HomeMy WebLinkAboutOCSD 98-36 (REPEALED) (AMENDED)RESOLUTION NO.OCSD 98-36
REAFFIRMING RESOLUTIONS NOS.94-39, 95-80,98-07,AND
98-20.OF THE DISTRICT’S PREDECESSOR DISTRICTS.AND
ESTABLISHING THE ORANGE COUNTY SANITATION DISTRICT
DEFERRED COMPENSATION PLAN FOR OFFICERS AND
EMPLOYEES
A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE
COUNTY SANITATION DISTRICT REAFFIRMING RESOLUTIONS
NOS.94-39,95-80,98-07 AND 98-20 OF ITS PREDECESSOR
DISTRICTS NOS.1,2,3,5,6,7,11,13 AND 14 OF ORANGE
COUNTY,CALIFORNIA,AND ESTABLISHING THE ORANGE
COUNTY SANITATION DISTRICT DEFERRED COMPENSATION
PLAN FOR THE OFFICERS AND EMPLOYEES OF THE
DISTRICT
WHEREAS,the Orange County Board of Supervisors,by approval on April 14,
1998 of County Resolution No.98-1 40,has ordered the Consolidation of County
Sanitation Districts Nos.1,2,3,5,6,7,11,13 and 14 of Orange County,California (the
“Predecessor Districts”)into a single new District,to be known as the Orange County
Sanitation District (“District”);and
WHEREAS,pursuant to Government Code Section 57500,the District succeeds
to all of the powers,rights,duties,obligations,functions,and properties of the
Predecessor Districts;and
WHEREAS,the Predecessor Districts,by Resolution No.94-39,adopted by the
Boards of Directors on April 13,1994,approved and adopted the County Sanitation
Districts of Orange County,California Deferred Compensation Plan as Amended 1994
(hereinafter referred to as the “Plan”);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;by Resolution No.98-07,adopted by the Boards of Directors on March 25,
1998,the Districts approved and adopted the Second Amendment to the Plan;and by
Resolution No.98-20,adopted by the Boards of Directors on June 24,1998,the
Districts approved and adopted the Third Amendment to the Plan;and,
WHEREAS,the District,as the consolidated successor,desires to acknowledge
and reaffirm the Plan.
NOW,THEREFORE,the Board of Directors of Orange County Sanitation
District,
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646451 1
REPEALED by
03-10
Amended by
02-12
DOES HEREBY RESOLVE,DETERMINE AND ORDER:
Section 1 The District accepts and reaffirms the findings,-certifications,
adoptions,and approvals of Resolutions Nos.94-39,95-80,98-07,and 98-20,
adopting,approving,and amending the Plan.
Section 2 The Plan,as so adopted,approved and amended,is hereby
adopted by the District as and shall hereafter be referred to as the “Orange County
Sanitation District Deferred Compensation Plan”,a copy of which is attached hereto as
Exhibit “A”and incorporated herein by reference.The District shall continue to carry
out the adopted,approved and amended Plan in accordance with its terms.
Section 3 This Resolution shall become effective immediately upon adoption.
PASSED AND ADOPTED at a Special Meeting held July 1,1998.
-~--
Chair
ATTE T:>A.~
Board Sec~tary
2090-300
646451 2
EXHIBIT “A”
ORANGE COUNTY SANITATION DISTRICT
DEFERRED COMPENSATION PLAN
SECTION 1:BackQround The Orange County Board of Supervisors,by approval
on April 14,1998 of County Resolution No.98-1 40,ordered the consolidation of County
Sanitation Districts Nos.1,2,3,5,6,7,11,13 and 14 of Orange County,California (the
“Predecessor Districts”)into a single new sanitation district,known as the Orange County
Sanitation District (“Employer”).By Resolution No.94-39 adopted by the Boards of
Directors of the Predecessor Districts,on April 13,1994,the Predecessor Districts
approved and adopted the County Sanitation Districts of Orange County,California
Deferred Compensation Plan as Amended 1994.By Resolutions Nos.95-80,98-07,and
98-20,adopted by the Boards of Directors of the Predecessor Districts,on July 26,1995,
March 25,1998,and June 24,1998,respectively,the Predecessor Districts approved and
adopted amendments to the County Sanitation Districts of Orange County,California
Deferred Compensation Plan as Amended 1994 (the County Sanitation Districts of
Orange County,California Deferred Compensation Plan as Amended 1994 and first,
second and third amendments thereto shall hereinafter be referred to collectively as the
“Predecessor Districts’Plan”).By Resolution No.OCSD 98-36 adopted by the Board of
Directors of the Employer,on July 1,1998,the Employer adopted the Predecessor
Districts’Plan,as set forth herein.The name of this deferred compensation plan is the
Orange County Sanitation District Deferred Compensation Plan (hereinafter referred to as
the “Plan”).
SECTION 2:Purpose 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.
SECTION 3:Definitions For the purposes of this Plan,certain words or phrases
used herein will have the following meanings:
3.1 “Category A Beneficiary”shall mean any individual designated as the
beneficiary by the Participant,either pursuant to the Participation Agreement
or pursuant to a later written election filed with the Employer before the
death of the Participant.A trust may also be designated as a beneficiary
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under the Plan,under certain circumstances more specifically described in
Subsection 10.6.2 below,but in that case the trust beneficiaries who may
receive trust distributions on account of payments from the Plan shall be
deemed to be the Category A Beneficiaries under the Plan.No other legal
entity,such as a charitable foundation or the estate of the Participant,may
be a Category A Beneficiary for the purposes of the Plan.
3.2 “Category B Beneficiary”shall mean a beneficiary who is designated by the
Participant in either the Participation Agreement or a later written election
filed with the Employer before the Participant’s death,and who is not a
“Category A Beneficiary”within the meaning of Section 3.1 above.
(Example:a legal entity other than a trust,such as a charitable foundation
or the estate of the Participant.)
3.3 “Deferred Compensation”shall mean the amount of compensation not yet
earned,which the Participant and the Employer mutually agree shall be
deferred in accordance with the provisions of this Plan.
3.4 “Deferred Compensation Investment Fund”shall mean the fund to which all
Deferred Compensation is credited,as described in Section 6.2.
3.5 “Employee”shall mean any employee who is a director or officer,or who is
a permanent,full-time employee of the Orange County Sanitation District.
3.6 “Employer”shall mean the Orange County Sanitation District.
3.7 “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.
3.8 “Investment Account”shall mean a book account for the individual
Participant,as more fully described in Section 6.3.
3.9 “Late Retirement”shall mean a termination of service with the Employer
which becomes effective after the date on which the Participant has met the
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requirements to effect a Normal Retirement.
3.10 “Normal Retirement”shall mean a termination of service with the Employer
which becomes effective on the first day of the calendar month after the
Participant meets the minimum age and/or service requirements,for
voluntary retirement,specified in the Retirement Plan.
3.11 “Normal Retirement Age”shall mean the age at which the Participant has
met the requirements for Normal Retirement;provided,however,that a
Participant who continues to work for the Employer after attaining Normal
Retirement Age may elect,for the purposes of Section 4.3 below,an
alternate Normal Retirement Age,which may be an age greater than age
701/2,but which shall be a date or age not later than either (a)any mandatory
retirement age specified by the Employer,or (b)the date or age at which the
Participant actually separates from service with the Employer.The
Participant shall make any such election by delivering to the Employer,prior
to separation from service with the Employer,written notice specifying the
chosen alternate Normal Retirement Age.Nothing in this Section 3.11 shall
be construed to mean that the Employer has imposed a mandatory
retirement age or that the Participant has agreed to retire at a designated
age.
3.12 “Participant”shall mean an Employee who has elected to participate in the
Plan.
3.13 “Participation Agreement”shall mean the agreement which is executed by
the Employee and filed with the Employer in accordance with Section 4,and
pursuant to which the Employee elects to become a Participant in the Plan
and defers a portion of his income.
3.14 “Plan”shall mean the Orange County Sanitation District Deferred
Compensation Plan as established hereunder.
3.15 “Plan Year”shall mean the calendar year.
3.16 “Required Beginning Date”shall mean the latest date that distributions are
permitted to commence under Section 10.3.
3.17 “Retirement Plan”shall mean the retirement plan of the Orange County
Employees’Retirement System,which is governed by the County Employees
Retirement Law of 1937 (California Government Code section 31450 et seq.
and is made available to the employees of the Employer pursuant to
contract.
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3.18 “Salary”shall mean the full,regular,basic salary which would be paid by the
Employer to or for the benefit of the Employee (if he were not a Participant
in the Plan)for actual services for the period that he is a Participant.
3.19 ‘Termination of Service”shall mean the severance,prior to retirement and
other than by death,of the Participant’s employment with the Employer.
3.20 “Unforeseeable Emergency”shall mean a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Internal Revenue Code section
152(a))of the Participant,loss of the Participant’s property due to casualty,
or other similar extraordinary and unforeseeable circumstances arising as
a result of events beyond the control of the Participant.The circumstances
that will constitute an Unforeseeable Emergency will depend upon the facts
of each case.Examples of what are not considered to be Unforeseeable
Emergencies include the need to send a Participant’s child to college or the
desire to purchase a home.
SECTION 4:ParticiDation in the Plan
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,which is to be deferred
pursuant to the Plan and to be withheld out of the Salary otherwise payable
to the 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)(1 5)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
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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 Includible
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
(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),pIus
(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.
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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.
4.4 A Participant may terminate his election to defer compensation under the
Plan by executing and filing with the Employer a written notice at least thirty
(30)days prior to the effective date of termination.In the event a Participant
ceases to qualify under Section 3 hereof as a Participant,his election to
defer compensation shall automatically terminate on the same date as he
becomes ineligible.A Participant (including a former Participant who is
again eligible to participate)may not resume the deferral of compensation
during the calendar month in which termination occurred;however,he may
elect to resume the deferral of compensation in subsequent calendar months
after a lapse of not less than three (3)months.No amounts shall be payable
to an Employee upon the termination of deferral of compensation,unless
otherwise provided for in either Section 10 or Section 11.
4.5 A Participant may change the amount of compensation to be deferred in a
subsequent calendar month by executing and filing notice with the Employer
at least thirty (30)days prior to the beginning of such month;provided,
however,that such change may be made not more than four (4)times in a
calendar year.
4.6 In applying the provisions of this Section 4,amounts deferred shall be taken
into account at present value in the Plan Year in which deferred.
SECTION 5:Deferral of Compensation During the period of participation,the
Employer shall not pay the Participant his full Salary,but shall defer payment of such part
of his Salary as is specified by the Participant in the Participation Agreement,which has
been executed and filed with the Employer.
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SECTION 6:Administration of the Plan
6.1 The Employer shall have full authority and power to adopt the rules and
regulations for the administration of the Plan,and to interpret,amend,alter
and revoke any rules and regulations so adopted.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.
6.2 The Employer shall establish a Deferred Compensation Investment Fund to
which all Deferred Compensation shall be credited at such times as the
amounts deferred would have been payable to the individual Employee if he
were not a Participant in the Plan.
6.3 The Employer shall maintain a book account (the “Investment Account”)for
each Participant,to which shall be credited the Deferred Compensation of
the individual Participant.The Participant’s Investment Account shall be
credited with the earnings thereof,if any,and shall be credited or debited,
as the case may be,with the net amount of any gains or losses which may
result from the investment of all or any portion of the amount in the
Participant’s Investment Account.The Employer,its directors,officers and
employees,shall not be liable for any losses on any investment credited to
any Investment Account.On a quarterly basis,the Employer shall credit the
earnings and/or gains and debit the losses on each Investment Account.
Such credits and debits shall be made,and the final quarterly balance of the
Investment Account shall be posted,as of the last day of each quarter.
SECTION 7:Asset OwnershiD 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 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
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rights purchased with amounts credited to the Deferred Compensation
Investment Fund,and all income attributable to such amounts,property,or
rights (collectively,the “Trust 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,
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 its 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
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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 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;
(0)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;
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(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;and
(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.
SECTION 9:Plan Benefits Deferred Compensation benefits are payable on the
happening of any of the following events:
(a)Normal Retirement of a Participant;
(b)Late Retirement of a Participant;
(c)Termination of Service of a Participant;or
(d)Death of a Participant who dies either before or after Deferred
Compensation payments commence,and before the entire amount of
his Investment Account is paid.
SECTION 10:Distribution of Benefits
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
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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.PAYMENTOPTION
(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.
(b)Consecutive equal monthly payments for the life of the
Participant or for the lives of the Participant and his
Category A Beneficiary.
(C)Annuity payments pursuant to an annuity that is offered
by a Plan provider providing services to the Employer
and that is structured so as to comply with all applicable
provisions of the Internal Revenue Code,the Treasury
Regulations and all other applicable laws.
(d)A single payment equal to the balance of the
Participant’s Investment Account.
(e)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
payment option (a),payment option (b),or payment
option (c)above.
(2)Modified or Delayed Election:
The Participant may modify his payment option election at any
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time until the date whiôh 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 (d)
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 (e)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 (e)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 Election
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
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(d)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,and 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.
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.
(b)Consecutive equal monthly payments for the life of the
Participant or for the lives of the Participant and his
Category A Beneficiary.
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(c)Annuity payments pursuant to an annuity that is offered
by a Plan provider providing services to the Employer
and that is structured so as to comply with all applicable
provisions of the Internal Revenue Code,the Treasury
Regulations and all other applicable laws.
(d)A single payment equal to the balance of the
Participant’s Investment Account.
(e)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
payment option (a),payment option (b),or payment
option (c)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 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 (d)
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 (e)above,the lump sum must be paid
on the same date that the first payment over time is paid.
14
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 (e)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 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 UBfl 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.
10.3 Required Beginning Date of Distributions Notwithstanding any other
provision of the Plan,payments under Sections 10.1 and 10.2 shall begin no
later than the later of:
(a)April 1 of the calendar year following the calendar year in which the
Employee attains age 701/2;or
(b)April 1 of the calendar year following the calendar year in which the
Employee retires.
15
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 the maximum
amount permitted under Internal Revenue Code section 457(e)(9)(or
a successor provision)at the time of the withdrawal;
(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.
10.5 Lifetime Distribution Requirements The distributions under this Plan must
be made primarily for the benefit of the Participant and the schedule elected
by the Participant for payment of benefits under Sections 10.1 and 10.2 of
the Plan must be such that benefits payable to a beneficiary are not more
than incidental,according to the applicable Treasury Regulations.Payments
under those sections shall be distributed over the life of the Participant or
over the lives of the Participant and a Category A Beneficiary (or over a
period not extending beyond the life expectancy of the Participant or the joint
life and last survivor expectancy of the Participant and a Category A
Beneficiary),in accordance with the Treasury Regulations under Internal
Revenue Code section 401 (a)(9).
In addition,as required by Internal Revenue Code section 401 (a)(9)(G),and
except as otherwise provided in Section 10.7 below,all distributions shall be
made in accordance with the incidental death benefit requirements of
Internal Revenue Code section 401(a).As more fully described in the
applicable Treasury Regulations,as promulgated pursuant to the authority
of Internal Revenue Code section 401 (a)(9),this means that distributions
must be made in accordance with a certain formula designed to ensure that
the entire Investment Account of the Participant is distributed over a period
of time not to exceed the joint life and last survivor expectancy of the
Participant and a Category A Beneficiary who is not more than ten years
16
younger than the Participant.
10.6 Death of Participant In the event of the death of the Participant,either
before or after termination of employment (by retirement or otherwise),and
before the entire amount of his Investment Account has been distributed,the
Employer shall distribute the amount then remaining in the Participant’s
Investment Account pursuant to Subsections 10.6.1 through 10.6.3 below.
10.6.1 When Participant Dies on or after the Required Beginning Date and
after Distributions Have Begun If distributions have already begun
during a Participant’s lifetime,and the Participant dies on or after the
Required Beginning Date and before the entire amount of his
Investment Account has been distributed,then the remaining portion
of the Participant’s Investment Account shall be distributed,as
elected 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,unless
the Participant’s election would permit distributions to be made less
rapidly after death than under the method of distribution being used
as of the date of death.In order to comply with Internal Revenue
Code section 401(a)(9),distributions (under this Subsection 10.6.1)
after death must be made at least as rapidly as under the method of
distribution being used as of the date of death.
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 A or B Beneficiary,then
the Employer shall pay such portion as follows -
A.CATEGORY A BENEFICIARIES -
(1)Cateaorv 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:
17
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)annuity payments pursuant to an annuity that is
offered by a Plan provider providing services to
the Employer and that is structured so as to
comply with all applicable provisions of the
Internal Revenue Code,the Treasury
Regulations and all other applicable laws;
(c)a single lump-sum payment;or
(d)a single lump-sum payment,with the remainder
of the portion of the Investment Account payable
to such beneficiary to be paid under either
payment option (a)or payment option (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.
(2)SurvivinQ SDouse
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:
18
PAYMENT OPTION:
(a)consecutive equal monthly payments over a
period not to extend beyond the life expectancy
of the surviving spouse;
(b)annuity payments pursuant to an annuity that is
offered by a Plan provider providing services to
the Employer and that is structured so as to
comply with all applicable provisions of the
Internal Revenue Code,the Treasury
Regulations and all other applicable laws;
(c)a single lump-sum payment;or
(d)a single lump-sum payment,with the remainder
of the portion of the Investment Account payable
to the surviving spouse to be paid under either
payment option (a)or payment option (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
701A.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.
19
(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 CateQorv 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 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
20
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 the election in which
the trust is named as a beneficiary or the Required Beginning Date,
andas of all subsequent periods during which the trust is named as
a beneficiary of the Plan,all 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
21
to the Employer.
10.6.3 Default Provision If,upon the death of the Participant,there exists
neither a Category A Beneficiary nor a Category B Beneficiary to
receive any portion of the Participant’s Investment Account,then the
Employer shall,on the first day of the third calendar month following
the month in which the death of the Participant occurs,pay that
portion in a lump sum to the estate of the Participant.
10.7 General Distribution Requirements and Provisions Notwithstanding any
other provision of this Plan to the contrary,all distributions under this Plan
shall be made in accordance with the provisions of this Section 10.7 and,to
the extent of any inconsistency,the provisions of this Section 10.7 shall
control.
10.7.1 Calculation of Life Expectancy For the purpose of ascertaining the
relevant distribution periods and amounts hereunder,life expectancy,
where applicable,shall not be recalculated annually.Rather,once
life expectancy has been initially calculated,it shall thereafter be
reduced by one year for each year that passes.Notwithstanding the
foregoing,however,with respect to permitted annuity distributions,
life expectancy may be calculated in any manner permitted by the
Internal Revenue Code,the Treasury Regulations,and all other
applicable tax laws.
10.7.2 Additional Distribution Requirements Any payments payable over a
period of more than one year shall only be made in substantially non-
increasing amounts,paid not less frequently than annually.
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 be
less than or equal to the amount provided in Internal Revenue Code
section 457(e)(9)(or a successor provision),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
22
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.
10.7.4 Statutory Compliance All distributions under this Plan shall be made
in accordance with the Treasury Regulations under Internal Revenue
Code section 401(a)(9),including both the minimum distribution
requirements of Treasury Regulation section 1.401 (a)(9)-1,and,(in
accordance with Internal Revenue Code section 401 (a)(9)(G))the
minimum distribution incidental benefit requirements of Treasury
Regulation section 1.401 (a)(9)-2.To the extent that any distribution
option hereunder is inconsistent with Internal Revenue Code section
401 (a)(9),the provisions of Internal Revenue Code section 401 (a)(9)
shall control and the Plan shall be administered so as to conform with
section 401 (a)(9).Notwithstanding the foregoing,however,if,
pursuant to Internal Revenue Code section 457(d)(2)(B)(i)(l),
Treasury Regulations (the “Superseding Regulations”)should be
issued which require more rapid distributions than those required by
Internal Revenue Code section 401(a)(9)(G)and the Treasury
Regulations under section 401 (a)(9)(G),then the distributions under
this Plan shall be made pursuant to such Superseding Regulations,
to the extent inconsistent with section 401 (a)(9)and the Treasury
Regulations under that section.
10.7.5 Cost-of-Living Adiustment 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 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.
SECTION 11:Emergency Withdrawals In the event of an Unforeseeable
Emergency,to be determined by the Employer in its sole discretion,the Employer may pay
to the Participant all or any portion of the amount in such Participant’s Investment Account,
as of the month end following the date when such determination is made.Payment may
not be made to the extent that the hardship resulting from the Unforeseeable Emergency
23
is or may be relieved (a)through reimbursement or compensation by insurance or
otherwise,(b)by liquidation of the ParticipanVs assets,to the extent the liquidation of such
assets would not itself cause severe financial hardship,or (C)by cessation of deferrals
under the Plan.The amount that may be paid out is limited to the amount reasonably
necessary to alleviate the Unforeseeable Emergency need and,in most cases,will be paid
only in a single lump sum.In the event of an Unforeseeable Emergency which causes the
initial lump sum payment to be inadequate to meet the Unforeseeable Emergency need,
the Participant (or former Participant)may apply for the payment of subsequent lump-sum
amounts,up to the entire amount in the Participant’s (or former Participant’s)Investment
Account.
Any distribution under this section shall be deemed a termination of the election to
defer compensation under Section 4.4 above,and no further deferral of compensation
shall be made unless the Participant subsequently re-elects to defer compensation under
the Plan,as provided in Section 4.4.Moreover,any distribution of 100%of the
Participant’s Investment Account under this section shall be deemed a revocation of the
Participant’s agreement to participate in the Plan.The (former)Participant may re-elect
to participate in the Plan,pursuant to Section 4.1,after a lapse of not less than three (3)
months.
SECTION 12:Assignments and Transfers
12.1.Consistent with Section 7 above,no one,including the Participant,his
beneficiary or designee,or any other person,shall have any right to
commute,sell,assign,transfer,or otherwise convey the right to receive any
payments hereunder,which payments and right thereto are expressly
declared to be non-assignable and non-transferable.The Employer shall
have no liability to either the Participant or a purported assignee or
transferee,on account of any attempted assignment or transfer.In addition,
except to the extent otherwise provided by law,no interest of the Participant
in the Plan shall be subject to attachment,garnishment or execution,or be
transferrable by operation of law,whether due to bankruptcy,insolvency,
liquidation for the benefit of creditors,or any other cause.
12.2 Notwithstanding the foregoing,however,the amounts deferred by a former
Participant may be transferred to another Internal Revenue Code section
457 eligible deferred compensation plan of which the former Participant has
become a participant,if the following conditions are met:
(1)the plan to which the former Participant wishes to transfer
amounts deferred is located within the State of California;
24
(2)the plan receiving such amounts provides for the acceptance
of such amounts;
(3)the employer accepting the transfer funds gives written notice
of its agreement to accept such transfer and assumes liability
therefor;and
(4)the Participant provides a written release to the Employer
releasing the Employer from any claim or liability under the
Plan after the date such transfer of funds occurs.
If a Participant separates from service in order to accept employment with
another entity which permits the Participant to participate in a section 457
eligible deferred compensation plan,and if the four conditions enumerated
above are met,payout of benefits will not commence upon separation from
service,notwithstanding any other provision of the Plan,and amounts
previously deferred will automatically be transferred to that other entity’s
section 457 eligible deferred compensation plan,to be credited to the
Participant’s account.
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.
SECTION 13:Notice Any notice or other communication required or permitted
under the Plan shall be in writing,and,if directed to the Employer (ATTN:Director of
Human Resources),shall be sent to the Employer at its principal office,and,if directed to
a Participant or a beneficiary,shall be sent to such Participant or beneficiary at his last-
known address as it appears on the Employer’s records.Such notice shall be deemed
given when mailed,unless notice is given in person,in which case such notice shall be
deemed given upon receipt.
SECTION 14:Amendment or Termination of Plan The Employer may,at any time,
terminate this Plan for all Participants.Upon such termination,the Participants in the Plan
shall be deemed to have withdrawn from the Plan as of the date of such termination;each
Participant’s full Salary on a non-deferred basis will be thereupon restored;and the
Employer agrees to pay each Participant the amount of money determined as if the
25
Participant had terminated his employment,said payment to be made in accordance with
the provisions of Section 10.2.
The Employer may also amend the provisions of this Plan at any time;provided,
however,that no amendment shall affect the rights of the Participants or their beneficiaries
to the receipt of payment of benefits,to the extent of any compensation already deferred
at the time of the amendment,as adjusted for investment experience prior to and
subsequent to the amendment.
SECTION 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 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
26
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.Distributions 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 shall not cause the then
outstanding balance of the Participant’s loan to exceed the maximum loan amount
described in Section 15.1 above.
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
absolute discretion,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
27
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.
The Employer hereby establishes,on the terms and conditions set forth above,the
Orange County Sanitation District Deferred Compensation Plan.
28