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1987-26 RESOLUTION NO. 87- 26 A RESOLUTION OF THE CITY COUNCIL- OF THE CITY OF GRAND TERRACE, CALIFORNIA, RESCINDING RESOLUTION NO. 79-49, AND ADOPTING AN EMPLOYEES' DEFINED CONTRIBUTION RETIREMENT PLAN AND AUTHORIZING THE EXECUTION OF AGREEMENTS RELATED TO SAID PLAN BY THE CITY MANAGER. WHEREAS, Resolution No. 79-49 established a Defined Contribution Retirement Plan for its employees who are and will be rendering valuable services to the City; and WHEREAS, it is intended that said Plan shall be in accordance with Federal and State laws and regulations: NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF GRAND TERRACE DOES HEREBY RESOLVE, DETERMINE, AND DEMAND AS FOLLOWS: SECTION 1. That Resolution No. 79-49 is hereby rescinded in its entirety. ,r SECTION12. That-�the;,Defined Contribution Retirement Plan, established by -Council effective November 30; 1978, attached hereto and incorporated herein as Exhibit "A", is to remain in effect until terminated by further resolution of the City Council. SECTION 3. That the City Manager is hereby designated as trustee and authorized to cause to be issued deposits amounting to 12.4% of the City employees' gross salaries. SECTION 4. That the City Manager is hereby appointed to administer the Plan on behalf of the City and is authorized to execute all documents and agreements necessary to implement and administer the Plan. ADOPTED this 12th day of November, 1987. ATTEST: City C1Qrk of the City of Grand Mar of the City o Grand Terrace-` and of the City Council T race and of the City Council thereof thereof. Approved as to form: A&,- � I City Attorney I, THOMAS SCHWAB, City Clerk of the City of Grand Terrace, do hereby certify that the foregoing Resolution was introduced and adopted at a regular meeting of the City Council of the City of Grand Terrace held on the 12th day of November, 1987, by the following vote: AYES: Councilmembers Pfennighausen, Grant, Evans, Shirley: Mayor Matteson NOES: None ABSENT: None ABSTAIN: None i y Clem • `1 TABLE OF CONTENTS PAGE PREAMBLE ARTICLE I - DESIGNATION OF TRUST AND DEFINITIONS 1 .01 Title 1 1 .02 Beneficiary 1 1 .03 City Council 1 1 .04 Break-In-Service 2 1 .05 Code 2 1 .06 Committee 2 1 .07 Compensation 2 1 .08 Effective Date 2 1 .09 Anniversary Date 2 1 . 10 Employee 2 1 .11 Employer 2 1 .12 ERISA 3 1 . 13 Hour of Employment Service 3 1 .14 Normal Retirement 3 1 .15 Plan 3 1 . 16 Plan Year 3 1 .17 Participant 4 1 . 18 Disability 4 1 . 19 Trustee 4 1 .20 Year of Service 4 1 .21 Limitation Year 5 1 .22 Entry Date 5 ARTICLE II - ELIGIBILITY AND MEMBERSHIP 2.01 Eligibility Requirement 5 2.02 Leaves of Absence 5 ARTICLE III - EMPLOYER CONTRIBUTIONS 3.01 Employer Contributions 6 ARTICLE IV - ALLOCATIONS TO PARTICIPANTS ACCOUNTS 4.01 Accounts 6 4.02 Valuation of Accounts 6 4.03 Allocation of Employer Contributions and Forfeitures 7 4.04 Statement of Accounts 10 i ",. PAGE ARTICLE V - VESTING AND BENEFIT ENTITLEMENT 5.01 Vesting 10 5.02 Forfeitures 11 ARTICLE VI - DISTRIBUTION OF BENEFITS 6.01 Methods of Distribution 11 6.02 Time of Distribution 13 6.03 Loans to Participants 15 6.04 Application of Benefit of Former Participant 16 6.05 Nonliability 16 6.06 Benefit Claims Procedure 16 6.07 Return of Prior Distributions 17 ARTICLE VII - BENEFICIARIES 7.01 Designation 18 7.02 Absence of Valid Designation of Beneficiaries 18 ARTICLE VIII - CONTRIBUTION OF MEMBERS _. 8.01 Voluntary Contributions 18 8.02 Separate Administration and Accounts for Participant Contributions 19 8.03 Vesting 19 8.04 Withdrawal of Voluntary Contributions 19 8.05 Distribution 19 8.06 Designation of Beneficiaries 19 ARTICLE IX - THE TRUSTEE 9.01 Acceptance of Trust 20 9.02 The Committee Shall Direct Investments 21 9.03 General Powers of the Trustee 22 9.04 Books and Records 24 9.05 Valuations 24 9.06 Life Insurance 24 9.07 Distributions 26 9.08 Resignation or Removal of Trustee 26 9.09 Taxes, Expenses and Compensation of the Trustee 27 9. 10 Miscellaneous 27 ii PAGE ARTICLE X - THE ADMINISTRATIVE COMMITTEE 10.01 Appointment of Committee 28 10.02 Administration of Plan 28 10.03 Compensation of Committee 29 10.04 Fiduciary 29 10.05 Delegation of Responsibilities 29 ARTICLE XI - AMENDMENT AND TERMINATION 11 .01 Amendment 29 11 .02 Termination or Partial Termination or Complete Dis- continuance of Contribution 30 11 .03 Determination by Internal Revenue Service 30 ARTICLE XII - STANDARD OF CONDUCT OF FIDUCIARIES 12.01 Standard of Conduct 30 ARTICLE XIII - MISCELLANEOUS 13.01 Limitation of Rights ; Employment Relationship 31 13.02 Merger; Transfer of the Assets 31 13.03 Merger or Consolidation of Plan 32 13.04 Transfers from Other Qualified Plans 32 13.05 Return of Prior Distributions 32 13.06 Indemnification 32 13.07 Headings 33 13.08 Counterparts 33 13.09 Purpose 33 \ iii CITY OF GRAND TERRACE EMPLOYEES' DEFINED CONTRIBUTION RETIREMENT PLAN AND TRUST AGREEMENT THIS AGREEMENT is called "CITY OF GRAND TERRACE EMPLOYEES' DEFINED CONTRIBUTION RETIREMENT PLAN AND TRUST" and hereinafter referred to as the "Trust," by and between CITY OF GRAND TERRACE, a California Corporation, hereinafter referred to as "Employer," and SETH-ARMSTEAB-apd-EBWARB-R.-GLARIE; THOMAS SCHWAB, Individuals as Trustees, and tbe4r-his successor, or successors, hereinafter referred to as the "Trustee(s) ." WITNESSETH ARTICLE I DESIGNATION OF TRUST AND DEFINITIONS 1.01 TITLE. This Retirement Plan and Trust shall be known as CITY OF GRAND TERRACE EMPLOYEES' DEFINED CONTRIBUTION RETIREMENT PLAN AND TRUST. The Plan and Trust are designed and intended to qualify under the appropriate provisions of the Internal Revenue Code, ERISA, and the California Revenue and Taxation Code. 1.02 "BENEFICIARY" shall mean person(s) entitled under the provisions of this Plan to receive benefits after the death of a Participant. 1.03 "CITY COUNCIL" shall mean the members of the City Council of the Employer. 1 1.04 "BREAK-IN-SERVICE" shall mean with respect to any Employee any Plan Year in which such Employee does not complete, in the aggregate, more than 500 hours of service. A former Participant who had a non-forfeitable right to all or a portion of his account balance derived from Employer contributions at the time of his termination shall receive credit for all Years of Service prior to his Break-In-Service upon completing a Year of Service after his return to the employ of the Employer. A former Participant who did not have a non-forfeitable right to any portion of his account balance derived from Employer contribu- tions at the time of his termination shall receive credit for Years of Service prior to his Break-In-Service if (1) he completes a Year of Service after his return to the employ of the Employer and (2) the number of consecutive one year breaks in Service is less than the aggregate number of Years of Service before such break. 1.05 "CODE" shall mean the Internal Revenue Code of 1954, as amended, or any similar statutory provisions, hereinafter enacted. Where reference is made herein to any specific section of the Code, such reference shall be deemed to refer to such specific section or to any similar statutory provisions hereafter enacted in lieu of such specific section. 1.06 "COMMITTEE" shall mean the Retirement Plan Administrative Committee appointed by the City Manager. 1.07 "COMPENSATION" shall mean the full regular basic salary and/or hourly wages, overtime, exclusive of health and welfare or any other payments, before deductions authorized by the Employee or required by law to be withheld from the Employee by the Employer. 1.08 "EFFECTIVE DATE" The effective date of the Trust on and after which date all action contemplated or per under its terms may be performed shall be December 1, 1978. 1.09 "ANNIVERSARY DATE" shall mean the last day of each ,Plan Year. 1.10 "ELIGIBLE EMPLOYEE" shall mean a person employed by the Employer aRy-peRt�eR-ef-whose-�REe�e-�s-seb�eei;-�e-wi�gbe�d�Rg-ef-�pEe�e tam;-as-we4;-as-aRy-ether-perseR-qua4tty4Rg-as-a-eeFflfen-;aw efflp4eyee-ef-the-Eiflp4eyerT _in a regular, permanent capacity as defined by the employer. The designated 6 month probationary period does not exclude the employee from being considered as having been hired in a "permanent capacity". 1.11 "EMPLOYER" shall mean CITY OF GRAND TERRACE, a California Corpora- tion, or any successor of affiliate corporation which may adopt this Plan. 2 1.12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.13 "HOUR OF EMPLOYMENT OR SERVICE" shall mean: (1) Each hour for which an employee is directly or indirectly paid, or entitled to payment, by the Employer for the performance of duties. These hours shall be credited to the computation period in which the duties are performed. (2) Each hour for which an Employee is directly or indirectly paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability) , layoff, jury duty, military duty or leave of absence. These hours shall be credited to the computation period or periods to which such hours pertain, rather than the computation period in which payment is made. (3) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the employer. These hours shall be creddited to the computation period or periods to which the award or agreement for back pay pertains, rather than to the computation period in which the award, agreement or payment is made. The same hours of service shall not be credited both under paragraph (1) or paragraph (2) above, as the case may be, and under this paragraph (3) . Computation periods determined under this definition shall be computated with reference to Department of Labor Regulations 2530.200 b-2(b) and (c) . 1.14 "NORMAL RETIREMENT" shall mean the Participant's 60th birthday or ten (10) years from the Entry Date in the Plan as a participant, whichever is later, at which time a Participant shall be 100% vested. A Participant who continues in the employ of the Employer after he reaches Normal Retirement Age shall continue to partici- pate in the Plan and have contributions allocated to his account. When such Participant subsequently retires, he shall then be entitled to benefits under the Plan payable in the same manner as if he had retired at Normal Retirement Age. 1.15 "PLAN" shall mean the Retirement Plan set forth herein and any amendments hereto. 1.16 "PLAN YEAR" shall mean the accounting period from 9eeeHiber-1st tbebQh-Plee�be -39t1�: July 1 through June 30. 3 1.17 "PARTICIPANT" shall mean any Eligible Employee who meets the eligibility requirements specified in ARTICLE II hereof. 1.18 "DISABILITY" shall mean the mental or physical inability of the Participant to perform his normal job as evidenced by the certifi- cate of a medical examiner satisfactory to the Employer certifying that such condition is likely to be permanent. 1.19 "TRUSTEE" shall mean SETb-ARMSTEAD-aed-EDWARB-R:-66ARK THOMAS SCHWAB, Individuals, or any successor trustee of the Trust estab- lished pursuant to this Plan 1.20 "YEAR OF SERVICE" shall mean: a. For purposes of vesting and-a;4g}6}}4ty-te-part4e}pate-in the Plan, apd-exeept-as-prev4ded-4m-kb4-bereef7-"Year of Service" means a 12-consecutive-month period during which an Employee has at least 1,000 Hours of Service, with such period commenc- ing on either (i ) the Employment Commencement Date, or (ii) the first day of the first Plan Year following the Employment Commencement Date if he has less than 1,000 Hours of Service during the 12-month period beginning on the Employment Commencement Date. �n-aey-evept;-after-aR-Epp;eyee-beeeRies-a Part4e4pant;-After the initial year, Years of Service shall be measured by Plan Years, beginning with the first Plan Year immediately following the employment commencement date. b- Fer-purposes-ef-deterFfl4R4ng-the-a;4g4b4}4ty-ef-ae-€fp;eyee-te part4e4pate-4n-the-P4an-after-be-has-;est-h4s-status-as-a Part4e}pant-4e-the-P;ae-due-te-b4s-bay4ng-4neurred-a-Break-IR- Sery4ee;--'Year-ef-Sera4ee-'-reaps-a-12-eemseebt4ve-Fflentb-per}ed db��eg-wh�eb-that-€�p�e,�ee-bas-a-feast-�;A9A-bears-ef-Se���ee; w�tb-saEb-peg}ed-ee�r�epe�eQ-ee-e�tbe►�-���-�e-tbe-ease-ei -ae EFflp4e,Yee-whose-sery4ees-w4th-the-Cefpafly-d4d-pet-tertfl4eate-4R the-R;aR-Year-4e-wh4eb-be-4eeurred-b4s-;ast-Break-IR-Sera4ee; or-{444-4n-the-ease-ef-ae-Emp;eyee-whose-sery4ee-w4tb-the 6efflpaey-terHi4eated-4e-the-R;an-Year-4e-wh4eb-be-4ReHrFed-h4s ;ast-Break-Ie-Sera4ee;-the-€Fflp;eyee's-EFHpleyfept-6eFRffleneement Bate-eext-fe;;ew4ng"sa4d-tei-Ffl4eat}ep-ef-sery4ee-er-the-first day-ef-tbe-first-P;an-Year-fe4;ew4eg-sa4d-EFflg4eyiflent-EeR9- �eeee�ept-date-�f-tbe-E�p�e�+ee-bas-less-tWap- ;AAA-bears-ef Se���ee-db��p9-tWe-12-a�eetW-pe��ed-beg�pp�pg-ep-said-E�p�ey- Ffleet-6efFaeeeeFflept-date: C. For purposes of vesting, all years of service with the employer will be considered, including years in which the employee declined to participate in the plan and years the employee was in a category of employees excluded from the plan (i .e. , hourly employees, employees covered under collectively bargained agreements, non-resident aliens, etc. ) unless such service may otherwise be properly disregarded. 4 1.21 "LIMITATION YEAR" shall mean the plan year as defined herein. 1.22 "ENTRY DATE" shall mean for the initial Plan Year the Effective Date and thereafter it shall be the last day of the Plan Year. ARTICLE II ELIGIBILITY AND MEMBERSHIP 2.01 ELIGIBILITY REQUIREMENT. Except for any Employee who is covered by a collective bargaining agreement where retirement benefits are subject to good faith bargaining, an Employee shall become a Participant in this Plan as follows: (a) The Participation of any Eligible Employee shall commence as of the-4ast-day-ef-the-P;am-Year-fe;4ew4Rg the employment commence- ment date, prey4ded;-heweyer;-that-the-€Fflp4eyee-}s-eFap;eyed-es-the Oast-day-ef-seeh-P;an-Year-4e-wh4eh-part4e4pat4on-eeiflFflenees. �h�---Netw4thstand4eg-aeyth4Rg-te-the-eeptrary-eemta4ned-here}e- abeae;-a-fer�er-part4e4paet-who-4s-re-e�p;eyed-fe4;ew}ng-a-Break- 4m-Sery4ee-shalt-aga4n-beeeRie-a-Part4e4pant-eRly-after-aga4n Ffleet4eg-the-e;4g4b4}4ty-requ4refents-et-Seet4on-2 91-hereef:--The date-ef-part4e4pat4enT-however;-sha4;-be-retreaet}ye-te-the-date-ef sa4d-re-emp4eyFReet- fe4--rf-an-€mpReyee-who-has-fet-the-e44g�6414ty-requ4reRiepts separates-f�e�-Se���ee-p��e�-te-heee��eg-a-Pa�t�e�papt-gip-the-Rae aid-�s-sbhsegaept�y-�e-e���eyed-p��e�-te-�aee���pg-a-B�ea�-1e- Se���ee;-saeh-€�p�eyee-sha��-heee�e-a-Past}e�papt-as-ef-the-fast day-ef-the-Ptan-Year-i•FHFfled4ate;y-preeed�ng-sweh-re-efp;eyfent-date- 2.02 LEAVES OF ABSENCE. No Employee shall be deemed to have suffered a Break-In-Service if his employment is interrupted because such Employee has been on a leave of absence with the consent of the Employer, provided that he returns to the employ of the Employer at the expiration of such leave. Leaves of Absence shall mean leaves granted by the Employer, in accordance with rules uniformly applied to all Employees, for reasons of health or public service or for reasons determined by the Employer to be in its best interest. A Break-In-Service shall likewise not be deemed to have occurred while an Employee is a member of the Armed Forces of the United States provided that he returns to the service of the Employer within 90 days (or such longer period as may be prescribed by law) from the date he first became entitled to his discharge. Employees who do not return to the employ of the Employer within 30 days following the end of a leave of absence or within the required time in the case of service with the Armed Forces, shall be deemed to have terminated Service as of the effective date of said leave of absence (unless such failure to return was the result of death, Total Disability or approved early deferred or Normal Retirement) . 5 ARTICLE III EMPLOYER CONTRIBUTIONS 3.01 For the Employer's first Plan Year in which this Plan is in effect and for each Plan Year thereafter, the Employer shall make contri- butions to the Trust, in one or more installments in such amounts as the Employer may determine, provided that (a) the amount of such contribution, or the formula for determining- such amounts, shall be agreed upon and communicated to the Participants prior to the end of each Plan Year; (b) the Plan Year for which each contribution is made shall be designated at the time of the contribution, (c) no contribution shall be made in excess of the current and/or accumu- lated revenues, (d) no contribution for any Plan Year shall exceed an amount which the Employer estimates will be deductible under Section 404(a) (3) , including carry overs, or if applicable, Section 404(a)(7) of the Code, and (e) no contribution for any Plan Year shall be made if the Employer estimates that such contribution would cause any Participant's annual addition for such Plan Year (as such term is defined in Section 403(b)(1) hereof) to exceed the limitation specified in Section 404(b) (1) hereof. ARTICLE IV ALLOCATIONS TO PARTICIPANTS ACCOUNTS 4.01 ACCOUNTS. For purposes of allocating the Employer's contributions and forfeitures, the Committee shall establish and maintain separate accounts in the name of each Participant. 4.02 VALUATION OF ACCOUNTS a. Within 90 days after the end of each Plan Year and within 90 days after the removal of resignation of the Trustee, the Trustee shall value the assets of the Trust on the basis of fair market values as of the close of the Plan Year (or the close of any shorter period ending with such resignation or removal ) . The Committee shall cause the assets of the Trust to be valued on a Participant's termination of employment if a change of 25% in the value of Trust assets has occurred since the last annual or interim valuation. As of any valuation date and prior to the allocation of Employer contributions and forfeitures for the Plan Year, the Committee shall allocate the increment of profits to or, as the case may be, charge the losses against the respective accounts of the Participants in proportion to the balances of such accounts as of the last preceding valuation date. If interim valuation adjustments are made, all Participants shall be treated alike. b. Notwithstanding the foregoing, segregated accounts held in accordance with the provisions of Section 6.02 shall be valued 6 separately on each valuation date, and the increment of profits shall be allocated to or, as the case may be, the loss shall be charged against each such account on a segregated basis. C. If the Trustee, in making such valuations, shall determine that the Trust consists, in whole or in part, of property not traded freely on a recognized market, or that information necessary to ascertain the fair market value thereof is not readily available to the Trustee, the Trustee may request the Committee to instruct the Trustee as to the fair market value of such property for all purposed under the Plan, and in such event the fair market value placed upon such property by the Committee shall be binding and conclusive. If the Committee shall fail or refuse to instruct the Trustee as to the fair market value of such property within a reasonable time after receipt of the Trustee's request, the Trustee shall take such action as it deems necessary or advisable to ascertain the fair market value of such property, including the retention of such counsel and independent appraisers, as it considers necessary, and in such event the fair market value determined by the Trustee shall be binding and conclusive. Fees incurred by Trustees in connection with appraisal for retaining legal counsel shall be borne 100% by the assets of the trust, and not by the Employer. 4.03 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES. a. The-€fp4eyer=s-eentr4but4ens-4me4us�ve-ef-Forfeitures for the Plan Year shall be allocated among the accounts of the Participants in proportion to their total Compensation for the Plan Year provided, however, that the Employee is employed on the last day of such Plan Year for which said contributions are allocated. b. Notwithstanding anything to the contrary contained in sub- paragraph a. above, the following limitation shall apply in respect of the allocation of Employer's contributions and forfeitures to any Participant in any Plan Year. (1) Subject to the adjustments hereinafter set forth, the maximum annual addition to a Participant's account shall in no event exceed the lesser of: (a) $32,700; or (b) 25% of the Participant's Compensation for such Plan Year. 7 -ti (2) For purposes of sub-paragraph (1 ) above , the term "annual addition" shall mean the sum for any Par- ticipant in any following amounts : (a) such Participant's allocable share of Employer contributions ; (b) such Participant' s allocable share of forfeitures arising on account of other Participants ' Breaks-In- Service under Section 5.02 hereof; and (c) the lesser of: (i ) the amount of such Participant's voluntary contributions to the Plan (as such contributions are authorized under Section 8.01 hereof) in excess of 6% of such Participant' s Compensation ; or (ii ) one-half (112) of such Participant',s total voluntary contributions. (3) The limitation set forth in this Section 4.03 (b) of this ARTICLE IV with respect to any Participant who at any time has been a participant in any other defined contribution plan maintained by the Employer shall apply as if the annual addi . tions accrued to such Participant under all defined contribution plans in which the Participant has been a participant were derived from one plan. (4) The limitation of $32 ,700.00 imposed by Section 4.03(b) (1 ) above shall be adjusted annually for increases in the cost of living, in accordance with the Regulations issued by the Secretary of the Treasury pursuant to the provisions of Section 415(d) of the Code. (5) Corrective Adjustments. Should a Corrective adjustment to any Participant' s account be required, in order to comply with the limitations herein con- tained, the annual addition to such account shall be reduced by one or more of the following adjust- ments , in the order set forth and to the extent necessary to obtain compliance with the Section 4.03. - 8 - —� (i ) By returning to such Participant all or the necessary portion of any voluntary contributions under Section 4.03(b) (2) (c) hereof; (ii ) By reallocating to all other Participants in the Plan not subject to Section 4.03(b) , in proportion to their compensation for such Plan Year, that amount of Employer' s contributions inclusive of forfeitures which is allocable to any Participant pursuant to Section 4.03(a) of this ARTICLE IV and which causes such Participant' s annual addition to exceed the applicable limitation. (iii ) By maintaining a suspense account for the excess forfeitures , pursuant to the provisions of Section 5.02(b) , which , if allocated , would cause the limitations on annual additions to be exceeded. c. Notwithstanding anything to the contrary contained in this Plan , the following additional limitation shall apply to any Participant in any Plan Year who is covered by any defined benefit plan maintained by the Employer or by a corporation referred to in Section 4.03(b) as well as this Retirement Plan and/or any other defined contribution plan: (1 ) The rate of benefit accrual by such Par- ticipant in any .such defined benefit plan and/or the amount of annual additions to his account(s) in this Retirement Plan and/or any other defined contribution plan will be reduced by the Committee to the extent necessary to prevent the sum of the defined benefit plan fraction and the sum of the defined contribution plan fraction of this Retirement Plan and/or any other defined con- tribution plan for any year from exceeding 1 .4. (2) For the purpose of applying the limitations of this sub-paragraph the "defined benefit plan fraction" shall be determined by dividing the projected annual actual benefit of such defined benefit plan by the maximum projected annual actual benefit allowed by law; and the "defined contribution plan fraction" shall be determined by dividing the sum of the annual additions to a Participant' s account(s) under such defined contribution plan(s) by the sum of the maximum amount of annual additions which could have been made for each year of service with the Employer. 9 - 4.04 STATEMENT OF ACCOUNTS. The Committee shall submit to each Participant, within 120 days after the close of each Plan Year, a statement in such form as the Committee deems desirable set- ting forth the account balance of such Participant in his account(s) . ARTICLE V VESTING AND BENEFIT ENTITLEMENT 5.01 VESTING. Amounts credited to any Participant' s account shall not vest in any individual Participant except as: a. Full Vesting. The full amount credited to a Participant's account shall be deemed 100% vested in him at Normal Retire- ment Age, when his membership terminates by deferred retire- ment with the approval of the Employer, by death, or by reason of Disability. b. Partial Vesting. No part of the account of a Participant whose employment terminates for reasons other than Normal Retire- ment, deferred retirement with the approval of the Employer, death, or Disability, shall vest in him except in accordance with the following schedule: Vested Percentage of Such Years of Service Participant' s Account 1 45% 2 55% 3 65% 4 7.0 5 75% 6 80% 7 85% 8 90% 9 95% 10 100% c. Any Employee who separates from service and is re-employed prior to incurring a Break-In-Service will continue to vest, starting at the point in the vesting schedule where he left employment, 'in both his pre-separation and post-separation accrued benefit. d. The pre-break service of a participant who separated from service with a non-forfeitable interest, or of a non-vested participant whose prior service cannot be disregarded under IRC j_ . 10 - 411 (a) (6) (D) , will be considered for vesting purposes in the post-break account balance. An Employee must complete a year of service measured from his re-employment commencement date prior to taking all such service into account: 5.02 FORFEITURES. a. If any Participant suffers a Break-In-Service in any Plan Year for reasons other than Normal Retirement, deferred retirement with the approval of the Employer, death , or Disability, the vested portion of his account shall be determined as of the end of such Plan Year, with reference to the vesting schedule contained in Section 5.01 b. above. All amounts in such Member' s account which are not vested shall be allocated as a forfeiture in the manner provided in Section 4.03. b. If in any year the forfeitures exceed the maximum amount that may be allocated, such excess forfeitures may not be allocated. A suspense account holding the unallocated forfeitures for any year or years may be maintained if (1 ) no employer contributions may be made at any time when their allocation would be precluded by IRC Section 415, (2) investment gains and losses and other income are not allocated to the suspense account, and (3) amounts in the suspense account are allo- cated as of each allocation date on which forfeitures may be allocated until the account is exhausted. ARTICLE VI DISTRIBUTION OF BENEFITS 6.01 METHODS OF DISTRIBUTION (a) STANDARD FORM In the case of a Participant who, on his retirement date or on the date of his death while employed by the Employer, is married, the Standard Form of retirement benefit shall be payable in lieu of any other form of retirement benefit unless he elects not to have the Standard Form apply to him. If he makes such an election , his benefits shall be payable according to an optional form, as provided in Section 6.01 (b) . The Standard Form of retirement benefit shall be a monthly benefit payable for the life of the Participant and, commencing on the first day of the month following the month in which the Participant dies , a monthly benefit not less than 50% .of and not to exceed 100% of the benefit Payable to the Participant under this Standard Form, payable for the life of the person who was his Spouse on his Retirement Date. _.� (b) OPTIONAL FORMS In lieu of the retirement benefits provided in Section 6.01 (a) , a Participant may elect to receive his benefit in another form. Other specific options available will be determined on a non- discriminatory basis by the Plan Administrator. Any benefits payable under an optional form shall be the Actuarial Equivalent of the benefit otherwise payable according to the Standard Form. Under any optional form the present value of benefits payable to the participant must exceed the present value of benefits payable to any other person unless the optional form provides benefits in the form of a joint and survivor annuity under which the Participant' s Spouse is the contingent annuitant and periodic payments to the Spouse are no greater than those to the Partici- pant. Such present values shall be evaluated as of the Partici- pant' s Retirement Date. Notwithstanding anything to the contrary, no Policy of life insurance shall be distributed to any Participant which contains any options not permitted under this Plan. The optional forms of benefit payments available under this Section shall be as follows: (1 ) Period-Certain and Life Option - A Participant may elect to receive a reduced Pension benefit until death; and if the Participant' s death - - occurs within a period of five , ten or twenty years (as elected by the Participant) , then payment of the Pension will be continued in the same amount to the person or persons desig- nated by the Participant for the balance of the five, ten or twenty-year period. (2) Contingent Annuitant Option - A Participant may elect to receive a reduced Pension payable during the joint lives of the Participant and another person as his contingent annuitant, so that, following the death of the Participant, payment of the Pension in the same amount or in an amount equal to 66 2/3% of the Participant' s reduced Pension (as elected by the Participant) shall continue to the contingent annuitant, if surviving , with the last payment to be made as of the first day of the month in which the death of the contingent occurs. (3) Lump-Sum Option - A Participant may elect to receive a lump-sum distribution in an amount equal to his Accrued Benefit earned to date. 12 - (c) PROCEDURE FOR RECEIVING OPTIONAL FORMS OF BENEFITS (1 ) Election Period - Any election under this Section 6.01 must be communicated to the Plan Administrator in writing during an election period which shall be a period of 90 days immediately prior to the first day of the first period with respect to which an amount is to be received as a benefit; provided, however, that if the information is not supplied to the Parti- cipant within the period specified in Section 6.01 (c) (2) , then the election period shall end on the 90th day following the date on which the last of the information is given. Any benefit paid to a Participant shall be reduced by the value of any benefit already received by said Participant. (2) Information for Participant - Within a reasonable time after the first day of the election period, the Plan Administrator shall deliver to each Participant a written notification of the availability of an elec- tion to receive the benefit in another form and of the availability of information , upon the request of the Participant, of a written explanation in non- technical language of the terms and conditions of the joint and survivor annuity and the financial effect upon the Participant's Annuity (in terms of dollars per annuity payment) of making an election to receive the benefit in another form. This information must be provided to the Participant at least 9 months before the Normal Retirement Age. (3) Revocation of an Election - An election made to re- ceive the benefit in another form may be revoked in writing during the election period. After an election has been revoked, another election to receive the bene- fit in another form may be made during the election period 6.02 TIME OF DISTRIBUTION a. It is the intent of the Employer that any Contracts purchased pursuant to Section 9.06 be converted to a non-transferable annuity to provide a Participant the amount of retirement benefit he is entitled to under the provisions of ARTICLE IV of this Plan. Additionally, notwithstanding anything herein to the con- trary, a Participant who h'as obtained the consent of his Eligible Spouse, or in the event there is no Eligible Spouse, the Participant alone, or in the event of the Participant's death , his beneficiary, may request the Committee to commute 13 - the value of his retirement benefit or any death benefit not payable under a Contract and pay said commuted value to him in an immediate lump sum in cash within 180 days of the date of his entitlement to such retirement benefit. The Committee shall have complete discretion whether or not to honor such request. The payment of benefits under the Plan to a Participant will begin not later than the 60th day after the latest of the close of the Plan Year in which: (a) the date on which the Participant attains the earlier of the age 65 or the Normal Retirement Age spe- cified under the Plan ; (b) occurs the loth anniversary of the year in which the Participant commenced participation in the Plan; or (c) the Participant terminates h.is service with the Employer. In the case of a plan which provides for the payment of an early retirement benefit, such Plan shall provide that a Participant who satisfied the Service requirements for such early retirement benefit, but separated from the Service (with any non-forfeitable right to an accrued benefit) before satisfying the age requirement for such early retirement benefit, is entitled upon satisfaction of such age requirement to receive- a benefit not less than the benefit to which he would be entitled at the Normal Retirement Age, actuarially reduced under regulations prescribed by the Secretary of the Treasury. b. When the Committee determines , in accordance with sub- paragraph a. above, that distribution to a Participant. shall be deferred and distributed in the form of cash, the Committee shall direct the Trustee to deposit the amount distributable in a savings account, or accounts , in any bank (including a Trustee bank) or savings and loan association , provided that any such savings account must be an account insured by an instrumentality of the United States Government and provided further, that the amount: deposited in any such account shall in no event exceed the maximum amount of insurance applicable thereto, or to purchase investment certificates or certificates of deposit issued by any bank or savings and loan association, provided the principal of such certificates is insured by an instru- mentality of the United States Government and provided further, that the amount so applied shall not exceed the maximum amount of such insurance applicable thereto. - 14 - Interest earned on or credited to any such savings account or certificates shall be added to the amount distributable to the Participant, and, prior to the distribution , any amounts held in such savings accounts or certificates shall be part of the Trust and shall be subject to all of the provisions thereof, except that they shall be valued sep- arately as provided in Section 4.02. C. When the Committee determines , in accordance with sub- paragraph a. above, that distribution to a Participant shall be deferred and distributed in kind, the Committee shall direct the Trustee to segregate, as a segregated account of the Trust, the property (including securities, annuities or other property) to be distributed , and such property shall thereafter be held for distribution in the manner designated by the Committee. Such segregated accounts shall continue as part of the Trust and be subject to all the provisions thereof, except that such accounts shall share in the allocations of Trust income or loss , as provided in Section 4.02 , on a segregated basis. d. The Plan Administrator or the Committee, as the case may be, may postpone payment of benefits until his actual retire- ment and in such event shall segregate the Participant's account and credit it with investment earnings. However, a Participant who elects to defer receipt of benefits may not do so to the extent that he is creating a death benefit that is more than incidental . At such time as his benefit shall become payable, it shall be subject to the provisions of this Section 6.01 . e. Involuntary distributions (including distributions made due to termination- of the member' s participation in the Plan) of $1 ,750 or less will be made only if such , distri- bution represents the entire value of the Participant's nonforfeitable benefit, and that distributions exceeding $1 ,750 will be made only with the member' s consent. 6.03 LOANS TO PARTICIPANTS. The Committee may, in its sole discretion and upon written application of a Participant, authorize the Trustee to make a loan or loans to such Participant in a total amount not in excess of 90% of the value of the vested amount credited to such Participant' s account(s) , provided- that the policy with respect to making any such loan shall be uniformly and nondiscriminatorily applied, and in no event shall the Com- mittee be required to authorize any such loans. Any loan or loans made to a Participant shall , to the extent of the amount thereof, be treated as a segregated investment of the vested portion of his account(s) , shall provide for a specific date and period of repayment that shall not be for a period extending beyond the date of the Participant' s Normal Retirement , shall be adequately J secured and shall be evidenced by the Participant's promissory - 15 - note bearing interest at a rate equal to the rate then being charged by institutional lenders in the area of the Employer' s principal place of business for other loans of this type; pro- vided, however, that no such promissory note shall bear interest at a rate which would exceed the then applicable usury limitation. 6.04 APPLICATION OF BENEFIT OF FORMER PARTICIPANT. In the event that the Committee finds that a Participant, former Participant, or Beneficiary is unable to care for his affairs because of his minority, illness , accident, or other reason , any benefits pay- able hereunder shall be paid by the Trustee to the duly appointed guardian or other legal representative, and any such payment so made shall be in complete discharge of all liability therefor. 6.05 NONLIABILITY. Any payment to a Participant, or to his legal representative or Beneficiary, in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Trustee, the Committee and the Employer, any of whom may require such Participant, legal representative or Beneficiary as a condition precedent to such payment to execute a receipt and release therefore in such form as shall be determined by the Trustee, the Committee, or the Employer, as the case may be. The Employer does not guarantee the Trust, the Participants , former Participants or their Bene- ficiaries against loss of or depreciation in value of any right or benefit that any of them may acquire under the terms of this j Plan. All of the benefits payable hereunder shall be paid or provided solely from the Trust and the Employer does not assume any liability or responsibility therefor. 6.06 BENEFIT CLAIMS PROCEDURE a. Applications. All applications for benefits under the Plan shall be submitted to the Committee at the Employer' s prin- cipal place of business. Applications for benefits must be in writing on the forms prescribed by the Committee and must be signed by the Participant and his spouse, if any, or in the case of a death benefit by the Beneficiary or legal representative of the deceased Participant. The Committee reserves the right to require the Participant to furnish proof of his age and that of his joint annuitant, if any, prior to processing any application. - Each application shall be acted upon and approved or disapproved within 60 days following its receipt by the Committee. In the event any application for benefits is denied, in whole or in part, the Committee shall notify the applicant in writing of such denial and of his right to a review by the Committee and shall set forth in a manner calculated to be understood by the applicant, specific reasons for such denial , specific references to per- tinent Plan provisions on which the denial is based , a des- cription of any additional material or information necessary for the applicant to perfect his application , an explanation of why such material or information is necessary, and an explanation of the Plan ' s review procedure. b. Review of Denials. Any person , or his duly authorized representative , whose application for benefits is denied in whole or in part may appeal from such denial to the Committee for a review of the decision by submitting to the Committee within 120 days after receiving written notice from the Committee of the denial of his claim a written statement (a) requesting a review of his application for benefits by the Committee; (b) setting forth all of the grounds upon which his request for review is based and any facts in sup- port thereof; and (c) setting forth any issues or comments which the applicant deems pertinent to his application. The Committee shall meet at least monthly to review applications for benefits submitted to it. The Committee shall act upon each application within 60 days after receipt of the appli- cant' s request for review by the Committee. The Committee shall make a full and fair review of each such application and any written material submitted by the applicant in connection therewith and may require the applicant to submit such additional facts , documents , or other evidence as the Committee, in its sole discretion , deems necessary or advis- able in making such a review. On the basis of its review, the Committee shall make an independent determination of the applicant' s eligibility for benefits under the Plan. The decision of the Committee 6n any application for benefits shall be final and conclusive upon all persons if supported by substantial evidence in the records. In the event the Committee denies an application in whole or in part, the Committee shall give written notice 6f its decision to the applicant setting forth in a manner calculated to be under- stood by the applicant the specific reasons for such denial and specific references to the pertinent Plan provisions on which the Committee decision was based. 6.07 RETURN OF PRIOR DISTRIBUTIONS." Upon the re-employment of a former Participant who had received Cash-Out and whose vested interest in his Accrued Benefit at the time of the Cash-Out was less than 100%, his Years of Accrual Service, as of the date of his termination of employment, shall be restored if he repays , within two years of his date of re-employment, the amount of such Cash-Out. If such amount -is not repaid in full , the Parti- cipant' s Years of Accrual Service shall not be restored. Any amounts so repaid shall be deposited by the Trustee in the Con- version Fund. Upon the re-employment of a former Participant who had received a Cash-Out and whose vested interest in his Accrued Benefit at the time of distribution was 100%, no repay- ment of the amount of the Cash-Out shall be permitted , and his Years of Accrual Service shall not be restored. Notwithstanding anything to the contrary contained hereinabove, all Years of Service for a re-employed Participant would be aggregated for - 17 - vesting purposes with respect to his post-distribution and post- Break-In-Service accrued benefits . ARTICLE VII BENEFICIARIES 7.01 DESIGNATION. Each Participant shall have the right to designate on forms provided by the Employer a Beneficiary or Beneficiaries to receive the benefits herein provided in the event of his death, and shall have the right at any time to revoke such designation or to substitute another such Beneficiary or Beneficiaries. 7.02 ABSENCE OF VALID DESIGNATION OF BENEFICIARIES. If, upon the death of a Participant, former Participant or Beneficiary, there is no valid designation of Beneficiary on file with the Employer, the Committee shall designate as the Beneficiary, in order of priority, the following: A. The surviving spouse; B. The surviving children , including adopted children; C. S.urviving parents ; or D. The Participant' s estate, provided that at all times the Committee shall have the right to designate as Beneficiary the Participant' s estate irrespective of said order of priority. The determination of the Committee as to which persons , if any, qualify within the aforementioned category shall be final and conclusive upon all persons . ARTICLE VIII CONTRIBUTIONS BY MEMBERS 8.01 !VOLUNTARY CONTRIBUTIONS a. Eligibility. All Employees who become Participants may become eligible for voluntary contributions to the Plan by submitting an application on a form to be provided by the Committee. All such applications shall include the Partici- pant 's acceptance of the relevant terms and conditions of this Plan , his designation of the proportion of his Compen- sation which he shall contribute, and his consent to the withholding of such contributions by the Employer from his Compensation. A Participant may continue to make voluntary contributions throughout the period he is a Participant in the Plan; provided , however, that a Participant shall have the absolute right to discontinue voluntary contributions as of the end of any month following the month in which he gives written notice thereof to the Employer. - 18 - b. Amount of Contributions. A Participant once eligible to make voluntary contributions may contribute to the Trust such amounts as he shall determine by his written election to the . Committee; provided , however, that such amounts shall not be less than 2% in any Plan Year nor shall the aggregate of such amounts contributed by him to this Plan and all other qualified plans maintained by the Employer exceed 10% of the aggregate Compensation paid him by the Employer in all years since he became a Participant in the Plan. A Participant may change once in each Plan Year the amount of his contri- bution , within the permissible limits, with respect to future contributions by filing a written direction with the Committee. The Committee may at its discretion, subject to written request by the participant, allow the participant to change his elec- tion more than one time during the Plan Year. c. Collection of Contributions. The contributions of Partici- pants shall be collected by the Employer either by means of payroll deductions or by direct contributions from the Par- ticipants. All contributions received by the Employer, whether by withholding or directly from the Participant, shall be paid over by the Employer to the Trustee within 30 days after they have been collected , to be held and administered in the Trust established under this Plan . 8.02 SEPARATE ADMINIISTRATION AND ACCOUNTS FOR PARTICIPANT CONTRIBUTIONS. The contributions of the Participants shall be accounted for separately from the Employer's contributions. The Committee shall open for each Participant a separate account for his voluntary . contributions made pursuant. to Section 8.01 and a separate account for his return of prior distributions made pursuant to Section 13.06. At least once each year as of the end of the Plan Year, or at more frequent intervals if directed by the Committee , the Trustee shall value on the basis of fair market values that part of the Trust- assets attributable to such separate accounts. As of any such valuation date, the Trustee shall allocate the pre- viously unallocated increments and profits to or, as the case may be, charge the previously unallocated losses against the respec- tive accounts in proportion to the amounts therein as of the valuation date. For the purpose of allocating profits and losses , the accounts t:) which Participants ' contributions are allocated shall include a portion of current year contributions , which por- tion shall be determined on a weighted basis by considering the length of time (in months) since the making of the contribution in relation to the number of months elapses since the last valua- tion. For example , if at the time of valuation twelve months have elapsed since the last valuation and a contribution has been made nine months previously, nine-twelfths of the contribution would be included for purposes of allocating profits or losses to such accounts. - 19 - 8.03 VESTING. A Participant ' s accounts) to which his contributions are allocated including both his own contributions , and any in- crease in value thereof, shall at all times be fully vested in the Participant and shall not be forfeitable for any cause. 8.04 WITHDRAWAL OF VOLUNTARY CONTRIBUTIONS. The balance of the account to which a Participant's voluntary contributions are allocated may be withdrawn upon 15 days written notice to the Committee, severance of employment being automatically deemed such notice; provided, however, that the amount credited to such account shall reflect any charges or credits to his account based on valuations directed by the Committee to be made during this 15-day period, and provided further that in the absence of sever- ance of employment such withdrawals shall Be subject to the prior consent of the Committee, which consent shall be granted or denied in accordance with rules uniformly and undiscriminately applied. Any Participant who withdraws any part of his voluntary contri- butions account must withdraw the lesser of the entire amount of his voluntary contributions or the fair market value of the account and shall be ineligible to reapply for voluntary contri- butions for a period of one year from the date of such withdrawal . 8.05 DISTRIBUTION. When a Participant terminates his employment with the Employer, the account to which his voluntary contributions are allocated shall be distributed to him in a single lump-sum payment, unless within 60 days prior to such termination he elects, in the form of a writing filed with the Employer, to have such account transferred to the account to which his vested share of Employer contributions is allocated. Distribution or transfer of such account(s) as provided above shall be made during or as soon as practical after the end of the Plan Year in which the Parti- cipant terminates his employment. 8.06 DESIGNATION OF BENEFICIARIES, Each Participant shall have the same right to designate a Beneficiary or Beneficiaries for the account(s) to which his contributions are allocated as he has for his account to which Employer contributions are allocated. In the absence of a valid designation of a Beneficiary or Bene- ficiaries upon the death of a Participant, the account estab- lished for voluntary contributions shall be distributed to his estate , and the account established for rollover contributions and the account established for returns of prior distributions shall be distributed in the same manner as provided in Section 7.02 . ARTICLE IX THE TRUSTEE 9.01 ACCEPTANCE OF TRUST, The Trustee hereby accepts the Trust created hereunder and agrees to perform the obligations imposed by this Agreement. - 20 - --, 9.02 THE COMMITTEE SHALL DIRECT INVESTMENTS a. General . The Trustee, as directed by the Committee, shall have the power to invest and reinvest the assets of the Trust, exercising the care, skill , prudence , and diligence under the circumstances then prevailing that prudent men acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like kind and with like aims, not with regard to speculation , but with regard to the permanent disposition of funds , considering the probable in- come generated thereby as well as the probable safety of capital . Within the limitations of the foregoing and subject to such limitations as may hereinafter be stated, the Trustee is authorized to acquire any kind of investment, specifically including, but not by way of limitation , commercial paper, corporate obligations of every kind, and stocks , preferred or common. b. Directions of Committee. The powers granted to the Trustee under this Agreement shall be exercised by the Trustee in its discretion subject to the direction of the Committee with reference to investing and re-investing assets of the Trust. Nevertheless the Committee may at any time and from time to time by written direction to the Trustee require the Trustee to invest in , retain or dispose of any security or other fiorm of investment as may be specified in such direction. Subject 'to any limitations hereinafter stated, the fund may be invested pursuant to such directions in any investment of any kind, for the investment of trust funds. Neither the Trustee nor any other person shall be under any duty to question any such direction . Any such direction may be of a continuing nature , or otherwise, and may be revoked in writing by the Committee at any time. The Trustee shall not be responsible in any manner and for any reason for the making, retention or disposition of any investment pursuant to the directions of the Committee. The Committee has been named fiduciary and. administrator of the Plan provided for by ERISA and, except as otherwise provided for in the Plan, shall have the authority to control and manage the operation and adminis- tration of the Plan, The Trustee shall not be responsible in any way for the operation and administration of the Plan. c. Combination With Assets of Other Trusts . The Trustee may combine the assets of this Trust for investment purposes with any other trusts established by the Employer .pursuant to the provisions of any qualified employee-benef.it plan . In such event, the Trustee shall keep separate records of the amounts allocable to each such fund . d. Company Security Limitation. The Trustee shall not invest in any security issued by the Employer which is not a Company Security, as defined herein. No investment of any part of the Trust shall at any time be made in any Company Security if by - 21 - reason of such investment the aggregate fair market value of all Company Securities held in the Trust immediately after such investment shall exceed 10% of the then fair market value of the assets of the Trust. For purposes of this provision , "Company Security" means stock of the Employer and any bond, debenture, note or certificate, or other evidence of indebted- ness of the Employer which is a "marketable obligation" as defined in Section 407 (e) of ERISA. 9.03 GENERAL POWERS OF THE TRUSTEE. The Trustee shall have all the powers necessary to hold in trust and administer all funds contem- plated hereby, including, but not by way of limitation , the power: a. to collect and receive the income of the Trust and any and all money, securities and other property, of whatsoever kind or nature due to, owing or belonging to the Trust; b. to hold and invest in , without liability for interest there- on, any money in any bank, including any banking department of any bank serving as Trustee hereunder, or in any insured savings and loan association or company; c. to sell , exchange or otherwise dispose of any securities or other property at any time or times and on such terms and conditions as it may deem appropriate and to contract or grant options for .the purchase, exchange or other disposition thereof; d. to have, respecting bonds , shares of stock and other securi- ties , all of the rights , powers and privileges of an owner, including the holdings of securities in its own name, or in the name of a nominee, with or without disclosure of the Trust, voting, giving proxies , making payments of costs , assessments or other sums deemed by the Trustee expedient for the protection of the Trust, exchanging securities , sell - ing or exercising subscription rights , exercising conversion rights , consenting to, and participating in foreclosures , reorganizations , consolidations , mergers , liquidations , pooling agreements and voting trusts , and assenting to cor- porate sales , leases and encumbrances ; e. to extend the time of payments of any obligation at any time owing to the Trust; to deposit any securities or other property with any protective, reorganization, or similar committee, to delegate discretionary powers thereto, and to pay and agree to pay a portion of the expenses and compensation thereof and any assessments levied with respect to any such securities or other property so deposited; f. to settle, compromise or submit to arbitration any claims , debts or damages due or owing to or from the Trust; to com- mence or defend legal proceedings for or against the Trust; 22 - and to represent the Trust in all proceedings in any court of law or equity or before any other body or tribunal ; g. to borrow money and to issue promissory notes evidencing any such borrowings or advances and to secure the repayment there- of by mortgage, deed of trust, or pledge of any securities or any other property constituting the Trust or any part thereof; and to pay and discharge any indebtedness of the Trust or any lien or other charge against the Trust; h. to enforce any mortgage, deed of trust, pledge or other secu- rity interest held hereunder, and to purchase at any sale thereunder any property subject thereto; i . to create reserves of cash or other assets of the Trust for the payment of expenses , or for distributions pursuant to the Plan, or for any other purposes in connection with this Agree- ment; j . to sue or defend in connection with any and all securities or other property at any time received or held by or for the Trust, and all costs and attorney's fees in connection there- with shall be charged against the Trust; k. to employ agents , including without limitation, investment advisors , appraisers , attorneys and accountants . Fees in- curred shall be borne 100% by the assets of the Trust, and not by the Employer. 1 . Notwithstanding any other provisions of this Agreement, the Trustee shall have full power and authority to transfer money and other assets of the Trust to any bank licensed to do business. in California as trustee of any investment fund or funds consisting exclusively of assets of pension and profit- sharing trusts . In such event, said instrument or instruments shall become a part hereof as fully as if set forth at length herein. Phoney and other assets of the Trust invested ---in said fund or funds small be held and adhinistered by the trustee thereof strictly in accordance with the terms and under the powers granted in said instrument or instruments. The com- bining of money and other assets of the Trust with money and other assets of other qualified trusts in -such fund or funds is specifically authorized, and if, at any time hereafter, the Trustee hereunder shall be .any bank licensed to do busi- ness in California, it shall have full power and authority to transfer the assets subject to this Trust to itself as trustee of any such common investment fund or funds to which the assets of the Trust might otherwise be transferred pur- suant to the above provisions if the Trustee hereunder were not such bank. - 23 - 9.04 BOOKS AND RECORDS. The Trustee shall keep accurate and detailed accounts of all investments , receipts and disbursements , and any other transactions engaqed in by the trust, and all accounts , books and records relating thereto shall be open to inspection at all reasonable times by the Committee or its designated representative. 9.05 VALUATIONS. Within ninety (90) days after the end of each fiscal year of the Employer, within ninety (90)days after the removal or resignation of any Trustee , and whenever so requested in writing by the Committee, the Trustee shall value the assets of the Trust and shall file with . the Committee a written statement reflecting the fair market value of the assets and liabilities of the Trust and the receipts and disbursements of the Trust since the last statement filed with the Committee. If the Trustee, in making any such valuation, shall determine that the Trust consists , in whole or in part, of property not traded fully on a recognized market, or that information necessary to ascertain the fair market value thereof is not readily available to the Trustee, the Trustee may request the Committee to instruct the Trustee as to the fair market value of such property for all purposes under the Plan, and in such event, the fair market value placed upon such property by the Committee shall be binding and conclusive. If the Com- mittee shall fail or refuse to instruct the Trustee as to the fair market value of such property within a reasonable time after receipt of the Trustee 's request, the Trustee shall take such action as it deems necessary or advisable to ascertain the fair market value of such property, including the retention of such counsel and independent appraisers as it considers necessary, and in such event the fair market value determined by the Trustee shall be binding and conclusive. Except for the Trustee 's negligence, willful misconduct or lack of good faith, upon the expiration of ninety (90) days from the filing of such statement and report, the Trustee shall be forever released and discharaed from all liability and accountability to anyone with respect to the pro- priety of its acts or transactions as set forth in such account, unless written objection is filed with the Trustee within the said ninety (90) day period by any person interested in this Agreement. 9.06 LIFE INSURANCE a. The Committee may direct the Trustee in writing to acquire life insurance or annuity contracts on the lives of the Par- ticipants in the Plan in specified amounts , which amounts shall be determined by the Committee on a uniform and non- discriminatory basis. Any type of life insurance contracts written by a legal reserve life insurance company and requested by the Committee , excepting tern insurance contracts , will be acceptable. The aggregate life insurance premiums with respect to each Participant shall be less than one-half of the aggregate Employer contributions and for- feitures allocated to him at any particular time. The acquisition of any policy by the Trustee pursuant to this . 1 - ?a - Article shall be subject to the provisions of ARTICLE X. When a Participant' s employment is terminated by retirement, disability, death or otherwise, the Trustee shall either convert such policy into an annuity contract or cash for the benefit of the Trust or, upon the written direction of the Committee, assign and deliver the policy to the Par- ticipant. No insurance company issuing any such policy shall be a party to this Plan or have any responsibility for the qualification of this Plan. The liability of any such insur- ance company shall be only as provided in any policy which it may issue. Notwithstanding any other provisions of this Plan , a Participant' s account(s) shall not be credited with such portions(s) of any contribution(s) used to pay premiums on life insurance on such Participant' s life, but, instead, upon the death of any such Participant, there shall be added to the account of such Participant, at the earliest practical date, the amount by which the proceeds receivable by. the Trust from all such insurance upon such Participant' s life shall exceed the amounts , if any, credited to such Participant's account, prior to the time of his death with respect to such insurance. Similarly, in the case of any life insurance upon any Participant's life which is converted for the cash value thereof, there shall be added to the account of such Partici- pant, at the earliest practical date, the amount by which the cash value receivable by the Trust from such insurance upon the life of such Participant shall exceed the amounts , if any, credited to such Participant's account, prior to such conversion with respect to such insurance. b. The Trustee shall exercise all right$ , options , and benefits provided by any policy or permitted by any insurance company with respect to any policy issued by it, including the right to change any provision which shall become operative upon the termination of employment of any Participant. When a Participant' s employment is terminated by retirement, dis- ability, death or otherwise, he may convert such policy into an annuity contract or cash for the benefit of the Trust or, may, with the written direction of the Committee, assign and deliver the policy to the Participant. No Participant shall have the right to direct the Trustee with respect to any policy held in the Trust on his life without proceeding through the Committee. c. At the written direction of the Committee, the Trustee shall pay the premiums on any. policy held in the Trust, except that the Trustee shall have no duty to pay premiums hereunder un- less there are sufficient assets available in the Trust. The Trustee shall accumulate dividends , receive dividends in cash or apply dividends in reduction of premiums. Any dividends payable with respect to any policy as to which there shall be no further premiums due shall be paid in cash - 25 - - to the Trustee and added to the Trust. d. The Participant shall designate the Beneficiary under any such policy, change such Beneficiary from time to time, state the method of settlement to be effective upon the maturity of any policy, and change any such method of settlement. No Participant shall have the right to direct the Trustee with respect to the Beneficiary or method of settlement of any such policy; the Participant's rights in this respect being limited. to those specified inthe Plan. e. No insurance company which shall issue any policy as herein- above provided shall be a party to this Trust, or have any responsibility for the validity of this Trust. The liabi- lity of any such insurance company shall be only as provided in any policy which it may issue. Any insurance company shall be fully protected from all liability in accepting premium payments from the Trustee and making payments to or on the direction of the Trustee, without liability as to the application of such payments . Such insurance. company shall be fully protected in dealing with the Trustee as the sole owner of policies held under this Trust, and shall not be liable in assuming that the Trust has not been amended or terminated until notice of any amendment or termination of the Trust has been received by the insurance company at its home office. No amendment of the Trust shall deprive the insurance company of any protection except as to poli- cies issued by it after receipt at its home office of notice of the terms of such amendment. The insurance company shall be fully protected in dealing with the Trustee according to the latest notification received by it at its home office. 9.07 DISTRIBUTIONS. The Trustee shall from time to time, under written direction of the Committee signed by a majority of the then members thereof, or by any such person or persons as may be from time to time designated therefor by the Committee acting by a majority of its members , make distribution from the Trust to such persons in such manner, in such amounts and for such purposes as may be specified in such directions. The Trustee shall incur no liability for any distribution made by it pursuant to the directions of the Committee, and shall be under no- duty to inquire as to whether any distribution directed by the Committee is made pursuant to the provisions of the Plan. The Trustee may make any payment required to be made by it hereunder by mr;.iling its check for the amount thereof to the person to whom such payment is to be made at the address furnished by the Committee, or if no such address shall have been furnished, to such pe-Son in care of the Employer at its principal office. 9.08 RESIGNATION OR RE140VAL OF TRUSTEE. Any Trustee may resign at any time upon the giving of fifteen (15) days written notice to the 26 - Employer, and any Trustee may be removed by the Employer at any time upon the giving of fifteen (15) days written notice to all Trustees . The resignation or removal shall become effective upon the receipt of the written notice and thereupon , the Employer shall , if there was but a sole Trustee, and may, if there was before such resignation or removal at least two Trustees , appoint a successor Trustee or Trustees which may be a corporation, one or more in- dividuals or a combination thereof. Notwithstanding the foregoing, however, no resignation or removal of a sole Trustee shall be effective until a successor has been appointed and the appoint- ment has been accepted. Any successor Trustee shall have the same rights, powers and duties as he would have had as an original Trustee. 9.09 TAXES, EXPENSES AND COMPENSATION OF THE TRUSTEE. a. Taxes. The Trustee shall deduct from and charge against the assets of any trust any taxes paid by it which may be imposed upon the Trust. b. Expenses; Compensation. The Trust (and in no event shall these expenses be of the Employer) shall pay to the Trustee annually its expenses in administering the Trust, including without limitations , fees paid to attorneys, accountants and appraisers, and, in the case of a corporate trustee only, the Trust shall also pay to the Trustee reasonable compensation for its services as the Trustee hereunder at a rate to be agreed upon in writing from time to time. The Trustee shall have a lien on the assets of the Trust for such expenses and compensation, and the same way be withdrawn from the Trust. 9.10 MISCELLANEOUS. a. Irrevocability__ Except for such amendments as are permitted u.nde.r ARTICLE X h,the Trust create un er t is Aareement is 'irrevocable.--Nev re theless , the Employer may at any time at �'its_sole and absolute discretion discontinue making contri- butions to the trust, or terminate the trust in accordance with the provisions of the Plan. b. Request for Instructions . In addition to instructions re- lating to valuations „ at any time the Trustee may, by written request, seek instructions from the Committee on any matter and may await the written instructions from the Committee without incurring an,; liability whatsoever. If at any time the Committee should fail to aive directions to the Trustee, the Trustee may act, and shall be protected in acting without such directions , in such manner as in its discretions seems appropriate and advisable under the circumstances for carry- ing out the purposes of this Trust. - 27 - 5 c. Liability of Trustee. The Trustee shall not be liable for any losses which may be incurred upon the investments of the Trust, except to the extent that; such losses shall have been causes by its negligence , bad faith or willful ] misconduct. d. Spendthrift Clause. No benefits under this Agreement shall be subject in any manner to be anticipated, alienated, sold, transferred, assigned, pledged, encumbered or charged; any attempt to so anticipate, alienate, sell , transfer, assign, pledge, encumber or charge the same shall be void, nor shall any such- benefits in any manner be liable for or subject to the debts , contracts , liabilities or torts of the person entitled to such benefits as herein provided for him. e. Gender and Number. As used in this Agreement, the masculine, feminine or neuter gender, the single or plural number and the use of the collective or the separate shall each be deemed to include the others whenever the context so indi- cates . f. Applicable Law; Severability. This Agreement shall be con- strued and enforced accordina to ERISA and, to the extent applicable, according to the laws of the State of California. If any provision of this Agreement is held invalid or un- enforceal:le, such invalidity or unenforceability shall not affect any other provision, and this Agreement shall be construed and enforced as if such provision had not been included. ARTICLE X THE ADMINISTRATIVE COMMITTEE 10.01 The City Council shall appoint an Administrative Committee which may be comprised of one or more members of the Employer' s City Council and the Employer may designate to serve as the Committee its entire City Council as the same may be constituted from time to time. The Employer shall certify to the Trustee the names and specimen signatures of the members of the Committee. The Committee shall serve at the pleasure of the Employer and any member of the Committee may resign by written instrument addressed to the Employer and may be removed by the Employer with or without cause. While a vacancy exists , the remaining members of the Com- mittee may perform any act which the Committee is Authorized to perform. 10.02 The Committee shall administer the Plan and shall resolve by majority vote all questions involving the interpretation , appli- cation and administration of the Plan. The Committee 's resolu- tion of such questions shall be final and binding upon the Participants and their Beneficiaries , former Participants , and their successors , assigns , heirs and personal representatives of any of them. The Committee may direct the investment of the - 28 - assets of the Trust by written direction to the Trustee. No member of the Committee may participate in any decision which involves solely his interest as a Participant in the Plan. 10.03 The members of the Committee shall receive no compensation for acting as such , but the Trust shall reimburse the Committee for all necessary and proper expenses incurred in administering this Plan. 10.04 The Committee is the named fiduciary and administrator of the Plan provided for by ERISA and, except as otherwise provided for herein, shall have the authority to control and manage the opera- tion and administration of the Plan. The Committee shall make such rules , regulations , interpretations and computations , and shall take such other action to administer the Plan as the Com- mittee may deem appropriate. The Committee shall administer the Plan in a uniform and nondiscriminatory manner consistent with the requirements of Section 401 (a) of the Code. 10.05 As provided above, the City Council shall appoint the Committee but the City Council shall have no responsibility for the operation and administration of the Plan. The Committee from time to time may allocate to one or more of its members and may delegate to any other persons or organizations any of its rights , powers , du-�ies and responsibilities with respect to the operation and administration of the Plan. Any such allocation and delegation of responsibilities shall be reviewed at least annually by the Committee and shall be terminable upon such notice as the Com- mittee, in its sole .discretion , deems reasonable and prudent under the circumstances. The Committee may employ such persons or organizations to render advice or perform services with respect to responsibilities of the Committee under the Plan as the Committee , in its sole discretion, determines to be necessary a:•id appropriate. Such persons or organizations may include, with- out limitation , actuaries , attorneys , accountants , and financial and administrative consultants. ARTICLE XI AMENDMENT AND TERMINATION 11 .01 AMENDMENT. To provide for contingencies which may require or make advisable the qualification , modification or amendment of this Plan , at any time and from time to time, in whole or in part, including without limitation , retroactive amendments neces- sary or advisable to qualify this Plan and the Trust established in connection therewith under the provision of Section 401 (a) of the Code. However, no such amendment shall (a) reduce the benefits of any Participant accrued under the Plan to' the date the amendment is adopted; or (b) divert any part' of the assets of the Trust Fund to purposes other than for the exclusive bene- _ ?q _ fit of the Participants , retired Participants or their joint annuitants or Beneficiaries who have an interest in the Plan or for the purpose of defraying the reasonable expenses of admin- istering the Plan. No amendment of the Plan shall permit any part of the fund to be used to pay premiums or contributions - of the Employer under any other plan maintained by the Employer for the benefit of its employees. 11 .02 TERMINATION OR PARTIAL TERMINATION OR COMPLETE DISCONTINUANCE OF CONTRIBUTIONS. Although the Employer has established the Plan with a bona fide intention and expectation that it will be able to make contributions indefinitely, nevertheless , the Employer is not and shall not be under any obligation or liabi lity whatsoever to continue its contributions or to maintain the Plan for any given length of time. The Employer may in its sole and exclusive discretion discontinue such contributions or terminate the Plan in accordance with its provisions at any time without any liability whatsoever for any such discontinuance or termination. If the Plan shall be terminated, partially ter- minated, or the contributions of the Employer shall be completely discontinued, the rights of all Participants in their accounts shall thereupon become nonforfeitable notwithstanding any other provisions of this Plan. However, the Trust shall continue un- til all Participants ' accounts have been completely distributed to or for the benefit of the Participants or their Beneficiaries in accordance with this Plan. -- 11 .03 DETERMINATION BY INTERNAL REVENUE SERVICE. Notwithstanding any other provision of this Plan , if the Internal Revenue Service shall fail or refuse to issue a favorable written determination or ruling with respect to the initial qualification of the Plan and exemption of the Trust from tax under Section 401 (a) and 501 (a) of the Code, the Trustee shall , within a reasonable time after receiving a written direction from the Committee to do so, return to the contributors the then value of all contri- butions theretofore made, provided that as a condition to such repayment the Employer shall execute, acknowledge and deliver to the Trustee its written undertaking, in form satisfactory to the Trustee, to indemnify, defend and hold the Trustee harm- less from all claims , actions, demands or liabilities arising in connection with such repayment. ARTICLE XII STANDARD OF CONDUCT OF FIDUCIARIES 12 .01 Each member of the City Council and of the Committee and any other person to whom any fiduciary responsibility with respect to the Plan is allocated or delegated shall discharge his duties and responsibilities with respect to the Plan in accordance with the standards set forth in Section 401 (a) (1 ) of ERISA, which provides : 30 - "Subject to Sections 403(d) , 4042, and 4044, a fiduciary shall discharge his duties with respect to a Plan solely in the interest of the Participants and Beneficiaries and -- (A) For the exclusive purose of: (i ) providing benefits to Participants and their Beneficiaries; and . (ii ) defraying reasonable expenses of admin- istering the Plan; (B) With the care, skill , prudence and diligence under the circumstance then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims ; (C) By diversifying the investments of the Plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (D) In accordance with the documents and instruments governing the Plan insofar as such documents and instruments are consistent with the provisions of this title. ARTICLE XIII MISCELLANEOUS 13.01 LIMITATION OF RIGHTS: EMPLOYMENT RELATIONSHIP. Neither the establishment of this Plan and the Trust nor any modifications thereof, nor the creation of any fund or account nor the payment of any benefits , shall be construed as giving to any Participant or other person any legal or equitable right against the Em- ployer or the Trustee except as provided herein; and, in no event, shall the terms of employment of any Employee or Participant be modified or in any way be affected hereby. 13.02 MERGER: TRANSFER OF THE ASSETS. If the Employer merges or con- solidates with or into any other corporation , if substantially all of the assets of the Employer shall be transferred to any other corporation, or if the Employer dissolves and liquidates, the Plan hereby created shall terminate on the effective date of such merger, consolidation , transfer, or dissolution. However, if the surviving corporation resulting from such merger or con- solidation, or the corporation to which the assets have been transferred, or any corporation which continues the business of the Employer adopts this Plan, the Plan shall continue and said corporation shall succeed to all rights , powers and duties of the Employer hereunder. The Employment of any Employee who is continuing in the employ of such successor corporation shall not be deemed to have been terminated for any purposes hereunder. 13.03 MERGER OR CONSOLIDATION OF PLAN. In the event that this Plan and the Trust merges or consolidates with, or transfers its assets or liabilities to, any other qualified plan of deferred compensation , no Participant herein shall , solely on account of such merger, consolidation or transfer, be entitled to a be- nefit on the date following such event which is less than the benefit to which he was entitled on the date preceding such event. For the purpose of this section, the benefit to which a Partici- pant is entitled shall be calculated based upon the assumption that a Plan termination and distribution of assets occurred on the date as of which the amount of the Participant's entitlement is being determined. 13.04 TRANSFER FROM OTHER QUALIFIED PLANS. Notwithstanding any other provision hereof, there may be transferred to the Trustee, suL- ject to the approval of the Employer and the Trustee and to a prior determination of the Internal Revenue Service that such transfer will not adversely affect the qualified status of the Plan, all or any of the assets held (whether by a trustee, custo- dian or otherwise) on behalf of any other plan which satisfied the applicable requirements of Section 401 (a) of the Code, and which is maintained for the benefit of any persons who are or- about to become Participants in this Plan. 13.05 RETURN OF PRIOR DISTRIBUTIONS. If any Participant shall have received, on account of his separation from service from the Employer, a single .distribution of his account(s) pursuant to Section 6.01 a. , and if such person may repay the full amount of such distribution (and not less than the full amount of such distribution) to the Plan, provided that no such repayment may be made if such person has (i ) suffered a 1 -year Break-In- Service commencing after receipt of such distribution or (ii ) such repayment is not made within 2 years from the date such person is notified in writing that he has once more qualified as a Participant. 13.06 INDEMNIFICATION. The Employer shall indemnify and hold harmless the members of the City Council , the Committee and any other per- ..,.f 32 - sons to whom any fiduciary responsibility with respect to the Plan is allocated or delegated, from and against any and all liabilities , costs and expenses incurred by such persons as a result of any act, or omission to act, in connection with the performance of their duties, responsibilities and obligations under the Plan and under ERISA, other than such liabilities, costs and expenses as may result from the bad faith or criminal acts of such persons or specifically prohibited by ERISA. 13.07 HEADINGS. Headings in this Plan are inserted for convenience or reference only and any conflict between such headings and the text shall be resolved in favor of the text. 13.08 COUNTERPARTS. This Plan may be executed in an original and any number of counterparts, each of which shall be deemed an original of one and the same instrument. 13.09 PURPOSE. The Trust, created in the United States by the Em- ployer, embodies a Retirement Plan for the exclusive benefit of its Employees or their Beneficiaries and, until after the satis- faction of all liabilities under the Trust to such Employees and their Beneficiaries (except as provided in Section 11 .03) , no part of the corpus or income shall be used for or diverted to purposes other than for their exclusive benefit, nor shall the same revert to the Employer. - 33 -