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HomeMy WebLinkAboutCSDOC Resolution 1998 - 0007RESOLUTION NO.98-07 APPROVING AMENDMENT TO DEFERRED COMPENSATION PLAN FOR OFFICERS AND EMPLOYEES A JOINT RESOLUTION OF THE BOARDS OF DIRECTORS OF COUNTY SANITATION DISTRICTS NOS.1,2,3,5,6,7,11, 13,AND 14 OF ORANGE COUNTY,CALIFORNIA,APPROVING SECOND AMENDMENT TO DEFERRED COMPENSATION PLAN FOR THE OFFICERS AND EMPLOYEES OF THE DISTRICTS ******************** WHEREAS,by Resolution No.94-39,adopted by the Boards of Directors on April 13, 1994,the Districts approved and adopted the County Sanitation Districts of Orange County, California Deferred Compensation Plan as Amended 1994 (hereinafter referred to as the “Plan”); and,by Resolution No.95-80,adopted by the Boards of Directors on July 26,1995,the Districts approved and adopted the first amendment to the Plan;and, WHEREAS,the Boards of Directors desire to amend the Plan in order to comply with changes to the U.S.Internal Revenue Code section 457,enacted into law by the U.S.Congress in 1996 (H.R.3448)P.L.104-188. NOW,THEREFORE,the Boards of Directors of County Sanitation Districts Nos.1,2,3, 5,6,7,11,13,and 14 of Orange County,California, DO HEREBY RESOLVE,DETERMINE AND ORDER: Section 1 That the County Sanitation Districts of Orange County,California Deferred Compensation Plan as Amended 1994 is hereby further amended as set forth in Exhibit “A,” attached hereto and incorporated herein by reference as though set forth herein at length,and as so amended shall remain in effect until further amended or terminated by Resolution of the Boards of Directors. PASSED AND ADOPTED at a regular meeting held March 25,19~98 2000-00019 48074_i ws&s August11,1997 STATE OF CALIFORNIA ) )SS. COUNTY OF ORANGE ) I,PENNY KYLE,Secretary of the Boards of Directors of County Sanitation Districts Nos.1,2,3,5,6,7,11,13 and 14 of Orange County,California,do hereby certify that the foregoing Resolution No.98-07,was passed and adopted at a regular meeting of said Boards on the 25th day of March,1998,by the following vote,to wit: AYES:Steve Anderson;Bruce Broadwater;George Brown;John Collins;Jan Debay;Barry Denes;Burnie Dunlap;Norman Z.Eckenrode;James V. Evans;James M.Ferryman;Jan Flory;Tom Harman;Mary Ann Jones; Mark Leyes;Patsy Marshall;Pat McGuigan;Eva Minor-Bradford;Mark A. Murphy;Thomas R.Saltarelli;Christina Shea;William G.Steiner;Dave Sullivan;Peer A.Swan;Charles E.Sylvia;Bob Zemel NOES:None ABSENT:Brian Donahue;John M.Gullixson IN WITNESS WHEREOF,I have hereunto set my hand and affixed the official seal of County Sanitation District No.I on behalf of itself and Districts Nos.2,3,5,6,7, 11,13 and 14 of Orange County,California,this 25th day of March,1998. Boards of Districts Nos.1,2,3,5,6, Orange County,California II,13 and l4of H:\wp.dta\admin\BS\FORMS~1 998\F1 2.07.doc SECOND AMENDMENT TO COUNTY SANITATION DISTRICTS OF ORANGE COUNTY,CALIFORNIA DEFERRED COMPENSATION PLAN AS AMENDED 1994 WHEREAS,by Resolution No.94-39,adopted by the Boards of Directors on April 13,1994,the County Sanitation Districts of Orange County,California (the “Districts”)approved and adopted a revised deferred compensation plan,known as “the County Sanitation Districts of Orange County,California Deferred Compensation Plan as Amended 1994”; WHEREAS,by Resolution No.95-80,adopted by the Boards of Directors on July 26,1995,the Districts approved and adopted a first amendment to the plan (the “First Amendment”),to permit greater flexibility in plan distribution elections and to clarify certain provisions of the plan (the County Sanitation Districts of Orange County, California Deferred Compensation Plan as Amended 1994,as amended by the First Amendment,shall hereinafter be referred to as the “Plan”); WHEREAS,section 457 of the Internal Revenue Code has been amended to require changes to section 457 deferred compensation plans,and the Boards of Directors desire to further amend the Plan to comply with section 457 as amended; THEREFORE,pursuant to Resolution No. _____,adopted by the Boards of Directors on ___________,1997,the Districts do hereby amend the Plan as follows: 1.Section 2 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: “The primary purpose of the Plan is to attract and retain personnel by permitting them to enter into Plan Participation Agreements which will provide future payments in lieu of current income upon death, disability,retirement,or other termination of employment with the Employer.Neither the Plan,nor any provision of the Plan,shall be construed as either an employment agreement,or a right to be retained by the Employer.The Employer intends that the Plan satisfy the Internal Revenue Code section 457 requirements for an “eligible deferred compensation plan.”However,the Employer does not guarantee any tax benefits due to participation in the Plan,and each Participant should consult his or her own tax representative for information and advice on the tax ramifications of participation in the Plan.” 2000-00019 50498_i CSDDrattNo.1 August11.1997 EXHIBIT “A” 2.Section 3.7 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: “37 “Includible Compensation”(a term defined in Internal Revenue Code section 457(e)(5)and Treasury Regulation section 1 .457-2(e)(2))shall mean compensation for services performed for the Employer which is currently includible in gross income.Accordingly,a Participant’s includible compensation for a taxable year does not include any amount payable by the Employer that is excludable from the Participant’s gross income under Internal Revenue Code section 457(a)and Treasury Regulation section 1.457-1 (including but not limited to this Plan),Internal Revenue Code section 403(b),or other applicable federal income tax laws.The amount of Includible Compensation shall be determined without regard to any community property laws.” 3.Section 3.14 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: “3.14 “Plan”shall mean the County Sanitation Districts of Orange County, California Deferred Compensation Plan as Amended 1994,as further amended by the First and Second Amendments thereto.” 4.Sections 4.1,4.2 and 4.3 of the Plan are hereby deleted in their entireties and the following language is hereby inserted in their places and steads: “4.1 Any Employee designated by the Employer to be eligible may elect to become a Participant in the Plan by executing and filing a Participation Agreement with the Employer.An election to participate in the Plan and to defer compensation under the Plan shall become effective with respect to compensation earned by the Participant during the period commencing with the beginning date of the first pay period in the month following the month in which the Employer consents to and approves of the Participation Agreement.Such election to defer compensation shall continue thereafter in full force and effect unless and until terminated by the Participant as provided in Section 4.4,Section 10.4 or Section 11. 4.2 Each Participation Agreement shall specify the amount of compensation, either by dollar amount or by percentage of Salary (as adjusted for matching and non-matching funds,if applicable),which is to be deferred pursuant to the Plan and (except in the case of matching and non matching funds)to be withheld out of the Salary otherwise payable to the 2000-00019 50498_i CSD Draft No.1 August 11.1991 Participant for each pay period.The amount deferred each year may not exceed the lesser of: (a)Seventy-Five Hundred Dollars ($7,500.00),or such greater amount as the Secretary of the Treasury may establish from time to time under Internal Revenue Code section 457 (e)(15)due to cost-of- living increases,reduced (i)by any amount excludable from the Participant’s gross income for the taxable year under Internal Revenue Code section 403(b)on account of contributions made by the Employer,or (ii)as otherwise provided in Internal Revenue Code section 457(c)(2);or (b)Thirty-Three and One-Third Percent (33-1/3%)of the Participant’s Includible Compensation,reduced (i)by any amount excludable from the Participant’s gross income for the taxable year under internal Revenue Code section 403(b)on account of contributions made by the Employer,or (ii)as otherwise provided in Internal Revenue Code section 457(c)(2), or be less than Three Hundred Dollars ($300.00)each year.This three hundred dollar ($300.00)limitation shall not be applied to any Participant who is paid less than $1,200.00 per year for services rendered to the Employer. (For practical application,note that 33-1/3%of lncludible Compensation is generally the equivalent of 25%of gross compensation, and that for Participants with an annual salary of less than $30,000,the subparagraph (b)deferral limit usually applies.) 4.3 Notwithstanding the provisions of Section 4.2 herein,during any or all of the last three (3)taxable years ending before a Participant attains Normal Retirement Age (or the alternate Normal Retirement Age chosen pursuant to Section 3.11 above),the maximum amount which may be deferred annually shall be the lesser of: (a)Fifteen Thousand Dollars ($15,000.00),reduced (i)by any amount excludable from the Participant’s gross income for the taxable year under Internal Revenue Code section 403(b)on account of contributions made by the Employer,or (ii)as otherwise provided in Internal Revenue Code section 457(c)(2);or 2000-00019 50498_i CSDDraftNo.1 August 11.1997 (b)The sum of: (I)The maximum deferral amount established for the purposes of Section 4.2 for the taxable year (determined without regard to this Section 4.3),plus (ii)The maximum deferral amount established in Section 4.2 for any prior taxable year or years,less the amount of compensation deferred under the Plan,for such prior taxable year or years,pursuant to either Section 4.2 or this Section 4.3. A prior taxable year shall be taken into account under subdivision (ii)only if:(a)it begins after December 31,1978;(b)the Participant was eligible to participate in the Plan during all or any portion of the taxable year;and (C)compensation deferred (if any)under the Plan during the taxable year was subject to the maximum deferral amount under Section 4.2 herein.A Participant will be considered to have been eligible to participate in the Plan for a taxable year if the Participant was an Employee for any part of that taxable year. A prior taxable year includes a taxable year in which the Participant was eligible to participate in an Internal Revenue Code section 457 eligible deferred compensation plan sponsored by an entity other than the Employer,provided that such other entity is located in the State of California.” 5.The following language is hereby added as the second sentence to Section 6.1 of the Plan: “The actions of the Employer,with respect to the Plan and the administration of the Plan,shall be presumed to be fair,reasonable,and impartial,and the Employer shall be deemed to have exercised reasonable care,diligence and prudence,unless the contrary is proven by affirmative evidence.” 6.Sections 7 and 8 of the Plan are hereby deleted in their entireties and the following language is hereby inserted in their places and steads: “7:Asset Ownership Except as otherwise provided in Section 8 below,all Deferred Compensation credited to the Deferred Compensation Investment Fund,all property and rights purchased with amounts 2000-00019 50498_i CSDDraftNo.1 4 August11.1997 credited to the Deferred Compensation Investment Fund,and all income attributable to such amounts,property,or rights shall be and remain (until made available to the Participant or other beneficiary)solely the property and rights of the Employer (without being restricted to the provision of benefits under the Plan),subject only to the claims of the Employer’s general creditors.Without such Employer ownership,the Plan would not qualify as an “eligible deferred compensation plan”within the meaning of Internal Revenue Code section 457, so as to make tax benefits available to the Participants. SECTION 8:Declaration of Trust 8.1 Notwithstanding the provisions of Section 7,all Deferred Compensation credited to the Deferred Compensation Investment Fund,all property and rights purchased with amounts credited to the Deferred Compensation Investment Fund,and all income attributable to such amounts,property, or rights (collectively,the uTrust Estate”)shall be held,by the Employer as trustee,in trust for the exclusive benefit of the Participants and their beneficiaries,per the terms and conditions of Section 8.2 below.No portion of the Trust Estate shall revert to the Employer or be used or diverted to purposes other than the exclusive benefit of the Participants and their beneficiaries. 8.2 The Employer,as trustee,and in accordance with applicable law: (a)shall have the power to invest and reinvest the Trust Estate in all assets permitted under Government Code section 53609; (b)shall have the power to retain in cash,without obligation for interest,such portion of the Trust Estate as it may deem (i) advisable to meet Plan obligations,or (ii)to be in the best interests of the Plan; (c)shall have the power to retain,manage,operate,administer and otherwise deal with the Trust Estate in such manner as it deems appropriate; (d)shall have the power to transfer,sell,exchange,redeem and dispose of the assets of the Trust Estate,in any manner and at any time,by private or public sale or otherwise; (e)shall have the power,with respect to the assets of the Trust Estate, 2000-00019 50498_i CSD Draft No.1 Augustll.1997 to exercise all the rights of an individual owner,including,but not limited to,the power to give proxies,to participate in any voting trusts,mergers,consolidations or liquidations,and to exercise or sell stock subscriptions or conversion rights; (f)shall have the power to hold,authorize the holding of,and register any assets of the Trust Estate in any manner permitted by law; (g)shall have the power,in iti discretion,to compromise,contest (whether through legal proceedings or otherwise),arbitrate,or abandon claims and demands on behalf of the Trust Estate and/or the Plan,and to commence,maintain or defend the Trust Estate and/or the Plan in suits or legal proceedings; (h)shall have the power to employ consultants,accountants, depositories,agents and legal counsel on behalf of the Trust Estate and/or the Plan; (I)shall have the power to open,maintain and close any bank account(s),in any federally insured financial institution permitted by law,in the name of the Plan,the Employer or,to the extent permitted by law,any nominee or agent of the Plan or the Employer; (j)shall have the power to charge to,and pay from,the Trust Estate: (i)any taxes levied or assessed upon or in respect to the assets of the Trust Estate,(ii)any commissions and similar expenses with respect to the assets of the Trust Estate,(iii)the reasonable compensation of any third-party manager or administrator utilized by the Employer in the management or administration of the Trust Estate and/or the Plan,and (iv)the reasonable expenses of such third-party manager or administrator or the Employer incurred in • connection with Trust Estate and/or Plan management or •administration (including,but not limited to,legal,accounting, investment and custodial services); (k)shall pay benefits to Plan Participants and their beneficiaries,in cash or in kind or partly in each,in accordance with the terms hereof; (I)shall have the power:(i)to retain any funds or property subject to 2000.00019 50498_I CSDDraftNo.1 6 August 11.1997 any dispute,without liability to pay interest,(ii)to decline to make payment or delivery of the funds or property until final adjudication of the dispute is made by a court of competent jurisdiction,and (iii) to charge an Investment Account with the Employer’s legal expenses and costs incurred due to a dispute concerning that Investment Account; (m)shall have the power to make Participant loans,as described in Section 15; (n)shall administer the Plan and the Trust Estate as described in Sections 6,15 and this Section 8; (o)shall have the discretion:(i)to make limited investment options available to the Participant and to change those investment options from time to time,(ii)to eliminate an investment option,even if all or a portion of a Participant’s Investment Account is already invested therein,with the result that such amount must be reinvested in another,permitted,investment),and (iii)to invest the amounts in a Participant’s Investment Account either as requested by the Participant,or as otherwise determined by the Employer; (p)shall not be required to invest the amounts in the Trust Estate; however,it is the Employer’s intent to invest and reinvest such amounts in a manner intended to increase the same,and the net interest,accumulation and increments thereon shall be credited to, and held in,the Trust Estate for the exclusive benefit of the Participants and their beneficiaries;the Employer shall not be responsible for any loss due to the investment or failure of investment of such assets;nor shall the Employer be required to replace any loss whatsoever which may result from said investments;arid (q)shall have the power to make,execute,acknowledge and deliver any and all instruments necessary or proper for the accomplishment of,and to do any and all other acts that it may deem necessary or appropriate to carry out,the foregoing powers~” 7.Sections 10.1 and 10.2 of the Plan are hereby deleted in their entireties and the following language is hereby inserted in their places and steads: 2000-000 19 50498_I CSDDraftNo.1 7 August11.1997 “10.1 Termination of Employment by Retirement The Participant is eligible to receive distributions of benefits,with respect to retirement,after the Participant has met the requirements for Normal Retirement and has retired from service with the Employer.The Participant may submit to the Employer an application for distribution of benefits under the Plan as early as the date he notifies the Employer of his intended retirement and as late as thirty (30)days following the actual date of termination of employment due to retirement.Pursuant to such application,the Participant shall elect one of’the benefits described below,expressed in terms of both payment option and commencement date option.Except as otherwise provided in Subsection 10.1.3,the commencement date portion of such election shall become irrevocable upon the lapse of the thirtieth (30th)day following termination of employment with the Employer due to retirement. 10.1.1 Options Following the Participant’s termination of employment due to retirement and the receipt of such application,the Employer shall pay to the Participant one of the following benefits (expressed in terms of both payment option and commencement date option)as elected by the Participant: A.PAYMENT OPTION - (1)Options: (a)Consecutive equal monthly payments over a period of 36 months to 180 months,as determined by the Participant;provided,however,that any such period may not extend beyond the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant’s Category A Beneficiary.(This payment option may be satisfied through annuity distributions.) (b)Consecutive equal monthly payments for the life of the Participant or for the lives of the Participant and his Category A Beneficiary.(This payment option may be satisfied through annuity distributions.) (c)A single payment equal to the balance of the 2000-00019 50498_i CSDDraftNo.1 8 August 11,1997 Participant’s Investment Account. (d)A single lump-sum payment in an amount to be determined by the Participant,with the remainder of the Participant’s Investment Account to be paid under either payment option (a)or payment option (b) above. (2)Modified or Delayed Election: The Participant may modify his payment option election at any time until the date which is thirty (30)days before the commencement date as finally determined pursuant to Subsection 10.1.1,10.1.2,or 10.1.3,as applicable (the “Final Commencement Date”).Or,the Participant may choose to defer making a payment option election altogether,until a date as late as thirty (30)days before the Final Commencement Date.Thirty (30)days before the Final Commencement Date,the most recent payment option election on file with the Employer shall become irrevocable. If there is no payment option election on file with the Employer at that time,the Employer shall pay the sum in the Participant’s Investment Account to the Participant according to payment option (c)above,on the Final Commencement Date. B.COMMENCEMENT DATE OPTION - (a)The first day of the third calendar month following the month in which termination of employment occurs,or (b)The first day of a later month as designated by the Participant. In the case of payment option (d)above,the lump sum must be paid on the same date that the first payment over time is paid. C.LIMITATIONS - The foregoing options are limited by,and these payments shall be made subject to,the provisions of Sections 10.3,10.5,10.6 and 10.7 hereof. 2000.00019 504981 CSDDraIINO.1 9 August11.1997 The total amount of any benefits paid pursuant to payment options (a) through (d)above shall not exceed the sum of the amounts deferred by the Participant,as adjusted for any earnings or losses thereon. 10.1.2 Default EFection Should the Participant fail to elect one of the benefits hereunder by way of an application for retirement benefits filed with the Employer within thirty (30)days after retirement,the Employer shall pay the sum in the Participant’s Investment Account according to the “Benefit A”election previously made pursuant to either the Participation Agreement or a modification thereof.However,if there is no such previous election,then the Employer shall pay the sum in the Participant’s Investment Account according to payment option (C)above on the Required Beginning Date. 10.1.3 One-Time Change in Commencement Date Election Notwithstanding anything to the contrary in this Section 10.1,the Participant may,at any time after the first day of the third calendar month following the month in which termination of employment occurs,~n i.at least thirty (30)days before the scheduled commencement date,pursuant to either Subsection 10.1.1 or the Benefit “A”election on file with the Employer as of the date of retirement,elect to further defer the commencement date,to a date later than that previously elected (but not later than the Required Beginning Date).The Participant may exercise his or her right,under this Subsection 10.1.3,to file a changed commencement date election only once. 10.2 Termination of Employment Prior to Retirement Following the Termination of Service of a Participant,the Employer shall pay to the Participant the benefit elected by the Participant pursuant to either’(a) “Benefit B”of the Participation Agreement submitted by the Participant at the time of election to participate in the Plan or (b)a later written election delivered to the Employer within thirty (30)days following Termination of Service.Except as otherwise provided in Subsection 10.2.3 below,the commencement date portion of the latest such election filed with the Employer shall become irrevocable upon the lapse of the thirtieth (30th) day following Termination of Service. 2000-00019 50498_i CSDDraftN0.1 10 August ii,1997 10.2.1 Options A.PAYMENT OPTION - (1)Options: (a)Consecutive equal monthly payments over a period of 36 months to 180 months,as determined by the Participant;provided,however,that any such period may not extend beyond the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant’s Category A Beneficiary.(This payment option may be satisfied through annuity distributions.) (b)Consecutive equal monthly payments for the life of the Participant or for the lives of the Participant and his Category A Beneficiary.(This payment option may be satisfied through annuity distributions.) (c)A single payment equal to the balance of the Participant’s Investment Account. (d)A single lump-sum payment in an amount to be determined by the Participant,with the remainder of the Participant’s Investment Account to be paid under either payment option (a)or payment option (b) above. (2)Modified or Delayed Election: The Participant may modify his payment option election at any time until the date which is thirty (30)days before the commencement date as finally determined pursuant to Subsection 10.2.1,10.2.2,or 10.2.3,as applicable (the “Final Commencement Date”).Or,the Participant may choose to defer making a payment option election altogether,until a date as late as thirty (30)days before the Final Commencement Date.Thirty (30)days before the Final Commencement Date,the most recent payment option 2000.00019 50498.1 CSDDraftNO.1 11 August 11.1997 election on file with the Employer shall become irrevocable. If there is no payment option election on file with the Employer at that time,the Employer shall pay the sum in the Participant’s Investment Account to the Participant according to payment option (C)above,on the Final Commencement Date. B.COMMENCEMENT DATE OPTION - (a)The first day of the third calendar month following the month in which termination of employment occurs,or (b)The first day of a later month as designated by the Participant. In the case of payment option (d)above,the lump sum must be paid on the same date that the first payment over time is paid. C.LIMITATIONS - The foregoing options are limited by,and these payments shall be made subject to,the provisions of Sections 10.3,10.5,10.6 and 10.7 hereof. The total amount of any benefits paid pursuant to payment options (a) through (d)above shall not exceed the sum of the amounts deferred by the Participant,as adjusted for any earnings or losses thereon. 10.2.2 Default Election Should the Participant fail to elect one of the benefits hereunder either pursuant to the “Benefit B”provisions of the Participation Agreement or pursuant to a subsequent written election delivered to the Employer within thirty (30)days after Termination of Service,then the Employer shall pay the total amount in the Participant’s Investment Account to the Participant in a single lump sum on the first day of the third calendar month following the month in which Termination of Service occurs.In no event,however, shall such payment occur later than the Required Beginning Date. 10.2.3 One-Time Change in Commencement Date Election Notwithstanding anything to the contrary in this Section 10.2,the 2000-00019 50498_i CSDDraftNO.1 12 August ii.1997 Participant may,at any time after the first day of the third calendar month following the month in which Termination of Service occurs,~at least thirty (30)days before the scheduled commencement date,pursuant to either Subsection 10.2.1 or the Benefit “B”election on file with the Employer as of the date of Termination of Service,elect to further defer the commencement date,to a date later than that previously elected (but not later than the Required Beginning Date).The Participant may exercise his or her right,under this Subsection 10.2.3,to file a changed commencement date election only once? 8.Section 10.4 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: “10.4 Acceleration of Payment of Small Investment Accounts Notwithstanding the provisions of Sections 10.1 and 10.2 above,a Participant may elect to receive the full balance of his or her Investment Account at any time,but only on the following conditions: (a)the balance of the Investment Account does not exceed $3,500; (b)no amount has been deferred under the Plan with respect to the Participant during the two-year period ending on the date of the distribution;and (c)there has been no prior distribution to the Participant under this Section 10.4 (i.e.,the acceleration right can be exercised only once). Any distribution under this Section 10.4 shall be deemed a termination of participation in the Plan.The (former)Participant may re-elect to participate in the Plan,pursuant to Section 4.1,after a lapse of at least three (3)months after the date of distribution under this Section 10.4.” 9.SubseCtion 10.6.2 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: “10.6.2 When Participant Dies either before the Required Beginning Date or before Distributions Have Begun If a Participant dies either before the Required Beginning Date or before distribution of his Investment Account has begun,and,if any portion of the Investment Account is payable to (or for the benefit of)a Category 2000.00019 504981 CSDDraftNo.1 13 August11,1997 A or B Beneficiary,then the Employer shall pay such portion as follows - A.CATEGORY A BENEFICIARIES - (1)Category A Beneficiary Other than Surviving Spouse If the Category A Beneficiary is other than the surviving spouse,the portion of the Investment Account payable to such beneficiary shall be distributed according to one of the following options,expressed in terms of both payment option and commencement date option: PAYMENT OPTION: (a)consecutive equal monthly payments over a period of 36 months to 60 months (but not exceeding the life expectancy of the Category A Beneficiary): (b)a single lump-sum payment:or (C)a combination of the benefits described in (a) and (b)above. COMMENCEMENT DATE OPTION: Such distributions shall begin on the date designated by either the Participant or,if permitted by the Participant,the Category A Beneficiary,but in no event later than December 31 of the calendar year immediately following the calendar year in which the Participant dies.If the Category A Beneficiary submits a permitted benefits election,the election must be filed with the Employer within ninety (90) days after the Participant’s death,and the earliest commencement date shall be the first day of the fifth calendar month following the month in which the death of the Participant occurred. 2000-00019 50498_i CSD Draft No.I August ii~1997 (2)Surviving Spouse If the Category A Beneficiary is the surviving spouse of the Participant,the portion of the Investment Account payable to the surviving spouse shall be distributed according to one of the following options,expressed in terms of both payment option and commencement date option: PAYMENT OPTION: (a)consecutive equal monthly payments over a period not to extend beyond the life expectancy of the surviving spouse; (b)a single lump-sum payment;or (c)a combination of the benefits described in (a) and (b)above. COMMENCEMENT DATE OPTION: Such distributions shall begin on the date designated by either the Participant or,if permitted by the Participant,the surviving spouse,but in no event later than the later of (i)December 31 of the calendar year immediately following the calendar year in which the Participant dies,and (ii)December 31 of the calendar year in which the Participant would have attained age 701/2.Notwithstanding the foregoing,however,if as of the date of the Participant’s death,both the surviving spouse and another are Category A Beneficiaries, then distributions shall begin on or before December 31 of the calendar year immediately following the calendar year in which the Participant dies.If the surviving spouse submits a permitted benefits election,the election must be filed with the Employer within ninety (90)days after the Participant’s death, and the earliest commencement date shall be the first day of the fifth calendar month following the month in which the death of the Participant occurred. 2000.00019 50498_I CSDDraftNo.1 15 August 11,1997 (3)Elections PARTICIPANT’S ELECTION: All elections (as to both payment option and commencement date)to be made under this Subsection 10.6.2 shall be made by the Participant pursuant to either the “Benefit C”provisions of the Participation Agreement or a later written election delivered to the Employer before the death of the Participant.Notwithstanding the foregoing,however, the Participant,in the Participation Agreement or such later written election,may specify that,following the death of the Participant,the Category A Beneficiary may elect,subject to the foregoing limitations,the form of payments and the commencement date of distributions. BENEFICIARY’S ELECTION: Any permitted beneficiary election must be in the form of a written election filed with the Employer no later than ninety (90)days following the date of death of the Participant.In the absence of any such timely election,the portion of the Investment Account payable to such Category A Beneficiary shall be distributed to him in a lump sum on the first day of the fifth calendar month following the month in which the death of the Participant occurs.The commencement date portion of the Beneficiary’s election shall become irrevocable on the date ninety (90)days after the Participant’s death.However,the Beneficiary may modify his payment option election up to thirty (30) days before the previously elected commencement date. (4)Death of a Category A Beneficiary If a Category A Beneficiary dies within six months of the date of the Participant’s death and before the entire portion of the Investment Account allocated to him has been paid 2000-00019 50498_i CSDDraftNo.1 16 August 11,1997 pursuant to this Subsection 10.6.2,then the remainder of such portion shall be paid to the contingent beneficiary,if any,designated by the Participant in either the Participation Agreement or a later written election delivered to the Employer before the Participant’s death.If there is no such contingent beneficiary,or if the Category A Beneficiary dies more than six months after the date of the Participant’s death and before the entire portion of the Investment Account allocated to him has been paid pursuant to this Subsection 10.6.2,then the remainder of such portion shall be paid to the estate of the deceased Category A Beneficiary.Any payment under this paragraph shall be made in a lump sum on the first day of the third calendar month following the month in which the death of the Category A Beneficiary occurs. B.CATEGORY B BENEFICIARIES - If the beneficiary is a Category B Beneficiary,which is a validly existing legal entity (such as a charitable foundation or the estate of the Participant),the portion of the Investment Account payable to such beneficiary shall be distributed as a lump sum on the first day of the third calendar month following the month in which the death of the Participant occurs. C.TRUST AS BENEFICIARY - The Participant may designate a trust as his beneficiary under the Plan.However,in that case,any beneficiary of the trust,who is eligible to receive trust distributions on account of payments from the Plan,shall be deemed to be a Category A Beneficiary under the Plan.(For example,if the Participant designates as his beneficiary a trust of which his surviving spouse is the life beneficiary,and elects lifetime payments,then for the purpose of this Subsection 10.6.2,the surviving spouse shall be deemed to be the Category A Beneficiary,and the terms of this subsection shall be applied by basing distributions on the life expectancy of the surviving spouse.)Notwithstanding the foregoing,however,a trust may only be designated as a beneficiary (and the beneficiary of the trust will only be deemed to be a Category A Beneficiary)if,as of the later of the date that the Participant submits to the Employer 2000-00019 50498_i CSD Draft No.1 August 11,1997 the election in which the trust is named as a beneficiary or the Required Beginning Date,and as of all subsequent periods during which the trust is named as a beneficiary of the Plan,aH of the following conditions are met:(1)the trust is a valid trust under state law,(2)the trust is irrevocable,(3)the beneficiaries of the trust can be identified from the trust instrument,and (4)a copy of the trust instrument has been provided to the Employer.” 10.Subsection 10.7.3 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: “10.7.3 Employer Discretion to Accelerate Distributions The Employer,in its sole and absolute discretion,shall have the right,at any time when subparagraphs (a)-(c)of Section 10.4 are satisfied,to distribute the entire balance of the Participant’s Investment Account to the Participant.In addition,after distributions have begun under Sections 10.1,10.2 or 10.6,if the balance of the Participant’s Investment Account,or any portion thereof payable to a beneficiary,should equal $3500.00 or less,the Employer,in its sole and absolute discretion and for administrative ease,may distribute such balance or such portion in a lump sum on the date of the first regularly scheduled payment of the next calendar year. Moreover,at any time after distributions have begun under Sections 10.1,10.2 or 10.6,if the Employer determines that the payment schedule as elected by the Participant,or by the Category A Beneficiary,if applicable,is such that monthly payments would be in an amount less than $200.00,then the Employer,in its sole and absolute discretion,may make distributions in the amount of $200.00 per month,until exhaustion of the Investment Account or portion thereof in question,irrespective of the fact that this would have the effect of shortening the distribution period originally elected by the Participant,or the Category A Beneficiary,if applicable.” 11.The following language is hereby added as subsection 10.7.5 of the Plan: “10.7.5 Cost-of-Living Adjustment of Periodic Payments The Participant or a Category A Beneficiary,at the time of submitting a distribution option election permitted under Section 10.1,Section 10.2,or Section 10.6 of the Plan,may elect that any distributions made pursuant to a periodic payment option may be made not in equal 2000.00019 50498_i CSODraftNo.i 18 August11.1997 amounts,but rather in increasing amounts,based on increases in the cost-of-living.The formula for determining cost-of-living increases shall be established by the Employer from time to time.” 12.The Plan Section 12.1 cross-reference to Section 8 is hereby changed to a cross-reference to Section 7. 13.Section 12.3 of the Plan is hereby deleted in its entirety and the following language is hereby inserted in its place and stead: “12.3 A Participant,who was formerly employed by another public agency located within the State of California,may transfer, to the Plan,funds from an Internal Revenue Code section 457 eligible deferred compensation plan maintained by that former employer,if that eligible deferred compensation plan permits transfers to other section 457 eligible deferred compensation plans and if the Participant complies with all applicable terms and conditions of both the transferring plan and this Plan in effectuating the transfer.As a condition to transfer to this Plan,the Employer may require that assets transferred from another plan be in the form of cash or cash equivalents.” 14.The following language is hereby added as Section 15 of the Plan: “15:Participant Loans The Employer may establish a Participant loan program on the terms and conditions set forth in this Section 15, and any additional terms and conditions as the Employer may prescribe from time to time,If the Employer establishes such a loan program,the Participants may apply to the Employer for loans,to be secured by their respective Investment Accounts.In addition to such other terms and conditions as the Employer may prescribe,the following terms and conditions shall apply to the Participant loans. 15.1 Maximum Loan Amount The outstanding aggregate balance of all loans made to the Participant under the Plan shall not exceed the lesser of: (a)fifty thousand dollars ($50,000),reduced by the excess (if any)of (I)the highest outstanding balance of loans from the Plan during 2000.00019 504981 CSD Draft No.1 August11.1997 the one-year period ending on the day before the date on which such loan was made,over (ii)the outstanding balance of loans from the Plan on the date on which such loan was made,or (b)one-half of the present value of the nonforfeitable accrued benefit of the Participant under the Plan. (For the purpose of determining the maximum loan amount under this Section 15.1,all deferred compensation plans of the Employer shall be treated as one plan.) 15.2 Maximum Loan Term Except as otherwise provided in this Section 15, each loan shall be repaid in full within five (5)years.However,the five-year limitation shall not apply if the purpose of the loan is to enable the Participant to acquire a dwelling unit which,within a reasonable period of time (to.be determined by the Employer at the time the loan is made),is to be used as the Participant’s principal residence. 15.3 Promissory Note The loan shall be evidenced by an interest-bearing promissory note,payable to the Employer.The promissory note shall be fully amortized,with payments to be made at such intervals as provided therein, which shall be no less frequently than quarterly.The promissory note shall contain terms and conditions as are required by this Section 15,and such additional terms and conditions as are established by the Employer from time to time. 15.4 Collateral/Security The loan shall be secured by the Participant’s assignment,to the Employer,of the Participant’s right,title and interest in and to his or her Investment Account,or such portion thereof as the Employer,in its sole and absolute discretion,determines to be adequate security under the circumstances. 15.5.IDistributions No distribution of any portion of a Participant’s Investment Account shall be made to any Participant,or to any beneficiary of the Participant, until such time as all Participant loans and accrued interest thereon are repaid in full.Notwithstanding the foregoing,however,the Employer,in its sole discretion, may permit an emergency withdrawal,under the terms and conditions described in Section 11 above,provided such emergency withdrawal shalt not cause the then outstanding balance of the Participant’s loan to exceed the maximum loan amount described in Section 15.1 above. 2000-00019 50498_i CSD Draft No.1 August11,1997 15.6 Repayment Loan repayments shall be made by payroll deduction,or when repayment cannot be made by payroll deduction,then by check. Notwithstanding any provision of Section 15.2 to the contrary,the outstanding balance of all loans to a Participant shall immediately become due and payable in full on Termination of Service for any reason.If the loan is not paid in full within thirty (30)days of Termination of Service,the unpaid balance shall be deducted from any Plan benefit payable to the Participant or the Participant’s beneficiary.In addition,in the event of default in repayment of a loan,the Employer,in its sole and absolutediscretion,may deem the loan to be immediately due and payable in full,in which case the Employer may pursue any and all remedies available at law or in equity,and may liquidate the security and apply it to satisfy the then outstanding balance under the loan,treat the then outstanding balance as a distribution to the Participant,and reduce the amount of the Participant’s Investment Account by such amount. 15.7 Participant Loan Account Notwithstanding any provision of Section 6.3 to the contrary,upon delivery,to the Employer,of the executed promissory note and assignment of interest in the Participant’s Investment Account,the Employer shall establish a loan account for the Participant (the “Participant’s Loan Account”),and transfer from the Participant’s Investment Account to the Participant’s Loan Account an amount equal to the amount of the Participant’s loan.The assets of the Participant’s Loan Account may be invested and reinvested only in promissory notes payable to the Employer by the Participant, or in cash.The Employer shall not be liable for any loss resulting from the Participant’s breach of his payment obligations under such promissory note(s). Uninvested cash balances in a Participant’s Loan Account shall not bear interest. Repayments of principal and interest shall be transferred to the Participant’s Investment Account and invested as provided in Sections 6 and 8.The amount of the Participant’s Loan Account shall be reduced by the amount of each such transfer. 15.8 Application Procedures.Loan Requirements.Terms and Conditions.and Accounting Procedures From time to time,the Employer shall establish loan application procedures,loan requirements,loan terms and conditions,and loan accounting procedures.The application procedures,loan requirements,terms and conditions,and accounting procedures shall be uniform and non discriminatory.From time to time,the Employer shall set an interest rate for new loans,based on prevailing rates.Loans made at different times may be subject to different interest rates,due to the difference in prevailing rates at the time.” 2000-00019 50498_I CSD Draft No.I Augustll.1997 15.The Plan shall continue in full force and effect except as expressly amended herein. 2000-00019 50498_i CSD Draft No.1 August11,1997