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Res 1392 - Amend ICMA Plan --- COUNCIL BILL NO. 1764 RESOLUTION NO. 1392 A RESOLUTION AMENDING THE INTERNATIONAL CITY MANAGERS ASSOCIATION (ICMA) RETIREMENT CORPORATION DEFERRED COMPENSATION PLAN AND TRUST FOR CERTAIN CITY EMPLOYEES. WHEREAS, the City has had the ICMA deferred compensation plan available for its employees since 1973 which serves the interest of the City 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 City has determined that the continuance of the deferred compensation plan will serve these objectives; and WHEREAS, amendments to the Internal Revenue Code have been enacted that require changes to the structure of, and allow enhancements of the benefits of the deferred compensation plan, now, therefore, THE CITY OF WOODBURN RESOLVES AS FOLLOWS: Section 1. The City hereby amends and restates the deferred compensation plan (the "Plan") in the form of the ICMA Retirement Corporation Deferred Compensation Plan and Trust, a copy of which is attached as "Exhibit A". Section 2. That the assets of the Plan shall be held in trust, with the Employer serving as Trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose, The City's beneficial ownership of Plan assets held in the ICMA Retirement Trust shall be held for the further exclusive benefit of the Plan participants and their beneficiaries. Notwithstanding the foregoing, all Plan provisions creating a Trust to hold all the assets of the Plan for the exclusive benefit of participants and beneficiaries shall become effective once the appropriate body, which includes the State of Oregon, makes the necessary amendments permitting the establishment and maintenance of such a Trust, Section 3. That the Plan will not permit loans, however, the City reserves the right to reconsider this action once the Trust is established to hold all of the assets of the Plan for the exclusive benefit of participants and beneficiaries, and guidelines have been established by the Internal Revenue Service, Section 4. That the City hereby under the Plan rv7 /1/. /\ Approved as to'Form:/ /.f(va-/~ agrees to serve as trustee Page 1 - City Attorney APPROVED <~?~~ NANCY A. K KSEY, COUNCIL BILL NO. 1764 , RESOLUTION NO, 1392 / 1- 7- I ~ 1~ , ......,"......-., ,_,_ "'-~.,',_"""',___>c.,.._ ~ , ,--- - Passed by the Council November 25, 1996 Submitted to the Mayor November 27, 1996 Approved by the Mayor November 27, 1996 Filed in the Office of the Recorder November 27, 1996 ATTEST fI/~~~ Mary nnant, Recorder City of Woodburn, Oregon Page 2 - COUNCIL BILL NO, 1764 RESOLUTION NO, 1392 .".,'~- ,_. -".._, i ICMA RETIREMENT CORPORATION This deferred compensation plan has been submitted to the Internal Revenue Service by a public employer for a Private Letter Ruling. The IRS has not yet issued a Ruling on the plan and may require changes in this document prior to issuing a'Ruling. If changes are required in the document, you will be notified of the changes. ..................................................................................................... . ".....-" ..- ... .-.--,-- ,~. ~-~. ,-.- ..-._~,,_.",_...__..__._-- . 457 Deferred Compensation Plan and Trust Document November 1996 -- DEFERRED COMPENSATION PLAN & TRUST ARTICLE I. PURPOSE The Employer hereby establishes the Employer's De- ferred Compensation Plan and Trust, hereafter referred to as the" Plan." The Plan consists of the provisions set forth in this document. The primary purpose of this Plan is to provide retirement income and other deferred benefits to the Employees of the Employer and the Employees' Beneficiaries in accordance with the provisions of Section 457 of the Internal Rev- enue Code of 1986, as amended (the "Code"), This Plan shall be an agreement solely between the Employer and participating Employees, The Plan and Trust forming a part hereof are established and shall be maintained for the exclusive benefit of eligible Employ- ees and their Beneficiaries, No part of the corpus or income of the Trust shall revert to the Employer or be used for or diverted to purposed other than the exclu- sive benefit of Participants and their Beneficiaries. ARTICLE II. DEFINITIONS 2.01 Account: The bookkeeping account maintained for each Participant reflecting the cumulative amount of the Participant's Deferred Compensation, including any income, gains, losses, or increases or decreases in market value attributable to the Employer's investment of the Participant's Deferred Compensation, and further reflecting any distributions to the Participant or the Participant's Beneficiary and any fees or expenses charged against such Participant's Deferred Compensa- tion, 2,02 Accounting Date: Each business day that the New York Stock Exchange is open for trading, as provided in Section 6,06 for valuing the Trust's assets, 2,03 Administrator: The person or persons named to carry out certain nondiscretionary administrative func- tions under the Plan, as hereinafter described, The Employer may remove any person as Administrator upon 60 days' advance notice in writing to such person, in which case the Employer shall name another person or persons to act as Administrator. The Administrator may resign upon 60 days' advance notice in writing to the Employer, in which case the Employer shall name another person or persons to act as Administrator. 2.04 Beneficiary: The person or persons designated by the Participant in his Joinder Agreement who shall receive any benefits payable hereunder in the event of the Participant's death. In the event that the Participant names two or more Beneficiaries, each Beneficiary shall be entitled to equal shares of the benefits payable at the Participant's death, unless otherwise provided in the Participant's Joinder Agreement. If no beneficiary is designated in the Joinder Agreement, if the Designated Beneficiary predeceases the Participant, or if the desig- nated Beneficiary does not survive the Participant for a period of fifteen (15) days, then the estate of the Par- ticipant shall be the Beneficiary. 2.05 Deferred Compensation: The amount of Normal Compensation otherwise payable to the Participant which the Participant and the Employer mutually agree to defer hereunder, any amount credited to a Participant's Account by reason of a transfer under section 6.09, or any other amount which the Employer agrees to credit to a Participant's Account. 2.06 Employee: Any individual who provides services for the Employer, whether as an employee of the Employer or as an independent contractor, and who has been designated by the Employer as eligible to partici- pate in the Plan, 2.07 Includible Compensation: The amount of an Employee's compensation from the Employer for a taxable year that is attributable to services performed for the Employer and that is includible in the Employee's gross income for the taxable year for federal income tax purposes; such term does not include any amount excludable from gross income under this Plan or any other plan described in Section 457(b) of the Code or any other amount excludable from gross income for federal income tax purposes. Includible Compensation shall be determined without regard to any community property laws, 2,08 Joinder Agreement: An agreement entered into between an Employee and the Employer, including any amendments or modifications thereof. Such agreement shall fix the amount of Deferred Compensation, specify a preference among the investment alternatives desig- nated by the Employer, designate the Employee's Bell eficiary or Beneficiaries, and incorporate the terms, conditions, and provisions of the Plan by reference, ............................................................................................................ . ,> ....>~ '.- 'T-'. '~_u__ . ,.,.- .,,- ._--..._..._...._,..,.-._-~""'-.... Two .... ICMA RETIREMENT CORPORATION 2,09 Normal Compensation: The amount of compensa- tion which would be payable to a Participant by the Employer for a taxable year if no Joinder Agreement were in effect to defer compensation under this Plan. 2,10 Normal Retirement Age: Age 70-1/2, unless the Participant has elected an alternate Normal Retirement Age by written instrument delivered to the Administra.. (Or prior to Separation from Service, A Participant's 0lormal Retirement Age determines the period during which a Participant may utilize the catch-up limitation 0f Section 5.02 hereunder. Once a Participant has to lny extent utilized the catch-up limitation of Section ),02, his Normal Retirement Age may not be changed. :\ Participant's alternate Normal Retirement Age may not be earlier than the earliest date that the Participant will become eligible to retire and receive unreduced retirement benefits under the Employer's basic retire- ment plan covering the Participant and may not be later than the date the Participant will attain age 70-1/2, If a Participant continues employment after attaining age 70-1/2, not having previously elected alternate Normal Retirement Age, the Participant's alternate Normal Retirement Age shall not be later than the mandatory retirement age, if any, established by the Employer, or the age at which the Participant actually separates from ,ervice if the Employer has no mandatory retirement age, If the Participant will not become eligible to receive benefits under a basic retirement plan main- tained by the Employer, the Participant's alternate :'>Jonnal Retirement Age may not be earlier than age 55 Jlld may not be later than age 70-1/2, 2.11 Participant: Any Employee who has joined the Phn pursuant to the requirements of Article IV, 2.12 Plan Year: The calendar year. 2,13 Retirement: The first date upon which both of the following shall have occurred with respect to a partici- pant: Separation from Service and attainment of age 65. 2,14 Separation From Service: Severance of the I'articip:mt's employment with the Employer which lOllstltutes a "separation from service" within the 1I1ealllllg of Section 402(d)(4)(A)(iii) of the Code. In ~el1nal, a Participant shall be deemed to have severed h 1\ l' III pIOYIlll'1l t with the Employer for purposes of this 1'1.111 whl'II, In accordance with the established practices of the hnployer, the employment relationship is considered ...... . to have actually terminated. In the case of a Participant who is an independent contractor of the Employer, Separation from Service shall be deemed to have oc- curred when the Participant's contract under which services are performed has completely expired and terminated, there is no foreseeable possibility that the Employer will renew the contract or enter into a new contract for the Participant's services, and is not antici- pated that the Participant will become an Employee of the Employer. 2.15 Trust: The Trust created under Article VI of the Plan which shall consist of all compensation deferred under the Plan, plus any income and gains thereon, less any losses, expenses and distributions to Participants and Beneficiaries, ARTICLE III. ADMINISTRATION 3.01 Duties of the Employer: The Employer shall have the authority to make all discretionary decisions affect- ing the rights or benefits of Participants which may be required in the administration of this Plan. The Employer's decisions shall be afforded the maximum deference permitted by applicable law, 3.02 Duties of Administrator: The Administrator, as agent for the Employer, shall perform nondiscretionary administrative functions in connection with the Plan, including the maintenance of Participants' Accounts, the provision of periodic reports of the status of each Account, and the disbursement of benefits on behalf of the Employer in accordance with the provisions of this Plan, ARTICLE IV. PARTICIPATION IN THE PLAN 4,01 Initial Participation: An Employee may become a Participant by entering into a Joinder Agreement prior to the beginning of the calendar month in which the Joinder Agreement is to become effective to defer compensation not yet earned. 4,02 Amendment of Joinder Agreement: A Participant may amend an executed Joinder Agreement to change the amount of compensation not yet earned which is to be deferred (including the reduction of such future deferrals to zero) or to change his investment preference (subject to such restrictions as may result from the nature of terms of any investment made by the Em- ployer), Such amendment shall become effective as of ................................................................................................. . Three .~..~._-- +...w"..____...~._.."'..._._....._...,_".." ... >,,,'._..........__~~..,,_,_....~ .m--". 457 Deferred Compel/sa/ioll Pla" allil Trust Do(umetl( November 1996 the beginning of the calendar month commencing after the date the amendment is executed, A Participant may at any time amend his Joinder Agreement to change the designated Beneficiary, and such amendment shall become effective immediately, ARTICLE V. LIMITATIONS ON DEFERRALS 5,01 Normal Lim.itation: Except as provided in section 5.02, the m,aximum amount of Deferred Compensation for any Participant for any taxable year shall not exceed the lesser of $7,500.00, as adjusted for the cost-of-living in accordance with Code section 457(e)(15) for taxable years beginning after December 31, 1996 (the" dollar limitation"), or 33-1/3 percent of the Participant's Includible Compensation for the taxable year. This limitation will ordinarily be equivalent to the lesser of the dollar limitation in effect for the taxable year or 25 percent of the Participant's Normal Compensation, 5.02 Catch-Up Limitation: For each of the last three (3) taxable years of a Participant ending before his attain- ment of Normal Retirement Age, the maximum amount of Deferred Compensation shall be the lesser of: (1) $15,000 or (2) the sum of (i) the Normal Limitation for the taxable year, and (ii) the Normal Limitation for each prior taxable year of the Participant commencing after 1978 less the amount of the Participant's Deferred Compensation for such prior taxable years, A prior taxable year shall be taken into account under the preceding sentence only if (i) the Participant was eli- gible to participate in the Plan for such year (or in any other eligible deferred compensation plan established under Section 457 of the Code which is properly taken into account pursuant to regulations under section 457), and (ii) compensation (if any) deferred under the Plan (or such other plan) was subject to the deferrallimita- tions set forth in Section 5,01 5,03 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 $7,500.00 (or such greater amount allowed under Sections 5.01 or 5,02 of the Plan), less any amount excluded from gross income under section 403(b), 402(a) (8), or 402(h)(1)(B) of the Code, or any amount with respect to which a deduction is allowable by reason of a contribution to an organiza- tion described in section 501(c)(18) of the Code, ARTICLE VI. TRUST AND INVESTMENT OF ACCOUNTS 6.01 Investment of Deferred Compensation: 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 6.03, The trustee shall be the Employer or such other person which agrees to act in that capacity hereunder. 6,02 Investment Powers: The trustee or the Plan Ad- ministrator, acting as agent for the trustee, shall have the powers listed in this Section with respect to invest- ment of Trust assets, except to the extent that the investment of Trust assets is directed by Participants, pursuant to Section 6.05. (a) To invest and reinvest the Trust without dis- tinction between principal and income in any form of tangible or intangible property, real, personal, or mixed, and wherever situated, including, but not by way of limitation, common or preferred stocks, shares of regulated investment companies and other mutual funds, bonds, loans, notes, debentures, mortgages, certificates of deposit, interest, or par- ticipation, 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 purport- ing 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, ............................................................................................................ . ..'"..~".. _..,.,.-~..''".._,..... ._..~.. ---_._.__..,.~- ..........-....- Four ICMA RETIREMENT CORPORATION , t t (b) To invest and reinvest all or any pan 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 Em- ployee plans described undcr sections 457 or 401 of the Code, or any successor provisions thereto, and during the period of time that an investment through any such medium shall exist, to the extent of participation of the Plan, the declaration of trust of such common, collective, or commingled trust fund shall constitute a part of this Plan. (c) To invest and reinvest all or any part of thc assets of the Trust in any group annuity, deposit administration or guaranteed interest contract issued by an insurance company or other financial institu- tion 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 pbn de- scribed in section 401 (a)(24) of the Code, and such contract may be held or issued in the name of the Phn Administrator, or such custodian as the Plan Administrator may appoint, as agent and nominee for the Employer. During the period that an invest- ment through any such contract shall exist, to the extent of participation of the Plan, the terms and conditions of such contract shall constitute a part of the Plan, (d) To purchase part interests in real property or in mortgages on real property, wherever such real property may be situated, and to delegate to a property manager or the holder or holders of a majority interest in such real property or mortgage all real property the management and operation of :IllY p:lrt interest in such re:lI property or IHortgages, (e) To hold cash awaiting investment and to keep sllch 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 Phn, (I) To retain, manage, operate, administer, divide, su bdivide, 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, :lnd to grant options to sell, exchange, lease, or otherwise dispose of any such property, without regard to restrictions applicable to fiduciaries or others and WIthout the approval of any court. (g) To sell for cash or credit, redeem, exchange for other property, convey, transfer, or otherwise dispose of any property held in the Trust in any manner and at any time, by private contract or at public auction or otherwise, and no other person shall be bound to see to the application of the purchase money or to inquire into the validity, expediency, or propriety of any such sale or other disposition, (h) To enter into contracts for or to make commit- ments either alone or in company with others to purchase or sell at any future date any property acquired for the Trust. (i) 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 securi- ties 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 inciden- tal 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. (j) To oppose or to consent to and participate In any organization, reorganization, consolidation, merger, combination, readjustment of finances, or similar arrangement with respect to any corporation, company, or association, any of the securities of which are held in the Trust, 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 deem,ed necessary or advisable in connection therewith, and to accept, hold, and retain any securities or other property that may be so acquired, ........ 4.............................................................................................. -.....--..."r"..'----..-..-.-' ........_... ....- F i lJ C ..... 457 Deferred Compensation Plall and Trust Document November 1996 (k) To deposit any property held in the Trust with any protective, reorganization, or similar commit- tee, and to delegate discretionary power thereto and to pay and agree to pay part of its expenses and compensation and any assessments levied with respect to any such property so deposited. (I) To hold, to authorize the holding of, and to register any investment to the Trust in the name of the Plan, the Employer, or any nominee or agent of any of the foregoing, including the Plan Administra- tor, or in bearer form, to deposit or arrange for the deposit of securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, and to organize corporations or trusts under the laws of any jurisdiction for the purpose of acquiring or holding title to any property for the Trust, all with or without the addition of words or other action to indicate that property is held in a fiduciary or representative capacity but the books and records of the Plan shall at all times show that all such invest- ments are part of the Trust. (m) Upon such terms as may be deemed advisable by the Employer or the Plan Administrator, as the case may be, for the protection of the interests of the Plan or for the preservation of the value of an investment, to exercise and enforce by suit for legal or equitable remedies or by other action, or to waive any right or claim on behalf of the Plan or any default in any obligation owing to the Plan, to renew, extend the time for payment of, agree to a reduction in the rate of interest on, or agree to any other modification or change in the terms of any obligation owing to the Plan, to settle, compromise, adj ust, 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 Employer, or any nominee or agent of the foregoing, including the Plan Administrator, in any bank or banks, (q) To do any and all other acts that may be deemed necessary to carry out any of the powers set forth herein. 6,03 Taxes and Expenses: All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon, or in respect to the Trust, or the income thereof, and all commissions or acq uisitions or dispositions of securities and similar expenses of invest- ment and reinvestment of the Trust, shall be paid from the Trust. Such reasonable compensation of the Plan Administrator, as may be agreed upon from time to time by the Employer and the Plan Administrator, and reimbursement for reasonable expenses incurred by the Plan Administrator in performance of its duties hereun- der (including but not limited to fees for legal, account- ing, investment and custodial services) shall also be paid from the Trust. 6.04 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, or by any custodian or other person so authorized by the Em- ployer to make such disbursement. The Plan Adminis- trator, custodian or other person shall not be liable with respect to any distribution of Trust assets made at the direction of the Employer. 6.05 Investment Funds: In accordance with uniform and nondiscriminatory rules established by the Employer and the Plan Administrator, the Participant may direct his/ her Accounts to be invested in one (1) or more invest- ment funds available under the Plan; provided, how- ever, that the Participant's investment directions shall not violate any investment restrictions established by the Employer. Neither the Employer, the Administrator, nor any other person shall be liable for any losses incurred by virtue of following such directions or with any reasonable administrative delay in implementing such directions, . . . . . . . . . . ~ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~- -_. 'T"" Six ..... t I I ICMA RETIREMENT CORPORATION -, I, ~ I (l.06 Valuation of Accounts: As of each Accounting Date, the Plan assets held in each investment fund offered shall be valued at fair market value and the investment income and gains or losses for each fund shall be determined. Such investment income and gains or losses shall be allocated proportionately among all Account balances on a fund-by-fund basis, The alloca- tion shall be in the proportion that each such Account balance as of the immediately preceding Accounting Date bears to the total of all such Account balances as of that Accounting Date, For purposes of this Article, all Account balances include the Account balances of all Participants and Beneficiaries, (l.07 Participant Loan Accounts: Participant Loan Accounts shall be invested in accordance with Section 8,03 of the Plan, Such Accounts shall not share in any investment income and gains or losses of the investment funds described in Sections 6,05 and 6,06, (J.l)8 Crediting of Accounts: The Participant's Account shall reflect the amount and value of the investments or other property obtained by the Employer through the investment of the Participant's Deferred Compensation pursuant to Sections 6.05 and 6,06. It is anticipated that the Employer's in vestments with respect to a Participant will conform to the investment preference specified in the Participant's Joinder Agreement, but nothing herein shall be construed to require the Employer to make any particular investment of a Participant's Deferred Com- pensation, Each Participant shall receive periodic reports, not less frequently than annually, showing the then current value of his/her Account. (d)') Transfers: (a) Incoming Transfers: A transfer may be accepted from an eligible deferred compensation plan main- tained by another employer and credited to a Participant's Account under the Plan if (I) the Participant has separated from service with that employer and become an Employee of the Em- ployer, and (ii) the other employer's plan provides that such transfer will be made. The Employer may require such documentation from the predecessor plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of Section 457 of the Code, and to assure that transfers are provided for under such plan, The Employer may refuse to accept a transfer in the form of assets other J!$, , I than cash, unless the Employer and the Administra- tor agree to hold such other assets under the Plan, Any such transferred amount shall be treated as a deferral subject to the limitations of Article V, except that, for purposes of applying the limitations of Sections 5.01 and 5.02, an amount deferred during any taxable year under the plan from which the transfer is accepted shall be treated as if it has been deferred under this Plan during such taxable year and compensation paid by the transferor em- ployer shall be treated as if it had been paid by the Employer, (b) Outgoing Transfers: An amount may be trans- ferred to an eligible deferred compensation plan maintained by another employer, and charged to a Participant's Account under this Plan, if (I) the Participant has separated from service with the Employer and become an employee of the other employer, (ii) the other employer's plan provides that such transfer will be accepted. and (iii) the Participant and the employers have signed such agreements as are necessary to assure that the Employer's liability to pay benefits to the Partici- pant has been discharged and assumed by the other employer. The Employer may require such docu- mentation from the other plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of section 457 of the Code, and to assure that transfers are provided for under such plan, Such transfers shall be made only under such circum- stances as are permitted under section 457 of the Code and the regulations thereunder. (',10 Employer Liability: In no event shall the Employer's liability to pay benefits to a Participant under this Plan exceed the value of the amounts cred- ited to the Participant's Account; neither the Employer nor the Administrator shall be liable for losses arising from depreciation or shrinkage in the value of any investments acquired under this Plan, ................................................................................................,...... . S e (l C fl _.."--...'r~.. ",.,-_....._,~-,~_.._,--_.- 4 5 7 D e fer red COllI P (' 11 sat i 0 If PIa II a fI d T r f~ s ( D 0 ( U m C fI t November 1996 ARTICLE VII. BENEFITS 7,01 Retirement Benefits and Election on Separation from Service: Except as otherwise provided in this Article VII, the distribution of a Participant's Account shall commence as of April 1 of the calendar year after the Plan Year of the Participant's Retirement, and the distribution of such Retirement benefits shalI be made in accordance with one of the payment options de- scribed in Section 7,02. Notwithstanding the foregoing, but subject to the following paragraph of this Section 7.01, the Participant may irrevocably elect within 60 days following Separation from Service to have the distribution of benefits commence on a fixed determin- able date other than that described in the preceding sentence which is at least 61 days after Separation from Service, but not later than April 1 of the year following the year of the Participant's Retirement or attainment of age 70-1/2, whichever is later. Notwithstanding the foregoing provisions of this Section 7,01, no election to defer the commencement of benefits after a separation from service shall operate to defer the distribution of any amount in the Participant's Loan Account in the event of a default of the Participant's loan. Effective on or after January 1, 1997, the Participant may elect to defer the commencement of distribution of benefits to a fixed determinable date later than the date described above, but not later than April 1 of the year following the year of the Participant's retirement or attainment of age 70-1/2, whichever is later, provided (a) such election is made after the 61st day following Separation from Service and before commencement of distributions and (b) the Participant may make only one (1) such election. Notwithstanding the foregoing, the Administrator, in order to ensure the orderly adminis- tration of this provision, may establish a deadline after which such election to defer the commencement of distribution of benefits shall not be allowed, 7,02 Payment Options: As provided in Sections 7.01, 7.04 and 7.05, a Participant or Beneficiary may elect to have value of the Participant's Account distributed in accordance with one of the following payment options, provided that such option is consistent with the limita- tions set forth in Section 7.03, (a) Equal monthly, quarterly, semi-annual or annual payments in dn amount chosen by the Participant, continuing until his/her Account is exhausted; -, ~" '-'"T~''' (b) One lump-sum payment; (c) Approximately equal monthly, quarterly, semi- annual or annual payments, calculated to continue for a period certain chosen by the Participant. (d) Annual Payments equal to the minimum distri- butions required under Section 401 (a)(9) of the Code over the life expectancy of the Participant or over the life expectancies of the Participant and his Beneficiary, (e) Payments equal to payments made by the issuer of a retirement annuity policy acquired by the Employer. (f) A split distribution under which payments under options (a), (b), (c) or (e) commence or are made at the same time, as elected by the Participant under Section 7,01, provided that all payments commence (or are made) by the latest benefit commencement date under Section 7.01 and that once a payment is made subsequent payments wiII be made in substan- tiaIly nonincreasing amounts. (g) Any payment option elected by the Participant and agreed to by the Employer and Administrator, provided that such option must provide for substan- tiaIly nonincreasing payments for any period after the benefit commencement date under Section 7.01, A Participant's or Beneficiary's selection of a payment option made after December 31, 1995, under Subsec- tions (a), (c), or (g) above may include the selection of an automatic annual cost-of-living increase, Such increase wiIl be based on the rise in the Consumer Price Index for AIl Urban Consumers (CPI-U) from the third quarter of the last year in which a cost-of-living in- crease was provided to the third quarter of the current year. Any increase will be made in periodic payment checks beginning the following January, The first cost- of-living increase will be based on the rise in the CPI-U from the third quarter of 1995 to the third quarter of 1996, and will be applied to amounts paid beginning January 1997. A Participant's or Beneficiary's election of a payment option must be made at least 30 days before the pay- ment of benefits is to commence, If a Participant or BenefiClary fails to make a timely election of a payment option, benefits shaIl be paid monthly under option (c) E ig Ir I ICMA RETIREMENT CORPORATION above for a period of five years or such shorter period of time necessary to ensure that the amount of any install- ment is not less than $1,200 per year, without the inclusion of a cost-of-living increase. 7,03 Limitation on Options: No payment option may be selected by a Participant under subsections 7'()2(a) or (c) unless the amount of any installment is not less than $1,200 per year. No payment option may be selected by a ParticipaIlt or Beneficiary under Sections 7,02, 7,04, or 7.05 unless it satisfies the requirements of Sections 401 (a)(<J) and 457 (d)(2) of the Code, including that payments commencing before the death of the Participant shall satisfy the incidental death benefits requirement under section 457(d)(2)(B)(i)(l), A cost-of- living increase included as part of a payment option selected under Section 7,02 shall not be considered to fail to satisfy the req uirement under section 457 (d)(2)(b) that any distribution made over a period of more than 1 year can only be made in substantially nonincreasing amounts, Unless otherwise elected by the Participant (or spouse, in the case of distributions described in Section 7.05 below) by the time distributions are required to begin, life expectancies shall be recalculated annually, Such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years, The life expectancy of a nonspouse Beneficiary may not be recalculated, 7,04 Post-retirement Death Benefits: (a) Should the Participant die after he/she has begun to receive benefIts under a payment option, the remaining payments, if any, under the payment option shall be payable to the Participant's Benefl- ci:ny within the 30-day penod commenclllg WIth the 61st day after the Participant's death, unless the Beneficiary elects payment under a different pay- ment optIOn that is available under SectIon 7,02 within 60 days of the Participant's death, Any different payment option elected by a Benefici;ny under this section must provide for payments :1t a rate that is :It least as rapid under the payment option thJt was JppJicable to the Particip.11lt. In no event shall the Employer or Administr:1tor be JiJble to the Beneficiary for the amount of any payment mack in the name of the Particip:lllt befon' the Administrator receives proof of dc;lth of the (larticipallt, (b) If the designated Beneficiary does not continue to live for the remaining period of payments under the payment option, then the commuted value of any remaining payments under the payment option shall be paid in a lump sum to the estate of the Beneficiary, In the event that the Participant's estate is the Beneficiary, the commuted value of any remaining payments under the payment option shall be paid to the estate in a lump Slim, 7, OS Pre-retirement Death Benefits: (a) Should the Participant die before he has begun to receive the benefits provided by Section 7.01, the \'Jlue of the Participant's Account shall be payable to the Beneficiary commencing within the 30-l13y period commencing on the 91st day after the Participant's death, unless the Beneficiary elects a different fixed or determinable benefit commence- ment dJte within <JO days of the Participant's de;lth, Such benefit commencement date shall be not bter than the later of (I) December 31 of the year fol- lowing the year of the Participant's death, or (ii) if the Beneficiary is the Participant's spouse, Decem- ber 31 of the year in which the Participant would ha ve Jttained age 70-1/2, {b) Unless a Beneficiary elects a different payment option prior to the benefit commencement date. death benefits under this Section shall be paid in approximately equal aIlnual installments over flve years, or over such shorter period as may be neces- sary to assure that the amount of any annual install- ment is not less than $3,500, A BeneficiJry shall be treated as if he/she were a Participant for purposes of determining the payment options available under Section 7,02, provided, however, that the payment option chosen by the Beneficiary must provide for payments to the Beneficiary over a period no longer than the life expectancy of the Beneficiary, and provided that such period may not exceed (15) years if the Beneficiary is not the Participant's spoliSe, (c) In the event that the Beneficiary dies before the payment of death benefits has commenced or been completed, the remaining value of the Participant's Account shall be paid to the estate of the BenefI- ciary in a lump sum. In the event thJt the Participant's estJte is the Beneficiary, payment shall be made to the estate in a lump sum. ..................................................................................,................... . .. 10..... ...............'-~., . ...'...'....T---..-...---....---.--...-'.......-....'.--. .\t I tl t' lJ I 4 S 7 D e fer red Com P (' II sat i 0 II P I a /I a II d T r " 5 I D 0 ( /I m e II I November 1996 7,06 Unforeseeable Emergencies: (a) In the event an unforeseeable emergency occurs, a Participant may apply to the Employer to receive that part of the value of his/her Account that is reasonably needed to satisfy the emergency need, If such an application is approved by the Employer, the Participant shall be paid only such amount as the Employer deems necessary to meet the emergency need, but payment shall not be made to the extent that the financial hardship may be relieved through cessation of deferral under the Plan, insurance or other reimbursement, or liquidation of other assets to the extent such liquidation would not itself cause severe financial hardship, (b) An unforeseeable emergency shall be deemed to involve only circumstances of severe financial hardship to the Participant resulting from a sudden unexpected illness, accident, or disability of the Participant or of a dependent (as defined in section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar and extraordinary unforeseeable circum- stances arising as a result of events beyond the control of the Participant. The need to send a Participant's child to college or to purchase a new home shall not be considered unforeseeable emer- gencies, The determination as to whether such an unforeseeable emergency exists shall be based on the merits of each individual case. 7,07 Transitional Rule for Pre-1989 Benefit Elections: In the event that, prior to January 1, 1989, a Participant or Beneficiary has commenced receiving benefits under a payment option or has irrevocably elected a payment option or benefit commencement date, then that pay- ment option or election shall remain in effect notwith- standing any other provision of the Plan, 7,08 De Minimis Accounts: Notwithstanding the fore- going provisions of this Article, if the value of a Participant's Account does not exceed $3,500 and (a) no amount has been deferred under the Plan with respect to the Participant during the 2-year period ending on the date of the distribution and (b) there has been no prior distribution under the Plan to the Participant pursuant to this Section 7,08, the Participant may elect to receive or the Employer may distribute the Participant's entire Account without the consent of the Participant. Such distribution shall be made in a lump stun. ARTICLE VIII. LOANS TO PARTICIPANTS 8,01 Availability of Loans to Participants: (a) Effective January 1, 1997, the Employer may elect to make loans available to Participants in this Plan. If the Employer has elected to make loans available to Participants, a Participant may apply for a loan from the Plan subject to the limitations and other provisions of this Article, (b) The Employer shall establish written guidelines governing the granting of loans, provided that such guidelines are approved by the Plan Administrator and are not inconsistent with the provisions of this Article, and that loans are made available to all Participants on a reasonably equivalent basis. 3,02 Terms and Conditions of Loans to Participants: Any loan by the Plan to a Participant under Section 8,01 of the Plan shall satisfy the following requirements: (a) Availability, Loans shall be made available to all Participants on a reasonably equivalent basis, (b) Interest Rate, Loans must be adequately secured and bear a reasonable interest rate, (c) Loan Limit. No Participant loan shall exceed the present value of the Participant's Account, (d) Foreclosure. In the event of default on any installment payment, the outstanding balance of the loan shall be a deemed distribution. In such event, an actual distribution of a plan loan offset amount will not occur until a distributable event occurs in the Plan, (e) Reduction of Account. Notwithstanding any other provision of this Plan, the portion of the Participant's Account balance used as a security interest held by the Plan by reason of a loan out- standing to the Participant shall be taken into account for purposes of determining the amount of the Account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. ................................ eo.......................................................................".... --- '1 Te II leMA RETIREMENT -:ORPORATION -- (t) Amount of Loan, At the time the loan is made, the principal amount of the loan plus the outstand- ing balance (principal plus accrued interest) due 011 any other outstanding loans to the Participant frol11 the Plan and from all other plans of the Employer that are qualified employer plans under section 72(p)(4) of the Code shall not exceed the least of: (1) $50,000, reduced by the excess (if any) of (a) The highest outstanding balallce of loans from the Plan during the one (1) year period ending on the day before the date on which the loan is made, over (b) The outstanding balance of loans from the Plan on the date on which such loan IS made; or (2) One-half of the value of the Participant's interest in all of his/her Accounts under this Plan. (g) Application for Loan, The Participant must give the Employer adequate written notice, as determined by the Employer, of the amount and desired time for receiving a loan, No more than one (1) loan may be made by the Plan to a Partici- pant in any calendar year. No loan shall be ap- proved if an existing loan from the Plan to the Participant is in default to any extent. (h) Length of Loan. Any loan issued shall req UHe the Participant to repay the loan in substantially equal installments of principal and interest, at least monthly, over a period that does not exceed five (5) years from the date of the loan; provided, however, that if the proceeds of the loan are applied by the Participant to acquire any dwelling unit that is to be used within a reasonable time (determined at the time the loan is made) after the loan is made as the principal residence of the Participant, the five (5) year limit shall not apply. In this event, the period of repayment shall not exceed a reasonable period determined by the Employer. Principal installments and interest payments otherwise due may be sus- pended for up to one (1) year during an authorized leave of absence, if the promissory note so provides, but not beyond the original term permitted under this Subsection (h), with a revised payment schedule ....................................................... . E / (' I' , t, - .-......-.- '.~. T- 'within such term) instituted at the end of such period of suspension. 'j) Prepayment. The Participant shall be permitted :0 repay the loan in whole or in part at any time ?rior to maturity, without penalty, j) Promissory Note, The loan shall be evidenced by a promissory note executed by the Participant lnd delivered to the Employer, and shall bear lI1terest at a reasonable rate determined by the Employer. k) Security. The loan shall be secured by an 1ssignment of the Participant's right, title and Interest in and to his/her Account. I) Assignment or Pledge, For the purposes of ?Jragraphs (t) and (g), assignment or pledge of any ?ortion of the Participant's interest in the Plan and a :oan, pledge, or assignment with respect to any Insurance contract purchased under the Plan, will be treated as a loan. Ill) Other Terms and Conditions. The Employer ,hall fix such other terms and conditions of the loan 1S it deems necessary to comply with legal require- :nents, to maintain the qualification of the Plan and Trust under section 457 of the Code, or to prevent the treatment of the loan for tax purposes as a iistribution to the Participant. The Employer, in Its discretion for any reason, may fix other terms lIld conditions of the loan, not inconsistent with the provisions of this Article and section 72(p) of the Code. :-, Participant Loan Accounts: ;}) Upon approval of a loan to a Participant by the Employer, an amount not in excess of the loan shall oe transferred from the Participant's other invest- :nent fund(s), described in Section 6,05 of the Plan, :0 the Participant's Loan Account as of the Account- :ng Date immediately preceding the agreed upon Jate on which the loan is to be made, b) The assets of a Participant's Loan Account may be invested and reinvested only in promissory notes .eceived by the Plan from the Participant as consid- ~ration for a loan permitted by Section 8.01 of the Plan or in cash. Uninvested cash balances in a ..................................................... . 457 Drfrrrl'd COltll'l'flsation Pia 11 afld Trust Document NOlJcmbcr 1996 : ::cipant's Loan Account shall not bear interest. :ner the Employer, the Administrator, nor any . ,~ person shall be liable for any loss, or by reason ,::y breach, that results from the Participant's .. : ~ise of such control. ::z.epayment of principal and payment of interest : be made by payroll deduction or, where .....ment cannot be made by payroll deduction, by .. . K, and shall be invested in one (1) or more '..:'~ investment funds, in accordance with Section : of the Plan, as of the next Accounting Date .. . : payment thereof to the Trust. The amount so ,'ted shall be deducted from the Participant's :: Account, The Employer shall have the authority to ~ lish other reasonable rules, not inconsistent : the provisions of the Plan, governing the :::-lishment and maintenance of Participant Loan '.. . Junts, ARTICLE IX NON-ASSIGNABILITY ::;eneral: Except as provided in Article VIII '. .:ion 9,02, no Participant or Beneficiary shall : right to commute, sell, assign, pledge, transfer . :wise conveyor encumber the right to receive ,::lents hereunder, which payments and rights :. ''c'ssly declared to be non-assignable and ." . ::sferable. , .- )mestic Relations Orders: ':.lIowance of Transfers: To the extent required :: ,'r final judgement, decree, or order (including .:':' :oval of a property settlement agreement) made . ." :.Jant to a state domestic relations law, any : :::on of a Participant's Account may be paid or .: .side for payment to a spouse. former spouse, or :', i of the Participant. Where necessary to carry u: :he terms of such an order, a separate Account :.. be established with respect to the spouse, ::::er spouse, or child who shall be entitled to .: '.:' investment selections with respect thereto in ",: ':lme manner as the Participant; any amount so .: ~slde for a spouse, former spouse, or child shall " ~ lid out In a lump sum at the earliest date that ,: :,fits may be paid to the Participant, unless the ':. ~ directs a different tIme or form of payment. Nothing in this Section shall be co::,true,: ::; autho- rize any amount to be distributed u::der I:'.:' Plan at a time or in a form that is not pern::tted :::::cr Section 457 of the Code, Any Payr;~~nt J:',~~:' to a person other than the Participant p::,suarc: :: this Section shall be reduced by require": inuc.o tax withholding; the fact that payment :; mac" :') a person other than the Participant n:~\' no: :-:::vent such payment from being includibJ~ in the ;:-oss income of the Participant for withl:~ldin::: ,-:.d income tax reporting purposes, (b) Release from Liability to PartiC:?:lnt: - Employer's liability to pay benefits :0 a I) .:::cipant shall be reduced to the extent that ~:,101lr.:' 'lave been paid or set aside for payment :2 a ~r: .:'e, former spouse, or child pursuant to ?araf!:~:-i (a) of the Section, No such transfer shall ':: ~ efL:: .:ated unless the Employer or Administrar::r ha' :: :::n provided with satisfactory evidence :hat t~.: .em- ployer and the Administrator are re:~ased :::m any further claim by the Participant wi;:: resp,.: to such amounts. The Participant shall be d~::mec :: have released the Employer and the AdIl:::listr~::: from any claim with respect to such amo.::lts, ::', ~ny case in which (i) the Employer or Admi::;stralC: ias been served with legal process or otherw:<e jOl:.: : in a proceeding relating to such transfer. (ii) t~.' ?artici- pant has been notified of the pende::cy 0:' . .:h proceeding in the manner prescribe: by t~.' :aw of the jurisdiction in which the proceding .' :-::nding for service of process in such actior. or by::.: lil from the Employer or Administrator to t~.~ Par: :.pant's last known mailing address, and (iii (he f' ~::lcipant fails to obtain an order of the COUrt :n tht :::oceed- ing relieving the Employer or Adm:J.istra::: from the obligation to comply with the .I.:dgmt:: decree, or order. (c) Participation in Legal Proceedir:~s: Th, .::m- player and Administrator shall not :-:: obL:::ed to defend against or set aside any judg~ll1enl ~=cree, or order described in paragraph (a) an', legal:: ier relating to the garnishment of a Par::cipa,.: ; ben- efits, unless the full expense of sud: legal ~::lon is borne by the Participant. In the eyet th~: ::'le Participant's action (or inaction) nc::ethe.,,' causes the Employer or Administrator to ll'.-:ur ~:..:::. ex- pense, the amount of the expense c,-y be . ::.arged against the Participant's Account ar.: the:, :.; reduce the Employer's obligation to pay be::efit~ ::: the T w {' I" c ................................................................................... . .~_.. -'''T- ICMA RETIF..EMf'.:T CORPORATION ;'lrticipant. In the course of any proceeding ~::Iatill~ :,' divorce, separation, or child support, the E:n- :' :oyer and Administrator shall be authorized :'J .':'iclose information relating to the P:nticip:L:'s ~,(count to the Particip:ll1t's spouse, former <~<)lISl'" :: child (including the legal representatives c:' the <'ouse, former spouse, or child), or to a cour: ARTICLE X. RELATIONSHIP TO OTHER PLANS AND EMPLOYMENT AGREEMENTS Th> ?lan serves in addition to any other retirell:::lt, pcr.'>Jn, or benefit plan or system presently in e:'::itcllt " or :-, :reinafter established for the benefit of the En: :-:'Jyer' s employees, and participation hereu n:::r SILl L llo:'.:Tect benefits receivable under any such pb:, l)f sy,: t'::1. Nothing contained in this Plan shall be C ::ll1ed to ,::lstitute an employment contract or agreell1:::t be!..', ~en any Participant and the Employer or to ;lVC ;1Il\ hrticipant the right to be retained in the en'.~loy 0:' the ::mployer. Nor shall anything herein be COIE::ueo to .:. Jdify the terms of :lIlY employment contraCl jr agL :ment between a Participant and the Employ:r. ARTICLE XI. AMENDMENT OR TERMINATION OF PLAN The =mployer may at any time amend this Plall :: :()- vide.: that it transmits such amendment in writiL-" to th, Ad::':nistrator at least 30 days prior to the effecc', : datt of!;':: amendment. The consent of the Adminiq: ~~or siD:: aot be required in order for such amendme:.: to bcc':ne effective, but the Administrator shall bt' _:lder 110 ,":,Iigation to continue acting as Administrate,: here.:nder if it disapproves of such amendment, . .le Ell: ::-:oyer may at any time terminate this Plan, Th: :\dministrator may at any time propose an J: 'clld- m(':'.: to the Plan by an instrument in writing trd:. mit- ted :,) the Employer at least 30 days before the e:':'::ctivc da!f of the amendment. Such amendment shall be :0111(' efft'::lve unless, within such 30-day period, the =:n- pItY, or notifies the Administrator in writing tha I .: th';,?proves such amendment, in which case sue!: :lln:,::dment shall not become effective, In the n::l! of, .::h disapproval, the Administrator shall be u: in 110 ,'::>Iigation to continue acting as Administr:lto: hne.:Jlder. 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 termination of the Plan shall divest any Participant of any rights with respect to compensation deferred before the date of the amendment or termination. ARTICLE XII. APPLICABLE lAW This Plan and Trust shall be construed under the laws of the state where the Employer is located and is estab- lished with the intent that it meet the requirements of an "eligible deferred compensation plan" under Section 457 of the Code, as amended. The provisions of this Plan and Trust shall be interpreted wherever possible in conformity with the requirements of that section. ARTICLE XIII. GENDER AND NUMBER The masculine pronoun, whenever used herein, shall include the feminine pronoun, and the singular shall include the plural, except where the context requires otherwise. ......................................... ...................................................... -... -....,.......,...-.-...- ~---_.-'..,-'.- -,."-'-...-,.",, ._-- ,-,_._, '(' I: . t e (' 1/