HomeMy WebLinkAboutOCSD 09-02 (REPEALED)RESOLUTION NO. OCSD 09-02
APPROVING A DEFERRED COMPENSATION PLAN WITH
ING FINANCIAL SERVICES FOR OFFICERS AND
EMPLOYEES OF ORANGE COUNTY SANITATION DISTRICT
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE
COUNTY SANITATION DISTRICT APPROVING A DEFERRED
COMPENSATION PLAN WITH ING FINANCIAL SERVICES FOR
OFFICERS AND EMPLOYEES OF ORANGE COUNTY SANITATION
DISTRICT; AND, REPEALING RESOLUTION NOS. OCSD 03-27 AND
05-27
WHEREAS, the Orange County Sanitation District Deferred Compensation Plan
was most recently amended by Resolution Nos. OCSD 03-27 and 05-27 adopted by the
District's Board of Directors on November 19, 2003, and November 16, 2005,
respectively;
WHEREAS, the assets in the Existing Plan, as amended, are currently held with
AIG Retirement Company, Lincoln Financial Group, and ICMA-RC;
WHEREAS, as the result of numerous legislative and regulatory changes
increasing the scope of the District's fiduciary responsibilities as an employer in the
administration of deferred compensation plans, OCSD requested proposals to act as
agents or advisors for the purpose of implementing and administering the District's
Deferred Compensation Plan;
WHEREAS, the Board of Directors desire to adopt a new deferred compensation
plan; and,
WHEREAS, the Board of Directors desire to have ING Financial Services
appointed to act as agents or advisors for the purpose of implementing and
administering the District's Deferred Compensation Plan.
NOW, THEREFORE, the Board of Directors of the Orange County Sanitation
District DOES HEREBY RESOLVE, DETERMINE AND ORDER:
Section 1. All of the recitals herein contained are true and correct and the
Board of Directors of the District so finds.
Section 2. The Orange County Sanitation District Deferred Compensation
Plan, as set forth in Exhibit "A," attached hereto and incorporated herein by reference as
though set forth herein at length, is hereby adopted, as the new Deferred Compensation
Plan of the District, superseding all previous plans and amendments of the District, and
621887.1
REPEALED BY
OCSD 16-18
shall remain in effect until amended or terminated by Resolution of the Board of
Directors.
Section 3. The District's General Manager, or his designee, is hereby
authorized to appoint or employ the services of ING Financial Services to act as agents
or advisors for the purpose of implementing and administering the District's Deferred
Compensation Plan .
Section 4. The District's General Manager, or his designee, is hereby
authorized to execute, on behalf of the District, any and all documents necessary to
effect the new Deferred Compensation Plan, with the approval as to form by the
District's General Counsel.
Section 5. Resolution Nos . OCSD 03-27 and 05-27 are hereby repealed.
Section 6. This Resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED at a regular meeting held on March 25, 2009.
ATTEST:
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ORANGE COUNTY SANITATION DISTRICT
457(b) DEFERRED COMPENSATION PLAN
ADMINISTRATIVE SERVICES AGREEMENT
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Orange County Sanitation District 457(b) Deferred Compensation Plan
TABLE OF CONTENTS
No table of contents entries found.SCHEDULE H: INVESTMENT ADVISORY
ACCESS AGREEMENT .................................................................................................. 39
APPENDIX 1 TO SCHEDULE H: DISCLSOURE STATEMENT FOR
INVESTMENT ADVISORY SERVICES ........................................... 45
SCHEDULE I: REIMBURSEMENT OF PLAN EXPENSES ........................................ 57
SCHEDULE J: CONTRACTOR’S PRIMARY CONTACT .......................................... 58
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ORANGE COUNTY SANITATION DISTRICT
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is made and entered into this 1st day of May, 2009, by and between
Orange County Sanitation District (the “Plan Sponsor”) on behalf of the Orange
County Sanitation District 457(b) Deferred Compensation Plan, (the “457 Plan”),
(unless specified otherwise, referred to herein as the “Plan”). ING Life Insurance and
Annuity Company (“ILIAC”), a corporation organized and existing under the laws of the
State of Connecticut and ING Financial Advisers, LLC a limited liability company
organized and existing under the laws of the State of Delaware and registered as a broker-
dealer under the federal securities laws (the “Broker-Dealer”). (ILIAC and the Broker-
Dealer are hereinafter collectively called the “Contractor”). This Agreement is separate
and apart from any other contract issued to the Plan, including any group annuity contract
or funding agreement issued to the Plan Sponsor by ILIAC.
RECITALS
WHEREAS, the 457 Plan has been established as an “eligible deferred
compensation plan” pursuant to Section 457(b) of the Internal Revenue Code (the “Code”)
and the laws of the State of California; and
WHEREAS, the Plan Sponsor has selected certain investment products offered or
otherwise made available by or through ILIAC or the Broker-Dealer, respectively, for the
investment of the Plan’s assets (the “Program”); and
WHEREAS, the Plan Sponsor further wishes to engage the Contractor as an
administrative service provider to facilitate the administration of the Plan by providing
services that shall include without limitation, accounting for deferrals or contributions,
disbursement of funds, withholding of taxes, investment education, retirement counseling,
investment of assets in the appropriate Plan investment options and proper recordkeeping
of participant accounts; and
WHEREAS, the Contractor wishes to provide such administrative services to the
Plan.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties do hereby agree as follows:
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Section 1. Services
1.01 Good Order: The Contractor and the Plan Sponsor acknowledge that for purposes
of this Agreement “Good Order” is defined as the receipt at the Contractor’s
designated location of instructions that are complete, accurate and in an acceptable
format, and which do not require the Contractor to apply any research or
discretionary judgment. To qualify as current business day instructions,
instructions sent by telephone, facsimile or mail must be received by us no later
than the close of the New York Stock Exchange (typically 4:00 p.m. ET).
1.02 Allocation of Contractor Responsibilities: The Broker-Dealer or other broker-
dealers with which ING Financial Advisers, LLC has a selling agreement shall
service or perform all marketing communications, enrollment and securities
transactions settlement and processing functions assigned to the Contractor. ILIAC
shall perform all other responsibilities assigned to the Contractor, including Plan
and participant recordkeeping.
1.03 Scope of Services: The Contractor agrees to provide the Plan with the services
listed on Schedule A for the term of this Agreement. Services offered pursuant to
the Plan’s loan program will be subject to the terms specified in Schedule B.
1.04 Administrative Requirements: The Contractor agrees to comply with the
requirements set forth on Schedule C in the performance of this Agreement. The
Contractor and the Plan Sponsor will review these administrative requirements
periodically and make adjustments as necessary and mutually agreed.
1.05 Performance Standards: The Contractor agrees to comply with the standards set
forth on Schedule D in the performance of this Agreement. At the Plan Sponsor’s
request, the Contractor shall report to the Plan Sponsor how it measures compared
to these performance standards. Any non-performance fee payable pursuant to the
terms of Schedule D shall be in addition to any damages or other remedies
available to the Plan, participants or the Plan Sponsor hereunder. The Contractor
and the Plan Sponsor will review these performance standards at the Plan
Sponsor’s request and make adjustments as necessary and mutually agreed.
1.06 Selection of Investment Options: The Contractor agrees to provide Plan
participants with a selection of investment options as specified in Schedule E.
1.07 Investment Provider Minimum Standards: Subject to the minimum standards set
forth in Schedule F, the Contractor will provide its administrative services in
connection with the Plan Sponsor’s selection of investment products to fund the
Plan’s non-stable value investment options.
1.08 Selection of Investment Options: The addition or removal of any investment
option to the Plan must be mutually agreed to by the Contractor and the Plan
Sponsor and will be made in accordance with a mutually agreed upon schedule for
implementing the change.
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(1) Subject to mutual agreement between the parties to add an investment
option;
(i) The Plan Sponsor may direct the Contractor to add an investment
option from the range of investment products the Contract currently
offers, and that are currently available in the Program, upon forty-
five (45) days written notice of the proposed change.
(ii) The Plan Sponsor may direct the Contractor to add an investment
option that the Contract does not currently offer or an investment
option that the Contractor currently offers but is not currently
available in the Program, upon at least ninety (90) days written
notice of the proposed change. Any investment option additions
made pursuant to this Subsection 1.07(1)(ii) will be made in
accordance with the Contractor’s scheduled quarterly fund updates.
(2) The Contractor reserves the right to reject any new investment option that
imposes short-term trading (redemption) fees on participant accounts.
(3) To the extent an existing investment option imposes short-term trading
(redemption) fees on Participant accounts, the Contractor reserves the right
to discontinue offering the investment option or to deduct any such short-
term trading (redemption) fees from participant accounts.
1.09 Limits Imposed by Underlying Funds: The Plan Sponsor understands and
acknowledges that orders for the purchase of fund shares may be subject to
acceptance by the fund. The Contractor reserves the right to reject, without prior
notice, any allocation of payments to the variable investment products, including
the NAV Funds, if the Contractor’s purchase order for the corresponding fund is
not acceptable by the fund for any reason.
1.10 Limits Imposed by Contractor on Frequent Transfers: The Plan Sponsor
understands and acknowledges that the investment products offered or otherwise
made available by or through the Contractor are not designed to serve as vehicles
for frequent trading in response to short-term fluctuations in the market. Such
frequent trading can disrupt management of a fund and raise its expenses. This in
turn can have an adverse effect on fund performance. Accordingly, the Plan
Sponsor agrees to adhere to the Contractor’s current Excessive Trading Policy, as
set forth in Schedule G (the “Excessive Trading Policy”). The Contractor reserves
the right to modify the Excessive Trading Policy in whole or in part at any time and
without prior notice, depending on the needs of the underlying fund(s), the best
interest of contractowners and fund investors, and/or state or federal regulatory
requirements.
1.11 Access to Investment Advice: The Contractor agrees to provide Plan participants
access to an independent third party online investment advice provider, as specified
in Schedule H.
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1.12 Access to Self Directed Brokerage Account: The Contractor agrees to make
available to Plan participants, a self directed brokerage account option (“SDBO”),
as specified in a separately signed agreement.
Section 2. Participant Information
2.01 Provision of Certain Participant Information: The Plan Sponsor or its authorized
representative shall facilitate the transmission to the Contractor of all current Plan
participant level records including, but not limited to: name; address; social
security number; active or terminated employment status; and deferral amount
information. Over the term of this Agreement, the Contractor and the Plan Sponsor
will develop procedures for the Plan Sponsor to notify the Contractor of changes in
employment status and, to the extent the Plan Sponsor has knowledge of the death
of any participant, the Plan Sponsor will notify the Contractor of such death. The
Plan Sponsor shall provide such information on a timely basis and use its best
efforts to assure the accuracy and completeness of all information provided to the
Contractor.
2.02 Changes in Deferral or Contribution Information; New Participant Deferral or
Contribution Information: The Contractor and the Plan Sponsor will develop
procedures to coordinate the processing of (i) changes in deferral or contribution
amount information and (ii) initial deferral or contribution information pertaining
to participants joining the Plan on or after the date the Contractor commences the
provision of services under this Agreement.
Section 3. Fees and Reimbursements
3.01 Contractor’s Compensation: The Contractor’s services under the Agreement are
rendered in connection with the Plan Sponsor’s selection of certain investment
products offered by or through the Contractor. The revenues paid to the Contractor
from such investment products shall constitute the sole source of compensation for
the services rendered and expenses incurred under this Agreement. The Contractor
shall not assess a daily fee against the value of all participant accounts allocated to
Plan investment options made available through direct purchases of registered
investment company shares.
Any fees, reimbursements, products and services rendered in connection with this
Agreement are contingent on the Contractor being the exclusive provider (with the
exception of any contractual obligations in existence prior to the transition to the
Contractor) of investment products and administrative services to the Plans during
the Term of this Agreement and any subsequent renewal periods (as described in
Section 4.01). The addition of any other provider or providers to the Plans during
the Term of this Agreement and any subsequent renewal periods or changes in the
Plan document may impact any fees, reimbursements, products and services under
this Agreement.
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This Agreement and fees are contingent on the Plan provisions in effect on the date
of this Agreement. Any amendment to the Plan may impact this Agreement and
fees.
3.02 Reimbursement of Plan Expenses: The Contractor shall reimburse the Plan for
reasonable administrative expenses as set forth in Schedule I.
3.03 Compensation Paid to Sales Professionals: The Contractor shall pay sales
professionals a flat salary. The compensation paid to sales professionals will be
derived exclusively from the Contractor’s revenue. Sales professionals may also be
eligible for additional expense reimbursement and bonuses based upon enrollment
goals. Compensation may also be paid at the time of participant election of an
annuitization distribution option and will be disclosed to the participant at the time
the distribution option is elected. Sales professionals are also eligible for
compensation derived from the sale of financial products outside of the Plan. The
Broker-Dealer will provide an annual report of this ancillary sales and support
activity to the Plan Sponsor.
Section 4. Term
4.01 Term: This Agreement shall commence on the Effective Date and continue for an
initial term of 5 years. Unless either Plan Sponsor or Contractor provides written
notice of intent to terminate this Agreement at least sixty (60) calendar days before
the end of the initial term, the Agreement shall automatically renew thereafter for
subsequent one-year terms; provided, however, that either Plan Sponsor or
Contractor may terminate the Agreement as of the last day of any such one-year
term by providing written notice of such termination at sixty (60) calendar days
prior to the effective date of the termination. The Plan Sponsor and Contractor may
mutually agree in writing to an earlier termination. This Agreement may be
amended in writing if agreed to by both parties.
4.02 Termination: Notwithstanding Section 4.01, either party may terminate this
Agreement at any time upon written notice “for cause”. For this purpose, “for
cause” shall mean: (1) failure of the other party to comply substantially with this
Agreement and attached schedules hereto which, when called to the attention of the
other party in writing has not been corrected within thirty (30) days; (2) the fraud or
embezzlement on the part of the other party or provider of investment advice; (3) if
the other party ceases to conduct business in the normal course, becomes insolvent,
makes a general assignment for the benefit of creditors, suffers or permits the
appointment of a receiver for its business or assets, or avails itself of, or becomes
subject to any proceeding under the Federal Bankruptcy Act or any other statute of
any state relating to insolvency or the protection of the rights of creditors; (4)
failure of the other party to pay any fees under this Agreement; or (5) if pursuant to
Section 1.07 the Plan Sponsor requests the addition or removal of an investment
option under the Plans, that is reasonably anticipated by the Contractor to result in a
reduction in revenues under the Plans and no mutual agreement is reached between
the parties on the recoupment of such lost revenues, the Contractor shall have the
right to terminate this Agreement.
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Section 5. General
5.01 Circumstances Excusing Performance: Neither the Plan Sponsor nor the
Contractor shall be liable to the other for any delays or damages or any failure to
act due, occasioned, or caused by reason of restrictions imposed by any
government or government agency, acts of God, strikes, labor disputes, action of
the elements, or causes beyond the control of the parties affected thereby.
5.02 Business Recovery Plan: The Contractor acknowledges that it has a Business
Recovery Plan in place for its computer environment, specifying steps to be taken
in the event of a disaster. The plan is built around a worst-case scenario involving
loss of the facility or loss of access to the facility. It is also adaptable to less severe
disasters. Generally, there are three phases to the Contractor’s Business Recovery
Plan:
Immediate response, damage assessment and critical notifications
Environmental and operation restoration
Operational readiness, testing and business resumption.
A critical part of this plan is the Contractor’s System Recovery Plan, which itself
has three components:
Hardware: the Contractor maintains a primary data center to support it mainframe
applications and a portion of its mid-range and Intel based distributed environment.
The Contractor has contracted with an outside vendor to provide hot site recovery
capabilities for the primary data center in case of a site level disaster. The vendor
maintains equipment that the Contractor will use to restore its applications in case
of emergency. In addition, the Contractor has several data centers located
throughout the U.S. with mid-range and distributed equipment to lessen the risk
from any one site. On-site generators and UPS systems provide continuous power
to the Contractor’s facilities. A fully redundant wide area network connects all of
the data centers in the U.S. as well as to the hot site vendor facility.
Application software: the Contractor secures program libraries, to tape cartridges
weekly, storing them in both on-site and off-site vaults.
Production data: the Contractor’s system and database files are backed up
periodically, many on a daily basis, to tape cartridges stored in both on-site and off-
site vaults.
The Contractor’s internal auditors have reviewed its disaster recovery procedures.
Portions of the plan are tested on an annual basis.
5.03 Ownership of Records: The Contractor agrees that all computer tapes, discs,
programs and any records generated by the Contractor under this Agreement shall
be the property of the Plan. In the event of the termination of this Agreement, the
Contractor shall provide all electronic and/or written data records to the Plan’s
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designated representative or to a new contractor in an agreed upon format at no cost
and within 180 days of written notice of intent to terminate this Agreement.
5.04 Parties Bound: This Agreement and the provisions thereof shall be binding upon
the respective parties and shall inure to the benefit of the same.
5.05 Applicable Law: This Agreement shall be construed in accordance with the laws of
the State of California. The Contractor and the Plan Sponsor shall comply with all
state and federal laws and regulations applicable to the services to be performed.
5.06 Severability: If any provision of this Agreement shall be found to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining
parts of this Agreement and the remainder of this Agreement shall be construed and
enforced as if said illegal or invalid provision had never been inserted herein.
Neither party shall be required to perform any services under this Agreement which
would violate any law, regulation or ruling.
5.07 Acknowledgment: The Plan Sponsor acknowledges that:
(a) the Contractor is performing non-discretionary, ministerial administrative
services at the direction of the Plan and it’s authorized representatives;
(b) the Plan Sponsor and its authorized representatives have sole authority for
making all benefit determinations. The Plan Sponsor may delegate the day-
to-day administration of initial benefit determinations to the Contractor as
indicated in Schedule A;
(c) the Plan Sponsor and its authorized representative have the sole authority
for the review and final disposition of a Plan Participant’s appeal of any
benefit determination made by the Contractor under the Plan;
(d) the Contractor does not directly provide any investment advice to the Plan
Sponsor with respect to the Plan’s assets, but the Contractor does perform
certain functions with respect to the selection of investment options, as
outlined in Section 1.08;
(e) in performing services under this Agreement, the Contractor is entitled to
rely on any information the Plan Sponsor, or it’s authorized representatives
or the Plan participants provide. The Contractor has a reasonable duty to
inquire as to the authenticity or the accuracy of such information or the
actual authority of such person to provide it; and
(f) The Plan Sponsor will promptly provide to the Contractor any proposed
amendments to the Plan for review and comment by the Contractor at least
90 days prior to the proposed amendment effective date.
5.08 Notices: Each party will promptly provide the other with notice and copy of any
attempts to levy or attach amounts held under the Plan and/or any litigation
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affecting the Plan of which it becomes aware and/or any notices or demands to be
given under this Agreement. All such notices, demands or other communications
hereunder shall be in writing and duly provided if sent certified mail, return receipt
requested, addressed to the party to be notified or upon whom a demand is being
made, at the addresses set forth in this Agreement or such other place as either
party shall from time to time designate in writing. The date of service of a notice
or demand shall be the receipt date on any certified mail receipt
Notices to the Contractor shall be sent to:
ING Life Insurance and Annuity Company
Attn: Associate General Counsel
Legal Department, C1S
One Orange Way
Windsor, CT 06095
Notices to the Plan Sponsor shall be sent to:
Kim Erickson
Senior Human Resources Analyst
Orange County Sanitation District Deferred Compensation Plan
10844 Ellis Avenue
Fountain Valley, CA 92708-7018
5.09 Copies of Agreement: This Agreement may be executed in any number of
counterpart copies, each of which when fully executed shall be considered as an
original.
5.10 Headings: Headings are for convenience of reference only. Headings do not limit
or expand the scope of the text and are not intended to emphasize any portion
thereof.
5.11 Independent Contractor: The Contractor is associated with the Plan Sponsor only
for the purposes and to the extent specified in this Agreement, with respect to the
performance of the contracted services pursuant to this Agreement, the Contractor
shall have the sole right to supervise, manage, operate, control and direct
performance of the details incident to its duties under this Agreement.
5.12 Contractor Primary Contact: The Contractor designates certain individual(s) to
serve as the primary point of contact for the Agreement. These individuals are
identified in Schedule J:
The Contractor or designee must confirm to Plan Sponsor its receipt of written
inquiries within two (2) business days and provide a full written response within
three (3) weeks. The Contractor shall not change the primary contact without prior
notice to the Plan Sponsor.
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5.13 Subcontracting: The Contractor agrees not to enter into any subcontracting
agreements for work contemplated under the Agreement without first obtaining
written approval from the Plan Sponsor. Any subcontractor shall be subject to the
same terms and conditions as the Contractor. The Contractor shall be fully
responsible for the performance of any subcontractor.
5.14 Contract Assignability: Without the prior written consent of the Plan Sponsor, the
Agreement is not assignable by the Contractor either in whole or in part.
5.15 Licenses and Permits: The Contractor shall ensure that it has all necessary licenses
and permits required by the laws of federal, state, and municipal laws, ordinances,
rules and regulations. The Contractor shall maintain these licenses and permits in
effect for the duration of this Agreement. The Contractor will notify the Plan
Sponsor immediately of loss or suspension of any such licenses and permits.
Failure to maintain a required license or permit may result in immediate
termination of this Agreement.
5.16 Conflict of Interest: The Contractor shall make all reasonable efforts to ensure that
no conflict of interest exists between its officers, employees, agents or
subcontractors and the Plan Sponsor. The Contractor shall make a reasonable
effort to prevent employees, consultants, or members of governing bodies from
using their positions for purposes that are, or give the appearance of being,
motivated by a desire for private gain for themselves or others such as those with
whom they have family, business, or other ties.
5.17 Improper Consideration: The Contractor shall not offer or be forced to provide
(either directly or through an intermediary) any improper consideration such as, but
not limited to, cash, discounts, services, the provision of travel or entertainment, or
any items of value to any officer, employee, group of employees, or agent of the
Plan Sponsor in an attempt to secure favorable treatment or consideration.
5.18 Indemnification: The Contractor agrees to indemnify and hold the Plan Sponsor, its
officers, employees and agents harmless from any loss, liability, claim, suit or
judgment resulting from work or acts done or omitted by the Contractor’s officers,
employees or agents in carrying out the Contractor’s responsibilities as set forth in
this Agreement to the proportionate extent that it results from the negligence or
wrongdoing of the Contractor or any of its officers, employees or agents. The
Contractor agreements to indemnify shall not extend to any injury or damage which
results from the Contractor’s reliance on information transmitted by the Plan
Sponsor.
The Plan Sponsor agrees to indemnify and hold the Contractor, its officers,
employees and agents harmless from any loss, liability, claim, suit or judgment
resulting from work or acts done or omitted by the Plan Sponsor’s officers,
employees or agents in carrying out the Plan Sponsor’s responsibilities as set forth
in this Agreement to the proportionate extent that it results from the negligence or
wrongdoing of the Plan Sponsor or any of its officers, employees or agents.
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5.19 Insurance: During the term of this Agreement, the Contractor shall maintain
Comprehensive General Liability insurance with limits of not less than one million
dollars, as well as automotive and Workers' Compensation insurance policies.
Also, the Contractor shall maintain Professional Liability in the amount of not less
than five million dollars. A Certificate of Insurance evidencing said coverage shall
be provided prior to commencement of performance of this Agreement.
Throughout the term of this Agreement, the Contractor shall provide upon request
an updated Certificate of Insurance upon expiration of the current Certificate.
5.20 Right to Monitor: The Plan Sponsor or any appointee thereof, shall have the right
to review and audit all records, books, documents, and other pertinent items as
requested, and shall have the right to monitor the performance of the Contractor in
the delivery of services provided under this Agreement. Full cooperation shall be
given by the Contractor in the implementation, and in any auditing or monitoring
conducted.
5.21 Confidentiality: The Contractor acknowledges that all information made available
by the Plan Sponsor about its employees shall be considered confidential. The
Contractor agrees that it will not distribute, disclose or release to any third party
any such confidential information except as may be necessary to the performance
of services hereunder either during or at any time after the term of the Agreement,
upon the prior written approval of the Plan Sponsor or as otherwise required by
law.
Section 6. RFP and RFP Response
6.01 RFP and RFP Response: Incorporation by Reference: Orange County Sanitation
District Request for Proposal dated August 4, 2008 and ILIAC’s responsive
proposal date September 10, 2008, as supplemented by ILIAC’s response to the
Finalist Interview: Issues and Questions dated October 24, 2008, as subsequently
signed by all parties, (collectively the “RFP Response”) are hereby incorporated by
reference and made a part of this Agreement. ILIAC agrees that it will comply
with all obligations undertaken in the RFP Response.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement (including all
referenced and attached Schedules and Appendices) to be executed by their respective
officers thereunto duly authorized as of the day and year first above written.
ORANGE COUNTY SANITATION ING LIFE INSURANCE AND
DISTRICT ANNUITY COMPANY
By: _____________________________ By: ______________________________
Printed Name:_____________________ Printed Name: _____________________
Title: ____________________________ Title: ____________________________
ING FINANCIAL ADVISERS, LLC
By:_______________________________
Printed Name:______________________
Title: _____________________________
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Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule A: Scope of Contractor Services
For purposes of this Schedule, all references to “participant” are intended to apply equally
to all account holders under the Plan. This includes participants, beneficiaries and
alternate payees.
1. The one-time preparation and implementation of a Plan-specific product and service
conversion or transition schedule which shall include notice to all Plan participants.
2. The initial installation of overall Plan records and individual Plan participant records.
3. The development of Plan enrollment materials.
4. Conducting introductory on-site education and enrollment meetings for employees.
5. Ongoing allocation of Plan contributions to individual participant accounts, and
reconciliation of Plan and participant activity on a daily basis.
6. Ongoing maintenance of participant beneficiary designations, including a solicitation
of current participant beneficiary designations, unless otherwise mutually agreed to.
7. Ongoing maintenance, recordkeeping of individual participant account records and
processing in a timely manner of all transactions permitted under the Plan as
authorized or approved by the Plan Sponsor. Any delegation of the Plan Sponsor’s
role of authorizing or approving transactions under the Plan to the Contractor will be
as directed later within this Schedule or other written instrument between the parties.
8. Ongoing provision to the Plan Sponsor of periodic Plan reports, as mutually agreed
to.
9. Ongoing provision of necessary tax forms on a timely basis to participants who
received taxable distributions during the previous year.
10. Ongoing provision of licensed representatives to perform enrollment and education
services, and to assist participants with account balance inquiries, investment
selection changes, interfund transfers or exchanges, and transaction initiation.
11. Ongoing provision of employee enrollment and education services, including the
provision of communication packages which includes the necessary information for
employees to enroll and make investment choices. Establish and maintain an
electronic interface with the Plan Sponsor for changes to the participant’s
contribution amount or rate, as proved in Appendix III to Schedule A.
12. Access to customer service representatives via a toll free telephone line to respond to
Plan participant inquiries, provide information about participants’ accounts and
investment options and to distribute administrative forms.
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13. Access to an automated voice response system via toll free telephone lines, through
which participants may obtain updated account and investment information and
initiate transactions permitted under the Plan.
14. Access to a customized internet site, through which participants may obtain updated
account and investment information, and initiate transactions permitted under the
Plan including electing a new contribution amount or rate and designating a
beneficiary(ies) under the Plan.
15. Incoming Rollovers / Transfers
Ongoing review and processing of participant-initiated incoming rollover or transfer
requests, on behalf of the Plan Sponsor, shall be based on mutually acceptable
procedures for the review, and processing of these types of requests. Incoming
rollover and transfer requests determined to be in Good Order will be processed on
the same business day as the assets are received by the Contractor.
At the Plan Sponsor’s direction, participants who have had a request denied shall be
given the opportunity to appeal to the Plan Sponsor for review and final disposition
of the determination.
16. Unforeseeable Emergency Withdrawal
Ongoing review and processing of participant unforeseeable emergency withdrawal
requests on behalf of the Plan Sponsor, based on the standard for the review,
qualification and processing of these withdrawals as provided in Appendix I to
Schedule A.
The Contractor will make a determination (approval / denial) within 5 business days
of receipt of the request, and supporting documentation, in Good Order. If the
request is approved, the request will be processed as of the date of favorable
determination; with payment being mailed or made available electronically through
ACH no later than 3 calendar days following the date of favorable determination.
The Contractor is responsible for IRS penalties associated with the improper administration of Unforeseeable Emergency withdrawals.
17. Domestic Relations Order Administration
Ongoing review and processing of Domestic Relations Orders (DRO) on behalf of
the Plan Sponsor, based on the standard for the review, qualification and processing
of DROs as provided in Appendix II to Schedule A.
The Contractor will make a determination within 5 business days of receipt of the
domestic relations order in Good Order. If the request is approved, the request will
be processed as of the date of favorable determination.
If the domestic relations order is not received in good order, the Contractor will work
with the respective parties until the order is presented in Good Order.
18. Benefit Payment Authorization
14
Ongoing review and processing of participant-initiated benefit payment requests
(including annuity payments and death benefits) due to participant’s separation from
service or death, on behalf of the Plan Sponsor, based on mutually acceptable
procedures for the review, qualification and processing of these requests. The Plan
Sponsor is responsible for providing the Contractor with any and all participant
termination data in the mutually agreed upon electronic format, within a reasonable
time period following the participant’s separation from service or death. The
Contractor may not make the applicable benefit payment request paperwork available
to the participant until the termination data is received from the Plan Sponsor in
Good Order.
Benefit payment requests are processed as of the date received in Good Order; with
payment being mailed or made available electronically through ACH.
At the Plan Sponsor’s direction, participants who have had a withdrawal request
denied shall be given the opportunity to appeal to the Plan Sponsor for a review and
final disposition of the benefit determination.
19. Access to counseling by licensed agents or representatives for Plan participants, who
are retiring or otherwise requesting a benefit payment from the Plan, based on
mutually acceptable standards.
20. Ongoing processing of Required Minimum Distributions (“RMD”) in accordance
with the rules of Code Section 401(a)(9) for eligible Plan participants and their
beneficiaries as follows:
(a) Participants: In the absence of an affirmative election or instructions received
in Good Order from the Participant on an annual basis for receiving the RMD,
the Contractor is directed by the Plan Sponsor, to calculate the RMD amount.
The Contractor shall calculate the RMD in the following manner.
i. For Participants with either (1) no beneficiary, (2) a non-spouse
beneficiary, (3) a spouse beneficiary without a date of birth, or (4) a
non-individual beneficiary (e.g., charitable organization), calculate
the current year RMD by dividing the account balance on 12/31 of
the prior year by the distribution period under the Uniform Lifetime
Table using the Participant’s age on 12/31 of the current year.
ii. For Participants with a spouse beneficiary more than 10 years
younger than the Participant, calculate the current year RMD by
dividing the account balance on 12/31 of the prior year by the
combined life expectancy factor under the Joint and Last Survivor
Table using the ages of the Participant and the spouse beneficiary on
12/31 of the current year.
(b) Beneficiary(ies): In the absence of an affirmative election or instructions
received in Good Order from the beneficiary (ies), the Plan Sponsor directs the
Contractor to calculate the RMD amount in accordance with Code Section
401(a)(9) provided the Contractor has received in Good Order proper
15
notification of the Participant’s death and complete beneficiary(ies)
information (including the complete name and address of the beneficiary(ies)).
In situations where the life expectancy rules are not available for the
calculation of the RMD either because the Contractor has not received the
requisite information by the date for issuing RMD payments or the beneficiary
is not entitled to receive RMD under the life expectancy rules, the Plan
Sponsor directs the Contractor to apply the five-year payout rule and force out
a lump sum by December 31st of the fifth year following the year of the
Participant’s death.
The Plan Sponsor acknowledges that the Contractor shall not be responsible for any
tax penalties or excise taxes the Plan Sponsor, Plan Participants, or beneficiaries may
incur as a result of the Contractor’s failure to calculate the RMD amount where the
failure is due to the Plan Sponsor’s, the Plan Participant’s or the beneficiaries’ failure
to provide the required information in a timely manner.
21. Ongoing facilitation of communications between the Contractor, the Plan Sponsor
and the Plan participants based on mutually acceptable guidelines.
16
Orange County Sanitation District 457(b) Deferred Compensation Plan
Appendix I to Schedule A:
Unforeseeable Emergency Withdrawal
Review and Approval Requirements
The Contractor is responsible for the ongoing review and processing of participant
unforeseeable emergency withdrawal requests on behalf of the Plan Sponsor. The
Contractor’s process is based on the following procedures for the review, qualification and
processing of these withdrawals under 457(b) deferred compensation plans.
To request an unforeseeable emergency withdrawal, a participant must complete the
relevant paperwork and provide the appropriate documentation to support the request.
The Contractor will review the request to determine whether it satisfies the IRS and Plan
requirements for an unforeseeable emergency. Specifically, an unforeseeable emergency
means extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the participant including:
• severe financial hardship of the participant resulting from an illness or accident of a
participant, the participant’s spouse or of a participant's dependent (as defined in
Code Section 152(a))*;
• loss of the participant’s property due to casualty (including the need to rebuild a home
following damage to a home not otherwise covered by homeowner’s insurance); or
• other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the participant.
*Effective in 2007, the Pension Protection Act of 2006 expanded this definition to include the participant’s
designated primary beneficiary.
In its evaluation, The Contractor will limit the withdrawal to the amount reasonably
necessary to satisfy the emergency need, which may include any amounts necessary to
pay Federal, state, or local income taxes or penalties reasonably anticipated to result from
the distribution. In addition, a withdrawal shall be allowed only to the extent that such
emergency is or may not be relieved through: 1) reimbursement or compensation from
insurance or otherwise; 2) liquidation of the participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship; or 3) cessation
of the participant’s deferrals under the Plan.
The determination of whether a request qualifies as an unforeseeable emergency will be
based on all the facts and circumstances of the participant’s specific situation. While it is
a subjective decision, the Contractor’s process incorporates three underlying principles:
consistent application of the IRS rules to similar situations; decisions must be reasonable
and not arbitrary; and when there is a close call, we err on the conservative side.
The Contractor takes this review process very seriously and understands the importance
of consistently administering the IRS and Plan requirements. The Contractor recognizes
that failure to do so, and thus treating the Plan like a savings account, can result in
adverse tax consequences to the participant and to the Plan.
Withdrawal requests will be reviewed in a timely manner. For requests which are
approved, The Contractor will process the withdrawal as of the date of the approval. A
17
participant, who has had a withdrawal request denied because of insufficient
documentation, can resubmit his or her request to the Contractor for re-review with all
applicable documentation.
A participant whose request has been denied after submission of all relevant
documentation has the opportunity to appeal the decision to the Plan Sponsor.
Appeals of Denied Requests
The Plan Sponsor is the final authority for review of any withdrawal requests which have
been denied by the Contractor.
• A participant desiring to appeal the Contractor’s decision must submit the appeal to
the Plan Sponsor or its designee within 30 days of receipt of the denied request. The
participant must document in a letter the reason he or she feels the request should be
reevaluated and why the circumstances quality as an unforeseeable emergency.
• Appeals must include all documentation submitted with the original request to the
Contractor; the Contractor’s determination letter and any additional supporting
documentation not previously submitted.
• The Plan Sponsor will review a participant’s request within 30 business days of the
date of receipt of an appeal request.
• In reviewing the original decision, the Plan Sponsor will review the specific facts and
circumstances of the participant’s situation, the Contractor’s analysis and the
applicable IRS and Plan requirements. The Plan Sponsor’s focus is on ensuring that
the Contractor’s decision was made in accordance with all of the IRS and Plan
guidelines, as summarized above. In its appeal review, the intent of the Plan Sponsor
is not to be more lenient than the law requires as this would jeopardize the favorable
tax treatment for the participant and the Plan.
• The Plan Sponsor or its designee shall provide written notification to the participant,
with a copy to the Contractor, as to whether its decision is to affirm the Contractor’s
original decision to deny the request, or reverse that decision and approve the
participant’s request.
• The Plan Sponsor’s decision shall be binding on the participant, and he or she shall
have no further ability to have the Plan Sponsor’s decision overturned.
18
Orange County Sanitation District 457(b) Deferred Compensation Plan
Appendix II to Schedule A:
Domestic Relation Order
Review and Approval Requirements
For a domestic relations order to meet the Contractor’s good order processing standards,
the order must meet the following requirements regardless of the type of plan. Certain
governmental plans are subject to less stringent requirements in the determination of
whether a domestic relations order is considered “qualified.” In addition, certain state
rules may be imposed on domestic relations orders by statute.
1. The order must be an original or a court-certified copy of the original, signed by the
judge or clerk of the court. A fax or a photocopy cannot be accepted in order to
meet Contractor’s good order standards.
2. The order must create or recognize the existence of an alternate payee’s right to, or
assigns to an alternate payee the right to, receive all or a portion of the benefits
payable with respect to a participant under the plan.
3. The order must constitute a judgment, decree or order (including approval of a
property settlement agreement) that relates to provisions of child support, alimony
payments or property rights to a spouse, former spouse, child or other dependent of
a participant, made pursuant to a state domestic relations law (including a
community property law).
4. The order must clearly and unambiguously name each plan to which the order
applies.
5. The order must clearly specify the name and last known mailing address of the
participant and each alternate payee covered by the order. (If the alternate payee is
a minor or is legally incompetent, the order must include the name and address of
the alternate payee’s legal representative.)
The order should identify the social security number and date of birth of the
participant and each alternate payee covered by the order. If State or local law
prevent the inclusion of such information in the court order, this data must be
provided to ING, in writing, by the party that drafts the court order, in order for
good order processing standards to be met.
6. The order must include the amount or percentage, or the manner in which the
amount or percentage is to be determined, of the participant’s benefits to be paid by
the plan to each alternate payee. The calculation of this amount must be very clear
and not subject to interpretation. If the amount ordered to be paid to the alternate
payee’s account is at all ambiguous, then the order cannot be accepted.
7. The order must be specific with respect to the dollar amount or percentage of the
participant’s benefit to which the alternate payee is entitled. The order must specify
the exact date as of which the account should be valued. Participant accounts are
19
valued each day the New York Stock Exchange is open under Contractor’s
processing standards.
8. The order must provide that the calculation of the amount of the participant’s
benefit to which the alternate payee is entitled to be readily calculable and
according to records currently available to the Contractor. Pursuant to this
requirement, the Contractor will not accept any order that requires calculations
prior to the time the Contractor began providing services to the plan, unless the
actual financial records necessary to make such calculation are provided to the
Contractor.
9. If the order specifies a dollar amount to be paid to the alternate payee, such amount
may not exceed the participant’s vested balance in the plan. Amounts payable to an
alternate payee shall be distributed proportionately from the participant’s account
with the Contractor. Account values fluctuate with market conditions, if the dollar
amount specified is above the current balance, the request may be rejected.
10. A plan may specify a date as of which QDROs are allowed under the plan (such as
orders dated after a specified date, e.g., January 1, 2002). Court orders which pre-
date the allowance of QDROs under the plan may not be accepted.
11. The order must not require the plan to provide any type or form of benefit, or any
option, not otherwise provided under the plan.
12. The order must not require the plan to provide increased benefits (determined on
the basis of actuarial value).
13. The order must not require any payment of benefits to an alternate payee that is
required to be paid to another person under any court order.
14. The order must not provide for tax treatment of the account other than as required
under federal law and regulations.
15. If earnings prior to the effective date are also to be segregated on behalf of the
alternate payee, the attorney representing the participant must provide the actual
financial records necessary to make such calculation, if such records are not
available to the Contractor.
When the Contractor receives a signed Domestic Relations Order (DRO), or is notified that
a legal action is pending in which a DRO will be sought, the Contractor will place an
administrative hold on the participant’s account. During this period, the participant will be
restricted from taking a distribution or loan until the QDRO has been processed.
20
Orange County Sanitation District 457(b) Deferred Compensation Plan
Appendix III to Schedule A:
Contribution Rate Change Service
This service allows participants to make contribution rate changes via the Contractor’s
Participant internet site. Please note it is your responsibility to notify ING of terminated
employees. Contribution rate changes are allowed in fractional percentages greater than 1
percent.
The Plan Sponsor elects to utilize the Contactor’s Contribution Rate Change
service in accordance with the following criteria (please check).
Minimum and Maximum Contribution Amount / Rate:
Pursuant to the Plan document, indicate the minimum and maximum contribution amount
or rate a participant can elect.
Employee elective deferral contributions Minimum _N/A $ Maximum _N/A $
Minimum _N/A % Maximum _N/A %
If applicable, indicate the maximum total contribution percentage allowed ___________%
If you have elected the Contribution Rate Change service feature, please provide the
minimum and maximum percentages in your plan:
Electronic File Delivery:
The Contractor will provide contribution rate reporting data through an automated process.
Please select one of the following delivery types (required):
Email: Contractor will send files to a specified recipient in an encrypted format
and access information will be provided Please provide the email address:
FTP (File Transfer Protocol): Contractor will send files via FTP. Please provide
the FTP delivery address, ID and password:
FTP Delivery Address: ftp://
FTP ID:
FTP Password:
Sponsor Web/Archive: Plan Sponsor will obtain reporting data though the
Contractor’s plan sponsor internet site.
The Contractor will send electronic contribution rate reporting data based on the
information selected above until a change is provided, in writing, by the Plan Sponsor.
Reporting Frequency:
The Contractor will provide the automated contribution rate reporting data on the
frequency that best meets the needs of the Plan Sponsor. Please select one of the following
delivery types (required):
21
Monthly (indicate preferred day):
Semi-Monthly (indicate preferred days):
Bi-weekly
Quarterly
Weekly
Semi-Annually
Please provide the first date the report is required. Future reports will be based on this date
and the frequency selected above (mm/dd/yyyy): 06/08/2009
22
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule B: Loan Program
Terms of Contractor’s Loan Program (“Loan Program”):
• Types of Loans Permitted – select all that apply.
General Purpose
Residential
• Maximum number of loans that may be outstanding at any time.
2 General Purpose
1 Residential
• Minimum Loan Amount - Indicate the minimum loan amount pursuant to this Loan
Program $1,000.00.
• Maximum Loan Amount - the maximum amount of a loan made pursuant to this
Loan Program shall be an amount which, when added to the outstanding balance of any
other loans to the participant from the Plan and any other qualified plan of the
Employer, does not exceed the lesser of:
(i) $50,000 reduced by the excess (if any) of
a) the highest outstanding balance of loans from the Plan to the participant
during the one year period ending on the day before the date on which
such loan is made, less
b) the outstanding balance of loans from the Plan to the participant on the
date on which such loan was made, or
(ii) one-half (1/2) of the present value of the non-forfeitable accrued benefit of
the participant under the Plan.
• For purposes of this limit, all plans of the Employer shall be considered one
plan, to the extent required by Section 72 of the Internal Revenue Code, and the
balance of all loans under any plan of the Employer under which the individual
participates must be aggregated in determining the maximum loan available
from the Plan. The Employer will be responsible for confirming the accuracy
of the loan amount available for participant and has an outstanding loan balance
with an Employer sponsored plan that is not administered by ING.
• All assets under the participant’s Account with the Contractor will be
considered in determining the maximum loan amount available.
• Loan fee shall be deducted from the participant’s total account balance before
determining the maximum loan amount available.
• Loan Interest Rate – the interest rate used for loans from your Plan must be
commensurate with interest rates currently charged by persons in the business of
lending money for loans which would be made under similar circumstances. Select one
of the following options:
The Contractor will set the loan interest rate on the first business day of each
calendar month following the month in which a change in the loan interest rate
index occurs. Changes to the loan rate will be applicable to loans issued on or after
the first business day of the month following the month in which the rate is
23
changed. The index for establishing the loan interest rate for the Plan is as follows.
Select one of the following options:
The Prime Interest Rate published in the Wall Street Journal on the last
business day of any month.
Moody's Corporate Bond Yield Average – Monthly Average Corporates, as
published by Moody's Investors Service, Inc. on the last business day of any
month.
The following adjustment factor is to be added to the indexed interest rate for loans
issued under the Plan. Select one of the following options.
No adjustment
0.5% (one-half percent)
1.0% (one percent)
1.5% (one and one-half percent)
2% (two percent)
2.5% (two and one-half percent)
Other (specify)* ______________________________________________
* Subject to the Contractor’s underwriting review and approval.
Plan Sponsor will set, and provide the Contractor with, the loan interest rate. If the
Plan Sponsor fails to submit an update, the Contractor will administer loans in
accordance with the latest interest rate provided by the Plan Sponsor. Select one
frequency.
Monthly
Quarterly
Semi-Annually
Annually
• Loan Repayment Frequency - The loan repayment frequency will be used to
amortize the loan and calculate loan repayments. Select only one frequency.
Monthly
Semimonthly
Biweekly
Weekly – Additional fees may apply
• Prepayment - Prepayment of the full loan amount will be allowed at any time, without
penalty. One partial loan prepayment is permitted for each outstanding loan.
• Maximum loan repayment period
General Purpose 60 months (maximum of 60 months.)
Residential 240 months (maximum of 240 months.)
• Investment of Loan Repayments - Loan repayments will be allocated in accordance
with the participant’s current contribution investment allocation instructions on the
date a loan repayment is received in good order.
• Loan Default Restrictions - If the participant defaults on any loan under the Plan, the
participant shall not be allowed to initiate another loan of that type under the Plan until
the defaulted amount is repaid.
• Loan Fee - The Contractor shall charge a one-time fee to the Participant at the time of
loan for services rendered under this Loan Program, in the amount of $100 per loan.
24
• Money Source Withdrawal Sequence – A withdrawal or liquidation sequence for
money sources available to fund a loan must be identified. Omit from the sequence the
money-sources that are not available to fund a loan. The default sequence for a
governmental 457(b) plan is shown below – if no changes are made, this is the
withdrawal sequence that will apply to loans issued under the Plan.
1st Employee Elective Deferrals
2nd Rollovers from another 457 Plan
3rd Rollovers from a 401 or 403(b) Plan or IRA
Other (Please specify)
Other (Please specify)
• Fund Withdrawal Sequence – money will be withdrawn from participant investment
options on a pro-rata basis.
• Spousal Consent – indicate if spousal consent is required for loans from the Plan
Yes
No
• Loan Authorization – indicate who will be responsible for authorizing loan
disbursements. Select one of the following options:
Authorized Plan Sponsor representative
the Contractor, based on the loan provisions of the Internal Revenue Code Section
72(p), corresponding regulations and terms of the Loan Program as identified in this
Schedule.
• Paperless Loan Processing – This is an optional service that allows Plan participants
to initiate general purpose loans through a toll-free customer service line and receive a
check directly from the Contractor without completing loan request paperwork. The
loan provisions (Promissory Note and Truth and Lending Disclosure) are included on
the check remittance. By endorsing the check, the participant accepts the terms of the
loan.
Paperless loan processing service is not available if the Plan requires additional
qualifying criteria for loans (e.g., hardships or unforeseeable emergency) or if the Plan
requires spousal consent for loan requests. This service is not available for residential
loan requests.
Select one of the following options:
Not applicable
Applicable
• Loan Request Notification – The Contractor will provide the Plan Sponsor with a
daily report, accessible from the internet, of those Plan participants that have request a
loan package from the Contractor within the previous 90 days.
• Loan Monitoring – select one of the following options:
Quarterly loan monitoring by the Contractor – the loan default process will occur
only on four specific days per year, i.e., the last business days of each calendar
quarter. This schedule allows us to more effectively monitor and take action on
loans that risk default. If you elect this option, you agree that the grace period on all
existing and future loans will be the last business day of the calendar quarter
following the calendar quarter in which the loan repayment was due. You also
25
agree to have the Contractor actively monitor and alert participants of potential loan
defaults and defaulted loans.
Ongoing loan monitoring by the Plan Sponsor – If you elect this option, you agree
to monitor loans and direct the Contractor on actions to be taken regarding missed
loan payments. It is your responsibility to notify the Contractor when a loan is to be
defaulted. It is your responsibility to alert participants of potential loan defaults and
defaulted loans. The grace period to be used to administer all existing and future
loans will be as noted below. Select one of the following options.
months (cannot extend beyond the end of the quarter following the
quarter the loan payment was missed.)
The end of the quarter following the quarter the loan payment was missed.
• Trust Requirement - Loans extended under this Loan Program will be held in trust by
ING National Trust.
Plan Sponsor Responsibilities:
• Ensure the Plan document and any applicable state/local law allows for loans to be
administered in accordance with the terms of this Loan Program.
• The Plan Sponsor will inform the Contractor of the any change to the provisions of the
Loan Program (and thus the criteria for approving loans under the Plan) as identified in
this Schedule.
• Notify the Contractor of any participant with an outstanding loan who begins a leave of
absence, either bona fide (for a period of not more than one year) or due to uniformed
service (military duty) and for whom suspension of loan repayments will apply.
Contractor Responsibilities:
• The Contractor will set the interest rate to apply to loans issued under the Plan. Such
rate will be determined monthly for new loans. A loan will be processed using the rate
in effect when the loan request package is sent to the Participant. The loan request
package and interest rate will be valid for a maximum of 30 days. The Contractor will
reset the loan interest rate as indicated in the Loan Interest Rate section above. The rate
will apply for the duration of the loan.
• Process loans from a participant’s account in accordance with the terms of the Loan
Program and the loan request package.
• Deduct the loan amount from the participant’s account based on the Money Source
Withdrawal Sequence selected above, on a pro-rata basis across all current investment
options within the participants account or such other method as agreed upon between
Contractor and the participant.
• Furnish quarterly reports to the Plan Sponsor showing participant loan activity.
• Furnish participants with quarterly account statements, reflecting loan activity since the
prior statement date.
• Process loan repayments made by directly by participants to the Contractor. Contractor
will accept checks and, upon completion of the Contractor’s scheduled development,
payments via Automated Clearing House (ACH).
26
• Upon notice from Plan Sponsor that a participant with an outstanding loan is on a
qualifying leave of absence, loan repayments may be suspended for the maximum
period permitted under IRS rules. Currently, IRS rules permit loan repayments to be
suspended in the following circumstances:
• A participant on a bona fide leave may suspend payments for up to one year if the
pay received by the participant during this period is less than the amount of the
installment payments required under the terms of the loan. However, the loan
must still be repaid by the end of the loan term (i.e., the period of suspension will
be less than one year if the loan was within one year of the final payment due date
when the leave began).
• A participant on a leave of absence due to performance of the uniformed services
(as described under Internal Revenue Code Section 414(u)), may elect to suspend
loan repayments for the period of uniformed service. In this situation, upon the
participant’s return from uniformed service, the loan repayment period will be
extended by a period equal to the length of the uniformed service.
• The Contractor will monitor loan repayments and perform default processing if a
scheduled loan repayment is not received by the end of the grace period allowed for
payment as defined in the Promissory Note and Security Agreement. Should this occur,
the entire loan will be in default. At the beginning of each calendar quarter, we will
generate a warning letter to any participant who has missed a loan repayment in the
previous quarter. The letter will describe the implications of missing a loan repayment
and the date on which the loan will be defaulted unless a repayment prior to the end of
the grace period. At the same time, we will generate loan reports noted below and
include them in the package of sponsor reports mailed on a quarterly basis.
• Report of all loans and loan repayments during the previous quarter.
• Report of all defaulted loans during the previous quarter.
• Report of all loans for which a repayment was missed during the previous calendar
quarter. These loans are potential defaults for the end of the upcoming calendar
quarter. The report would represent a list of all the letters sent to participants
who missed a loan repayment during the previous quarter.
One month prior to the end of each calendar quarter, we will mail warning letters to
participants who have missed a loan repayment in the preceding calendar quarter. The
letter would again explain the implications of a missed loan repayment.
On the last business day of the calendar quarter we will default any loan in which the
grace period expires that day. A confirmation letter will be sent to participants for
whom a loan default is processed.
• Compute and withhold federal and state income taxes, as required by law, for loan
defaults or withdrawals from the Plan in order to repay outstanding loan amounts in
full, in accordance with the Internal Revenue Code and applicable guidance. The
Contractor will forward, within the applicable time limit, the appropriate information
return reflecting the amount of the defaulted loan disbursement and taxes withheld to
the appropriate taxing authority and to the participant.
27
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule C: Administrative Requirements
For purposes of this Schedule, all references to “participant” are intended to apply equally
to all account holders under the Plan. This includes participants, beneficiaries and
alternate payees.
1. Participant account statements and Plan Sponsor reports shall reflect accurate
information with regard to contributions, allocations, earnings and withdrawals.
2. Under normal circumstances and unless otherwise authorized by the Plan Sponsor;
participant quarterly statements shall be mailed within 10 business days of the end of
a calendar quarter.
3. Information on payout options, including a notice which satisfies the requirements of
Internal Revenue Code Section 402(f), will be made available to participants through
the internet or a toll free telephone number. Additionally, upon a terminated
Participant’s request, a licensed representative will provide to the Participant
education and assistance on the available payout options.
4. Contributions determined to be in Good Order on any day that the New York Stock
Exchange is open (a "Business Day"), and prior to the close of the exchange, shall be
applied to the appropriate account on that day's close of business of the New York
Stock Exchange. Contributions received at any other time will be applied to the
appropriate account on the next succeeding Business Day. Written confirmation of
receipt and deposit will be provided to the Plan Sponsor or its designee by mail. The
Contractor shall notify the Plan Sponsor or its designee by telephone within two
business days of discovery of transactions received not in Good Order. If after 5
business days, transactions remain not in Good Order, the Contractor will require the
Plan Sponsor to provide written consent for the Contractor to continue holding the
amount of the contributions related to the not in Good Order transactions in a non-
interest bearing suspense account. If after 14 business days, the transactions remain
not in Good Order, the amount of the contributions received not in Good Order will
be refunded to the Plan Sponsor.
5. All correspondence and marketing materials written specifically for the Plan
Sponsor, the Plan participants and the Plan Sponsor’s employees shall be provided to
the Plan Sponsor or its designee for approval prior to the scheduled date of
publication or distribution.
6. A calendar year-end report shall be delivered to the Plan Sponsor, by March 31st of
the following year. Such report shall be prepared for the Plan and shall include:
Investment Performance;
° Asset Allocation by Investment Option;
° Investment Option Summary by Asset Class;
28
° Asset Distribution by Participants Age;
° Historical Assets;
° Contributions/Deferrals by Asset Class;
° Contributions/Deferrals by Investment Option;
° Historical Contributions/Deferrals;
° Investment Diversification;
° Participant Demographics (Age & Gender);
° Participation Levels;
° Participant Service Utilization;
° Communication Update
29
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule D: Performance Standards
10.1. Transition Services (period from formal approval to fund transition)
A. Pre-Transition Services Standard: Assure attendance at
finalist meetings by representatives who will provide
direct transition and ongoing services.
Date: Finalist Meeting
Guarantee: N/A
Will meet
Unable to meet
Will exceed
B. Standard: Answer phone calls from employer contact
designee within 24 hours and propose method of
measuring standard.
Date: Transition Period.
Guarantee: $100 per incident for failure to return phone calls
from employer contact designee within 24 hours.
Will meet
Unable to meet
Will exceed
C. Standard: Provide draft, customized contract
(incorporating agreed-upon, proposed services).
Date: 30 Days after formal approval by OCSD.
Guarantee: $1,000.
Will meet
Unable to meet
Will exceed
D. Standard: Respond, in writing with a copy to the
employer, to phone or in-person complaints within 5
business days.
Date: Transition Period.
Guarantee: $100 per incident of failure to respond to
complaint within specified time.
Will meet
Unable to meet
Will exceed
E. Standard: Comply with Sarbanes-Oxley Act
requirements regarding notification of blackout period.
Date: Transition period.
Guarantee: $1,000 plus the equivalent of any penalties that
would be assessed.
Will meet
Unable to meet
Will exceed
F. Standard: Finalize and publish performance standards
and guarantees.
Date: Provide final copy to employer within 30 days of being
selected by employer.
Guarantee: $500
Will meet
Unable to meet
Will exceed
G. Standard: Provided agreed upon training to employees
and retirees within transition period.
Date: Transition period.
Guarantee: $1,000
Will meet
Unable to meet
Will exceed
10.2. Transition Exit (period from notification of non-renewal to fund transition)
A. Standard: Upon termination, provide: 1) last four
quarters of transaction reports, 2) current account
balances, 3) past 12 months distribution and deferral
information and 4) loan or other outstanding payment
amounts.
Date: Within 30 business days after termination, provide report
on disk, tape or internet.
Guarantee: $1,000 for initial failure to provide and $500 per
day thereafter.
Will meet
Unable to meet
Will exceed
B. Standard: Upon termination, provide information as
described in Section 8 on disk, tape or internet.
Date: Within 30 days of request.
Will meet
Unable to meet
Will exceed
30
Guarantee: $1,000 on failure to provide information within
timeframe.
10.3. Customer Services
A. Standard: Telephone calls to service center(s) will be
answered within 90 seconds 90% of the time. (Propose
method of measuring standard).
Date: Transition Period.
Date: Quarterly summary / review due before the end of the
month following the quarter.
Guarantee: $1,000 per year for failure to meet annual,
calendar year average.
Will meet
Unable to meet
Will exceed
B. Standard: Participant statements will be mailed within
10 business days after quarter-end.
Date: Quarterly.
Guarantee: $5 per participant per quarter for each statement
postmarked after 10 business days.
Will meet
Unable to meet
Will exceed
C. Standard: Finalize customized web within parameters
specified in 5.2B site providing hot link between
employer and provider websites and draft participant
communication advertising site content and way to
access.
Date: Due 60 days after implementation.
Guarantee: $500 for failure to provide live web site and
participant announcement by end of 3rd month after
implementation.
Will meet
Unable to meet
Will exceed
D. Standard: Process investment fund transfers,
contribution reconciliation and posting within one
business day and propose method of measuring
standard.
Date: Annual report due 31 days after each 12 month period
from fund transition.
Guarantee: Maximum $1,000 for failure to meet agreed-upon
standard.
Will meet
Unable to meet
Will exceed
E. Standard: Process hardship distributions, rollover
requests, in-service distributions, retiree distribution
requests within 5 working days of acceptable
documentation and propose method of measuring
standard.
Date: Annual summary of performance by provider.
Guarantee: $1,000 annually for failure to meet standard in
90% of actions.
Will meet
Unable to meet
Will exceed
F. Standard: Review plan documents for legal, legislative
compliance, identify policy issues between employer
and provider and summarize, in writing, any
recommended changes to documents.
Date: Within 180 days of fund transition and annually
thereafter.
Guarantee: $500 for failure to provide each written summary.
Will meet
Unable to meet
Will exceed
G. Standard: Review investment policy and summarize, in
writing, any recommended changes.
Date: Annually with fund evaluation results.
Guarantee: $500 for failure to provide review / summary
within specified timeframe.
Will meet
Unable to meet
Will exceed
H. Standard: Provide written proposal of services and draft
plan for ongoing participant communication utilizing
Will meet
Unable to meet
31
internet educational resources (e.g. internet or
computer based training).
Date: Within 180 days of fund transition.
Guarantee: $500 for failure to provide proposal within
timeframe.
Will exceed
10.4 Reports
A. Standard: Provide written summary of Quarterly
Reports (as described in Section 7.2) to employer.
Date: Mailed within 30 days of quarter-end.
Guarantee: $500 per failure to provide reports by specified
date.
Will meet
Unable to meet
Will exceed
B. Standard: Provide written draft proposal for
recommended reports that will be available to employer
online (internet) including proposed access protocols.
Date: Within 90 days of fund transition.
Guarantee: $500 for failure to provide written draft proposal
within specified time.
Will meet
Unable to meet
Will exceed
C. Standard: Provide written Plan / Participant
Enhancement Services (as described in Section 7.5) to
employer.
Date: Annual Summary at time of Investment Review.
Guarantee: $1,000 per month for failure to provide written
report within specified time.
Will meet
Unable to meet
Will exceed
D. Standard: Conduct training of employer-designated
personnel on access to online reports and use of
reporting capability.
Date: Within 120 days of fund transition
Guarantee: $500 for failure to provide training within specified
time.
Will meet
Unable to meet
Will exceed
10.5. Surveys
A. Standard: Draft survey.
Date: Draft due by end of 4th month after implementation.
Guarantee: $500 if failure to provide draft survey.
Will meet
Unable to meet
Will exceed
B. Standard: Distribute survey to all plan participants.
Date: Distribution by end of 6th month after implementation.
Guarantee: $500 if failure to mail 30 days from date of final
agreed upon survey content.
Will meet
Unable to meet
Will exceed
C. Standard: Analyze survey results, provide executive
summary and recommended actions.
Date: Complete by end of 8th month after implementation.
Guarantee: $1,000 if Executive Summary and Recommended
Actions is not provided within timeframe.
Will meet
Unable to meet
Will exceed
D. Standard: Repeat survey process steps described above
for surveys at 24 and 36 months after implementation.
Date: Executive Summary and Recommended Actions due by
end of 24th and 36th month after implementation.
Guarantee: $1,000 for failure to provide Executive Summary
and Recommended Actions by 24th and 36th month.
Will meet
Unable to meet
Will exceed
E. Standard: Survey results will average Satisfactory or
Above and will be incorporated into Executive Summary
and Recommended Actions document.
Date: Due by 8th, 24th and 36th month after implementation
Guarantee: $1,000 for any survey results that fail to meet
Satisfactory or Above
Will meet
Unable to meet
Will exceed
32
10.6. Educational Services
A. Standard: Provide training to all decision-makers and
administrative staff on 404(c) requirements.
Date: 90 after fund transition.
Guarantee: $500 for failure to provide on-site training within
timeframe.
Will meet
Unable to meet
Will exceed
B. Standard: Propose and schedule first year on-site
training sessions and content of training for decision-
makers and administrative personnel.
Date: Proposal within 90 after fund transition and educational
programs quarterly thereafter.
Guarantee: $500 for failure to provide proposed training and
$500 for failure to provide four training sessions in any year of
contract.
Will meet
Unable to meet
Will exceed
C. Standard: Develop and schedule new decision-maker
training for employer identified new Committee
members or administrative staff.
Date: Provide half-day on-site training for identified new
personnel within 30 days of notification by OCSD.
Guarantee: $500 for failure to provide training within specified
timeframe.
Will meet
Unable to meet
Will exceed
D. Standard: After implementation, provide mutually
agreeable number of educational seminars annually to
participants.
Date: Within 90 days after fund transition.
Guarantee: $1,000 for failure to provide agreed-upon number
of onsite group seminars.
Will meet
Unable to meet
Will exceed
E. Standard: After implementation, provide newsletters to
plan participants regarding plan benefits / issues.
Date: Quarterly.
Guarantee: Annual $500 penalty for failure to provider
quarterly newsletters
Will meet
Unable to meet
Will exceed
F. Standard: Provide representative on site for mutually
agreeable number of days per month to meet with plan
participants.
Date: Monthly.
Guarantee: $1,000 per year in agreed-upon number of days is
not provided for 3 or more months.
Will meet
Unable to meet
Will exceed
G. Standard: Provide draft PowerPoint and / or other
communication material for transition specifically
proposed for group meetings separated for employees /
retirees.
Date: 30 Days after formal approval.
Guarantee: $500 for initial failure to provide within 30 days
after formal approval and $500 per day thereafter.
Will meet
Unable to meet
Will exceed
H. Standard: Draft communication to plan participants
describing investment advice services and access.
Date: Within 60 days of fund transition.
Guarantee: $500 for initial failure to provide within 60 days
after formal approval and $500 per day thereafter.
Will meet
Unable to meet
Will exceed
I. Standard: Recommend, in writing, steps provider and
employer may take to communicate and coordinate
information regarding defined benefits offered through
the employer and available fund options.
Date: Within 180 days of fund transition.
Will meet
Unable to meet
Will exceed
33
Guarantee: $1,000 for failure to provide within specified time.
J. Standard: Provide one half-day session per quarter to
employer decision-making and administrative
personnel on mutually agreeable topics.
Date: Quarterly.
Guarantee: $250 per quarter if education sessions are not
provided.
Will meet
Unable to meet
Will exceed
10.7. Miscellaneous Performance Standards / Guarantees
A. Standard: Provide web site copy listing final agreed-
upon Performance Standards / Guarantees.
Date: Implementation Date and 30 days after any mutually
agreed-upon revisions.
Guarantee: $500 for each failure to provide web-ready
document to employer.
Will meet
Unable to meet
Will exceed
B. Standard: Provide agreed upon number of written
copies of final agreed-upon Performance Standards /
Guarantees to employer for distribution.
Date: Implementation Date and 30 days after any mutually
agreed-upon revisions.
Guarantee: $500 for each failure to provide specified number
of copies of final agreed-upon Performance Standards /
Guarantees.
Will meet
Unable to meet
Will exceed
C. Standard: Provide annual written summary of all
Performance Standards / Guarantees categories and
results to employer and as a web document for
communication to plan participants.
Date: 30 days after annual anniversary of implementation.
Guarantee: $1,000 for failure to provide web-ready document
within specified timeframe.
Will meet
Unable to meet
Will exceed
D. Standard: Recommend, in writing, to employer any
modifications / enhancements to Performance
Standards / Guarantees.
Date: 30 days after annual anniversary of implementation.
Guarantee: $1,000 for failure to provide written
recommendations.
Will meet
Unable to meet
Will exceed
E. Standard: Encrypt all laptops and remote computers
carrying District participant information and provide
written quarterly reports on any compromise of data
that occurs.
Date: Immediate notification of any data compromise (within
24 hours of provider knowledge of compromise) and quarterly
written reports.
Guarantee: $100 for each participant information
compromised and/or $1,000 for each quarter in which report
not provided.
Will meet
Unable to meet
Will exceed
34
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule E: Plan Investment Options
Stability of Principal
9958 ING Stable Value Option
0167 ING Money Market Fund - Class I
Bond
2540 Loomis Sayles Investment Grade Bond Fund - Class A
1500 Pioneer Global High Yield Fund - Class Y
1451 Oppenheimer International Bond Fund - Class Y
Asset Allocation / Target Date
2199 LIVESTRONG 2015 Portfolio from American Century Investments® - Inv Class
2200 LIVESTRONG 2025 Portfolio from American Century Investments® - Inv Class
2201 LIVESTRONG 2035 Portfolio from American Century Investments® - Inv Class
2202 LIVESTRONG 2045 Portfolio from American Century Investments® - Inv Class
2203 LIVESTRONG Income Portfolio from American Century Investments® - Inv Cl
Balanced
0788 ING T. Rowe Price Capital Appreciation Portfolio - Service Class
Large Blend / Value / Growth
2539 Eaton Vance Dividend Builder - Class A
1404 Vanguard® 500 Index Fund - SignalTM Shares
2534 Blackrock Equity Dividend - Class A
1355 Allianz NFJ Dividend Value Fund - Class A
0215 Janus Adviser Series Forty Fund - Class S
0572 The Growth Fund of America® - Class R-4
Mid-Cap Blend / Growth / Value
1599 Fidelity® Advisor Leveraged Company Stock Fund - Institutional Class
1576 Vanguard® Mid-Cap Index Fund - Investor Shares
1607 Fidelity® VIP Mid Cap Portfolio - Service Class 2
2028 RiverSource® Mid Cap Value Fund - Class R4
Small Blend / Growth / Value
1312 Keeley Small Cap Value Fund
1519 Vanguard® Small-Cap Index Fund - Investor Shares
1571 Royce Value Plus Fund - Investment Class
0275 Allianz NFJ Small-Cap Value Fund - Class A
Global / International
1308 ING Global Real Estate Fund - Class I
1004 Capital World Growth and Income FundSM - Class R-4
2538 Allianz NFJ International Value Fund - Class A
0936 Lazard Emerging Markets Equity Portfolio - Open Shares
35
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule F: Investment Provider Minimum Standards Disclosure Statement
The following items summarize the minimum administrative requirements
required in order for the Contractor to transact with an investment provider on
the Plan’s behalf:
1. Pricing Deadlines: The investment provider must furnish the Contractor
with confirmed net asset value information as of the close of trading
(generally 4:00 p.m., Eastern Time) on the New York Stock Exchange
(“Close of Trading”) on each business day that the New York Stock
Exchange is open for business (“Business Day”) or at such other time as
the net asset value of the fund is calculated as disclosed in the relevant
then current prospectus(es) in a format that includes (i) the fund’s name
and the change from the last calculated net asset value, (ii) dividend and
capital gains information as it arises, and (iii) in the case of a fixed
income fund, the daily accrual or the distribution rate factor. Such
information shall be provided to the Contractor by 6:30 p.m. Eastern
Time. “Net” means after all management, service and administrative
expenses are deducted.
2. Pricing Error Reimbursements: The investment provider shall agree to
hold the Plan harmless for any amounts erroneously credited to
participant accounts due to (i) an incorrect calculation of the fund’s
daily net asset value (“NAV”), dividend rate, or capital gains
distribution rate or (ii) incorrect or late reporting of the daily net asset
value, dividend rate, or capital gains distribution rate of a fund, by
reimbursing the Contractor, on the Plan’s behalf. In addition, the fund
shall be liable to the Contractor for systems and out of pocket costs
incurred by the Contractor in making the Plan’s or the participant’s
account whole, if such costs or expenses are a result of the fund’s failure
to provide timely or correct net asset values, dividend and capital gains
or financial information and if such information is not corrected by 4:00
p.m. Eastern Time of the next Business Day after releasing such
incorrect information provided the incorrect NAV as well as the correct
NAV for each day that the error occurred is provided. If a mistake is
caused in supplying such information, which results in a reconciliation
with incorrect information, the amount required to make a Plan’s or a
Participant’s account whole shall be borne by the investment provider
providing the incorrect information, regardless of when the error is
corrected.
3. Sales Literature: The investment provider will provide to the Contractor
at least one complete copy of all prospectuses, statements of additional
information, annual and semiannual reports and proxy statements, other
related documents, and all amendments or supplements to any of the
above documents that relate to the fund promptly after the filing of such
document with the SEC or other regulatory authorities. The investment
36
provider agrees to provide to the Contractor, in electronic format,
performance updates and portfolio updates for the fund within 10
business days after the end of each calendar quarter.
4. Advertising: Advertising and literature with respect to the fund
prepared by the Contractor for use in marketing shares of the fund to the
Plan shall be submitted to the investment provider for review and
approval before such material is used with the Plan. The investment
provider shall advise the Contractor in writing within three (3) Business
Days of receipt of such materials of its approval or disapproval of such
materials.
5. Expense Reimbursement: The investment provider shall make available
for reimbursement certain out-of-pocket expenses the Contractor incurs
in connection with providing shareholder services to the Plan. These
expenses include actual postage paid by the Contractor in connection
with mailing updated prospectuses, supplements and financial reports to
participants, and all costs incurred by the Contractor associated with
proxies for the fund, including proxy preparation, group authorization
letters, programming for tabulation and necessary materials (including
postage).
6. Excessive Trading: The investment provider shall use its best efforts
and shall reasonably cooperate with the Contractor to generally prevent
any market timing and frequent trading activity under the Plan. See the
ING “Excessive Trading” Policy, Attachment I.
37
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule G: ING Excessive Trading Policy
The ING family of insurance companies (“ING”), as providers of multi-fund variable
insurance and retirement products, has adopted this Excessive Trading Policy to respond to
the demands of the various fund families which make their funds available through our
variable insurance and retirement products to restrict excessive fund trading activity and to
ensure compliance with Section 22c-2 of the Investment Company Act of 1940, as
amended. ING’s current definition of Excessive Trading and our policy with respect to
such trading activity is outlined below.
1. ING actively monitors fund transfer and reallocation activity within its variable
insurance and retirement products to identify Excessive Trading.
ING currently defines Excessive Trading as:
a. More than one purchase and sale of the same fund (including money market
funds) within a 60 calendar day period (hereinafter, a purchase and sale of the
same fund is referred to as a “round-trip”). This means two or more round-trips
involving the same fund within a 60 calendar day period would meet ING’s
definition of Excessive Trading; or
b. Six round-trips within a twelve month period.
The following transactions are excluded when determining whether trading activity is
excessive:
a. Purchases or sales of shares related to non-fund transfers (for example, new
purchase payments, withdrawals and loans);
b. Transfers associated with scheduled dollar cost averaging, scheduled
rebalancing or scheduled asset allocation programs;
c. Purchases and sales of fund shares in the amount of $5,000 or less;
d. Purchases and sales of funds that affirmatively permit short-term trading in
their fund shares, and movement between such funds and a money market fund;
and
e. Transactions initiated by a member of the ING family of insurance companies.
2. If ING determines that an individual has made a purchase of a fund within 60 days of a
prior round-trip involving the same fund, ING will send them a letter warning that
another sale of that same fund within 60 days of the beginning of the prior round-trip
will be deemed to be Excessive Trading and result in a six month suspension of their
ability to initiate fund transfers or reallocations through the Internet, facsimile, Voice
Response Unit (VRU), telephone calls to the ING Customer Service Center, or other
electronic trading medium that ING may make available from time to time (“Electronic
Trading Privileges”). Likewise, if ING determines that an individual has made five
round-trips within a twelve month period, ING will send them a letter warning that
another purchase and sale of that same fund within twelve months of the initial
purchase in the first round-trip in the prior twelve month period will be deemed to be
Excessive Trading and result in a six month suspension of their Electronic Trading
Privileges. According to the needs of the various business units, a copy of the warning
letters may also be sent, as applicable, to the person(s) or entity authorized to initiate
38
fund transfers or reallocations, the agent/registered representative or investment adviser
for that individual. A copy of the warning letters and details of the individual’s trading
activity may also be sent to the fund whose shares were involved in the trading activity.
3. If ING determines that an individual has used one or more of its products to engage in
Excessive Trading, ING will send a second letter to the individual. This letter will state
that the individual’s Electronic Trading Privileges have been suspended for a period of
six months. Consequently, all fund transfers or reallocations, not just those which
involve the fund whose shares were involved in the Excessive Trading activity, will
then have to be initiated by providing written instructions to ING via regular U.S. mail.
During the six month suspension period, electronic “inquiry only” privileges
will be permitted where and when possible. A copy of the letter restricting future
transfer and reallocation activity to regular U.S. mail and details of the individual’s
trading activity may also be sent to the fund whose shares were involved in the
Excessive Trading activity.
4. Following the six month suspension period during which no additional Excessive
Trading is identified, Electronic Trading Privileges may again be restored. ING will
continue to monitor the fund transfer and reallocation activity, and any future
Excessive Trading will result in an indefinite suspension of the Electronic Trading
Privileges. Excessive Trading activity during the six month suspension period will also
result in an indefinite suspension of the Electronic Trading Privileges.
5. ING reserves the right to limit fund trading or reallocation privileges with respect to
any individual, with or without prior notice, if ING determines that the individual’s
trading activity is disruptive, regardless of whether the individual’s trading activity
falls within the definition of Excessive Trading set forth above. Also, ING’s failure to
send or an individual’s failure to receive any warning letter or other notice
contemplated under this Policy will not prevent ING from suspending that individual’s
Electronic Trading Privileges or taking any other action provided for in this Policy.
6. Each fund available through ING’s variable insurance and retirement products, either
by prospectus or stated policy, has adopted or may adopt its own excessive/frequent
trading policy. ING reserves the right, without prior notice, to implement restrictions
and/or block future purchases of a fund by an individual who the fund has identified as
violating its excessive/frequent trading policy. All such restrictions and/or blocking of
future fund purchases will be done in accordance with the directions ING receives from
the fund.
39
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule H: Investment Advisory Access Agreement
ING LIFE INSURANCE AND ANNUITY COMPANY PLAN SPONSOR
INVESTMENT ADVISORY ACCESS AGREEMENT
This Agreement (“Agreement”) effective May 1st , 2009 is between ING Life Insurance and Annuity
Company (“ILIAC”) and Orange County Sanitation District (“Sponsor”), the Sponsor of the Orange County
Sanitation District 457(b) Deferred Compensation Plan (the “Plan”), ING Plan / Contract No. 666889,
located at 10844 Ellis Avenue, Fountain Valley, CA 92708-7018.
BACKGROUND
A. Sponsor maintains the Plan, and has entered into a separate written agreement with ILIAC
to provide investment options, recordkeeping and/or other administrative service to the Plan
(the “Plan Services Agreement”); and
B. Morningstar Associates, LLC (“Morningstar”) has developed proprietary, independent
investment advice (“Managed by You”) and managed account (“Managed by Morningstar”)
services, provided over the Internet through the Morningstar Retirement ManagerSM
platform (“Retirement Manager”); and
C. ILIAC has entered into agreements with Morningstar to allow ILIAC to provide access to
Retirement Manager services for participants of plans in which ILIAC acts as investment
product provider and/or recordkeeper (the “Morningstar Agreements”); and
D. Sponsor desires to make available Retirement Manager services to participants in
connection with the Plan; and
E. Sponsor and Morningstar have entered into a separate agreement, the Plan Sponsor
Investment Advisory Services Agreement, to provide Retirement Manager services to the
Plan (the “Advisory Services Agreement”); and
F Pursuant to the Advisory Services Agreement, Morningstar will enter into an agreement
(the “Participant Advisory Services Agreement”) with Plan participants to provide them
with investment advisory services through Retirement Manager.
Sponsor and ILIAC, in consideration of their mutual promises and covenants contained herein, and of other
good consideration duly received, hereby agree as follows:
ILIAC SERVICES
1.1 Set-up and Maintenance
(a) Set up services with Morningstar.
(b) Maintenance services: refresh Plan business rules, participant information and profiles
with Morningstar.
(c) Standard reporting on participant activity.
(d) Sponsor and participant customer service support services.
1.2 Retirement Manager Services Access. ILIAC hereby agrees to facilitate Sponsor’s
participants’ access to Retirement Manager services provided by Morningstar. Only
participants for whom ILIAC maintains account records shall be entitled to access Retirement
Manager.
40
1.3 Limited Duties. ILIAC’s duties under this Agreement are limited to facilitating access to
Retirement Manager services and providing related administration and recordkeeping services.
Sponsor agrees and acknowledges that ILIAC is not providing any investment advice under
this Agreement, and that ILIAC is not responsible for any losses or claims arising or alleged to
have arisen from the provision of investment advice by Morningstar.
2. SPONSOR RESPONSIBILITIES
2.1 Provision of Data. Sponsor agrees to provide accurate and timely data and understands that
ILIAC will transmit such data to Morningstar. ILIAC shall not have any liability for Sponsor’s
failure to timely inform ILIAC or Morningstar, as applicable, of any changes to the Plan or
participant data. Specifically, Sponsor shall:
(a) Provide Plan information and rules to ILIAC and Morningstar that are necessary for set-
up and promptly update this information if changes are made; and
(b) Promptly provide to ILIAC any changes to Plan investment options or transaction rules.
2.2 Independent Decision. Sponsor has made its own determination to enter into this Agreement
and to utilize Retirement Manager services from Morningstar. Sponsor is solely responsible
choosing to make Retirement Manager services available to its participants and has not relied
upon ILIAC or any of its affiliates or its or their employees or representatives in making that
decision.
2.3 Provision of Data to Morningstar. In connection with making Retirement Manager
available to participants, Sponsor acknowledges and agrees that:
(a) ILIAC will provide Plan and participant data to Morningstar for its use in providing
Retirement Manager services; and
(b) Morningstar is not required to continue to provide Retirement Manager if ILIAC
terminates its relationship with Morningstar.
2.4 Sponsor Representations and Acknowledgments. In connection with making Retirement
Manager available to participants, Sponsor hereby represents that it has entered into an
Advisory Services Agreement directly with Morningstar, pursuant to which Sponsor
acknowledged and, where necessary, consented to the following:
(a) The data and advice are produced solely on the Plan and participant data provided to
Morningstar by ILIAC and Morningstar is not responsible for any errors or omissions or
incomplete data provided by ILIAC.
(b) Retirement Manager services and the analysis, opinions and other information produced
by Morningstar may only be used for purposes of assisting participants in making their
retirement planning decisions and not for any other purposes.
(c) Morningstar is not required to continue to provide Retirement Manager services if the
Plan Sponsor terminates its relationship with ILIAC.
(d) Morningstar will be a fiduciary to the Plan, as defined under ERISA (where applicable),
with respect to the provision of investment advice and discretionary asset management
under the Advisory Services Agreement and Participant Advisory Services Agreements,
but Morningstar is not thereby a fiduciary to the Plan for any other purposes. In
addition, Morningstar has no responsibility for any benefits due or claimed to be due
under the Plan, for administering the Plan or determining whether the Plan is operated
or administered in accordance with ERISA or other applicable laws, including (but not
by way of limitation) any requirements governing delivery of information to
participants under ERISA, regulations and interpretations under ERISA, or under any
other applicable law or regulation.
(e) Morningstar uses commercially reasonable efforts to ensure that data, analysis, opinion
or other information provided within Retirement Manager is correct. Data and other
information are gathered from sources that Morningstar believes to be reliable.
Timeliness of data is dependent on Morningstar schedule for collecting the data and
cooperation of the sources, which is outside Momingstar’s control. Morningstar does
41
not represent or warrant the accuracy, correctness, completeness, or timeliness of
Retirement Manager.
(f) Use of Retirement Manager is contingent on the Plan’s investment options satisfying
Morningstar’s compatibility requirements. Only funds included in Morningstar’s
database are covered by the Morningstar Retirement Manager service.
(g) If the Plan Sponsor wishes to make a change to the investment options available for the
Managed by Morningstar Service, it shall provide ILIAC with forty five (45) days’
prior written notice thereof. If custom data collection is required, an additional ten (10)
weeks prior notice is required to provide data collection and maintenance of such funds.
3. FEES
There is no fee due from the Plan, the Plan Sponsor or Plan participants to either ING or Morningstar
in connection with the use of Retirement Manager. For the Managed by Morningstar services, the
following fee schedule, set forth below, shall apply. ILIAC is hereby authorized to deduct fees from
participant accounts in accordance with the following schedule:
Basis points payable Administrative and recordkeeping
to Morningstar: fee payable to ILIAC:
25 bp per annum 15 bp per annum
The fees will automatically be deducted from participant accounts on a periodic basis. The fees paid
to Morningstar Associates and ILIAC are reviewed annually at the plan’s contract anniversary and
are subject to change (up or down) based on the overall level of assets in the plan at that time. While
the fee paid to Morningstar is subject to change up or down, the administrative fee payable to ILIAC
may be lowered, but will not be raised.
4. TERM AND TERMINATION
4.1 Term. Except as otherwise provided herein, the term of this Agreement shall begin on the
effective date and continue for an initial term of one (1) year unless terminated as forth in this
Section. Upon expiration of the initial term, the Agreement will automatically renew for
successive one (1) year terms unless otherwise terminated by either party pursuant to this
Section, or unless one party notifies the other party in writing of their intent not to renew this
Agreement within 90 days of the end of a term.
4.2 Breach. If either party materially breaches in the performance of any provision of this
Agreement or the Plan Service Agreement, or is otherwise in noncompliance with any
provision of this Agreement, and such breach is not cured within thirty (30) days of written
notice of breach to the breaching party, the party giving such notice may terminate this
Agreement by providing the breaching party with written notice of such termination.
4.3 Automatic Termination. The Agreement will automatically terminate upon written notice if
(a) either party files a petition in bankruptcy, is adjudged bankrupt, or ceases to do business in
the ordinary course; (b) Morningstar’s registration as an investment adviser terminates, or is
terminated, suspended, withdrawn or restricted so as to substantially impede performance of
Retirement Manager hereunder; (c) this Agreement is assigned in violation of Section 7.7 or
(d) the Agreement between ILIAC and Morningstar expires or is terminated for any reason.
4.4 Termination of Morningstar Agreement or Plan Services Agreement. In addition to any
other termination, this Agreement will terminate automatically upon the termination of the
Morningstar Agreement between ILIAC and Morningstar or the Plan Services Agreement
between ILIAC and Sponsor, or the full withdrawal/case surrender of all amounts invested
with 1NG under the Plan.
4.5 Effect of Termination. Upon termination of this Agreement for any reason, Sponsor and
participants shall no longer have to access to the Retirement Manager services. The Plan and
42
Plan Participants’ obligations to pay any fees accruing under this agreement before the
effective date of termination, if applicable, will survive termination of this Agreement.
Sections 5 and 6 hereof also shall survive the termination of this Agreement.
5. LIMITATION OF LIABILITY
SPONSOR WILL NOT BE LIABLE TO ILIAC FOR ANY INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF PROFITS INCURRED BY
ILIAC OR ANY THIRD PARTY, ARISING FROM OR RELATED TO THIS AGREEMENT OR
RETIREMENT MANAGER, HOWEVER CAUSED AND WHETHER BASED IN CONTRACT,
TORT (INCLUDING NEGLIGENCE) OR ANY OTHER THEORY OF LIABILITY. ILIAC’S
LIABILITY WILL IN NO EVENT EXCEED THE AMOUNT OF FEES PAID BY SPONSOR
UNDER THIS AGREEMENT. THE PARTIES ACKNOWLEDGE AND AGREE THAT THIS IS
A REASONABLE ALLOCATION OF RISK AND THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY. FEDERAL AND STATE SECURITIES LAWS IMPOSE LIABILITIES UNDER
CERTAIN CIRCUMSTANCES ON PERSONS WHO ACT IN GOOD FAITH, AND
THEREFORE NOTHING IN THIS AGREEMENT ACTS TO WAIVE OR LIMIT ANY OF
THESE RIGHTS.
6. SPONSOR INDEMNIFICATION
(a) ILIAC Indemnification. ILIAC agrees to hold harmless and indemnify Sponsor, Sponsor’s
agents, officers and employees when acting on Sponsor’s behalf, from every claim and demand to
the proportionate extent that it results from ILIAC’s negligence or wrongdoing or the negligence or
wrongdoing of its representatives acting in that capacity in connection with this Agreement.
(b) Indemnification. Sponsor agrees to hold harmless and indemnify ILIAC, ILIAC’s agents,
officers and employees when acting on ILIAC’s behalf, from every claim and demand to the
proportionate extent that it results from Sponsor’s negligence or wrongdoing or the negligence or
wrongdoing of its representatives acting in that capacity in connection with this Agreement.
7. MISCELLANEOUS
7.1 Disclaimer. Sponsor agrees that ILIAC makes no warranties or guaranties of any kind
regarding Retirement Manager, including access to Morningstar’s web site. Sponsor shall not
make any warranties or guarantees to participants with respect to Retirement Manager.
7.2 Notice. Each party will promptly provide the other with notice and copy of any litigation of
which it becomes aware of involving the terms or Retirement Manager under this Agreement
and/or any other notices or demands to be given under this Agreement. All such notices,
demands or other communications hereunder shall be in writing and duly provided if sent
certified mail, return receipt requested, addressed to the party to be notified or upon whom a
demand is being made, at the addresses set forth in this Agreement or such other place as either
party shall from time to time designate in writing. The date of service of a notice or demand
shall be the receipt date on any certified mail receipt.
43
Notices to ILIAC shall be sent to:
ING Life Insurance and Annuity Company
One Orange Way
Attention Legal Department - C1S
Windsor, CT 06095
Notices to Sponsor shall be sent to:
Kim Erickson
Senior Human Resources Analyst
Orange County Sanitation District Deferred Compensation Plan
10844 Ellis Avenue
Fountain Valley, CA 92708-7018
7.3 Governing Law; Jurisdiction. This Agreement shall be governed by the laws of the State of
California, without regard to its conflicts of law provisions. The parties agree that any and all
actions relating to this Agreement will be brought exclusively in the state and/or federal courts
located in Orange County, California, and that each party is subject to the personal jurisdiction
of those courts.
7.4 Force Majeure. Neither party shall be liable to the other for any delays or damage or any
failure to act due, occasioned, or caused by reason of restrictions imposed by any government
or government agency, acts of God, strikes, labor disputes, action of the elements, or causes
beyond the control of the party affected thereby.
7.5 Severability. If any provision of this Agreement shall be found to be illegal or invalid for any
reason, the illegality of invalidity shall not affect the remaining parts of this Agreement and
the remainder of the Agreement shall be construed and enforced as if said illegal or invalid
provision had never been inserted herein. No party shall be required to perform any services
under this Agreement that would violate any law, regulation or ruling.
7.6 Waiver; Amendment. A waiver or amendment of any provision of this Agreement or of a
party’s rights or remedies under this Agreement must be in writing and signed by an
authorized representative of both parties to be effective. Any waiver of the terms of this
Agreement shall be effective only in the specific instance and for the specific purpose.
7.7 Assignment. This Agreement may not be assigned by either party without the prior written
consent of the other party; provided that ILIAC may assign the agreement to an affiliate. Any
assignment or attempted assignment of this Agreement in violation of this section is void. This
Agreement shall be binding upon and inure to the benefit of the parties’ permitted successors
and assigns.
44
WHEREFORE, the parties have signed below to indicate their acceptance of the terms and
conditions of this Agreement.
ING Life Insurance and Annuity Company Orange County Sanitation District
Signature: Signature:
Name: Name:
Title: Title:
Date: Date:
45
Orange County Sanitation District 457(b) Deferred Compensation Plan
Appendix 1 to Schedule H
PLAN SPONSOR INVESTMENT ADVISORY SERVICES AGREEMENT
This investment advisory services agreement and the exhibit(s) hereto (the “Agreement”) is
entered into as of May 1, 2009 ("Effective Date") by and between Morningstar Associates, LLC, a
Delaware limited liability company and an investment adviser registered under the Investment
Advisers Act of 1940, with its principal place of business at 225 West Wacker Drive, Chicago, Illinois
60606 ("Morningstar"), and Orange County Sanitation District, (“Plan Sponsor”) with its principal
place of business at 10844 Ellis Avenue, Fountain Valley, CA 92708-7018.
WHEREAS Plan Sponsor maintains the Orange County Sanitation District 457(b) Deferred
Compensation Plan (the “Plan”), a defined contribution plan that is intended to comply with certain
provisions of the Internal Revenue Code; and
WHEREAS Plan Sponsor has entered into a separate written agreement with ING Life
Insurance and Annuity Company and/or an affiliate (the “Service Provider”) to provide daily
valuation, recordkeeping and other administrative services to the Plan, including access to
Morningstar’s investment advisory services, if Plan Sponsor so elects; and
WHEREAS Plan Sponsor wishes to have Morningstar provide certain investment advisory
services to and for the benefit of the Participants in Plan Sponsor’s Plan, and Morningstar is willing
to provide Plan Sponsor with such investment advisory services, subject to the terms and conditions
of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises set forth herein, Morningstar
and Plan Sponsor hereby agree as follows:
1. DEFINITIONS The following definitions shall apply to this Agreement and to any exhibit(s)
attached hereto.
• Advice Service shall mean Fund specific non-discretionary investment advisory service
provided to a Participant by Morningstar. Advisory Services shall mean individually or
collectively the Advice Service and the Managed Accounts Service, provided, however, that
the Plan and Participants shall only receive those Advisory Services specifically selected by
Plan Sponsor pursuant to this Agreement. The Advisory Services specifically exclude
analysis of or advice regarding the potential local, state or federal tax consequences
resulting from any investment advice or recommendation provided by Morningstar.
• Initial Delivery Date shall mean that date on which the Advisory Services are made
available to the Plan and its Participants pursuant to the terms of this Agreement.
• Managed Accounts Service shall mean Fund specific discretionary investment advisory
service provided to a Participant by Morningstar.
• Morningstar Services shall mean the services to be performed or delivered by Morningstar
along with the Advisory Services, including the various modules described in this
Agreement. Morningstar Services shall not include Advice Service or Managed Accounts
Service.
46
• Participant shall mean an individual who is enrolled or is eligible to enroll in any Plan
offering the Advisory Services. The parties acknowledge and agree that Morningstar
reserves the right to exclude any Participant whose current age is greater than his or her
retirement age.
2. MORNINGSTAR OBLIGATIONS
a. Morningstar shall:
(i) Provide the Advisory Services and the Morningstar Services to the Plan and
its Participants pursuant to the terms and provisions of this Agreement;
(ii) Act as a fiduciary to the Plan only to the extent of its provision of Advice
Service or Managed Accounts Service to Participants, and not as a plan
administrator or in any other capacity; and
(iii) Retain final control and authority over the Advisory Services and
Morningstar Services provided to the Participants.
b. No Liability for Plan Benefits. In providing the Advisory Services, Morningstar shall
not be liable for any benefits due, or claimed to be due, under the Plan.
c. Standard of Care. Morningstar will provide the Advisory Services at all times in
good faith, and will use reasonable care, consistent with industry practices of similarly situated
advisors, in providing the Advisory Services. Morningstar does not guarantee that the Advisory
Services will be delivered without interruption, timely, error-free, or secure. Errors may occur in the
software-based Advisory Services as a result of programming errors, database errors, or other
causes. Morningstar will provide the Advisory Services with that degree of prudence, diligence, care,
and skill which a prudent person rendering similar services as an investment advisor would exercise
under similar circumstances. The provisions of this Agreement shall not be interpreted to imply any
other obligation on the part of Morningstar to observe any other standard of care. Under certain
circumstances, the federal and state securities laws impose liabilities on persons who act in good
faith and nothing contained in this Agreement should be construed as a waiver or limitation of your
rights under such laws.
3. PLAN SPONSOR OBLIGATIONS
a. Provision of Data Plan Sponsor agrees to provide or cause Service Provider to provide
accurate and timely data and understands that Morningstar will rely on such data to
provide the Advisory Services. Morningstar shall not have any liability for Service
Provider’s or Plan Sponsor's failure to timely inform Morningstar or Service Provider, as
applicable, of any changes to the Plan or Participant data. Therefore, Plan Sponsor
shall or shall cause Service Provider to:
(i) Provide all necessary Participant census data and updates as requested by
Morningstar or Service Provider in order for Morningstar to provide the services
described in this Agreement;
47
(ii) Provide Plan information and rules to Service Provider that are necessary for
set-up services and promptly notify Service Provider with any updates to this
information if changes are made; and
(iii) Promptly provide to Service Provider any changes to Plan investment options or
transaction rules.
b. Selection of Plan Investment Options Plan Sponsor shall:
(i) Select investment options offered under the Plan;
(ii) Monitor and periodically review Plan investment options; and
(iii) Determine if changes to Plan investment options are necessary.
c. Cooperation Plan Sponsor shall fully cooperate with Morningstar in Morningstar's
provision of the Advisory Services and Morningstar Services, in such manner as Morningstar may
from time to time reasonably request. Such cooperation shall include accurately communicating to
Participants the scope of the Advisory Services and Morningstar Services, and, in certain instances,
the Participants' ultimate responsibility for investment decisions.
d. Disclosure to Participants In addition to any disclosure required of Plan Sponsor in
the applicable exhibit(s), Plan Sponsor shall disclose, or will cause Service Provider to disclose, to
Participants in the Plan (a) the amount of any charges to the Participant's Plan account, (b) whether
or not such charges will be imposed if the Participant does not use the Advisory Services, and (c)
that any such charges may be allocated among various service providers to the Plan, including but
not limited to Morningstar, to compensate them for the services they provide to the Plan. Upon
Morningstar's request, Plan Sponsor shall provide Morningstar with copies of such disclosure, or
shall direct Service Provider to provide such copies.
e. Errors Plan Sponsor shall promptly notify Service Provider of any errors,
incompleteness or untimeliness in any of the data, analyses, opinions or other information
contained in the Advisory Services or the Morningstar Services about which Plan Sponsor becomes
aware.
f. Fund Universe The initial universe of funds for the Plan (the “Fund Universe”) must
be provided (or have previously been provided) to Morningstar by the Service Provider, no later
than twelve (12) weeks prior to the Initial Delivery Date. Plan Sponsor agrees and acknowledges
that any funds not included in the Fund Universe shall not be included in the recommendation given
by Morningstar, and that any funds added to the Fund Universe after such date may not be included
within the Morningstar Services on the Initial Delivery Date.
If, after the Initial Delivery Date, Plan Sponsor intends to add funds to the Fund Universe or make a
change to the investment options available for the Managed Accounts Service, it shall cause
Service Provider to give Morningstar fourteen (14) days’ prior written notice thereof, which notice
shall include the name of the fund, the fund type (i.e. open-end fund or custom fund) and the fund
identifier, such as the ticker symbol, cusip, or external fund identification number, as may be
applicable. If custom data collection is required, Morningstar requires twelve (12) weeks prior
notice.
48
A plan has a sufficient set of funds if all of the following conditions are met:
1. There is at least one Core Blend fund OR (There is at least one Core Value fund and
at least one Core Growth fund)
2. There is at least one Core Stable Value fund OR (There is at least one Cash fund
AND at least one Core Bond)
Plan Sponsor acknowledges that all funds within a Plan’s Fund Universe must be covered in
Morningstar Inc.’s database in order for such Fund to be included in the Advisory Services. The
Plan Sponsor acknowledges that the Service Provider may require additional time to complete the
Fund Set Up.
g. Proxy Voting Plan Sponsor represents that with respect to proxies attributable to
securities held in Plan accounts, the Plan provides that the Plan Sponsor, the Plan trustee or the
Participants shall be responsible for voting such proxies. Plan Sponsor agrees that Morningstar
shall have no responsibility or liability for such proxy voting.
4. USE AND PROMOTION
a. The Advisory Services shall be made available only to retirement plans duly
established under the laws of the United States of America and to Participants that are citizens
and/or legal residents of United States of America or its territories.
b. The Advisory Services, or any portion thereof, may be used by Plan Sponsor and its
Participants only for effecting retirement planning for Participants that elect to receive the Advisory
Services. Any other use by the Plan Sponsor, including commercial use for the benefit of another
person, is prohibited under this Agreement and shall be a material breach of this Agreement. Plan
Sponsor shall take all commercially reasonable actions to ensure that there is no unauthorized use
by its employees, agents, independent contractors, vendors or other third parties. Plan Sponsor
shall immediately notify Morningstar of any actual or potential unauthorized use of which Plan
Sponsor becomes aware. Plan Sponsor agrees to cooperate and provide reasonable assistance to
Morningstar in connection with preventing and stopping any unauthorized use, of the data,
analyses, opinions and other information contained in the Advisory Services or the Morningstar
Services.
c. Plan Sponsor may not mention or refer to Morningstar, the Advisory Services, the
Morningstar Services, any of Morningstar’s Intellectual Property or any of Morningstar’s web sites in
any public announcements, advertising, marketing or promotional materials (collectively, the
“Promotion Material”) without Morningstar’s prior written approval, except if such material was
provided to Plan Sponsor by Morningstar or the Service Provider. This provision shall not be
construed to prohibit Plan Sponsor from referring to Morningstar or the Advisory Services in any
announcements or correspondence made directly to Participants.
5. CONFIDENTIALITY The parties acknowledge that in the course of their dealings hereunder,
each may acquire information about the other, its business activities and operations, its technical
information and its trade secrets, all of which are proprietary and confidential (the “Confidential
Information”). Each party hereby agrees that: (a) all Confidential Information (including, but not
49
limited to the terms of this Agreement) remains the exclusive property of the disclosing party; (b) it
shall maintain, and shall use prudent methods to cause its employees and agents to maintain (and
not to otherwise copy, publish, disclose or use other than as contemplated under this Agreement),
the confidentiality and secrecy of the disclosing party’s Confidential Information; and (c) it shall return
or destroy all copies of the disclosing party’s Confidential Information upon request of the disclosing
party. Notwithstanding the foregoing, Confidential Information shall not include any information to
the extent it: (i) is or becomes a part of the public domain through no act or omission on the part of
the receiving party; (ii) is disclosed to third parties by the disclosing party without restriction on such
third parties; (iii) is in the receiving party’s possession, without actual or constructive knowledge of
an obligation of confidentiality with respect thereto, at or prior to the time of disclosure under this
Agreement; (iv) is independently developed by the receiving party without reference to the disclosing
party’s Confidential Information; (v) is released from confidential treatment by written consent of the
disclosing party; or (vi) is required to be disclosed by court of competent jurisdiction; provided the
receiving party gives the disclosing party prior written notice of such proposed disclosure sufficient to
enable the disclosing party to obtain an appropriate protective order, if it so desires.
6. OWNERSHIP Notwithstanding the rights granted under this Agreement, Plan Sponsor
acknowledges and agrees that: (i) Morningstar retains sole and exclusive ownership over and all
data, analyses, opinions, software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, hardware configuration information or other information contained in
the Advisory Services and the Morningstar Services (“Intellectual Property”), except the data referred
to in (ii) below, and that the Advisory Services and the Morningstar Services and all data, analyses,
opinions and other information contained in it include valuable copyrighted and proprietary material
of Morningstar; (ii) Morningstar, Inc. retains sole and exclusive ownership rights in certain data
contained within each the Morningstar Services and the Advisory Services (the “Morningstar Data”)
and that the Morningstar Data contain the valuable copyrighted and proprietary material of
Morningstar, Inc. (iii) Morningstar or Morningstar, Inc, as applicable, retains sole and exclusive
ownership over the Intellectual Property; (iv) the Morningstar Services and Intellectual Property are
being made available to the Plan Sponsor for the express purposes and use set forth herein and
nothing contained herein transfers to Plan Sponsor any ownership interest in the Intellectual
Property or the Morningstar Services and any software, pictures, images, materials, changes,
materials, or other works of authorship provided contained therein or Intellectual Property; and (v)
Plan Sponsor shall not have any rights in and to the Morningstar Services and Intellectual Property,
except as specifically granted by this Agreement. Plan Sponsor has no right to make derivative
works of the Morningstar Services, the Morningstar Data or the Intellectual Property in any form for
use in any medium currently in existence or under development, now or in the future.
Plan Sponsor shall not, at any time during or after the term of this Agreement: (i) contest or assist
any third party in contesting the validity or enforceability of Morningstar’s ownership of all right, title
and interest in and to the Morningstar Services and all corresponding intellectual property rights, or
in Morningstar, Inc.’s ownership of all right, title and interest in and to the Morningstar Data and all
corresponding intellectual property rights thereto; (ii) use the Intellectual Property, except as
specifically authorized by this Agreement; (iii) use any trademark, service mark, trade name or
corporate name that is a colorable imitation or confusingly similar to any of the Intellectual Property,
except as expressly authorized by Morningstar in writing in advance; or (iv) contest or assist any
third party in contesting the validity or enforceability of the Intellectual Property or the ownership of
all right, title and interest in and to the Intellectual Property. To the extent Plan Sponsor is
authorized to use any of the Intellectual Property, such use shall inure to the benefit of Morningstar
50
or Morningstar, Inc., as appropriate. Plan Sponsor shall, at all times during or after the term of this
Agreement, execute any documents and take such other actions reasonably requested by
Morningstar to confirm or protect Morningstar’s and Morningstar, Inc.’s right, title and interest in and
to the Morningstar Data or the Intellectual Property, as applicable, and any corresponding intellectual
property rights.
7. TERM AND TERMINATION
a. Term The term of this Agreement (“Initial Term”) shall begin on the Effective Date
and shall continue for one (1) year from the Initial Delivery Date unless the term ends earlier as
otherwise provided for under this Section 7. This Agreement shall automatically renew for
successive periods of one (1) year each (“Renewal Term”) after the Initial Term and each Renewal
Term unless either party provides written notice of non-renewal to the other party no later than ninety
(90) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be.
b. Termination Upon Default or Insolvency If either party defaults in the performance
of, or is in non-compliance with, any provision contained in this Agreement (including, but not limited
to, any uncured insolvency or the like), and such default is not cured within thirty (30) days after
written notice thereof is given to the defaulting party, the party giving such notice may then give
further written notice which shall terminate this Agreement as of the date specified in such notice.
c. Termination upon Termination of Agreement between Morningstar and Service
Provider or Plan Sponsor and Service Provider This Agreement will terminate automatically upon (i)
the termination of the agreement between Morningstar and the Service Provider under which
Morningstar provides the Service Provider with certain retirement services, including, but not limited
to, any of the Advisory Services or Morningstar Services described herein, or (ii) the termination of
the agreement between Plan Sponsor and Service Provider under which Service Provider provides
certain recordkeeping and administrative services to the Plan.
d. Effect of Termination Upon expiration or termination of this Agreement for any
reason, all rights granted to Plan Sponsor hereunder shall terminate immediately and all Participants
shall no longer have access to the Advisory Services or the Morningstar Services. Expiration or
termination of this Agreement for any reason shall not affect Plan Sponsor’s or their Participants’
obligation to pay any and all fees and other amounts due and payable or relieve Plan Sponsor of any
liability for breach of this Agreement.
8. FEES AND BILLING
a. Fees During the term of this Agreement (including any Renewal Term), the
Participants and/or the Plan Sponsor, as the case may be, shall pay the applicable fees that are set
forth on Exhibit A attached hereto and made part hereof.
b. Collection Authorization and Payment Terms The parties hereby agree that Service
Provider shall deduct all applicable fees from the Participant accounts and is hereby authorized to
remit such fees to Morningstar. The parties agree and acknowledge that Service Provider shall
deduct and remit the applicable Managed Accounts Fees in periodic installments in arrears.
9. REPRESENTATIONS AND WARRANTIES
51
a. Representations of Morningstar Morningstar represents and warrants to Plan
Sponsor that it is an investment adviser registered with the Securities and Exchange Commission
under the Investment Advisers Act of 1940 and, to Morningstar’s knowledge (a) it has all rights in
and to all the Intellectual Property necessary to market, distribute the Advisory Services and the
Morningstar Services in accordance with the terms of this Agreement; (b) this Agreement is binding
on Morningstar; and (c) Morningstar’s entry into this Agreement does not violate any prior obligation
or agreement of Morningstar.
b. Representations of Plan Sponsor Plan Sponsor represents and warrants to
Morningstar that (a) Plan Sponsor has the authority and power to enter into and comply with its
obligations under this Agreement and the rights and licenses necessary to enter into and perform its
obligations under this Agreement; (b) this Agreement is binding on Plan Sponsor; (c) Plan Sponsor’s
entry into this Agreement does not violate any prior obligation or agreement of Plan Sponsor; (d) the
individual signing this Agreement and any exhibit(s) thereto on behalf of Plan Sponsor is a named
fiduciary of Plan or is authorized to sign on behalf of the Plan Sponsor in its capacity as a named
fiduciary of Plan and is authorized to sign on behalf of the Plan Sponsor; (e) consistent with the
terms and conditions contained in all governing documents of Plan Sponsor’s Plan with respect to
the voting of proxies, Plan Sponsor, the Plan Trustee or the Participants will vote proxies for
securities held in any investment account for which Morningstar may provide advice hereunder, and
(f) the instruments under which the Plan is maintained authorize the use of Plan assets to pay any
fees for which the Participant is responsible as provided in this Agreement.
10. DISCLAIMERS
a. Data Disclaimer Morningstar will use commercially reasonable efforts to ensure that
the data, analysis, opinion, and other information contained in the Advisory Services or the
Morningstar Services are correct. Although gathered from sources believed to be reliable, Plan
Sponsor acknowledges that Morningstar cannot guarantee the accuracy of the data or information
used to provide the Services. The completeness and timeliness of all data and information used to
provide the Services is dependent upon the sources of such data and information, which are outside
of Morningstar's control.
b. Disclaimer of Warranties EXCEPT AS EXPRESSLY SET FORTH IN SECTION 9
ABOVE, MORNINGSTAR PROVIDES NO WARRANTIES, EITHER EXPRESS, IMPLIED OR
OTHERWISE WITH RESPECT TO THE SERVICES DELIVERED PURSUANT TO THIS
AGREEMENT, OR THE SOFTWARE COMPRISING THE SERVICES, AND TO THE EXTENT
PERMITTED BY LAW, MORNINGSTAR DISCLAIMS THE IMPLIED WARRANTIES OF FITNESS
FOR A PARTICULAR PURPOSE AND MERCHANTABILITY WITH RESPECT TO SUCH
SERVICES.
c. Acknowledgement of Limitations on Recommendations Plan Sponsor
acknowledges and agrees that in formulating recommendations through the Advisory Services,
Morningstar will only consider investment options offered by the Plan Sponsor’s Plan. As a result,
the Advisory Services may not be comprehensive because it may not recommend use of investment
options that otherwise might be appropriate investments but that are not offered through Plan
Sponsor’s Plan.
11. LIMITATION OF LIABILITY The following Limitations of Liability shall be applicable:
52
a. Limitation of Damages EXCEPT AS OTHERWISE PROVIDED BY LAW, AND
EXCEPT FOR DAMAGES ARISING AS A RESULT OF A PARTY’S WILLFUL MISCONDUCT OR
BREACH OF FIDUCIARY DUTY, EACH PARTY’S AGGREGATE LIABILITY FOR ANY DIRECT
DAMAGES ARISING UNDER OR IN ANY WAY RELATING TO THIS AGREEMENT, THE
ADVISORY SERVICES, AND MORNINGSTAR SERVICES PROVIDED HEREUNDER (WHETHER
ARISING IN CONTRACT, TORT, OR ANY OTHER LEGAL THEORY) SHALL BE LIMITED TO ONE
MILLION DOLLARS ($1,000,000).
EXCEPT AS OTHERWISE PROVIDED BY LAW, AND FOR DAMAGES ARISING FROM A
PARTY’S WILLFUL MISCONDUCT, IN NO EVENT WILL THAT PARTY BE LIABLE TO THE
OTHER FOR ANY PUNITIVE, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR SIMILAR
DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
b. Plan Sponsor's Rights Under Securities Laws Nothing in this Agreement is intended
to or shall waive any rights to which Plan Sponsor is specifically entitled under the securities laws of
the United States.
12. ENHANCEMENTS AND MODIFICATIONS Morningstar reserves the right in its sole
discretion to enhance, modify, or provide upgrades (collectively "Changes") of the Morningstar
Services or Advisory Services from time to time.
13. ACCESS AND TECHNICAL REQUIREMENTS
Method of Access Morningstar shall provide Participants with access to Morningstar Retirement
Manager via Service Provider’s call center or via the Internet through an HTTP connection, which
connection shall be established and maintained by Service Provider for Plan Sponsor’s benefit.
Technical Requirements for access to Morningstar Retirement Manager:
Browsers:
• Microsoft® Internet Explorer 6.0 and above
• America Online 9.0 and above
• Apple Macintosh Safari
• Firefox 1.5 and above
System Requirements:
• Windows®
• Mac® OS X® with Safari browser
• JavaScript and Cookies must be enabled
• Adobe Acrobat (for printing reports from the Retirement Manager Web site)
• Sun's Java Plug-in - J2SE Java Runtime Environment (JRE) version 1.4.2 or higher
Security:
• 128 bit encryption
Pop-ups:
• In order to view certain pages in the Retirement Manager site, pop-ups much be enabled.
53
Morningstar reserves the right to change the above-referenced technical requirements as certain
browser versions become obsolete or outdated or as new versions are released.
14. RESEARCH, EDUCATION, AND MEASUREMENT MODULES
Plan Sponsor will be provided access to Morningstar’s Research Module, Education Module and
Measurement Module. The Research Module will consist of reports and information concerning
Funds within the Fund Universe. The Education Module will consist of articles, information and
interactive planning tools. The Research Module and the Education Module will be made available
to the Plan Sponsor and Participants that have agreed to receive the Advisory Services, and may not
be offered outside of this Agreement. The Measurement Module will be made available to the
Service Provider who may then provide access to the Plan Sponsor. Licensor reserves the right in
its sole discretion to modify, add, or delete data points in the Research Module, the Education
Module, and the Measurement Module.
15. INVESTMENT PROCESS AND RESTRICTIONS
a. Investment Process Upon receipt from the Service Provider of personal and
financial data for a Participant (“Participant Data”), if a Participant has selected the Advisory
Services, Morningstar will use the Funds made available by the Plan Sponsor to create a portfolio
with an asset allocation composition (each a “Participant Portfolio”).
Morningstar will analyze the Funds to determine which particular Funds will be assigned to a
Participant Portfolio. If the Participant has indicated an instruction that his or her Participant Portfolio
not include a particular Fund (“Restriction”) which Morningstar deems unreasonable, Morningstar
shall not be required to deliver a Participant Portfolio for that Participant.
b. Self-directed Brokerage Accounts Morningstar shall have no duty to provide the
Advisory Services with respect to assets held within a Self-directed Brokerage Account.
16. PROPOSAL LETTER
Morningstar will provide information about the Advisory Services to the Participants though a
Proposal Letter in its standard design with current supported plan types and functionality and any
subsequent global modifications, enhancements, or upgrades. Plan Sponsor has authorized Service
Provider to deliver to Morningstar such Participant data as is required to create and deliver the
Proposal Letter to Participants. Morningstar agrees that it shall not use any such Participant data for
any purpose other than providing the services expressly described herein.
17. MISCELLANEOUS
a. Notices All notices or other communications shall be in writing and be delivered in
person, or sent by certified mail, return receipt requested, overnight courier service, facsimile or e-
mail to such addresses or numbers as may be stipulated in writing by the parties pursuant hereto.
Unless otherwise provided, notice will be effective on the date it is officially recorded as delivered by
return receipt or equivalent or by facsimile confirmation date.
54
b. Entire Understanding; Partial Invalidity This Agreement, along with any exhibit(s) or
other attachments hereto, sets forth the entire understanding between the parties and supersedes
any and all oral or written agreements between the parties as to the subject matter of this
Agreement. If any provision of this Agreement shall to any extent be held to be invalid or
unenforceable, the remainder of the Agreement, or the application of such provisions as to which it is
not held to be invalid or unenforceable, shall not be affected thereby, and each provision shall be
valid and be enforced to the fullest extent permitted by law.
c. Modification This Agreement may be modified only in a document signed by both
parties.
d. Assignment The parties’ benefits and obligations in this Agreement shall not be
assigned without the prior written consent of the other party. This Agreement shall apply to, inure to
the benefit of, and be binding upon the parties hereto and upon their permitted successors in interest
and assigns. The parties acknowledge that there are no intended third party beneficiaries of this
Agreement.
e. No Waiver; Force Majeure The failure of one party to require the other to perform
hereunder shall in no way affect the first party’s right to require such performance thereafter, nor
shall the waiver by either party of a breach of any Agreement provision be deemed a waiver of any
succeeding breach of that provision or a waiver of the provision itself. In no event shall one party be
liable to the other for any delay or failure to perform hereunder if the delay or failure is due to causes
beyond the reasonable control of that party.
f. Injunctive Relief Each party acknowledges that the other’s legal remedies (including
the payment of damages) would not adequately compensate the non-breaching party for the other’s
breach of this Agreement regarding ownership, use, copying, distribution, confidentiality or
nondisclosure, as applicable, of the Morningstar Services or the Advisory Services (or any part
thereof), the Intellectual Property, or Confidential Information and that it would suffer continuing,
irreparable injury as a direct result of such breach. Therefore, in the event of any such breach or
threatened breach, the non-breaching party may seek entry of any injunctive relief necessary to
prevent or cure such breach (including temporary and preliminary relief, and relief by order of
specific performance), without posting of bond or other security or proof of irreparable harm.
g. Arbitration Any dispute under this Agreement shall be settled by binding arbitration
in Los Angeles, California before a panel of three impartial arbitrators under the rules of the
American Arbitration Association. Such panel shall consist of an actuary, an attorney and an
employee benefit consultant, each of whom shall have had at least ten (10) years of professional
experience in the administration of participant-directed defined contribution plans similar to the Plan.
In any such arbitration, each party shall bear its own costs, expenses and attorneys' fees. The
arbitration award may be enforced in any court having jurisdiction over the parties and the subject
matter of the arbitration, and the parties irrevocably submit to the nonexclusive jurisdiction of the
Superior Court of the State of Illinois, and the United States District Court for the Northern District of
Illinois, in any action to enforce an arbitration award.
h. Choice of Law and Venue Except as provided in Section 14(g), all disputes arising
under this Agreement or its performance shall be determined exclusively under the laws of the State
of California without regard to its conflict of laws provisions.
55
i Acknowledgment of Receipt of Morningstar’s Disclosure Statement Plan Sponsor
acknowledges that it has received Part II of Morningstar’s Form ADV at least 48 hours prior to
entering into this Agreement.
j. Survival of Rights Termination or cancellation of this Agreement for any reason shall
not relieve either party of obligations that accrued prior to termination or cancellation, or of
obligations that by their nature are intended to survive this Agreement, including but not limited to
obligations in connection with warranties, confidential information and indemnification.
k. Counterparts This Agreement may be signed in two counterparts, which together
shall form a single agreement as if both parties had executed the same document.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date set
forth above.
Orange County Sanitation District Morningstar Associates, LLC
(Plan Sponsor)
By: _____________________________ By: __________________________
Name: ___________________________ Name: Patrick Reinkemeyer
Title: ____________________________ Title: President
Date:____________________________ Date:_________________________
56
EXHIBIT A
There is no fee due from the Plan, the Plan Sponsor or Participants to either the Service Provider
or Morningstar in connection with the use of Morningstar Retirement Manager. For the Managed
Accounts Service, the following fee schedule, set forth below, shall apply. ILIAC is hereby
authorized to deduct fees from participant accounts in accordance with the following schedule:
Select one (X) Plan Asset Range Basis points payable
to Morningstar:
________ Less than $3 million 30 bp per annum
________ $3 million to $10 million 28 bp per annum
____X____ Over $10 million 25 bp per annum
In addition to the fees set forth above, the Plan, Plan Sponsor or Participants may also pay an
administrative and recordkeeping fee to the Service Provider. The fees are reviewed annually at the Plan’s
contract anniversary and are subject to change (fees may be lowered but will not be raised) based on the
overall level of assets in the plan at that time.
57
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule I: Reimbursement of Plan Expenses
The Contractor shall reimburse the Plan Sponsor annually for the Plan’s reasonable and
necessary administrative expenses as set forth below. The annual reimbursement will be
paid by the Contractor no later than December 31st of each contract year.
2009 $43,470
2010 $46,360
2011 $48,210
2012 $48,860
2013 $45,910
The Plan Sponsor represents that any amounts reimbursed to the Plan pursuant to this
Agreement shall be for expenses that are both reasonable and necessary to the
administration of the Plan.
58
Orange County Sanitation District 457(b) Deferred Compensation Plan
Schedule J: Contractor’s Primary Contact
The Contractor designates the following individual(s) to serve as its primary point of
contact to the Plan Sponsor with respect to this Agreement.
Susan (“Sue”) Silva
Plan Manager
ING Life Insurance and Annuity Company
One Orange Way
Windsor, CT 06095
Phone: 860.580.3277
Email: Susan.Silva@us.ing.com