) year can only be made in substantially nonincreasing amounts. Unless elected otherwise by the participant (or spouse, in the cases of distributions described in Section 7.10), life expectancies shall be recalculated annually. Such election shall be irrevocable as to the participant (or spouse, if applicable) and shall apply to all subsequent years. The life expectancy of a nonspouse beneficiary may not be recalculated. 7.12 Taxation of Distributions To the extent required by law, income and other taxes shall be withheld from each benefit payment, 11/1/98 15 and payments shall be reported to the appropriate governmental agency or agencies. 7.13 De Minimis Accounts Notwithstanding the foregoing provisions of this Article, the participant may elect to receive or the City may distribute, without the consent of the participant, the participant's entire account if all of the following conditions are met: (a) The value ofa participant's account does not exceed $5,000 (or such greater dollar amount in accordance with Section 457 of the Code for calendar years beginning after December 31, 1997); (b) 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 (c) There has been no prior distribution under the Plan to the participant pursuant to this Section. ARTICLE 8 - P ARTICIP ANT RIGHTS 8.1 Account Balances The benefits payable to each participant (or beneficiary, if applicable) shall be measured by and limited to the amount properly credited to the participant's account. A participant shall have no claim under the Plan for any loss or diminution of his or her account balance that is attributable to any loss in the value of the investment portfolios that corresponds with the investment option(s) selected by the participant under the Plan. 8.2 Non-Assignability Except as provided in Section 8.3, the participant or beneficiary shall have no rights under this Plan to sell, assign, pledge, commute, transfer, or otherwise convey his or her rights or benefits under the Plan. Except as otherwise required by law, the rights of a participant or beneficiary under this Plan shall not be subject to attachment, garnishment, execution, or to transfer by operation of law in the event of bankruptcy or insolvency of the participant or beneficiary or otherwise. 8.3 Domestic Relations Orders To the extent required under a 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 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 Conforming Equitable Distribution Order (CEDO) must be completed by the participant and his or her spouse, former spouse, or child, herein referred to as the alternate recipient. Pursuant to the guidelines of the CEDO and subject to the City's approval, a separate account shall be established with respect to the participant and alternate recipient. The following provisions will apply: (a) The alternate recipient will be solely responsible for designating the investment option(s) for the funds in his or her account; The alternate recipient may not make additional contributions to his or her account; (b) 11/1/98 16 (c) Distribution of the alternate recipient's account may only be made at the earliest of the participant's separation from service with the Plan sponsor, the participant's attainment of age 70Y" or death of the participant; and (d) Distribution to an alternate recipient shall be paid out to the alternate recipient (less required income taxes) in a lump sum, Nothing in this Section 8.3 shall be construed to authorize any amount to be distributed under the Plan at a time or in a form that is not permitted under Section 457 of the Code. 8.4 Liability to Participant A participant's right to receive benefits under the Plan shall be reduced to the extent that any portion of a participant's account has been paid or set aside for payment to a spouse, former spouse, or child pursuant to Section 8.3 or to the extent that the City or the Plan is otherwise subject to a binding judgment, decree, or order for the attachment, garnishment, or execution of any portion of the participant's account or any distributions therefrom. The participant shall be deemed to have released the City, the Plan, and the Plan Administrator from any claim with respect to such amounts. 8.5 Legal Proceedings Neither the City, the Plan, nor the Plan Administrator shall be obligated to incur any cost to defend against or set aside any judgment, decree, or order relating to the division, attachment, garnishment, or execution of the participant's account or of any distribution therefrom. Notwithstanding the foregoing, if the City, the PIan, or the Plan Administrator is joined in any such proceeding, a Plan Administrator shall take such steps as it deems necessary and appropriate to protect the terms of the Plan. ARTICLE 9 - GENERAL PROVISIONS 9.1 Amendment Subject to the requirements ofthe Government Code, the City and the Plan Administrator reserve the right to amend or modify the Plan at any time without the consent of any participant or beneficiary, Except as may be required to maintain the status of the Plan as an eligible deferred compensation plan under Section 457 of the Code or to comply with other applicable laws, no amendment or modification shall impair any individual's right to benefits under the Plan or expand the City's obligation to provide benefits with respect to amounts previously credited to participant's accounts. 9.2 Effect on Employment Nothing contained in this Plan shall be deemed to constitute an employment contract or agreement between any participant and the City or to give any participant the right to be retained in the employ of the City. Nor shall anything herein be construed to modify the terms of any employment contract or agreement between a participant and the City. 9.3 Binding Contract The terms of this Plan, as amended from time to time, shall constitute a contract between each participant and the City and shall be binding, as applicable, upon their heirs, administrators, trustees, 11/1/98 17 successors, assigns, and beneficiaries. 9.4 Incompetence of Participant If the City finds any person to whom an amount is payable under the Plan to be unable to care for his or her affairs, is a minor, or has died, any payment due him or her, or his or her estate, may be paid to his or her spouse, a child, a relative, or any other person having custody of such person, unless a prior claim has been made by a duly appointed legal representative. Any such payment shall be a complete discharge of all liability under the Plan thereof. 9.5 Applicable Law This Plan shall be construed under the laws of the State of California and in conformity with the requirements of Section 457 of the Code and all regulations thereunder applicable to eligible deferred compensation plans. The provisions of the Plan shall be interpreted whenever possible in conformity with the requirements of Section 457 of the Code. 9.6 Total Agreement This Plan and the Participation Agreement, and any subsequently adopted amendment, thereof, shall constitute the total agreement or contract between the City and the participant regarding the PIan. No oral statement regarding the Plan may be relied upon by the participant. 11/1/98 18 .tiAtl.1.t).1T .".t)"" CITY OF ARCADIA DEFERRED COMPENSATION PLAN AND TRUST FOR EMPLOYEES NOT COVERED BY THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM This Deferred Compensation Plan and Trust, herein referred to as the "Plan," is for employees of the City of Arcadia, herein referred to as the "City," who are not covered by the California Public Employees' Retirement System (CALPERS), The purpose of the Plan is to extend, to Eligible Employees of the City, certain benefits which ordinarily accrue from participation in an "Eligible Deferred Compensation Plan," as that term is used in Section 457 of the Federal Internal Revenue Code of 1986 as amended. It is intended that Participants in the Plan be considered members of a retirement system, within the meaning of Section 3121 (b) (7) (F) of the Internal Revenue Code of 1986 as amended. The Participant should consult with his own attorney or other representative regarding all tax or other consequences of participation in this Plan. The Plan and Trust forming a part hereof are established and shall be maintained for the exclusive benefit of Eligible Employees and their Beneficiaries. No part of the corpus or income of the Trust shall revert to the City or be used for or diverted to purposes other than the exclusive benefit of Participants and their Beneficiaries. ARTICLE 1 - DEFINITIONS 1.1 Account The bookkeeping Account maintained for each Participant reflecting the value of the Participant's deferred compensation, including the Participant's deferrals, the eamings or losses attributable to any increase or decrease (net of fees or expenses) in the value of the investment portfolios that corresponds with the investment option(s) selected by the Participant, any transfers for the Participant's benefit, and any distributions made to the Participant or the Participant's Beneficiary. 1.2 Accounting Date The last business day of the month or any other date determined by the Trustee, as provided in Section 5.2 for valuing the Trust's assets. 1.3 Beneficiary May be any person, trust, corporation or firm, or the estate of the Participant, or any combination of the foregoing designated by a Participant to receive benefits under the Plan. Designations shall be in writing and executed by the Participant unless otherwise provided. Beneficiary may be singnlar or plural, primary or contingent. 1.4 CALPERS CALPERS shall refer to the California Public Employees' Retirement System. 8120/98 1.5 Code The Federal Internal Revenue Code of 1986, as amended from time to time. 1.6 Compensation The total annual remuneration which would be payable to a Participant by the City for the performance of services for a taxable year if this Plan was not established to enable Participants to defer their compensation. 1.7 Deferred Compensation Contributions The amount of Participant compensation and the City's contributions credited to the Participant's Account. 1.8 Disability The substantial permanent 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 City on the basis of advice from a physician or physicians. 1.9 Eligible Deferred Compensation Plan A plan maintained by an employer that constitutes an "Eligible Deferred Compensation Plan" pursuant to Section 457 of the Code. 1.10 Eligible Employee An employee who is not a qualified CALPERS participant. No employee shall be an Eligible Employee if their service is described in clauses (1) through (v) of the Code Section 3121 (b) (7) (F). 1.11 Employee Any individual who provides services for the City either as an Employee or an independent contractor and who has been designated by the City to be eligible to participate in the Plan. 1.12 Includible Compensation A Participant's Compensation from the City for a calendar year that is currently includible in gross income for federal income tax purposes (as reported on Form W-2). It does not include any deferred compensation excluded from gross income under this Plan, any amount excludable from gross income described in Section 457(a), 403(b), 401(k), or 125 of the Code, or any other amount excludable from gross income for federal income tax purposes. Includable Compensation shall be determine without regard to any community property laws. 1.13 Normal Retirement Age This age shall be 70 Yz. Normal retirement age under this agreement does not represent a mandatory age of retirement, nor is it an agreement to retire at a designated age. 1.14 Participant Any Employee who is eligible to defer compensation under this Plan or former Employee who has deferred a portion of his or her Compensation to an Account maintained by the Plan and retains the . 8120/98 2 right to receive benefits under the Plan, 1.15 Participation Agreement The written agreement between a Participant and the City to defer receipt of Compensation by the Participant electing to become a Participant under the Plan. 1.16 Plan Administrator The City and/or othet parties appointed by the City to administer the Plan, 1.17 Provider An institution providing an investment or deposit vehicle for a deferred compensation fund. 1.18 Qualified CALPERS Participant An Employee who: a) is or ever has been a member in CALPERS, and b) either: I. based upon the Employee's current Compensation, is making employee contributions to CALPERS and having Employer Contributions made to CALPERS, 2. previously retired from the service of the of the City and has attained Normal Retirement Age under CALPERS, or 3. previously retired from the service of the City and is currently receiving retirement benefits under the CALPERS 1.19 Separation From Service The cessation of an Employee's active employment with the City as defined by Section 402(d)(4)(A)(iii) of the Code. A Participant shall be deemed to have severed his or her employment with the City, for pUl'poses of this Plan, when the employment relationship is considered to have actually terminated. 1.20 Transfer An amount debited ftom one Eligible Deferred Compensation Plan and credited to a Participant's Account in another Eligible Deferred Compensation Plan. 1.21 Trust The Trust created under Article 5 of the Plan which shall consist of all Compensation deferred under the Plan, plus any gains thereon, less any losses, expenses and distributions to Participants and Beneficiaries. 1.22 Trustee The Trustee shall be the City of Arcadia or such other person or persons designated by the City to act in that capacity. 8120/98 3 1.23 Unforeseeable Emergency A condition of severe financial hardship for a Participant (or Beneficiary after the death of the Participant) resulting from a sudden and unexpected illness or accident of the Participant (or Beneficiary, if applicable) or of a dependent (as defined in Section 152(a) of the Code), loss of property due to a casualty, or other similar extraordinary or unforeseeable circwnstances arising from events beyond the control of the Participant (or Beneficiary, if applicable). Payment may not be made to the extent that such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise; by liquidation of the Participant's (or Beneficiary's, if applicable) assets, to the extent that the liquidation would not itself cause severe financial hardship; or by cessation of deferrals under the Plan. Section 7.9 of this Plan gives a detailed explanation of what is and what is not considered to be an Unforeseeable Emergency signifying the eligibility for early withdrawal from the Participant's Account. ARTICLE 2 - ADMINISTRATION OF THE PLAN 2.1 Plan Administrator The Plan shall be administered by the City or by the person or persons designated by the City, and such Plan Administrator shall be responsible for the operation of the Plan in accordance with the terms and conditions set forth in the Code and in this Plan Docwnent. The Plan Administrator will perform in an advisory capacity and act as the custodian and record keeper for all Participant Accounts. The Plan Administrator will also be responsible for carrying out various administrative duties under the Plan. These duties include, but are not limited to, processing and ensuring compliance with the Code and the Plan Docwnent with respect to domestic relation orders and unforeseeable emergency withdrawal requests. The City may remove any person as Plan Administrator upon 60 day advance notice in writing to such person, and the Plan Administrator may resign upon 60 day advance notice in writing to the City. If either of these two situations occur, the City may name another person or persons to act as the Plan Administrator. 2.2 Authority The City shall have the authority to make all decisions affecting the rights or benefits of Participants which may be required in the administration of the Plan. The City's decisions shall be afforded the maximwn deference permitted by applicable law. The administration of the Plan shall be handled by the appointed Plan Administrator under the direction of the City. The Plan Administrator shall determine all questions arising out of the administration, interpretation, and application of the Plan. Upon agreement by the City, all such determinations shall be conclusive and binding. 2.3 Reporting A Plan provider shall furnish the following reports: (a) At least quarterly, the City shall be furnished with written reports showing the fair market value and/or current balances of the amounts invested and any interest or dividends accrued. The amounts shown in each report shall be reflected in each Participant's Account. (b) At least quarterly, each Participant shall be furnished with a statement showing transactions, eamings, and the current balance of the amount 8f20/98 4 invested from his or her Account. ARTICLE 3 - PARTICIPATION IN THE PLAN 3.1 Mandatory Participation Each eligible employee shall have 7.5 % of his or her Compensation eamed as an Eligible Employee withheld by the City as a Participant contribution under this Plan. Notwithstanding the preceding, the City and the Eligible Employee mutually acknowledge that unless indicated otherwise in the salary resolution, personnel ordinance, or policies of the City, the salary or wages ofthe eligible employee inclndes the Participant contributions made under this Plan. As soon as practicable after the deductions from the Compensation of the Eligible Employee, the City shall pay all Participant contributions to the fund or funds established pursuant to this Plan. 3.2 Impact of Taxes Subject to the limitations of Article 4 of this Plan, Deferred Compensation Contribntions shall not be subject to Federal or the State of California income tax withholding and shall not be reported as gross income on the Participant's annual wage statement (Form W-2) until such amounts are distributed or made available to the Participant. Deferred Compensation Contributions shall be subject to FICA taxation when eamed. 3.3 Leave of Absence An approved leave of absence with pay shall not affect agreements to participate in the Plan. An approved leave of absence without pay shall be considered to be a temporary suspension of participation in the Plan. 'Participation shall be automatically reinstated as of the first day of the next pay period subsequent to the termination of such leave of absence status. In the event of a non- permitted leave of absence without pay, the City, at its discretion, may deem such absence a revocation of the Participation Agreement. 3.4 Beneficiary Designation Upon enrollment, the Participant shall designate a Beneficiary to receive distributions from the Participant's Account in the event of the Participant's death. A Participant may designate any person or persons as Beneficiaries, Unless otherwise provided on the form to designate a Beneficiary, each designated Beneficiary shall be entitled to equal shares of the benefits payable after the Participant's death. If a Participant fails to designate a Beneficiary or if the designated Beneficiary does not survive the Participant for a period of fifteen (15) days, then the Participant's estate becomes the Beneficiary. A Participant may change his or her designated Beneficiary at any time, but the amended Beneficiary designation shall not take effect until the Participant signs the form and it is delivered to the Plan Administrator (or post-marked for delivery) prior to the Participant's death. Notwithstanding the foregoing, a Participant's Beneficiary designation shall not be given effect and shall be overridden to the extent that such a designation impairs the rights of any surviving spouse under applicable law. ARTICLE 4 - DEFERRAL OF COMPENSATION 4.1 Deferral Limitations 8120/98 5 The Deferred Compensation Contributions made on behalf of a Participant for the calendar year shall not exceed the lesser of: (a) $8,000 in a calendar year (or such greater dollar amount adjusted for the cost-of-living in accordance with Section 457 of the Code for calendar years beginning after December 31, 1996), or (b) 33-1/3 % of the Participant's Includible Compensation for the calendar year. 4.2 Other Plans The amount excludable from a Participant's gross income under this Plan or any other Eligible Deferred Compensation Plan nnder Section 457 of the Code shall not exceed $8,000 (or such greater amount allowed under Section 4.1 of the Plan), less any amount excluded from gross income under Section 402 (a)(8), 402 (h)(l)(B), or 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)(l8) of the Code. ARTICLE 5 - TRUST AND INVESTMENT OF ACCOUNTS 5.1 Property Rights A Trust is hereby created to hold all the assets of the Plan for the exclusive benefit of Participants and Beneficiaries, except that expenses and taxes may be paid from the Trust as provided in Section 5.4. The Trustee shall be the City or such other person or persons designated by the City to act in that capacity hereunder. 5.2 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 balances as of the immediately preceding account date bears to the total of all such Account balances as of that Accounting Date. For purposes of this Article, all Account balances include the Account balances of all Participants and Beneficiaries. Participant Account(s) shall be based on the investment option(s) selected by the Participant and shall be made pursuant to written instruction from the City. All amounts deferred and/or transferred by a Participant shall be invested as soon as practicable after such amounts are withheld from the Participant's salary or wages or are available from the transferor plan, as applicable. 5.3 Investment Powers The Trustee or the Plan Administrator, acting as agent for the Trustee, shall have the powers listed in this Section with respect to investment of Trust assets. (a) To invest and reinvest the Trust without distinction between principle and income in any form of tangible or intangible property, real, personal, or mixed, and 8120/98 6 . (b) (c) (d) 8120/98 wherever situated, including but not by way oflimitation, common or preferred stock, shares of regulated investment companies and other mutual funds, bonds, loans, notes, debentures, mortgages, certificates of deposit, interest, or participation, equipment trust certificates, commercial paper including but not limited to participation in pooled commercial paper accounts, contracts with insurance companies including but not limited to insurance, individual or group annuity, deposit administration, and guaranteed interest contracts, deposits at reasonable rates of interest at banking institutions including but not limited to savings accounts and certificates of deposit, and other forms of securities or investments of any kind, class, or character whatsoever and representing interests in any form of enterprise, wherever it may be located, organized or operated within or without the United States of America, whether such investments are income producing or not, without being limited in any respect by statute or court rule or decision of any jurisdiction now or hereafter in force purporting to limit or otherwise affect such investments. Assets of the Trust may be invested in securities or new ventures that involve a higher degree of risk than investments that have demonstrated their investment performance over an extended period oftime. To invest and reinvest all or part ofthe assets of the Trust in any common, collective or commingled trust fund that is maintained by a bank or other institntion and that is available to employee plans qualified under Sections 457 or 40 I 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 in 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 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 Plan Administrator, or such custodian as the Plan Administrator may appoint, as agent and nominee for the City, 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. To purchase part interest 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. 7 (e) (f) (g) (h) (i) (j) (k) 8120/98 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 interest of the Plan. To retain, manage, operate, administer, divide, subdivide, partition, mortgage, pledge, improve, alter, demolish, remodel, repair, and develop in any manner any property, and any part of or partial interest in any property, real or personal, held in the Trust, to lease such property for any period of time, and to grant options to sell, exchange, lease, or otherwise dispose of any such property, without regard to restrictions applicable to fiduciaries or others and without the approval of any court. To sell for cash or credit, redeem, exchange for other property, convey, transfer, or otherwise dispose of any property held in the Trust in any manner and at any time, by private contract or at public auction or otherwise, and no other person shall be bound to see to the application of the purchase money or to inquire into the validity, expediency, or propriety of any such sale or other disposition. 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. To vote or to refrain from voting any stocks, bonds, or other securities held in the Trust, to exercise any other right appurtenant to any securities or other property held in the Trust, to give general or special proxies or powers of attorney with or without power of substitution with respect to such securities and other property, to exercise any conversion privileges, subscription rights, or other options or privileges with respect to such securities and other property and make any payments incidental thereto, and generally to exercise, personally or by general or limited power of attorney, any of the powers of an owner with respect to stocks, bonds, securities, or other property held in the Trust at any time. To oppose or to consent to and participate in any organization, reorganization, consolidation, merger, combination, readjustment of finances, or similar arrangement with respect to any corporation, company, or association, any of the securities of which are held in the Trust, to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions and the payment of expenses, assessments, or subscriptions that may be deemed necessary or advisable in the connection therewith, and to accept, hold, and retain any securities or other property that may be so acquired. To deposit any property held in the Trust with any protective, reorganization, or similar committee, and to delegate discretionary power thereto and to pay and agree to pay part of its expenses and compensation and any assessments levied 8 , with respect to any such property so deposited. (I) To hold, to authorize the holding of, and to register any investment to the Trust in the name of the Plan, the City, or any nominee or agent of any of the foregoing including the PIan 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 secnrities deposited therein by any other person, and to organize corporations or trusts under the laws of any jurisdiction for the purpose of acquiring or holding title to any property for the Trust, all with or without the addition of words or other action to indicate that property is held in a fiduciary or representative capacity but the books and records of the Plan shall at all times show that all such investments are part of the Trust. (m) Upon such terms as may be deemed advisable by the City or the Plan Administrator, with the approval of the City, 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 the 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. (0) 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 City, 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. 5.4 Taxes and Expenses All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future Sfl0198 9 , laws upon, or in respect to the Trust, or the income thereof, and all commissions or acquisitions or dispositions of securities and similar expenses of investment and reinvestment of the Trust, shall be paid from the Trust. Such reasonable Compensation of and reimbursement for reasonable expenses incurred by the Plan 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 City, shall be paid for from the Trust. 5.5 Payment of Benefits The payment of benefits from the Trust in accordance with the terms of the Plan may be made by the Plan Administrator at the direction of the City, or by any custodian or other person so authorized by the City to make such disbursements. 5.6 Employer Liability In no event shall the City'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 City nor the Plan Administrator shall be liable for losses arising from depreciation or shrinkage in the value of any investments acquired under this Plan. 5.7 Statements Each Participant shall receive periodic statements, at least quarterly, reflecting his or her current value of their Account. ARTICLE 6 - TRANSFERS 6.1 Transfers to the Plan A Transfer from an Eligible Deferred Compensation Plan maintained by another employer will be accepted and credited to a Participant's Account under the following conditions: (a) The Participant has Separated from Service from the other employer plan and has become an Employee of the City; and (b) The other employer's deferred compensation plan allows such Transfers to be made. If amounts being transferred from another plan are subject to an irrevocable election, the Transfer into the City's Plan shall render that election null and void. In addition, the City may refuse to accept a Transfer in the form of assets other than cash, unless the City agrees to hold such other assets under the Plan. Any amount transferred shall be subject to the limitations of Article 4, except that, for purposes of applying the limitations of Section 4.1, 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 City. 6.2 Transfers from the Plan If a Participant Separates from Service prior to Normal Retirement Age and becomes a Participant in an Eligible Deferred Compensation Plan of another employer, such Participant may request a distribntion of his or her Account to the Eligible Deferred Compensation Plan of the other employer. 8/20/98 10 .. Requests for such Transfer must be made in writing to the Plan Administrator and shall be granted at the discretion of the City. If an amount is to be transferred pursuant to this Section, the Plan Administrator shall Transfer such amount directly to the Eligible Deferred Compensation Plan of the other employer, 6.3 Transfers Within the Plan Should a Participant become a qualified CALPERS Participant, and is no longer eligible for this Plan, his or her Account will be automatically transferred to The City of Arcadia Deferred Compensation Plan and Trust. 6.4 Conditions of Transfers The City reserves the right to limit the terms and conditions under which a Transfer will be accepted from or made to other Eligible Deferred Compensation Plans, including such terms and conditions as are necessary to comply with this Plan and the regulations or other pronouncements under section 457 of the Code and to assure that any transferor or transferee plan constitutes an Eligible Deferred Compensation Plan as defined by Section 457 of the Code. ARTICLE 7 - DISTRIBUTIONS 7.1 Conditions for Distributions No distributions from the Plan to the Participant or Beneficiary shall be made prior to one or more of the following events: (a) The Participant's Separation from Service; or (b) The Participant's attainment of age 70 \/'; or (c) The Participant's Unforeseeable Emergency that has been approved by the City as meeting the conditions outlined in Section 7.9; or (d) The Participant's death. Except as provided in Section 7,9 (relating to Unforeseeable Emergencies), and Section 7.13 (relating to De Minimis Accounts) no amount will be distributed from a Participant's Account prior to the sixty-first (6Ist) day following the events outlined in subsection (a) and (c) of this Section. 7.2 Separation from Service Upon a Participant's Separation from Service with the City, the Participant may either elect to receive distributions in one of the forms described in Section 7.3 or may elect to defer the commencement date of their distribution pursuant to the guidelines in Section 7.4. If a Participant fails to elect one of these methods of distribution within sixty (60) days of their Separation from Service, distributions will be made according to the default distribution option outlined in Section 7.5. 7.3 Payment Options If a Participant's Account balance is $5,000 or less, he or she will automatically receive a single lump-sum payment. A lump-sum payment shall be issued as soon after the 61st day following the Participant's Separation from Service as administratively feasible, but no later than the 91st day 8120198 11 t following the Participant's Separation from Service. If a Participant's Account balance is over $5,000, he or she may elect a payment option. A Participant's election of a payment option must be made at least thirty (30) days prior to the date that the payment of benefits is to commence. No payment option in the forms described in this Section 7,3 may be made or changed after the commencement date for such distribution form. If a Participant fails to make a timely election of a payment option, benefits may be paid in accordance with Section 7.5. A participant who is eligible to choose a payment option may elect to have his or her Account distributed in accordance with one of the following payment options: (a) A single Inmp-snm payment; (b) Substantially nonincreasing installment payments for a period of years (payable on a monthly, quarterly, semi-annual or annual basis) which extends no Ionger than the life expectancy of the Participant or such longer period as permitted under Section 7.1 0; (c) Partial lump-sum payment of a designated amount, with the balance payable in substantially nonincreasing installment payments for a period of years, as described in subsection (b); (d) Annuity payments (payable on a monthly, quarterly, or annual basis) for the , lifetime of the Participant or the lifetimes of the Participant and Beneficiary if permitted under Section 7.1 0; or (e) Such other forms of substantially nonincreasing installment payments as may be approved by the City consistent with the limitations of Section 7.10, Any Plan provider may choose to offer Participants the option of an automatic cost-of-living increase for payout options made after December 31,1995, under subsection (b), (c), or (e) above. Such increase win be based on the rise in the Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of the last year in which a cost-of-living increase was provided to the third quarter ofthe current year. Any increase will be made in periodic payment checks beginning the following January. Thus, the first cost-of-living increase will be based on the rise in the CPI-U from the third quarter of 1997 to the third quarter of 1998, and will be applied to the amounts paid beginning January 1999. 7.4 Deferred Commencement Date No later than sixty (60) days following the date of the Participant's Separation from Service, the eligible Participant may elect a deferred commencement date for all or a portion of the Participant's Account balance. Such date may not be later than April 1st of the year following the year of a Participant's attainment of age 70 Y:z or Separation from Service, whichever is later. Unless a payment option is elected before the deferred commencement date, the Participant's Account shall be distribnted under the default distribution option described in section 7.5. A Participant's election of a deferred commencement date shall be irrevocable except as otherwise provided in this Section, 8/20/98 12 . The participant may make an additional election to defer the commencement of distribution of benefits to a fixed determinable date later than the initially elected deferred commencement date but not later than April 1st of the year following the year of the Participant's retirement or attairunent of age 70 v" whichever is later, provided that: (a) Such election is made on or after the 6lst day following the Participant's Separation from Service; (b) Such election is made before commencement of distributions has begun; and (c) The Participant may make only one (I) such election. 7.5 Default Distribution Option For purposes of this Article 7, if a Participant fails to make a timely election of a payment option, the Participant's benefits shall be paid in equal monthly installments over a period of 5 years without the inclusion of a cost-of-living increase. Payments shall commence as soon after the 6Ist day following the Participant's Separation from Service as is administratively feasible, but no later than the 9lst day following the Participant's Separation from Service. 7.6 Funds with More than One Provider If a Participant is Separating from Service and has funds with more than one Plan provider, the Participant will be required to reallocate his or her entire funds under the Plan into an Account with a single provider. This reallocation of funds must take place within 60 days of the Participant's . Separation from Service. Subsequent to the 6lst day of the Participant's Separation from Service and for as long as the Participant maintains an Account balance in the Plan, he or she may continually reallocate all of his or her funds under the Plan into an Account with another provider as long as the following conditions are met: (a) The Participant never has funds with more than one provider (i.e., the Participant must Transfer their entire Account balance to the desired provider); (b) The Participant does not have restricted investments that limit the Participant's ability to Transfer his or her entire Account balance to another provider; (c) The Participant has not chosen an annuity as a payment option; and (d) The deferred commencement date and the payment option elected by the Participant are forwarded and adhered to by the newly selected provider. Investment restrictions will not apply to a Participant who is Separating from Service and is transferring all of his or her funds to a single provider within the initial 60 days from their Separation of Service. However, after this initial selection of a provider, a Participant will be subject to the investment restrictions placed on their investment options by the Plan provider. 7.7 Cash-Outs and Combined Payments The City reserves the right to adopt guidelines, which shall be uniformly applied to all Participants and Beneficiaries, under which Account balances below a pre-determined level may be distributed in a single lump-sum amount upon Separation from Service or at a deferred commencement date. In addition, installment payments below a specified amount may be combined and paid at less , 8120198 13 . frequent intervals (but not less frequently than annually). 7.8 Annuities In the event that a Participant or Beneficiary elects to receive distributions in the form of a life annuity or another annuity form, the portion of the Participant's Account balance allocable to that form of distribution shall be used to purchase a commercial annuity contract under which that form of annuity is provided. The amount of the annuity payments to the Participant or Beneficiary shall equal the amount payable under such annuity contract. 7.9 Unforeseeable Emergencies In the event of an Unforeseeable Emergency prior to or after the commencement of distributions, a Participant (or Beneficiary after the death of a Participant) may apply to receive only the value of his or her Account balance, including any income tax resulting from the distribution, that is reasonably needed to satisfy the emergency need. The determination of need will be made by the Plan Administrator and approved by the City. However, the following events are not considered to be unforeseeable emergencies as defined by the Internal Revenue Code: (a) Enrollment of a child in college (b) Purchase of a house (c) Purchase or repair of an automobile (d) Repayment ofloans ( e) Payment of income taxes, back taxes, or fines associated with back taxes (f) Unpaid expenses including rent, utility bills, mortgage payments, or medical bills (g) Marital separation or divorce (h) Bankruptcy except when resulting directly and solely from illness or casualty loss Payment will not be made to the extent that the financial hardship may be satisfied through cessation of deferrals, insurance or other reimbursement, loans, or a liquidation of other assets to the extent that such liquidation would not itself cause severe financial hardship. After a Participant receives an Unforeseeable Emergency distribution, the Participant will be required to stop all future deferrals for a period of twelve (12) months beginning from the date of distribution. If a Participant wishes to begin deferring money after this twelve (12) month period, . he or she must write a letter of explanation outlining the reasons that they should be allowed to resume deferring his or her money. If the City or Plan Administrator determines that this letter supports the Participant's financial ability to defer a portion of his or her money, the Participant will be granted the right to resume deferring his or her money. 7.10 Death Benefits Upon the Participant's death, the Participant's remaining Account balance shall be payable to the Beneficiary commencing on the sixty-first (6Ist) day after the date of the Participant's death, unless, within the sixty (60) days of the Participant's death, the Beneficiary irrevocably elects a deferred commencement date that is consistent with the limitations set forth below. Prior to the Beneficiary's commencement date, the Beneficiary may irrevocably elect to receive the Participant's remaining Account balance under any of the payment options described in Section 7.3 consistent 8120/98 14 . with the limitations set forth below. If a Beneficiary fails to make a timely election of a payment form, the death benefit shall be paid under the default distribution option described in Section 7.5 or over such shorter period as set forth below: (a) If the Participant dies prior to April 1st of the year following the year of his or her attainment of age 70 Yz or Separation of Service, whichever is later and; (I) The surviving spouse is the sole Beneficiary: (i) The commencement date shall be no later than the first day of the calendar year in which the Participant would have attained age 70 Yz (or, if later, the calendar year immediately following the year of the Participant's death); and (ii) Distribution shall be made over a period that does not exceed the life expectancy of the surviving spouse. (2) The surviving spouse is not the sole Beneficiary: (i) The entire Account balance shall be distributed no later than the last day of the calendar year which includes the fifth (5th) anniversary of the Participant's death; or (ii) If distributions to an individual Beneficiary commence by the last day of the calendar year immediately following the year of the Participant's death, the entire Account balance shall be distributed no later than the last day of the calendar year which includes the fifteenth (15th) anniversary of the Participant's death or the Beneficiary's life expectancy, whichever is earlier. (b) If the Participant dies after April 1st of the year following the year of their attainment of age 70 Yz or Separation of Service, whichever is later, or after the commencement of distributions in the form of an annuity: (\) The Beneficiary may not elect to defer the commencement of death benefits; and (2) The Participant's remaining Account balance shall be distributed at least as rapidly as under the method selected by the Participant. (c) If there are two or more Beneficiaries, the provisions of this Section 7.10 and Section 7.11 shall be applied to each Beneficiary separately with respect to each Beneficiary's share in the Participant's Account. If the Beneficiary dies before all payments from the Participant's Account have been depleted, the remaining Account balance shall be paid to the estate of the Beneficiary in a lump-sum. (d) 8/20/98 15 ;.1 . ' (e) Under no circumstances, shall the City be liable to the Beneficiary for the amount of any payment made in the name of the Participant before a Plan Administrator receives proof of the Participant's death. 7.11 Limitations on Distribution Options No distribution option may be selected by a Participant or Beneficiary under this Article 7 unless it satisfies the requirements of Section 401 (a)(9) and Section 457(d)(2) of the Code, including that installment payments be made in substanti~ly nonincreasing amounts and that payments commencing before the death of the Participant satisfy the incidental death benefits requirement of section 457. A cost-of-living increase included as part of a payment option selected under Section 7.3 shall not violate the requirement under Section 457 of the Code that any distributions made over a period of more than one (I) year can only be made in substantially nonincreasing amounts. Unless elected otherwise by the Participant (or sponse, in the cases of distributions described in Section 7.IO), life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Participant (or spouse, if applicable) and shall apply to all subsequent years. The life expectancy of a nonspouse Beneficiary may not be recalculated. 7.12 Taxation of Distributions To the extent required by law, income and other taxes shall be withheld from each benefit payment, and payments shall be reported to the appropriate governmental agency or agencies. 7.13 De Minimis Accounts Notwithstanding the foregoing provisions of this Article 7, the Participant may elect to receive or the City may distribute, without the consent of the Participant, the Participant's entire Account if all of the following conditions are met: (a) The value of the Participant's Account does not exceed $5,000 (or such greater dollar amount in accordance with Section 457 of the Code for calendar years beginning after December 31,1997); (b) 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 (c) There has been no prior distribution under the Plan to the Participant pursuant to this Section, ARTICLE 8 - PARTICIPANT RIGHTS 8.1 Account Balances The benefits payable to each Participant (or Beneficiary, if applicable) shall be measured by and limited to the amount properly credited to the Participant's Account. A Participant shall have no claim under the Plan for any loss or diminution of his or her Account balance that is attributable to any loss in the vaIue of the investment portfolios that corresponds with the investment option(s) selected by the Participant under the Plan. 8.2 Non-Assignability Except as provided in Section 8.3, the Participant or Beneficiary shall have no rightS under this Plan 8120198 16 ~ . . to sell, assign, pledge, commute, Transfer, or otherwise convey his or her rights or benefits under the Plan. Except as otherwise required by law, the rights of the Participant or Beneficiary under this Plan shall not be subject to attachment, garnishment, execution, or to transfer by operation of law in the event of bankruptcy or insolvency of the Participant or Beneficiary or otherwise. 8.3 Domestic Relations Orders To the extent required under final judgement, 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 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 Conforming Equitable Distribution Order (CEDO) must be completed by the Participant and their spouse, former spouse, or child, herein referred to as the alternate recipient. Pursuant to the guidelines of the CEDO and subject to the City's approval, a separate Account shall be established with respect to the Participant and alternate recipient. The following provisions will apply: (a) The alternate recipient will be solely responsible for designating investment option(s) for the funds in his or her Account; (b) The alternate recipient may not make additional contributions to his or her Account; (c) Distribution of the alternate recipient's Account may only be made at the earliest of the Participant's Separation from Service with the Plan sponsor, the Participant's attainment of age 70 \1" or death of the Participant; and (d) Distribution to an alternate recipient shall be paid out to the alternate recipient (less required income taxes) in a lump sum. Nothing in this Section 8.3 shall be construed to authorize any amount to be distributed under the Plan at a time or in a form that is not permitted under Section 457 of the Code. 8.4 Liability to Participant A Participant's right to receive benefits under the Plan shall be rednced to the extent that any portion of a Participant's Account has been paid or set aside for payment to a spouse, former spouse, or child pursuant to Section 8.3 or to the extent that the City or the Plan is otherwise subject to a binding judgment, decree, or order for the attachment, garnishment, or execution of any portion of the Participant's Account or any distributions therefrom, The Participant shall be deemed to have released the City, the Plan, and the Plan Administrator from any claim with respect to such amounts. 8.S Legal Proceedings Neither the City, the Plan, nor the Plan Administrator shall be obligated to incur any cost to defend against or set aside any judgment, decree, or order relating to the division, attachment, garnishment, or execution of the Participant's Account or of any distribution therefrom. Notwithstanding the foregoing, if the City, the Plan, or the Plan Administrator is joined in any such proceeding, a Plan Administrator shall take such steps as it deems necessary and appropriate to protect the terms of the Plan. 8/20198 17 , .' , ARTICLE 9 - GENERAL PROVISIONS 9.1 Amendment Subject to the requirements of the Government Code, the City and the Plan Administrator reserve the right to amend or modify the Plan at any time without the consent of any Participant or Beneficiary. Except as may be required to maintain the status of the Plan as an Eligible Deferred Compensation Plan under Section 457 of the Code or to comply with other applicable laws, no amendment or modification shall impair any individual's right to benefits under the Plan or expand the City's obligation to provide benefits with respect to amounts previously credited to Participant's Accounts. 9.2 Effect on Employment Nothing contained in this Plan shall be deemed to constitute an employment contract or agreement between any Participant and the City or to give any Participant the right to be retained in the employ of the City. Nor shall anything herein be construed to modify the terms of any employment contract or agreement between a Participant and the City. 9.3 Binding Contract The terms of this Plan, as amended from time to time, shall constitute a contract between each Participant and the City and shall be binding, as applicable, upon their heirs, administrators, trustees, successors, assigns, and beneficiaries. 9.4 Incompetence of Participant If the City finds any person to whom an amount is payable under the Plan to be unable to care for their affairs, is a minor, or has died, any payment due him or her, or his or her estate, may be paid to his or her spouse, a child, a relative, or any other person having custody of snch person, unless prior claim has been made by a duly appointed legal representative. Any such payment shall be a complete discharge of all liability under the Plan thereof. 9.5 Applicable Law This Plan shall be construed under the laws of the State of California and in conformity with the requirements of Section 457 of the Code and all regulations thereunder applicable to Eligible Deferred Compensation Plans. The provisions of the Plan shall be interpreted whenever possible in conformity with the requirements of Section 457 of the Code, 9.6 Total Agreement This Plan and the Participation Agreement, and any subsequently adopted amendment, thereof, shall constitute the total agreement or contract between the City and the Participant regarding the Plan. No oral statement regarding the Plan may be relied upon by the Participant. 8120198 18