HomeMy WebLinkAboutCMR- 473-02TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: HUMAN RESOURCES
DATE:DECEMBER 16, 2002 CMR: 473:02
SUBJECT:APPROVAL OF A RESOLUTION AMENDING AND RESTATING
THE DEFERRED COMPENSATION PLAN FOR REGULAR
EMPLOYEES, AND INCORPORATING TAX LAW CHANGES, BY
ADOPTION OF ICMA AND HARTFORD PLAN AND TRUST
DOCUMENTS (AS AMENDED) IN PLACE OF CITY'S CURRENT
DEFERRED COMPENSATION PLAN DOCUMENT AND TRUSTEE
DESIGNATIONS; APPROVAL OF RESOLUTIONS APPOINTING
THE CITY MANAGER AND DIRECTOR OF ADMINISTRATIVE
SERVICES TO ACT ON BEHALF OF THE CITY UNDER THE PLANS
RECOMMENDATION
This report recommends Council take the following actions, which are required to amend and
restate the City's Deferred Compensation Plan for regular employees to reflect changes made
to the Internal Revenue Code by the Economic Growth and Tax Relief Reconciliation Act of
2001 (EGTRRA), and the associated California tax law changes:
Approve (2) Resolutions amending and restating the City's deferred compensation
plan and trust for regular employees by adopting the attached ICMA and Hartford
deferred compensation plan and trust documents, respectively, in place of the City's
existing plan and trust documents, thereby replacing current plan trustees.
Approve (2) Resolutions appointing the City Manager and Director of Administrative
Services to act on behalf of the City under the ICMA and Hartford deferred
compensation plan and trust documents, respectively.
BACKGROUND
The City of Palo Alto has provided regular City employees with a deferred compensation
plan set up under Section 457 of the Internal Revenue Code (IRC) since 1982. The plan
permits employees, on a voluntary basis, to defer receiving a portion of their current salary
and the earnings for payment at a later date. Neither the deferred salary amounts or earnings
are subject to federal or state income taxes until deferred compensation is distributed to the
CMR: 473:02 Page 1 of 4
employee upon termination or at retirement. The City adopted its own Deferred
Compensation Plan document for regular employees on September 27, 1982. The plan
document was amended and restated in 1983, 1987, 1989, 1997 and 1998 to comply with the
requirements of Section 457 of the Internal Revenue Code (IRC) and related tax law.
DISCUSSION
The Economic Growth and Tax Relief and Reconciliation Act of 2001 and corresponding
State law allow the City to amend the deferred compensation plan for regular employees to
provide valuable additional benefits to participants. The new plan documents, based on
ICMA and Hartford's standard plan documents, incorporate new deferred compensation plan
options available as of 2002 under these laws and their implementing regulations, as
described below:
Increase in Maximum Deferral Amount. Under the current plan, contributions are
limited to the lesser of 33 1/3 percent of taxable compensation or $8,500. As
amended, Section 457 (e) (15) increases the maximum regular deferral limit to the
lesser of 100% of includible compensation or $11,000 in 2002, increasing $1,000 per
year up to $15,000 in 2006, then indexed in $500 increments. Catch-up contributions
during the three years prior to normal retirement will be increased from $15,000 to
twice the regular elective deferral limit.
o Additional Contributions for Particit~ants Age 50 and Over. New IRC code Section
414 (v) permits employees age 50 or over to contribute an additional amount into the
plan for all plan years (except during the three years the participant is utilizing regular
457 catch-up. The additional amount is $1,000 in 2002, increasing $1,000 each year
up to $5,000 in 2006. The additional amount is then indexed in $500 increments
based upon cost-of-living.
Flexible Distributions. Under the current 457 plan, participants must elect a
beginning date for distributions from their account within a restricted time frame after
leaving employment. This date could be postponed one time. Once distributions
begin, the payment schedule cannot be changed. Under amended IRC Section 457 (a)
and the new plan documents participants will be able to start and stop their
distributions at wil! and there will no longer be a need for an election of a beginning
payment within a specified period of time after separation from employment. In
addition, non-spouse beneficiaries may now take distributions over life expectancy,
not just 15 years.
In-Service Transfers for Purchase of Defined Benefit Plan Service Credits. New IRC
Section 457 permits the plan participants to receive a trustee-to-trustee transfer of
assets from their 457 account to a governmental defined benefit plan, such as PERS,
CMR: 473:02 Page 2 of 4
for the purpose of permissible service credit.
o Rollovers From Employer-Sponsored Plans and IRAs. EGTRRA permits the plan to
accept rollover contributions from other types of employer-sponsored plans, including
401 (a), 401 (k), 403 (b) and IRAs. Rollovers into the 457 plan from 401 (a), 401 (k),
403 (b) or an IRA are subject to the 10% premature distribution penalty tax if
distribution from the 457 plan is prior to age 59 ~/2.
o Qualified Domestic Relations Orders (QDROs). The City's current plan accepts
qualified domestic relations orders. The plan may provide for immediate payments to
an ex-spouse or alternate payee and the distribution will be taxed to the ex-spouse that
receives the court-ordered distribution rather than the plan participant.
The City's Deferred Compensation Plan is currently governed by the City's tailored plan
document. As the City' s plan document has been restated and amended over the years, it has
become substantively very similar to the standard plan documents offered by the City's two
plan administrators, ICMA and Hartford. Adopting the standard plan documents of the
City's plan administrators (amended where necessary) would simplify the day-to-day
administration of the plans, and save the City time and money by shifting much of the
ongoing contract updating work from City staff and outside counsel onto plan administrators
ICMA and Hartford. Staff believes ICMA and Hartford, given the numerous clients they
serve in such a capacity, are well positioned to provide such services in a proficient and
efficient manner.
As of January 1, 1999, a Trust Agreement was established by the City pursuant to IRC
Section 457 (g), which requires that all assets and income under the deferred compensation
plan be held in a trust for the exclusive benefit of plan participants and beneficiaries. The
City Manager and the Director of Administrative Services were designated as co-trustees.
Under the trust agreement, the City would indemnify these trustees for any liability arising
out of their trustee duties.
In conjunction with the proposed adoption of the ICMA and Hartford plan documents, it is
also proposed that the City replace the current designated plan trustees, the City Manager and
the Director of Administrative Services, with institutional trustees Vantage Trust Company
(ICMA Plan) and the Hartford Insurance Company (Hartford Plan), as provided for in the
plan documents in accordance with ICMA and Hartford's standard practice. These
institutional trustees are subject to the same duties to hold all plan assets and income in trust
for the exclusive benefit of plan participants and beneficiaries.
In accordance with the ICMA and Hartford plan documents, the City retains authority to
make all discretionary decisions affecting the rights or benefits of participants which may be
required in the administration of the plans. It is in the City's interest to appoint particular
CMR: 473:02 Page 3 of 4
manager positions to act on behalf of the City and exercise the City's authority under the
plans. Thus, it is recommended that the Council approve the attached resolutions appointing
the City Manager and Director of Administrative Services to serve in this role for both plans.
RESOURCE IMPACT
There will be no cost impact by the amending and restating of the Plan or by the adoption of
the Hartford and ICMA plan documents in place of the existing plan document.
POLICY IMPLICATIONS
This report does not represent any change to existing policies
ENVIRONMENTAL REVIEW
This is not a project under the California Environmental Quality Act (CEQA).
ATTACHMENTS
Attachment A:
Attachment B"
Resolutions amending and restating the City's deferred compensation
plan and trust for regular employees by adopting the attached ICMA
and Hartford deferred compensation plan and trust documents
Resolutions appointing the City Manager and Director of
Administrative Services to act on behalf of the City under the ICMA
and Hartford deferred compensation plan and trust documents.
PREPARED BY: Leonard Zucker, Employee Benefits Manager
DEPARTMENT HEAD:
Leslie Loomis
Director of Human Resources
Emily'Harrison
Assistant City Manager
CMR: 473:02 Page 4 of 4
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
APPOINTING THE CITY MANAGER AND THE DIRECTOR OF
ADMINISTRATIVE SERVICES TO ACT ON BEHALF OF THE
CITY UNDER THE CITY OF PALO ALTO'S DEFERRED
COMPENSATION PLAN FOR REGULAR EMPLOYEES, INCL~ING
THE ICMA DEFERRED COMPENSATION PLAN AND TRUST
DOCUMENT, AS AMENDED
WHEREAS, pursuant to Resolution No. 7603, adopted June 14,
1996, the City Counci! amended and restated the '~City of Palo Alto
Deferred Compensation Plan" (the "Plan") as the exclusive Deferred
Compensation Plan for regular employees, in accordance with
Internal Revenue Code Section 457 and other applicable law; and
WHEREAS, pursuant to Resolution No. 7819, adopted
December 14, 1998, the City Council approved an amendment to said
plan providing that al! assets of the plan be held in trust, or
under an appropriate annuity contract or custodia! account, for the
exclusive benefit of plan participants and their beneficiaries, as
required by changes to the Internal Revenue Code, and estab!ishing~
a trust and designating as co-trustees the City Manager and
Director of Administrative Services; and
WHEREAS, adoption of the standard 457 plan document of ICI~A
(and that of the City's other 457 plan administrator), which
incorporates current tax law, in place of the City's current,
tailored plan will reduce the City's administrative costs and
burden without effecting any negative impact on plan participants;
and
WHEREAS, the City has determined that it is in the City's
and its employees' best interest to amend and restate the existing
Plan, administered by ICMA, into the ICMA Deferred Compensation
Plan and Trust Document, as amended, thereby incorporating tax law
changes and replacing the current plan trustees with VantageTrust
Company, effective January i, 2003; and
WHEREAS, the amended and restated ICMA Deferred
Compensation Plan and Trust document shall supersede the provisions
of the City's existing Plan to the extent the existing Plan is
inconsistent with the provisions of the amended and restated ICMA
Deferred Compensation Plan and Trust; and
WHEREAS, under the ICMA Trust Document, which provides for
the holding and investing of plan assets by Plan Trustee
VantageTrust, the City as Employer has discretionary authority over
the Plan and directs the Plan Trustee with respect to investing
plan assets and other discretionary actions under the Plan; and
1
021212 cl 8120317
WHEREAS, it is in the City's and its employees' best
interest to appoint the City Manager and the Director of
Administrative Services to exercise the City's discretionary
authority under the Plan and Trust; and
WHEREAS, the current City Manager and the Director of
Administrative Services have agreed to serve in this role for the
City, with the understanding that the City Manager or his designee
may take those non-discretionary actions necessary to keep the Plan
in compliance with law.
NOW, THEREFORE, the Council of the City of Palo Alto does
RESOLVE as follows:
SECTION i. The Council hereby designates the City Manager
and the Director of Administrative Services to act on behalf of the
City and exercise the City's discretion under the City of Pa!o
Alto's Deferred Compensation Plan for regular employees, and
specifically under the ICMA Deferred Compensation Plan and Trust.
SECTION 2. The Council finds that this is not a project
under the California Environmental Quality Act.
INTRODUCED AND PASSED :
AYES :
NOES :
ABSENT :
ABSTENTIONS :
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM:APPROVED:
Senior Asst. City Attorney City Manager
Director of Administrative
Services
Director of Human Resources
021212 cl 8120317
2
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
APPOINTING THE CITY MANAGER AND THE DIRECTOR OF
ADMINISTRATIVE SERVICES TO ACT ON BEHALF OF THE
CITY UNDER THE CITY OF PAL0 ALTO'S DEFERRED
COMPENSATION PLAN FOR REGULAR EMPLOYEES,INCLUDING
THE HARTFORD DEFERRED COMPENSATION PLAN AND GROUP
ANNUITY CONTRACT (TRUST SUBSTITUTE), AS AMENDED
WHEREAS, pursuant to Resolution No. 7603, adopted June 14,
1996, the City Council amended and restated the "City of Palo Alto
Deferred Compensation Plan" (the "Plan") as the exclusive Deferred
Compensation Plan for regular em_mloyees, in accordance with
Internal Revenue Code Section 457 and other applicable law; and
WHEREAS, pursuant to Resolution No. 7819, adopted
December 14, 1998, the City Council approved an amendment to said
plan providing that all assets of the plan be held in trust, or
under an appropriate annuity contract or custodial account, for the
exclusive benefit of plan participants and their beneficiaries, as,
required by changes to the Internal Revenue Code, and establishing
a trust and designating as co-trustees the City Manager and
Director of Administrative Services; and
WHEREAS, adoption of the standard 457 plan documents of
Hartford (and that of the City's other 457 plan administrator),
which incorporates current tax law, in place of the City's current,
tailored plan will reduce the City's administrative costs and
burden without effecting any negative impact on plan participants;
and
WHEREAS, the City has determined that it is in the City's
and its employees' best interest to amend and restate the existing
Plan, administered by Hartford, into the Hartford "City of Palo
Alto Deferred Compensation Plan", as amended, thereby incorporating
tax law changes and replacing the current Plan trust for this
purpose with Hartford's Group Annuity Contract, under which plan
assets likewise must be held in trust for the exclusive benefit of
plan participants and their beneficiaries, effective January i,
2003; and
WHEREAS, the amended and restated Hartford "City of Palo
Alto Deferred Compensation Plan" (and the corresponding Group
Annuity Contract) shall supersede the provisions of the City's
existing Plan to the extent the existing Plan is inconsistent with
the Hartford "City of Pa!o Alto Deferred Compensation Plan" (and
the corresponding Group Annuity Contract); and
021212 c] 8120318
WHEREAS, pursuant to the Hartford "City of Palo Alto
Deferred Compensation Plan" and the corresponding Hartford Group
Annuity Contract, under which Plan assets must be held in trust for
the exclusive benefit of plan participants and their beneficiaries,
the City as Employer has discretionary authority to administer the
Plan and the City's appointed ~Administrator" exercises~the City's
discretion or other functions under the Plan; and
WHEREAS, it is in the City's and its employees' best
interest to appoint the City Manager and the Director of
Administrative Services to serve as "Administrators" under the Plan
and to exercise the City's discretionary authority under the Plan;
and
WHEREAS, the current City Manager and the Director of
Administrative Services have agreed to serve in this role for the
City, with the understanding that the City Manager or his designee
may take those non-discretionary actions necessary to keep the Plan
in compliance with law.
NOW, THEREFORE, the Council of the City of Palo Alto does
RESOLVE as follows:
SECTION i. The Council hereby designates the City Manager
and the Director of Administrative Services to act on behalf of the
City and exercise the City's discretion under the City of Palo
Alto's Deferred Compensation Plan for regular employees, and
specifically to serve as ~Administrators" under the Hartford "City
of Palo Alto Deferred Compensation Plan" and the corresponding
Group Annuity Contract.
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021212 cl 8120318
2
SECTION 2. The Council finds that this is not a project
under the California Environmenta! Quality Act.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Asst. City Attorney City Manager
Director of Administrative
Services
Director of Human Resources
021212 cl 8120318
3
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
~ING AND RESTATING THE CITY OF PALO ALTO'S
DEFERRED COMPENSATION PLAN FOR REGULAR EMPLOYEES,
AND INCORPORATING TAX LAW CHANGES, BY ADOPTION OF
THE HARTFORD DEFERB~D COMPENSATION PLAN AND GROUP
ANNUITY CONTRACT (TRUST SUBSTITUTE), AS AFZENDED
WHEREAS, pursuant to Resolution No. 7603, adopted June 14,
1996, the City Counci! amended and restated the "City of Palo Alto
Deferred Compensation Plan" (the ~P!an") as the exclusive Deferred
Compensation Plan for regular emp!oyees, in accordance with
Internal Revenue Code Section 457 and other applicable law; and
WHEREAS, pursuant to Resolution No. 7819, adopted
December 14, 1998, the City Counci! approved an amendment to said
plan providing that al! assets of the plan be held in trust, or
under an appropriate annuity contract or custodial account, for the
exclusive benefit of plan participants and their beneficiaries, as
required by changes to the Internal Revenue Code, and establishing
a trust and designating as co-trustees the City Manager and
Director of Administrative Services; and
WHEREAS, Hartford Insurance Company has served as an
administrator of the Plan pursuant to Section 457 of the Interna!
Revenue Code and the above-cited resolutions; and
WHEREAS, the City desires to amend its Deferred
Compensation Plan and trust in conformance with the Economic Growth
and Tax Relief Reconciliation Act (EGTRRA) and the final and
temporary Treasury regulations under Section 401(a) (9) of the
Internal Revenue Code, as published in the Federal Register on
April 17, 2002, 74 FR 18987; and
WHEREAS, adoption of Hartford's standard 457 plan documents
(and those of the City's other 457 plan administrator), which
incorporate current tax law, in place of the City's current,
tailored plan will reduce the City's administrative costs and
burden without effecting any negative impact on plan participants;
and
WHEREAS, the City has determined that it is in the City's
and its employees' best interest to amend and restate the existing
Plan, administered by Hartford, into the Hartford "City of Pa!o
Alto Deferred Compensation Plan", as amended, thereby incorporating
tax law changes and replacing the current Plan trust for this
021212 cl 8120316
purpose ~ith Hartford's Group Annuity Contract, under which plan
assets likewise must be held in trust for the exclusive benefit of
plan participants and their beneficiaries, effective January i,
2003; and
WHEREAS, the amended and restated Hartford "City of Pa!o
Alto Deferred Compensation Plan" (and the corresponding Group
Annuity Contract) shall supersede the provisions of the City's
existing Plan and trust to the extent they are inconsistent with
the provisions of the amended and restated restated Hartford "City
of Palo Alto Deferred Compensation Plan" (and the corresponding
Group Annuity Contract).
NOW, THEREFORE, the Council of the City of Pa!o Alto does
RESOLVE as follows:
SECTION !. The Council hereby amends and restates the
existing "City of Palo Alto Deferred Compensation Plan," as
administered by Hartford, into the Hartford "City of Palo Alto
Deferred Compensation Plan" (and the corresponding Group Annuity
Contract), and adopts said Plan and Contract, and thereby replaces
current plan trustees with Hartford under the Group Annuity
Contract. Copies of the Hartford "City of Pa!o Alto Deferred
Compensation Plan" and the corresponding Group Annuity Contract are
attached hereto as Exhibit ~A" and incorporated herein by this
reference.
SECTION 2. The Council authorizes the City Manager (or his
designee) to sign documents and take such other non-discretionary
actions as are necessary to implement the amended and restated plan
and trust, and authorizes the City Manager to otherwise act on
behalf of the City in accordance with the separate resolution
designating the City Manager and the Director of Administrative
Services to act for the City under the plan and trust.
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021212 cl 8120316 2
SECTION 3. The Council finds that this is not a project
under the California Environmental Quality Act.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
Mayor
APPROVED:
City Manager
Director of Administrative
Services
Director of Human Resources
021212 cl 8120316 3
CITY OF PALO ALTO
DEFERRED COMPENSATION PLAN
AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2002
812/Palo Alto-Hartford 457 plan v.2(2)Exhibit ~A"
PREAMBLE amended.
This City of Palo Alto Deterred Compensation Plan (the
"Plan") was originally adopted effective September 27, 1982,
and was amended and restated effective December 12, 1983,
and August 17, 1987, and September 18, 1989. The Plan is
hereby amended and restated as set forth below, effective as
of July 1, 2002, in order to comply with the applicable
requirements of Section 457 of the Internal Revenue Code of
1986, as amended (the "Code"), and to provide for other
changes set forth below.
The primary purpose of this Plan is to permit Employees of
the Employer to enter into an agreement which will provide for
deterral of payment of a portion of their current compensation
until death, retirement, severance from employment, or other
event, in accordance with the provisions of Section 457 of the
Code, with other applicable provisions of such Code, and in
accordance with State law.
It is intended that the Plan shall qualify as an Eligible Deferred
Compensation Plan with in the meaning of Section 457(b) of
the Code sponsored by an Eligible Governmental Employer.
The Employer does not and cannot represent or guarantee
that any particular tederal or state income, payroll or other tax
consequence will occur by reason of participation in this Plan.
A Participant should consult with his or her own attorney or
other representative regarding all tax or other consequences
of participation in this Plan.
ARTICLE I
DEFINITIONS
1.1 Plan Definitions
For purposes of this Plan, the tollowing words and phrases
shall have the meaning set forth below, unless a different
meaning is plainly required by He context:
"Administrator" of "Plan Administrator" means the
Employer or its duly authorized designee for that purpose
who shall exercise the discretion or other functions given to
the Employer under the terms of the Plan.
"Contracts" means an insurance contract (fixed and/or
variable) issued by Hartford Life Insurance Company.
"Beneficiar,~' means any person designated by the
Participant to receive an annuity, death benefit, or other
benefit under the provisions of this Plan, by reason of such
Participant's death.
"Code" means the Internal Revenue Code of 1986, as
"Compensation" means the total of all wages or salaries
which are paid by the Employer to, or for the benefit of, an
Employee for services rendered, calculated without deduction
tot any portion thereof deferred under the provisions of this
Plan or for any amounts contributed to any program
established pursuant to Code Sections 403(b), 401(k),
408(k)(6), or 501 (c)(18).
"Deferred Compensation" means that portion of an
Employee's Compensation which said Employee has elected
to defer in accordance with the provisions of this Plan.
"Eligible Deferred Compensation Plan" means a plan that
satisfies the requirements of Code Section 457(b) and the
regulations thereunder.
"Eligible Governmental Employer" means a State, political
subdivision of a State, and any agency or instrumentality of a
State or political subdivision of a State.
"Employer" means the City of Palo Alto.
"Employee" means any full-time employee of the Employer
who receives Compensation, including any of the following
individuals selected below;
X Part-time regular employees
X Elected Officials
"Includible Compensation" means compensation from the
Employer, within the meaning of Code Section 415(c)(3) and
the regulations-thereunder.
"Participant" means any Employee or former Employee of
the Employer, who elects to participate in this Plan or who
has unpaid benefits due under the Plan.
"Participation Agreement" means an agreement filed by an
Employee to elect or modify participation in the Plan.
"Participant Account" means the account established and
maintained on behalf of a Participant to reflect the total value
of his or her interest under the terms of this Plan.
"Plan" means this City of Palo Alto Deferred Compensation
Plan, as amended and restated effective July 1, 2002, which
plan constitutes an Eligible Deferred Compensation Plan.
"Plan Year" means the calendar year during which the Plan
becomes effective, and each succeeding year during the
existence of this Plan.
"State" means the State of California.
812/Palo Alto-Hartford 457 plan v.2(2)- 1 -
ARTICLE il
OPERATION OF PLAN
2.1 Participation
Any Employee may elect to become a Participant in the Plan
and to defer payment of part of his compensation not yet
earned by executing a written Participation Agreement and
filing it with the Employer. The Employer shall defer payment
of Participant compensation in the amount specified in each
Participation Agreement filed with the Employer.
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits, and service credit with respect to
qualified military service will be provided in accordance witl~
Code Section 414(u).
2.2 Participation Agreement
The Administrator shall establish a written Participation
Agreement which shall contain, among other provisions, a
provision whereby the Participant specifies:
(a)that portion of his/her Compensation which is to be
deferred.
(b)his/her investment preference; however, the
Employer reserves the right to disapprove the
Participant's selection.
(c)a Beneficiary or Beneficiaries, including one or
more contingent Beneficiaries, to receive any
benefits which may be payable under this Plan or
on the death of the Participant.
(d)that his salary, wage or other compensation is as
set forth in any salary ordinance or otherwise
without deductions for amounts deferred under the
provisions of this plan.
(e)that the Participant together with his heirs,
successors, and assigns, holds harmless the
Employer from any liability hereunder for all acts
performed in good faith, including acts relating to
the investment of deferred amounts and/or the
Employee's investment preference hereunder.
(f)a payment option and payment frequency if
applicable.
2.3 Agreement Effective Date
Participation commences on the first day of the pay period
following the date employee submits a Participation
Agreement. Thereafter, during each employment year in
which the Employee is a Participant in the Plan, that portion of
his said Compensation which is specified by the Employee in
the Participation Agreement shall be deferred and paid in
accordance with the provisions of this Plan.
2.4 Amendment of Participation Agreement
The Participant may revoke his election to participate and
may change the amount of Compensation to be deferred, or
his investment preference, by signing and filing with the
Employer a written revocation or amendment, on a form
approved by the Administrator. Any such revocation or
amendment shalt be effective prospectively only, beginning
with the first pay period of the subsequent month.
2.5 Regular Contributions
The regular contribution is the amount of compensation which
may be deferred by a Participant subject to the following
limitations:
(a)Calendar Year Maximum - Except as provided in
section 2.6, the maximum amount a Participant may
defer during a calendar year to this and/or any other
Eligible Deferred Compensation Plan shall. not
exceed the lesser of (i) the applicable dollar amount
as set forth in Section 457(e)(15) of the Code, or (ii)
100% of the Participant's Includible Compensation.
(b)Pay Period Minimum - The minimum amount a
Participant may defer is $10.00 per biweekly pay
period.
2.6 Pre-Retirement Catch-Up Contributions
A Participant may defer an additional amount under this
section for one or more of the last three Plan Years ending
before the Plan Year in which the Participant attains his or her
Normal Retirement Date. Such additional deferrals shall
hereinafter be referred to as "pre-retirement catch-up." The
use of pre-retirement catch-up is subject to the following
restrictions:
(a)The maximum amount a Participant may defer, in
each of the Plan Years in which he/she is eligible
for the pre-retirement catch-up, to this or any other
Eligible Deferred Compensation Plan shall not
exceed the lesser of these two amounts:
(1)twice the dollar limit in effect under
section 2.5(a) hereunder, or
(2)the maximum amount that may be
deferred under section 2.5(a) plus the
portion of the maximum amount of
deferral available under this Plan in prior
812./Palo Alto-Hartford 457 plan v.2(2)- 2 -
years that was not actually deferred by
the Participant. A prior year shall be
taken into account only if it is a year
beginning after December 31, 1978, and
the Participant was eligible in that year to
participate in the Plan.
(b)The pre-retirement catch-up provision may be used
only once by any Participant, whether under this
Plan or any other eligible Deferred Compensation
Plan.
(c)Participants may continue to make regular
contributions after they are no longer eligible to use
pre-retirement catch-up.
For purposes of this section, Normal Retirement Date shall
mean the age designated by a Participant as his/her Normal
Retirement Date. For this purpose, the designated Normal
Retirement Date may be any age within the range of dates (i)
beginning on the earlier of (A) the date the Participant attains
age 65, or (B) the date the Participant has attained age 50
and been credited with at least 5 years of service under the
California Public Employees' Retirement System (CalPERS),
and (ii) ending on the date the Participant attains age 70Y2.
2.7 Age 50+ Catch-Up Contributions
A Participant who has attained age 50 before the close of a
Plan Year shall be eligible to make catch-up contributions for
such Plan Year in accordance with, and subject to the
limitations of, Section 414(v) of the Code. Such contribution
shall not, with respect to the Plan Year in which the
contribution is made, be subject to any otherwise applicable
limitation contained in Section 457 of the Code, or be taken
into account in applying such limitations to other contributions
or benefits under this Plan or any other plan. The maximum
amount that may be deferred under this Plan for any Plan
Year by a Participant eligible for both the pre-retirement catch
up contribution at section 2.6 and this age 50+ catch-up
contribution is the greater of: (i) the maximum amount that
may be deferred under section 2.5(a), plus any age 50+
catch-up contribution allowed under this section; or (ii) the
maximum amount that may be deferred under section 2.6(a).
2.8 Rollover Contributions
A Participant who is an Employee may contribute a Rollover
Contribution to the Plan. For this purpose, a "Rollover
Contribution" is a Participant contribution or a direct rollover of
an eligible rollover distribution as defined in Section 402(c)(4)
of the Code. The Plan Administrator may require the
Employee to certify, either in writing or in any other form
permitted under rules promulgated by the IRS, that the
contribution qualifies as a Rollover Contribution under the
applicable provisions of the Code. If it is later determined that
all or part of a Rollover Contribution was ineligible to be
contributed to the Plan, the Plan Administrator shall direct that
any ineligible amounts, plus earnings or losses attributable
thereto (determined in a uniform and nondiscriminatory
manner) be distributed from the Plan to the Employee as
soon as administratively feasible. Separate accounting shall
be maintained by the Plan Administrator for any Rollover
Contribution not attributable to an Eligible Deferred
Compensation Plan. Ro!lover Contributions will be
nonforfeitable at all times.
2.9 Employer Contributions
Nothing in this Plan prohibits the Employer from making
deposits to a Participant Account as additional compensation
for services rendered, subject to the Participant's regular
contribution limits.
ARTICLE III
INVESTMENT RESPONSIBILITIES
3.1 Investment of the Deferred Amount
Amounts deferred or contributed pursuant to Article II shall be
held for the exclusive benefit of Participants and their
Beneficiaries in trust or under one or more Contracts. All
amounts so held will be allocated to the appropriate
Participant Accounts. Each Participant shall direct the
investment of amounts held in his or her Participant Account
under the plan. In the absence of such Participant investment
direction, amounts held in his or her Participant Account shall
be invested in such manner as the Administrator shall
determine. The investment of amounts segregated on behalf
of an alternate payee pursuant to a "qualified domestic
relations order" within the meaning of Section 4!4(p) of the
Code may be directed by such alternate payee to the extent
provided in such order. In the absence of such direction,
such amounts shall be invested in the same manner as they
were immediately before such segregation was made on
account of such order. Each Participant Account shall share
in any gains or losses of the investment(s) in which such
account is invested.
3.2 Amendment of Investment Election
A Participant may amend his statement of investment election
at such times and by such manner and form as prescribed by
the Administrator. Such amendment will, unless specifically
stated otherwise, apply only to future amounts deferred under
the Plan.
3.3 Investment Changes
A Participant may elect to transfer amounts in his or her
812/Palo Alto-Hartford 457 plan v.2(2)- 3 -
Participation Account among and between those investments
available under trust and/or Contract at such times and by
such manner and form prescribed by the Administrator,
subject further to any restrictions or limitations placed on any
investment by the Administrator to be uniformly applied to all
Participants.
3.4 Investment Responsibility
Where a Participant exercises control over the investment of
amounts credited to his/her Participation Account, the
Employer and any other fiduciary of the Plan shall not be
liable for any loss which results from such Participant's
exercise of control.
3.5 Statements
The Employer will cause to be issued statements periodically
to reflect the actual earnings, gains, contributions and losses
posted to the Participation Accounts.
ARTICLE IV
DISTRIBUTIONS
4.1 Eligibility
Distribution may be taken under any of the following
circumstances, subject further to the provisions of this Article
IV:
(a)On account of an unforeseeable emergency;
(b)Non-participation;
(c)Attainment of age 70-1/2, whether or not still
employed;
(d)Severance from employment; or
(e)Participant's death.
4.2 Unforeseeable Emergency Distribution
A Participant may apply for a lump sum withdrawal of funds
from the Plan under certain emergency conditions. The
Employer will evaluate the request for conformity with its
interpretation of the applicable regulations.
The Participant must satisfy the Employer that all of the
following conditions are met before the Employer may
authorize the emergency withdrawal:
(a)Major unexpected and unreimburseable expenses
exist that were not foreseeable and are beyond the
(b)
Employee's control;
The unforeseeable emergency event involves the
Participant, or his/her spouse or any dependent
who qualifies under Section 152(a) of the Code;
(c)The financial burden created must be the legal
obligation of the Participant;
(d)
(e)
All other financial sources, such as insurance
payments and attempts to obtain loans, have been
exhausted;
All assets must be liquidated except where
liquidation would itself cause severe financial
hardship;
(f)The amount of the requested withdrawal is limited
to the amount necessary to meet the financial
emergency; and
(g)Great financial hardship will occur if the withdrawal
is not permitted.
Examples of hardship circumstances include major proPerty
loss and catastrophic illness of spouse or dependents.
Withdrawals are not authorized for expenses related to the
death or illness of any other family member, or for budgetable
expenses such as automobile or college costs, a home down
payment, or expenses relative to divorce proceedings.
Any remaining benefits shall be paid upon retirement,
severance from employment, or death in accordance with this
Article IV.
The decision of the Employer concerning withdrawals under
this section 4.2 shall be final as to all Participants.
4.3 Distribution for Certain Non-Participating
Participants
If the total amount of a Participant's Account under the Plan,
excluding amounts attributable to Rollover Contributions,
does not exceed the dollar limit under Code Section
411(a)(11)(A), the Participant may elect to receive (or the
Employer may elect to pay to the Participant without the
Participant's consent) the total amount in a single sum
payment within 60 days of such election; provided, however,
such amount may be distributed pursuant to this section 4.3
only if: (a) no amount has been deferred under the Plan with
respect to such Participant during the two-year period ending
on the date of the distribution, and (b) there has been no prior
distribution under the Plan to such Participant to which this
section 4.3 applied.
812/Palo Alto-Hartford 457 plan v.2(2)- 4 -
4.4 Distribution On or After Age 70-1/2 or Severance
From Employment
Upon becoming eligible in accordance with section 4.1(c) or
(d) hereof, a Participant may elect to commence distribution in
accordance with the payment options set forth at section 4.6
hereof.
4.5 Distribution On Account of the Participant's
Death
In the event o{ the Participant's death, the full amount credited
to the Participant's Account (including earnings and net gain
or loss), less any federal or State income tax required to be
withheld, shall be distributed according to the following
requirements:
(a)If distribution has commenced prior to the death of
the Participant, the balance of a Participant's
Account shall be paid to the Beneficiary in
accordance with the payment option already
selected by the Participant so that the remaining
distribution will be effected at least as rapidly as
under the payment option used before the
Participant's death.
(b)If the distribution has not commenced prior to the
death of the Participant;
(1) a non-spousal Beneficiary must either;
(A)elect a distribution payable over a period
not extending beyond his or her own life
expectancy, commencing no later than
the end of the calendar year following the
calendar year in which the Participant
died; OR
(B)elect a single-sum payment by the end of
the calendar year which contains the fifth
anniversary of the date of death of the
employee, otherwise, such single-sum
payment shall be made by the end of
such calendar year.
(2)a spousal Beneficiary may elect either a
single-sum payment or a distribution payable
over a period not exceeding his/her own life
expectancy. Distribution to the spousal
beneficiary must commence no later than the
year the deceased Participant would have
reached age 70-1/2.
4.6 Forms of Payment
Except in the event of the Participant's death, all or a portion
of the amount credited to the Participant's Account shall be
distributed, as instructed by the Participant, under one of the
following payment options:
(a)A single sum payment;
(b)Payments for a specified period where amounts are
paid in installments not in excess of the Participant's
allowable life expectancy or joint life expectancy of
the Participant and his/her Beneficiary;
(c)Annuity for a period certain of five (5) to thirty (30)
years, but not in excess of the Participant's
allowable life expectancy
(d)A life annuity;
(e)A life annuity with period certain guaranteed, with
the guarantee that if at the annuitant's death
payments have not been made for the guaranteed
period as elected, payments will continue to the
Beneficiary. The guaranteed period to be elected
may be either ten (10), fifteen (15) or twenty (20)
years but may not exceed the life expectancy of the
Participant and his or her Beneficiary; or
(f)A joint and survivor annuity payable during the
lifetime of the Participant and his/her Beneficiary.
4.7 Minimum Distribution Requirements
Notwithstanding anything in this plan to the contrary,
distribution from the Plan shall commence and be made in
accordance with Section 401(a)(9) of the Code and the
regulations promulgated thereunder. Participants must
commence distribution no later than April 1st following the
later of (i) the calendar year in which the Participant attains
age 70-1/2 or (ii) the calendar year in which the Participant
retires.
ARTICLE V
BENEFICIARY
5,1 Designation
Each Participant has the right, by written notice filed with the
Employer, to designate one or more Beneficiaries to receive
any benefits payable under this Plan in the event of the
Participant's death prior to the complete distribution of
benefits. The Participant accepts and acknowledges that he
has the burden for executing and filing, with the Employer, a
proper beneficiary designation form.
812/Palo Alto-Hartford 457 plan v.2(2)- 5 -
The form for this purpose shall be provided by the Employer.
It is not binding on the Employer until it is signed, filed with
the Employer by the Participant, and accepted by the
Employer.
If no such designation is in effect upon the Participant's death,
or if no designated beneficiary survives the Participant, the
beneficiary shall be the Participant's estate. If no estate
executor or administrator is appointed and qualified within one
hundred twenty (120) days after the Participant's death, the
payment may be made first, to a surviving spouse, second, to
a surviving child or children, and third, to a surviving parent or
parents.
ARTICLE Vl
NON-ASSIGNABILITY
6.1 Non-Assignability
Neither the Participant nor the Participant's beneficiary, nor
any other designee, shall have any right to commute, sell,
assign, pledge, hypothecate, transfer, or otherwise convey
the right to receive any payments hereunder, which payments
and right thereto are expressly declared to be non-assignable
and nontransferable.
Except to the extent otherwise provided by law, no payments
shall be subject to attachment, garnishment or execution, or
be transferable in the event of bankruptcy or insolvency.
6.2 Domestic Relations Orders
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily
pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as
defined in Section 414(p) of the Code.
ARTICLE Vii
ROLLOVERS AND PLAN TRANSFERS
7.1 Direct Rollovers
A distributee may elect to have all or any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the distributee.
For purposes of this section an Eligible Rollover Distribution
means any distribution under this Plan of all or any portion of
the balance to the credit of the distributee, except that an
Eligible Rollover Distribution does not include: any distribution
that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint
life expectancies) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is
required under Section 401 (a)(9) of the Code; or any amount
that is distributed on account of hardship.
For purposes of this section an Eligible Retirement Plan
means an eligible retirement plan that is an individual
retirement account described in Section 408(a) of the Code,
an individual retirement annuity described in Section 408(b) of
the Code, an eligible deferred compensation plan described in
Section 457(b) of the Code which is maintained by an eligible
employer described in Section 457(e)(~)(A) of the Code, an
annuity plan described in Section 403(a) of the Code, an
annuity contract described in Section 403(b) of the Code, or a
qualified trust described in Section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution. The
definition of eligible retirement plan shall also apply in the
case of a distribution to a surviving spouse, or to a spouse or
former spouse who is the alternate payee under a qualified
domestic relation order, as defined in Section 414(p) of the
Code.
For purposes of this section, a distributee includes an
Employee or former Employee. In addition, the Employee's
or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are distributees with
regard to the interest of the spouse or former spouse.
For purposes of this section a Direct Rollover is a payment by
the Plan to the Eligible Retirement Plan specified by the
distributee.
7.2 Transfers In
All or a portion of an Employee's benefit may be transferred
from another Eligible Deferred Compensation Plan
maintained by the Employer or another Eligible Governmental
Employer and credited to the Participant's Account under this
Plan, if:
(a)the transferor plan provides that such transfer can
be made; and
(b)where the transfer is from a plan of another
employer, the Employee has severed employment
with such other employer.
As it deems necessary, the Employer may require such
documentation from the transferor plan to effect the transfer,
to confirm that such plan is an Eligible Deferred
Compensation Plan within the meaning of Code Section
457(b) and to assure that transfers are provided for under
such plan.
812JPalo Alto-Hartford 457 plan v,2(2)- 6 -
The Employer may refuse to accept a transfer in the form of
assets other than cash, unless the Employer agrees to hold
such other assets in trust under the Plan.
Any amounts transferred that have been deferred during the
current calendar years will be considered deferrals subject to
current calendar year deferral limitations.
Notwithstanding the preceding provisions of this section 7.2, if
a transfer is associated with a distributable event and the
Employee is eligible to receive an eligible rollover distribution
as defined Section 402(c)(4) of the Code, such transfer will be
considered a Rollover Contribution subject to the provisions of
section 2.8.
7.3 Transfers Out
All or a portion of a Participant Account may be transferred to
another Eligible Deferred Compensation Plan maintained by
an Eligible Governmental Employer, if:
(a)the transferee plan provides that such transfer can
be made;
(b)the Participant or Beneficiary whose Participant
Account is being transferred will have an account
balance under the transferee plan immediately after
the transfer that is at least equal to the amount
credited to such Participant immediately before the
transfer, less any amounts not so transferred; and
(c)where the transfer is to a plan of another Eligible
Governmental Employer, the Participant has
incurred a severance of employment with the
Employer.
Upon the completion of such transfer, the Plan and Employer
are discharged of any liability to the Participant to pay
amounts so transferred.
As it deems necessary, the Employer may require such
documentation from the other plan to effect the transfer, to
confirm that such plan is an Eligible Deferred Compensation
Plan within the meaning of Code Section 457(b) and to
assure that transfers are provided for under such plan. Such
transfers shall be made only under such circumstances as are
permitted under Code Section 457 and the applicable
regulations.
Notwithstanding the preceding provisions of this section 7.3, if
a transfer is associated with a distributable event and the
distribution is an eligible rollover distribution as defined
Section 402(c)(4) of the Code, such transfer will be
considered a Direct Rollover subject to the provisions of
section 7.1, but only if the transferee plan provides for the
acceptance of rollover contributions.
7.4 Trustee to Trustee Transfers to Purchase
Permissive Service Credit
A Participant may elect to have all or a portion of a his/her
Participant Account directly transferred to a defined benefit
governmental plan (as defined in Section 414(d) of the Code)
of the State, if such transfer is:
(a)for the purchase of permissive service credit (as
defined in Section 415(n)(3)(A) of the Code) under
such plan; or
(b)a repayment to which Section 415 of the Code does
not apply by reason of subsection (k)(3) thereof.
ARTICLE VIII
ADMINISTRATION AND ACCOUNTING
8.1 Administration by Employer
This Plan shall be administered by the Employer, which shall
prescribe such forms, and adopt such rules and regulations
as are necessary to carry out the purposes of the Plan. The
Employer may employ investment counsel to provide advice
concerning categories of investment, investment guidelines
and investment policy, provided, however, that the advice or
recommendations of any such investment counsel shall not
be binding on the Employer, which shall make the final
determination concerning investment categories, investment
guidelines and policies.
The Employer may contract with a financially responsible
independent contractor to administer and coordinate the Plan
under the direction of the Employer. The Administrator shall
have the right to designate a coordinator or other party of its
choice to perform such services under this agreement as may
be mutually agreed to between the Administrator and the
coordinator or other party. Notwithstanding any other
provisions to the contrary, the Administrator agrees that it
shall be solely responsible to the Employer for any and all
services performed by a subcontractor, assignee, or designee
under this agreement.
8.2 Paperless Administration
To the extent permitted by law, regulation or other guidance
from an appropriate regulatory agency, the Administrator,
trustee, Employer or any other party may provide any notice
or disclosure, obtain any authorization or consent, or satisfy
any other obligation under this Plan through the use of media
other than paper. Such alternative media may include, but is
not necessarily limited to, electronic or telephonic media.
812/Palo Alto-Hartford 457 plan v.2(2)- 7 -
8.3 Administrative Costs
The Employer shall determine, in a manner deemed fair and
equitable, the administrative costs associated with the
withholding of Deferred Compensation amounts pursuant to
this plan or in making investments or otherwise administering
or implementing the Plan. The Employer may withhold or
collect, or have withheld or collected, such costs, in such
manner as he deems equitable either (1) from the
compensation deferred pursuant to the Plan, the income
produced from the compensation deferred pursuant to the
Plan, the income produced from any investment, whether or
not augmented, or (2) from the organization receiving such
investment where required by law to collect therefrom or, if
not so required, where mutually satisfactory to such
organization and the Administrator. The Administrator may
remit or direct the remission of appropriate amounts so
withheld or collected to the Employer.
ARTICLE IX
AMENDMENTS
9.1 Right to Amend, Modify and Terminate
The Employer may at any time modify or terminate the Plan
by notifying Participants of such action. The Employer shall
not have the right to reduce or affect the value of any
Participant's account or any rights accrued under the Plan
prior to modification or termination.
9.2 Conformation
The Employer shall amend and interpret the Plan to the
extent necessary to conform to the requirements of Code
Section 457 and any other applicable law, regulation or ruling,
including amendments that are retroactive. In the event the
Plan is deemed by the Internal Revenue Service to be
administered in a manner inconsistent with Code Section 457,
the Employer shall correct such inconsistency within the
period provided in Code Section 457(b).
9.3 Plan Termination
In the event, of the termination of the Plan, distribution of
benefits shall be made to Participants and Beneficiaries
pursuant to the distribution guidelines in section 4 or the
rollovedtransfer provisions of section 7.
ARTICLE X
EXCLUSIVE BENEFIT
10.1 Exclusive Benefit
All amounts of compensation deferred under the Plan,
property and rights purchased with such amounts, and all
income attributable to such amounts, property or rights shall
be held in trust or under one or more insurance contracts
described in Section 401(0 of the Code. Except as may
otherwise be permitted or required by law, no assets or
income of the Plan shall be used for, or diverted to, purposes
other than for the exclusive purpose of providing benefits for
Participants and their Beneficiaries or defraying reasonable
expenses of administration of the Plan.
ARTICLE Xl
MISCELLANEOUS
11.1 Employment
Neither the establishment of the Plan nor any modification
thereof, nor the establishment of any account, nor the
payment of any benefits, shall be construed as giving to any
Participant or other person any legal or equitable right against
the Employer except as herein provided; and, in no event,
shall the terms or employment of any Employee be modified
or in any way affected hereby.
11,2 Successors and Assigns
The Plan shall be binding upon and shall inure to the benefit
of the Employer, its successors and assigns, all Participants
and Beneficiaries and their heirs and legal representatives.
11.3 Written Notice
Any notice or other communication required or permitted
under the Plan shall be in writing, and if directed to the
Employer shall be sent to the designated office of the
Employer, and, if directed to a Participant or to a Beneficiary,
shall be sent to such Participant or Beneficiary at his last
known address as it appears on the Employer's record.
11.4 Total Agreement
This Plan and the Participation Agreement, and any
subsequently adopted amendment thereof, shall constitute
the total agreement or contract between the Employer and
the Participant regarding the Plan. No oral statement
regarding the Plan may be relied upon by the ParticipanL
11.5 Gender
As used herein the masculine shall include the neuter and the
feminine where appropriate.
11.6 Controlling Law
This Plan is created and shall be construed, administered and
interpreted in accordance with Section 457 of the Code and
the regulations thereunder and under the laws of the State. If
any portion of this Plan is held illegal, invalid or
812/Palo Alto-Hartford 457 plan v.2(2)- 8 -
unenforceable, the legality, validity and enforceability of the
remainder shall be unaffected.
812./Palo Alto-Hartford 457 plan v.2(2)- 9 -
IN WITNESS WHERISOF, the Employer has executed this Plan document this day of ,2002.
SEAL
by
(Name of Employer)
Attest:
Its
(Title)
Title (Witness)
457 Plan Doc - Rev. 03-02 l0
CONTRACT SPECIFICATIONS
CONTRACT OWNER:
CONTRACT EFFECTIVE DATE:
RESTATEMENT EFFECTIVE DATE:
CONTRACT JURISDICTION:
CONTRACT NUMBER:
City of Palo Alto
October 20, 1981
October 1, 2002
California
GC-20007
General Account
GROUP ANNUITY CONTRACT
Guaranteed Interest Rates prior to and including the Annuity Commencement Date:
Contributions shall be credited with interest at a rate declared for the calendar quarter in which they are
received. The declared interest rate for any quarter shall be determined by the Company and may be
changed for any subsequent quarter at the discretion of the Company. The declared interest rate
applicable to any quarter will be guaranteed to the end of the applicable calendar year. Any change in the
declared interest rate will be declared before the start of the quarter.
For each subsequent calendar year, each contribution will be credited with interest at a rate guaranteed for
the entire year (the "Guaranteed Interest Rate") which rate will never be less than 4%. The Guaranteed
Interest Rate for a calendar year will be determined at the end of the preceding calendar year. The
Company may, from time to time, credit interest rates in excess of the Guaranteed Interest Rate.
Separate Account(s)
The Separate Account(s) of the Company supporting the Contract are entitled Separate Account 457.
The various Separate Account 457 Sub-Accounts under this Contract and the corresponding investment
Funds for each Sub-Account are set forth in the most recent Administrative Notice which is attached to
and made part of this Contract.
The Company reserves the right, subject to compliance with applicable law, to substitute the shares of any
other registered investment company for the shares of any Fund held by a Separate Account included in
this Contract. Substitution may occur if shares of any Fund(s) become unavailable, or due to changes in
the applicable law or interpretations of law, or as the Company deems appropriate.
The Company also reserves the riglat, in its sole discretion and subject to compliance with applicable law,
to add, replace or delete Separate Accounts and/or Funds (with or without differing investment
objectives) to or from this Contract, and to terminate ongoing contributions to Separate Accounts and/or
Funds under this Contract, provided the Company gives the Contract Owner thirty (30) days advance
written notice of its intent to do so, and further provided that the Company takes the same action(s) with
respect to all contracts of the same class and risk characteristics. If the Company adds additional Separate
Accounts and/or Funds to.this Contract, the Separate Accounts and/or Funds so added will be subject to
the charges, fees and transfer restrictions then in effect for such Separate Accounts and/or Funds at the
time they are added to this Contract.
A list of the investment options selected by the Contract Owner and available under this Contract will be
provided to the Contract Owner from time to time in an Administrative Notice. The various Investment
Options/Sub-Accounts available under this Contract, unless otherwise elected by the Contract Owner, are
HL-1581 I(CA)
set forth in accordance with the most recent Administrative Notice issued by the Company. An
Administrative Notice may be furnished when Investment Options/Sub-Accounts have been added,
frozen, eliminated or replaced under the Contract. Such Notice may also reflect information relative to
such Investment Options, including, but not limited to, the applicable deduction for mortality, expense
risk and administrative undertakings, its classification as a competing fund (ifapp!icable), and any
applicable transfer restrictions.
Competing Funds
For purposes of applying the transfer restrictions described under CONTRIBUTION PROVISIONS, the
following Funds are considered competing funds ("Competing Funds"):
Hartford Money Market HLS
General Account
The Company reserves the right, in its sole discretion, to determine whether or not any Fund included in
this Contract on the Effective Date or subsequently added to this Contract after the Effective Date is or
has become a Competing Fund.
Contingent Deferred Sales Charges
Surrenders and transfers from this Contract shall be subject to a Contingent Deferred Sales Charge;
provided, however, such Contingent Deferred Sales Charge shall apply only to the extent such surrenders
or transfers constitute amounts contributed or earned under this Contract or any Related Contract. The
Contingent Deferred Sales Charge is a percentage of the contract values transferred or surrendered. The
number of Participant's Contract Years completed prior to the surrender or transfer will determine the
amount of the Contingent Deferred Sales Charge. For the purpose of calculating the Contingent Deferred
Sales Charge only, the number of Participant's Contract Years under this Contract shall be deemed to
have commenced with the Participant's Date of Coverage under a Related Contract, provided such
Related Contract is so accepted by the Company for such purpose.
(a)The Contingent Deferred Sales Charge to be applied under this Contract shall be equal to five percent
(5%) of the surrendered or transferred amount from the Participant's Account during the first six
Participant's Contract Years, four percent (4%) of the surrendered or transferred amount during the
seventh and eighth Participant's Contract Years, three percent (3%) of the surrendered or transferred
amount during the ninth and tenth Participant's Contract Years, and two percent (2%) during the
eleventh and twelfth Participant's Contract Years. After the twelfth Participant's Contract Year,
surrenders or transfers will no longer be subject to any deduction for Contingent Deferred Sales
Charges.
Effective for any surrender or transfer initiated on or after October 1, 2002, the Contingent
Deferred Sales Charge shall no longer be applicable to any amounts surrendered from a
Participant's Account on or after such date, provided the Contract Owner elects not to offer
any additional providers under the plan after such date. The Company reserves the right to
reinstate the Contingent Deferred Sales Charge if the Contract Owner elects to add any
additional providers under the plan after October 1, 2002. For purposes of this paragraph,
"additional providers" shall not include any providers under the plan on October 1, 2002.
(b)The Contingent Deferred Sales Charge described in (a) above shall not apply to an Eligible Surrender.
For purposes of this Contract, an Eligible Surrender is a surrender, including a surrender applied to
effect an annuity under Section 9(d), "Election of Annuity Option", where such surrender is (1) made
on account of a Qualifying Event and (2) payable directly to the Participant, or, if applicable, to the
Participant's beneficiary. For purposes of this Contract, the term 'Qualifying Event" shall mean: (i)
HL-15811(CA) 3
the death of the Participant, (ii) financial hardship, as defined in the Plan, (iii) the Participant's
separation from service, or (iv) the Participant's retirement. An amount surrendered for transfer to
the Plan funding vehicle 0f another investment provider for the Plan shall not be considered payable
directly to the Participant and shall not constitute an Eligible Surrender under this Contract.
(c)The Contingent Deferred Sales Charges shall not apply to a transfer of Contract values from this
Contract to a Related Participant Directed Account Option.
Deduction for Mortati _ty, Expense Risk and Administrative Undertakings
For assuming the mortality, expense risk and administrative undertakings under this Contract the
Company makes a deduction from the average daily net assets of the Separate Accounts as follows:
During the Accumulation Period, the annualized rate of the deduction for such risks and undertakings has
initially been set at 0.90% of the average daily net assets of the Group A Investment Options; 0.75% of
the average daily net assets of the Group B Investment Options and 0.85% of the average daily net assets
of the Group C Investment Options. During the Annuity Period, the annualized rate of the deduction for
such risks and undertakings has initially been set at 1.25% of the average daily net assets of the Group A
Investment Options; 0.75% of the average daily net assets of the Group B Investment Options; and,
0.85% of the average daily net assets of the Group C Investment Options. These deductions may be
decreased by the Company, in its sole discretion and may be increased by the Company upon 90 days
advance written notice to the Contract Owner, and subject to a maximum deduction of 2.00% per year
from the average daily net assets of each Investment Option under Separate Account 457 included in this
Contract. Deductions applicable to each Investment Option under Separate Account 457 included in this
Contract may increase or decrease based on the amount of assets held under this Contract.
The following table demonstrates the annuatized rates of deduction for assuming the mortality, expense
and administrative undertakings to be applied on the Restatement Effective Date, or as soon as
administratively feasible thereafter.
For Assets in the
Accumulation Period:
For Assets in the
Annuity. Period:
ANNUALIZED RATES OF DEDUCTION
Group A Investment
,,.Options.
0.25%
1.25%
Gro,,gp B Investment
Options
0.25%
O.75%
GrOup C Investment
Options
0.25%
0.85%
HL-1581 I(CA)4
TABLE OF CONTENTS
Section
1
2
3
4
5
6
7
8
9
10
11
Endorsements
Contract Specifications
Table of Contents
Definitions of Certain Terms
Contribution Provisions
Contract Control Provisions
General Provisions
Valuation Provisions
General Account Liquidity Provisions
Contract Discontinuance
Effect of Contract Discontinuance
Settlement Provisions
Annuity Rates
Annuity Tables
Administrative Notice
Starting on
Page
2
5
6
8
9
10
13
14
14
15
16
19
20
HL-1581 I(CA)5
SECTION 1 - DEFINITIONS OF CERTAIN TERMS
Accumulation Period - The period under this Contract prior to the Annuity Commencement Date.
Accumulation Unit - An accounting unit of measure used to calculate the Separate Account values during
the Accumulation Period.
Active Life Fund - A term used to describe the sum of the value of all Participants' Accounts during the
Accumulation Period.
Annuitant - The individual whose life shall serve as the measuring life for purposes of annuity payments
under this Contract.
Annuity Commencement Date - The date as of which annuity payments to a Participant are to begin as
described under Settlement Provisions in this Contract.
Annuity Period - The period in the Contract, following the Accumulation Period, during which annuity
payments are made.
Annuity Unit - An accounting unit of measure in the Separate Account used to calculate the amount of
variable annuity payments.
Code - The Internal Revenue Code of 1986, as amended, or any successor thereto, along with the rulings
and regulations issued thereunder.
Company - Hartford Life Insurance Company.
Contract Term - The Contract Term will commence on the Restatement Effective Date of the Contract
and end on September 30, 2007.
Contract Year - A period of ! 2 months commencing with the effective date of this Contract or with any
contract anniversary.
Date of Coverage - The date on which the application made on behalf of a Participant is received by the
Company in Good Order.
Due Proof of Death - A certified copy of the d~ath certificate, an order of a court of competent
jurisdiction, a statement from a physician who attended the deceased or any other proof acceptable to the
Company.
Fund - The underlying investment(s) to which contributions may be allocated under a Separate Account.
General Account - All assets of the Company other than those in the Separate Accounts, or in any other
separate investment account established by the Company.
Good Order - An authorized Participant or Contract Owner instruction to the Company that is given with
such clarity and completeness that the Company is not required to exercise any discretion, utilizing such
forms as the Company may require.
Minimum Death Benefit - The minimum amount payable upon the death of a Participant prior to age 65
and before Annuity payments have commenced.
HL-1581 I(CA)6
Participant - A person who participates in the Plan and elects to participate in this Contract.
~Participant's Account - A bookkeeping account to which the General Account values and Separate
Account.values held by the Contract Owner on behalf of a Participant are allocated, together with credited
earnings and losses and less any prior surrenders (including transfers).
Participant's Contract Year - A period of twelve (12) months commencing with the Participant's Date of
Coverage under this Contract and each successive twelve (12) month period thereafter.
Plan - The deferred compensation plan that is funded by this Contract.
Premium Tax - The tax or amount of tax, if any, charged by a state or municipality on premiums or
contract value.
Related Contract - any Plan funding vehicle identified by the Contract Owner in writing and accepted by
the Company for the purpose of calculating or determining certain charges, services and/or benefits in
connection with this Contract, as directed by the Contract Owner and agreed to by the Company.
Related Participant Directed Account Option - Any Participant directed investment account under the
Plan is identified by the Contract Owner and accepted by the Company for the purpose of Participant
directed transfers of amounts from the Contract for investment outside of the Contract.
Separate Account - Each Separate Account of the Company (identified under the Contract Specifications
section of this contract) under which income, gains and losses, whether or not realized, from assets
allocated to such account are, in accordance with the contracts issued with respect thereto, credited to or
charged against such Separate Account without regard to the other income, gains, or losses of the
Company.
Sub-Account - The accounts established within a Separate Account with respect to a Fund.
Termination Value - The Termination Value for each Participant's Account for any day prior to the
Annuity Commencement Date is the value of the Participant's Account on that Valuation Day, less:
(a) any applicable Premium Taxes not previously deducted; and
(b)any applicable Contingent Deferred Sales Charges as set forth under the Contract
Specifications.
The portion of a Participant's Termination Value invested in a Separate Account may decrease or increase
from day to day.
Valuation Day - Every day the New York Stock Exchange is open for trading. The value of a Separate
Account is determined as of the close of the New York Stock Exchange on such days.
Valuation Period - The period between successive Valuation Days.
HL-15811(CA)7
SECTION 2 - CONTRIBUTION PROVISIONS
(a)Contributions
During each Contract Year, the Contract Owner will remit to the Company all contributions to be
made on behalf of the Participants. Such contributions will be applied by the Company to the
General Account and/or the Separate Account for Accumulation Units in the Separate Account on
behalf of a Participant in accordance with the Valuation Provisions and the instructions of the
Contract Owner or, with the consent of the Contract Owner, the instructions of the Participant. The
minimum contribution which may be made at any time on behalf of any Participant is $30, except
where the plan of an Employer requires a lesser amount which in any event may not be less than
$10.
(b)Allocation of Contributions durin¢ the Accumulation Period
The Contract Owner, or the Participant, if applicable, shall specify that portion of a contribution on
behalf of a Participant to be al!ocated to the General Account and/or to each Sub-Account of a
Separate Account in multiples of 10%. or a lower multiple as specified by the Company from time
to time. The minimum amount that may be allocated to any account to which a portion of the
contribution is to be allocated is 10% of such contribution. Such allocation may be changed by
written notice submitted to the Company with each contribution by the Contract Owner.
(c)Transfer or R~-Allocation of Contract Values within the Contract!Related Contracts
With respect to a Participant's Account, the Contract Owner, or the Participant, if applicable, may
transfer monies between accounts under this Contract during the Accumulation Period, subject to
the provisions of this Section 2(c). If elected by the Contract Owner and agreed to by the
Company, such transfers may also be made between accounts under this Contract and a Related
Participant Directed Account Option.
Separate Account values may be re-allocated between Sub-Accounts within the Separate
Account(s) or, if applicable, between sub-accounts within separate accounts under a Related
Contract and transferred to the General Account at any time.
General Account values may be transferred to one or more Sub-Accounts within the Separate
Accounts or, if applicable, to one or more sub-accounts within a separate account under a Related
Contract except that the Company may limit the sum of any such transfers for a Participant's
Account in any Participant's Contract Year to one sixth (1/6th) of the General Account value of
such Participant's Account as of the end of the preceding Participant's Contract Year.
In addition, a transfer of contract values within the Contract or, if applicable, between this Contract
and a Related Contract shall be subject to the following restrictions:
Transfers of assets presently held in the General Account, or which were held in the General
Account at any time during the preceding three month period, to a Competing Fund are
prohibited. Similarly, transfers of assets presently held in a Competing Fund, or which were
held in a Competing Fund or the General Account during the preceding three months, to the
General Account are prohibited. Competing Fund(s) are described under Contract
Specifications If applicable, Competing Fund(s) shall also include any investment options
under a Related Contract, as determined by the Company in its sole discretion.
HL-15811(CA)8
(d)A Participant who is properly enrolled under this Contract may elect to transfer an amount to the
Contract from the contract of another carrier under the Plan. Such transferred amount shall first be
transferred to the General Account of the Company and may be reallocated within the Contract by
the Contract Owner or the Participant as permitted by the Contract.
SECTION 3 - CONTRACT CONTROL PROVISIONS
(a)Owner
The Contract Owner has the power to exercise all the rights, privileges and options granted by this
Contract or permitted by the Company and to agree with the Company to any change in or amendment
to the Contract. Such power shall be exercised in a manner consistent with the written plan adopted by
the Contract Owner for the exclusive benefit of Participants and their beneficiaries. The assets and
income of this Contract may not be used for or diverted to purposes other than the exclusive benefit of
Participants and their beneficiaries, except as permitted under the Code. The preceding sentence does
not limit the Company's exercise of the rights granted to the Company by this Contract, including the
right to deduct and retain amounts specified in the Contract.
(b)Beneficiary
The Beneficiary is the person to whom any death benefit from the Contract on behatf of a Participant is
payable in the event of the Participant's death. The Beneficiary is designated by (and may be changed
by) the Participant, subject to any rules established by the Contract Owner or the Company. If no
designated beneficiary remains living at a Participant's death, the Participant's estate is the Beneficiary.
(c)Assignment
Amounts held under the Contract on behalf of a Participant are nontransferable and cannot be sold,
assigned, or pledged as security, for a loan or for any other purpose to any person other than the
Company, except as permitted under the Code and the terms of this Contract.
The Contract Owner's interest in this Contract may be assigned only if agreed to by the Company.
The Contract Owner agrees to provide the Company with such information as the Company may
reasonably request concerning any proposed assignrnent. The Company assumes no responsibility
for the validity of any assignment.
HL-1581 I(CA)9
SECTION 4 - GENERAL PROVISIONS
(a)The Contract
This Contract and the application for the Contract which is attached hereto when issued to the
Contract Owner, constitute the entire Contract. All statements in the application shall, in the
absence of fraud, be deemed representations and not warranties. No statement shall void this
contract or be used in defense of a claim under it unless contained in the written application for this
Contract. Contract Years, months and anniversaries shall be computed from the effective date of
this Contract.
(b)Modification of the Contract
This Contract may be modified at any time by written agreement between the Contract Owner and
the Company. In addition, the Company may at any time modify the Contract in any manner it
deems necessary or appropriate to satisfy the requirements of any law or regulation applicable to it;
the Company will provide the Contract Owner with written notice of any such modifications no
later than thirty days after the effective date of such modifications. No modification may operate in
a manner inconsistent with the Contract Control Provisions of this Contract. No modification will
affect the amount or term of any annuities begun prior to the effective date of the modification,
unless it is required to conform this Contract to, or give the Contract Owner the benefit of, any
federal or state statutes or any rule or regulation of the United States Treasury Department.
Any modification of this Contract requires the signature of the President, a Vice President, a
Secretary, or an Assistant Secretary of the Company.
(c)Suspension of the Contract
The Contract Owner may suspend this Contract upon ninety (90) days advance written notice to the
Company at its Office in Hartford, Connecticut (or at any other address the Company may specify).
The Contract will be suspended automatically on a Contract Anniversary if the Contract Owner
fails to assent to any modifications, as described under Modification of the Contract, above, which
would have been effective on or before that Contract Anniversary. On suspension, contributions
will be accepted by the Company on behalf of Participants covered under the Contract prior to the
date of suspension, but no contributions will be accepted on behalf of new Participants. Suspension
of the contract will not affect payments to be made by the Company under an Annuity that
commenced prior to the date of suspension.
(d)Non-Participating
This Contract does not share in the surplus earnings of the Company.
HL-1581 I(CA)10
(e)Misstatement of A~e
If the age of an Annuitant has been misstated, the amount of the annuity payable by the Company
shall be that provided by the values under this Contract allocated to effect such annuity on the basis
of the corrected information, without changing the date of the first payment of such annuity.
Any underpayments by the Company shall be made up immediately and any overpayments shall be
charged against future amounts becoming payable.
(f)Reports to the Contract Owner
The Company will, shortly following the end of each calendar year, transmit to each Contract
Owner a written statement of account showing the total value of General Account and Separate
Account interests held under this Contract.
(g)Votin~ RiMats
The Company shall cause the Contract Owner to be advised, in a timely manner, of any Fund
shareholders' meetings at which the Fund shares held for the Contract Owner may be voted and
shal! also cause proxy materials and a form of instruction by means of which the Contract Owner
can instruct the Company with respect to the voting of the Fund shares held for the Contract
Owner's Account to be sent to the Contract Owner. In connection with the voting of Fund shares
held by it, the Company shall arrange for the handling and tallying of proxies received from the
Contract Owner. The Company, as such, shall have no right, except as herein provided, to vote any
Fund shares held by it hereunder which may be registered in its name or the names of its nominees.
The Company will vote the Fund shares held by it under this Contract in accordance with the
instructions received from the Contract Owner. If the Contract Owner desires to attend any
meeting at which the Fund shares held for the Contract Owner's benefit may be voted, the Contract
Owner may request that the Company furnish a proxy or otherwise arrange for the exercise of
voting rigA~ts with respect to the Fund shares held for such Contract Owner's account. In the event
that the Contract Owner gives no instructions or leaves the manner of voting discretionary, the
Company will vote such shares of each Fund in the same proportion as shares of that Fund held in
the same Separate Account for which instructions have been received.
(h)Proof of Survival
The payment of any annuity benefit will be subject to evidence that the Annuitant is alive on the
date such payment is otherwise due.
(i)Information from the Contract Owner
The Contract Owner will furnish any information which the Company may reasonably require in
order to administer this contract. If the Contract Owner cannot furnish any required item of
information, the Company may request the person concerned to furnish the information. The
Company will not be liable for the fulfillment of any obligations under this Contract which is
dependent upon that information unless and until it receives such information in a form satisfactory
to it.
HL-15811(CA)11
Individual Certificates
The Company will issue an individual certificate to each Participant for whom an annuity is
effected under this Contract. If the state of jurisdiction in which this Contract is issued so requires,
the Company will also issue a certificate to each Participant for whom contributions are being made
to this Contract and for whom an annuity has not yet been effected. A certificate will evidence the
contributions being made to this Contract and describe the Participant's or Annuitant's rights and
duties under this Contract.
(k)E_xperience Credits
The Company may apply experience credits under this Contract based on investment,
administrative, mortality or other factors. Experience credits may be applied, either prospectively
or retrospectively, as a reduction in the deduction for mortality, expense risk and administrative
undertakings, a reduction in the term or amount of any applicable contingent deferred sales charges,
an increase in the rate of interest credited under the Contract, a payment to be allocated as directed
by the Contract Owner, or any combination of the foregoing. The Company may apply and allocate
experience credits in such manner as the Company deems appropriate for the class of contracts to
which this Contract belongs within the state of issue. Any such credit will be computed for the
contracts of the same class in accordance with the Company's administrative practice consistently
applied. Experience Credits may be discontinued in the event of a change in applicable factors.
(1)Payments for Plan Related Expenses
If directed by the Contract Owner and agreed to by the Company, the Company may deduct
amounts from the assets under this Contract and/or under a Related Contract to pay certain
administrative expenses or other Plan related expenses including, but not limited to, fees to
consultants, auditors and other Plan service providers. Such amounts may be deducted under this
Contract and/or under a Related Contract and paid to the Contract Owner or paid as directed by the
Contract Owner. With the Company's consent, amounts deducted pursuant to this Section may be
included as an adjustment to the charge for administrative undertakings deducted from a Separate
Account or as an adjustment to the rate of interest credited to the General Account.
(m)Plan Changes
The Contract Owner will furnish the Company a copy of the deferred compensation plan which is
funded by this Contract. While this Contract remains in-force, the Contract Owner will also furnish
a copy of each amendment to such Plan. The terms of the Plan in effect on the Effective Date of
this Contract apply to this Contract. Plan amendments received by the Company will also apply to
this Contract unless the Company notifies the Contract Owner otherwise within ninety (90) days
following its receipt of the Plan amendment.
(n)Governina Law
This Contract will be governed by and construed in accordance with the laws of the Contract
Jurisdiction set forth on page 2 of this Contract.
HL-1581 I(CA)12
(o) Nonwaiver
The Company may, in its sole discretion, elect not to exercise a right or reservation specified in this
Contract. Such election shall not constitute a waiver of the right to exercise such right or
reservation at any subsequent time, nor shall it constitute a waiver of any other provisions of the
Contract.
SECTION 5 - VALUATION PROVISIONS
(a)Net Contributions
The net contribution to the Contract on behalf of a Participant is equal to the total contributions
made on behalf of that Participant less any applicable Premium Taxes.
The net contribution for the General Account or Separate Account (determined in accordance with
the account allocation percentages elected) is applied to provide General Account values or
Separate Account Accumulation Units. The number of Accumulation Units credited to each
variable account is determined by dividing the net contribution for that account by the dollar value
of one Accumulation Unit next computed after the receipt of the contribution by the Company.
Distributed earnings with respect to the underlying Funds will be credited to Contract Owners by
increasing the value of units of interest held under this Contract.
The number of Accumulation Units so determined will not be affected by any subsequent change in
the value of Accumulation Units. The Accumulation Unit value in the Separate Account may
decrease or increase from day to day as specified below.
(b)Net Investment Rate and Net Investment Factor
The General Account net investment rate applicable to this Contract for any day is guaranteed to be
at least the rate shown under the Contract Specifications section of this Contract.
The net investment rate for each sub-Account in each of the Separate Accounts for any day is equal
to the gross investment rate for each Sub-Account in the Separate Accounts expressed in decimal
form to at least six (6) decimal places, less applicable deductions by the Company for the expense,
mortality and administrative undertakings as set forth under the Contract Specifications section of
this contract. The gross investment rate for a Sub-Account is (a) its investment income for the
Valuation Day plus its capital gains and minus its capital losses, whether realized or unrealized, and
less a deduction for any applicable taxes arising from the income and the realized and unrealized
capital gains attributable to that Sub-Account, divided by (b) the value of that Sub-Account on the
previous Valuation Day.
The net investment factor for each Sub-Account is the sum of 1.000000 plus the net investment rate
for that account.
(c)Se~egation of Separate Account Assets
That portion of the assets of each Separate Account equal to the reserves and other Contract
liabilities of the Separate Account shall not be chargeable with liabilities arising out of any other
business the Company may conduct. The assets of each Separate Account are segregated from all
other assets of the Company and are subject only to the claims of contracts participating in such
Separate Accounts.
HL-1581 I(CA)13
(d)Accumulation Unit Value
The value of an Accumulation Unit for each Sub-Account of a Separate Account was set at an
initial fixed value on the date the Sub-Account was initially established. The value of the
respective Accumulation Units for any subsequent day is determined by multiplying the
Accumulation Unit value for the preceding day by the net investment factor for that Sub-Account
for the current day.
(e)Armuitv Unit Values Durina the Annuity Period
The value of an Annuity Unit for each Sub-Account in a Separate Account was set at an initial
fixed value on the date the Sub-Account was initially established and for any day thereafter is
determined by multiplying the value of the Annuity Unit for that Sub-Account on the preceding day
by the product of(a) 0.999892 and (b) the net investment factor for that Sub-Account of the
Separate Account for the day for which the annuity value is being calculated.
SECTION 6 - GENERAL ACCOUNT LIQUIDITY PROVISIONS
Prior to the Date of Discontinuance as defined in the Contract Discontinuance provisions in Section 7, a
request for a partial surrender or transfer of General Account values in the Active Life Fund may be made
at any time; provided, however, any and all such requests shall be subject to the transfer restrictions set
forth at Section 2(c) and the Liquidity Restrictions set forth in paragraphs (a) and (b) of this Section 6.
(a)Notwithstanding any benefits which may be payable to Participants or beneficiaries under the terms
of the Plan, including, but not limited to, benefits under the Plan on account of retirement, death,
separation from service, or financial hardship, the Contract Owner specifically agrees that the
Company has the absolute right to deny any request for any surrender or transfer of General
Account values in the Active Life Fund, when the sum of all requests for surrenders and transfers of
such General Account values in any Contract Year exceeds one sixth (1/6) of the General Account
values held in the Active Life Fund at the end of the immediately preceding Contract Year. The
Company reserves the right to defer any request for a surrender or transfer in excess of the one sixth
(1/6) limit until the next Contract Year. Any surrender or transfer request that is deferred to a later
Contract Year shall be counted towards, and shall be subject to, the one sixth (1/6) limit applicable
to the Contract Year to which such surrender or transfer is deferred.
(b)Unless the Contract Owner gives the Company written direction otherwise, deferred surrenders and
transfers shall be made in the order originally received.
SECTION 7 - CONTRACT DISCONTINUANCE
This Contract shall be discontinued if:
(a)the Contract Owner gives written notice to the Company that the Contract is being discontinued, in
which event the Date of Discontinuance shall be the later of: (i) the first business day following the
date on which such notice is received by the Company at its Home Office in Hartford, Connecticut,
or (ii) the business day specified in such notice; or
(b)no contributions are made to the Contract with respect to a Contract Year and the Company gives
written notice to the Contract Owner that the Date of Discontinuance will occur as of the date
specified in such notice, such date not to be earlier than thirty-one (31 ) days after the date such
notice is mailed by the Company.
HL-15811(CA)14
Discontinuance After Five Years:
Notwithstanding any provision of this Contract to the contrary, after five (5) completed Contract Years,
the Company shall have the right, in accordance with its existing administrative practices, and procedures,
to pay all contract values in the Active Life Fund, without application of Contingent Deferred Sales
Charges under the Contract, to the Contract Owner in full, provided that the Company gives the Contract
Owner ninety (90) days advance written notice, and further provided that the Company takes the same
action with respect to all contracts of the same class and risk characteristics.
SECTION 8 - EFFECT OF CONTRACT DISCONTINUANCE
On and after the Date of Discontinuance as defined in the Contract Discontinuance Provisions of Section
7, no contributions will be payable to, or accepted by, the Company. Notwithstanding any other
provision of this Contract to the contrary, after the Date of Discontinuance, Contract values in the Active
Life Fund shall be paid in accordance with paragraphs (a) and (b) of this Section 8:
(a)General Account Values
The total amount of all General Account values in the Active Life Fund under the Contract shall be
reduced, as of the Date of Discontinuance, by any:
(1) Premium Taxes not previously deducted, and
(2) Contingent Deferred Sales Charges as set forth in the Contract Specifications.
The resulting amount shall be referred to as the "Balance at Discontinuance."
Notwithstanding any benefits which may be payable to Participants or beneficiaries under the terms
of the Plan, including, but not limited to, benefits under the Plan on account of retirement, death,
separation from service, or financial hardship, the Contract Owner specifically agrees that the
Company has the absolute right to pay the Balance at Discontinuance in six (6) equal installments,
plus any interest due, annually over a period of five (5) years. The Company shall pay the first such
installment not later than thirty (30) days after the Date of Discontinuance. The remaining five
installments, plus interest, shall be payable on each successive anniversary of the Date of
Discontinuance.
The Balance at Discontinuance shall be credited with interest at a rate of not less than three (3)
percent per annum commencing on the Date of Discontinuance.
(b)Contract Funds Held Under the Separate Account(s)
As of the Date of Discontinuance, all Contract funds held under the Separate Accounts shall be
reduced by any:
(1) Premium Taxes not previously deducted, and
(2) Contingent Deferred Sales Charges as set forth in the Contract Specifications.
The resulting amount shall be paid within seven (7) days following the Date of Discontinuance
except as the Company may be permitted to defer payment under applicable law.
HL-1581 I(CA)15
SECTION 9 - SETTLEMENT PROVISIONS
(a)Termination of Contributions
After termination of contributions on behalf of a Participant prior to the specified Annuity
Commencement Date, the Contract Owner may continue the Participant's Account in force under
the Contract or notify the Company as to the manner in which the Termination Value of the
Participant's Account is to be disbursed or applied in accordance with the terms of this Contract.
(b)Payment of Termination Value
When all or any part of the Termination Value invested in a Separate Account is taken by the
Participant payment will be made within seven (7) days following the day the request is received in
Good Order by the Company, except as the Company may be permitted to defer payment under the
applicable federal law.
(c)Armuitv Ri~_hts
"Annuity Rights" shall be provided under the Contract entitling the Contract Owner to have annuity
payments made at the rates set forth in this Contract. Such rates will be made applicable to all
amounts held in the Participant's Account during the Accumulation Period.
(d)Election of Annuity. OptiQn
The Annuity Commencement Date may be the first day of any month before or including the month
of a Participant's 75th birthday, or such earlier date as applicable laws shall prescribe, but in the
absence of a written election to the contrary, the Annuity Commencement Date shall be the first day
of the month coincident with or next following the Participant's 75th birthday.
Provision is made for both variable and fixed dollar annuity payments. The Contract Owner may
elect to have the Termination Value of the Participant's Account applied on the Annuity
Commencement Date under one of the annuity options described below, but in the absence of such
election, the Termination Value of the Participant's Account will be applied, on the Annuity
Commencement Date, under the Second Option to provide a life annuity with 120 monthly
payments certain. The Termination Value of the Participant's Account for that portion invested in a
Separate Account is determined on the basis of the Accumulation Unit value of the fifth business
day preceding the Annuity Commencement Date.
If elected by the Contract Owner, and agreed to by the Company, participant account values under a
Related Contract may be transferred to this Contract for the purpose of effecting an annuity under
one of the annuity options described below.
Election of any of these options, including any election for an earlier Annuity Commencement
Date, must be made by notice in writing to the Office of the Company in Hartford, Connecticut at
least 30 days prior to the date such election is to become effective.
(e)Date of Payment
HL-1
The first payment under any option shall be made on the first day of the next following calendar
month, upon receipt of claim for settlement or on any other specified date, and subsequent
payments shall be made periodically in accordance with the manner of payment elected on the first
business day of the month in which a payment is due.
5811(CA) 16
(f)Termination after the Annuity Commencement Date
An Annuity effected under this Contract is irrevocable and may not be surrendered for its
Termination Value after the commencement of annuity payments.
(g)Allocation of Annui_ty
At the time election of one of the annuity options is made, the Contract Owner may further elect to
have the Termination Value of the Participant's Account applied to provide a fixed dollar annuity, a
variable annuity, or a combination of both. The election of an annuity payment option by a
Participant may not result in a first payment that is tess than $20.00. If at any time Annuity
payments are to become less than $20.00, The Hartford has the right to change the frequency of
payment to intervals that will result in payments of at least $20.00. In the event a variable annuity
option is elected and in the event that the portion of an Annuity payment which is based upon each
investment allocation is less than 10.00, The Hartford has the right to change the frequency of
payment to intervals that will result in payments from such investment allocation of at least 10.00.
Fixed Dollar Annuity - A fixed dollar annuity is an annuity with payments which remain fixed as to
dollar amount throughout the payment period.
Variable Annuity - A variable annuity is an annuity with payments decreasing or increasing in
amount in accordance with the net investment result of the Sub-Account or Sub-Accounts in the
Separate Account as described in "Valuation Provisions" at Section 5. After the first monthly
payment for a variable annuity has been determined in accordance with the provisions of this
Contract, a number of Annuity Units is determined by dividing that first monthly payment by the
appropriate Annuity Unit value on the effective date of the annuity payments. Once variable
annuity payments have begun, the number of Annuity Units remains fixed. The method of
calculating the Annuity Unit value is described under Section 5, Valuation Provisions.
The dollar amount of the second and subsequent variable annuity payments is not predetermined
and may decrease or increase from month to month. The actual amount of each variable annuity
payment after the first is determined by multiplying the number of Annuity Units by the appropriate
Annuity Unit value for each Sub-Account as described in the "Valuation Provisions", for the fifth
business day preceding the date the annuity payment is due.
(h)Mortality and Expense Risk
The Company guarantees that the dollar amount of variable annuity payments will not be adversely
affected by variations in the actual expenses incurred in providing and administering this Contract,
or in the actual mortality experience of payees from the mortality assumption, including any age
adjustments, used in determining the first monthly payment.
(i) Death of Participant or Beneficiary,
(1)Death during the Accumulation Period. In the event a Participant dies before his or her Annuity
Commencement Date, a death benefit will be payable to the Beneficiary in an amount described
in (A), (B) or (C) below, as applicable:
(A)Death on or after age 65. If the Participant died on or after attaining age 65, the amount
of the death benefit is the Termination Value of the Participant's Account under this
Contract as of the date Due Proof of Death and a claim for payment are received in Good
Order at the Administrative Offices of the Company.
HL-1581 I(CA).17
(B)Death prior age 65. If the Participant died prior to attaining age 65, the amount of the
death benefit is the Minimum Death Benefit which is the greater of (I) the Termination
Value of the Participant's Account under this Contract as of the date Due Proof of Death
and a claim for payment are received in Good Order at the Administrative Offices of the
Company, or (II) 100% of the contributions made to this Contract on behalf of that
Participant, reduced by the dollar amount of any partial surrenders not repaid.
(c)Related Contracts. If requested by the Contract Owner and agreed to by the Company,
the Minimum Death Benefit described at (B) above will be determined by reference to
the greater of (I) the Termination Value of the Participant's Account under this Contract
plus the termination value of any account(s) of the Participant under any Related
Contract(s), as of the date Due Proof of Death and a claim for payment are received in
Good Order at the Administrative Offices of the Company, or (ii) 100% of the
contributions made on behalf of that Participant under this Contract and any Related
Contract(s), reduced by the dollar amount of any partial surrenders from such contracts,
not repaid. The amount of any death benefit payable by reason of this paragraph (C) shall
be offset by amounts payable under any Related Contract.
(2)The death benefit may be taken in one sum or under any of the settlement options available in the
Company's variable annuities then being issued and will be paid to the Beneficiary.
Not-withstanding the foregoing, or any provision of this Section 9(i), payment of any account
value held under a Related Contract shall be made from such Related Contract, except to the
extent such amount, or portion thereo~ is transferred to this Contract, with the consent of the
Company, for the purpose of effecting one of the available settlement options under this Contract.
When payment is taken in one sum, a variable payment will be made within 7 days after the date
Due Proof of Death and a claim for payment are received in Good Order by the Company.
(4)Death during the Annuity Period. In the event of the death of the Annuitant while receiving
annuity payments, the present values of the current dollar amount on the date of death of any
remaining guaranteed number of payments, will be paid in one sum to the Beneficiary, unless
other provisions shall have been made and approved by the Company. In the case of the Separate
Account, calculations for such present value of the guaranteed number of payments remaining
will be based on assumed net investment rate of 4% per annum. In the case of the General
Account the net investment rate assumed will be the rate that is used by the Company to
determine the amount of each certain payment. The Annuity Unit value on the date of receipt of
due proof of death shall be used for the purpose of determining such present value.
(j)Minimum Distributions
Any distribution to a Participant under these Settlement Provisions shall be made in accordance
with the provisions of the plan established by the Contract Owner, but in no event will such
distribution be made at a time or in a method that fails to satisfy the requirements of section
457(d) of the Code, or any successor provision.
(k)Annuity Options
FIRST OPTION - Life Annuity - An annuity payable monthly during the lifetime of the Annuitant,
ceasing with the last payment due prior to the death of the Annuitant.
SECOND OPTION - Life or Joint Life and Last Survivor Annuity with 120, 180 or 240 Monthly
Payments Certain - An annuity providing monthly income to the Annuitant for a fixed period of
HL-15811(CA)18
120 months, 180 months, or 240 months (as selected), and for as long thereafter as the Annuitant, or
Joint Annuitants, as applicable, shall live.
THIRD OPTION - Unit Refund Life Annuity - An annuity payable monthly during the lifetime of
the Annuitant, ceasing with the last payment due prior to the death of the Annuitant, provided that,
at the death of the Annuitant, the beneficiary will receive an additional payment of the then dollar
value of the number of Annuity Units equal to the excess, if anY, of (a) over (b) where (a) is the
total amount applied under the option divided by the Annuity Unit value at the effective date of
annuity payments and (b) is the number of Annuity Units represented by each payment multiplied
by the number of payments made.
FOURTH OPTION - Joint and Last Survivor Life Annuity - An annuity payable monthly during
the joint lifetime of the Annuitant and a secondary Annuitant, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the death of the survivor.
FIFTH OPTION- Payments for a Designated Period - An amount payable monthly for the number
of years selected which may be from 5 to 30 years.
Any other payment options mutually agreed upon by the Company and the Contract Owner.
SECTION 10 - ANNUITY RATES
The rates applicable to the purchase of the immediate annuity options described above will be based on
the following assumptions:
Mortality:1983 Table a for Individual Annuity Mortality set back one year.
Interest:4.00%
HL-1581 I(CA)19
AMOUNT OF FIRST MONTHLY PAYMENT
FOR EACH $1,000 APPLIED
Second and subsequent payments, when based on the experience of a Separate Account, are variable and
are not guaranteed as to a fixed dollar amount.
FIRST, SECOND AND THIRD OPTIONS - SINGLE LIFE ANNUITIES
LIFE ANNUITY LIFE ANNUITY LIFE ANNUITY
WITH 120 WITH 180 WITH 240
PAYEE' S PAYMENTS PAYMENTS PAYMENTS
AG_....~E LIFE ANNUITY CERTAIN CERTAIN CERTAIN REFUND
50 $ 4.62 $ 4.58 $ 4.54 $ 4.48 $ 4.48
55 4.98 4.92 4.85 4.75 4.77
60 5.46 5.36 5.24 5.06 5.15
65 6.14 5.94 5.70 5.38 5.64
70 7.08 6.67 6.20 5.66 6.28
FOURTH OPTION - JOINT AND LAST SURVIVOR ANNUITY
FIRST
PAYEE'S
AGE
SECOND PAYEE'S AGE
5o 55 6o 6~7o
50 $ 4.16 $ 4.26 $ 4.36 $ 4.43 $ 4.49
55 4.26 4.41 4.54 4.67 4.76
60 4.36 4.54 4.74 4.92 5.09
65 4.43 4.67 4.92 5.19 5.45
70 4.49 4.76 5.09 5.45 5.83
FIFTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD
NUMBER MONTHLY
OF YEARS PAYMENT
3 $ 29.40
4 22.47
5 18.32
10 10.06
20 6.00
The monthly payment for any payment for any ages not shown above will be quoted upon request.
HL-15811(CA)20
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING AND RESTATING THE CITY OF PALO ALTO'S
DEFERRED COMPENSATION PLAN FOR REGULAR EMPLOYEES,
AND INCORPORATING TAX LAW CHANGES, BY ADOPTION OF
THE IC~A DEFERRED COMPENSATION PLAN AA!D TRUST
DOCUFfENT, AS AMENDED
WHEREAS, pursuant to Resolution No. 7603, adopted June 14,
1996, the City Council amended and restated the ~City of Palo Alto
Deferred Compensation Plan" (the "Plan") as the exclusive Deferred
Compensation Plan for regular employees, in accordance with
Internal Revenue Code Section 457 and other applicable law; and
WHEREAS, pursuant to Resolution No. 7819, adopted
December 14, 1998, the City Council approved an amendment to said
plan providing that al! assets of the plan be held in trust, or
under an appropriate annuity contract or custodial account, for the
exclusive benefit of plan participants and their beneficiaries, as
required by changes to the Interna! Revenue Code, and establishing
a trust and designating as co-trustees the City Manager and
Director of Administrative Services; and
WHEREAS, ICMA Retirement Corporation (ICMA) has served as
an administrator of the Plan pursuant to Section 457 of the
Interna! Revenue Code and the above-cited resolutions; and
WHEREAS, the City desires to amend its Deferred
Compensation Plan and trust in conformance with the Economic Growth
and Tax Relief Reconciliation Act (EGTR_RA) and the final and
temporary Treasury regulations under Section 401(a) (9) of the
Internal Revenue Code, as published in the Federal Register on
April 17, 2002, 74 FR 18987; and
WHEREAS, adoption of the standard 457 plan document of ICMA
(and that of the City's other 457 plan administrator), which
incorporates current tax law, in place of the City's current,
tailored plan wil! reduce the City's administrative costs and
burden without effecting any negative impact on plan participants;.
and
WHEREAS, the City has determined that it is in the City's
and its emp!oyees' best interest to amend and restate the existing
Plan, administered by ICMA, into the ICMA Deferred Compensation
Plan and Trust Document, as amended, thereby incorporating tax law
changes and replacing the current plan trustees with VantageTrust
Company, effective January !, 2003; and
WHEREAS, the amended and restated ICMA Deferred
Compensation Plan and Trust document shall supersede the provisions
of the City's existing Plan to the extent the existing Plan is
021212 cl 8120315 1
inconsistent with the provisions of the amended and restated ICMA
Deferred Compensation Plan and Trust.
NOW, THEREFORE, the Council of the City of Pa!o Alto does
RESOLVE as follows:
SECTION i. The Council hereby amends and restates the
existing ~City of Pa!o Alto Deferred Compensation Plan," as
administered by ICMA, into the ICMA ~Deferred Compensation Plan and
Trust" document, as amended, and adopts said plan, and thereby
replaces current plan trustees with the trustee of the ICMA
"Deferred Compensation Plan and Trust" VantageTrust Company. A
copy of the ICMA Deferred Compensation Plan and Trust Document is
attached hereto as Exhibit "A" and incorporated herein by this
-reference.
SECTION 2. The Council authorizes the City Manager (or his
designee) to sign documents and take such other non-discretionary
actions as are necessary to implement the amended and restated plan
and trust, and authorizes the City Manager to ,otherwise act on
behalf of the City in accordance with the separate resolution
designating the City Manager and the Director of Administrative
Services to act for the City under the plan and trust.
SECTION 3. The Council finds that this is not a project
under the California Environmental Quality Act.
INTRODUCED AND PASSED :
AYES :
NOES :
ABSENT :
ABSTENTIONS :
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Asst. City Attorney City Manager
Director of Administrative
Services
Director of Human Resources
021212 cl 8120315 2
APPENDIX A
DEFERRED COMPENSATION PLAN & TRUST
As Amended and Restated Effective July i, 2002
Article Io Purpose
The Employer hereby establishes the Employer's Deferred
Compensation Plan and Trust, hereafter referred to as the
~Plan." The Plan consists of the provisions set forth in
this document.
The primary purpose of this Plan is to provide retirement
income and other deferred benefits to the Employees of the
Emp!oyer and the Employees' Beneficiaries in accordance
with the provisions of Section 457 of the Internal Revenue
Code of 1986, as amended (the "Code").
This Plan shall be an agreement solely between the Employer
and participating Employees. The Plan and Trust forming a
part hereof are established and shall be maintained for the
exclusive benefit of Participants and their Beneficiaries.
No part of the corpus or income of the Trust shal! revert
to the Employer or be used for or diverted to purposes
other than the exclusive benefit of Participants and their
Beneficiaries.
Article If. Definitions
2o01 Account: The bookkeeping account maintained for each
Participant reflecting the cumulative amount of the
Participant's Deferred Compensation, including any income,
gains, !osses, or increases or decreases in market value
attributable to the Employer's investment of the
Participant's Deferred Compensation, and further reflecting
any distributions to the Participant or the Participant's
Beneficiary and any fees or expenses charged against such
Participant's Deferred Compensation.
2°02 Accounting Date: Each business day that the New York
Stock Exchange is open for trading, as provided in Section
6.06 for valuing the Trust's assets.
2°03 Administrator: The person or persons named to carry
out certain nondiscretionary administrative functions under
the Plan, as hereinafter described. The Employer may
021211 cl 8120290 1
Exhibit ~A"
remove any person as Administrator upon 60 days' advance
notice in writing to such person, in which case the
Employer shall name another person or persons to act as
Administrator. The Administrator may resign upon 60 days'
advance notice in writing to the Employer, in which case
the Employer shall name another person or persons to act as
Administrator.
2.04 Automatic Distribution Date: April ! of the calendar
year after the Plan Year the Participant attains age 70-1/2
or, if later, has a Severance Event.
2°05 Beneficiary: The person or persons designated by the
Participant in his or her Joinder Agreement who shall
receive any benefits payable hereunder in the event of the
Participant's death. In the event that the Participant
names two or more Beneficiaries, each Beneficiary shall be
entitled to equal shares of the benefits payable at the
Participant's death, unless otherwise provided in the
Participant's Joinder Agreement. If no beneficiary is
designated in the Joinder Agreements if the Designated
Beneficiary predeceases the Participant, or if the
designated Beneficiary does not survive the Participant for
a period of fifteen (15) days, then the estate of the
Participant shall be the Beneficiary. If a married
Participant resides in a community or martial property
state, the Participant shall be responsible for obtaining
appropriate consent of his or her spouse in the event the
Participant designates someone other than his or her spouse
as Beneficiary.
2.06 Deferred Compensation: The amount of Normal
Compensation otherwise payable to the Participant which the
Participant and the Employer mutually agree to defer
hereunder, any amount credited to a Participant's Account
by reason of a transfer under Section 6.09, a rollover
under Section 6.10, or any other amount which the Employer
agrees to credit to a Participant's Account.
2.07 Dollar Limitation: The applicable dollar amount within
the meaning of Section 457(b) (2) (A) of the Code, as
adjusted for the cost-of-living in accordance with Section
457(e) (15) of the Code.
2.08 Employee: Any full-time regular employee or part-time
regular employee, or elected officia! of the Employer, who
021211 cl 8120290 2
has been designated by
participate in the Plan.
the Employer as eligible to
2°09 ~m~ployer: The City of Palo Alto, which is a political
subdivision, agency or instrumentality of California,
within the meaning of Section 414(d) of the Code and
Section 3(32) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
2o10 457 Catch-Up Dollar Limitation: Prior to January i,
2002, "457 Catch-Up Dollar Limitation" means $15,000. On
and after January i, 2002, "457 Catch-Up Dollar Limitation"
means twice the Dollar Limitation.
2oll Includible Compensation: The amount of an Employee's
"compensation" from the Employer as defined under Section
4!5(c) (3) of the code. Includible Compensation shall be
determined without regard to any community property laws.
2.12 Joinder Agreement: An agreement entered into between
an Employee and the Emp!oyer, including any amendments or
modifications thereof. Such agreement shall fix the amount
of Deferred Compensation, specify a preference among the
investment alternatives designated by the Employer,
designate the Employee's Beneficiary or Beneficiaries, and
incorporate the terms, conditions, and provisions of the
Plan by reference.
2.13 Normal Compensation: The amount of Compensation which
would be payable to a Participant by the Employer for a
taxable year if no Joinder Agreement were in effect to
deter compensation under this Plan.
2.14 Normal Limitation: The maximum amount of Deferred
Compensation for any Participant for any taxable year
(other than amounts referred to in Sections 6.09 and 6.10).
2.15 Normal Retirement Age: Age 70-1/2, unless the
Participant has elected an alternate Normal Retirement Age
by written instrument delivered to the Administrator prior
to a Severance Event. A Participant's Normal Retirement
Age determines the period during which a Participant may
utilize the 457 Catch-Up Dollar Limitation of Section
5.02(b) hereunder. Once a Participant has to any extent
utilized the catch-up limitation of Section 5.02(b), his
Normal Retirement Age may not be changed.
021211 cl 8120290 3
A Participant's alternate Normal Retirement Age may not be
earlier than the earlier of (i) the date the Participant
has attained age 65, or (ii) the date the Participant has
attained age 50 and been credited with at least five years
of service under the-California Public Emp!oyee Retirement
System, and may not be later than the date the Participant
wil! attain age 70-1/2. If a Participant continues
employment after attaining age 70-1/2, not having
previously elected alternate Normal Retirement Age, the
Participant's alternate Normal Retirement Age shall not be
later than the mandatory retirement age, if any,
established by the Employer, or the age at which the
Participant actually has a Severance Event if the Employer
has no mandatory retirement age.
2o16 Participamt: Any Employee who has joined the Plan
pursuant to the requirements of Article IV.
2o17 Percentage Limitation: i00 percent of the
Participant's Includible Compensation for the taxable year.
2o18 Plan Year: The calendar year.
2o19 Retirement: The first date upon which both of the
following shal! have occurred with respect to a
participant: Severance Event and attainment of age 65.
2°20 Severance Event: A Severance Event means a severance
of the Participant's employment with the Employer within
the meaning of Section 457(d)(!)(A)(ii) of the Code.
In general, a Participant shall be deemed to have
experienced a Severance Event for purposes of this Plan
when, in accordance with the established practices of the
Employer, the emp!oyment relationship is considered to have
actually terminated.
2.21 Trust: The Trust created under Article VI of the Plan
which shall consist of all compensation deferred under the
Plan, plus any income and gains thereon, less any losses,
expenses and distributions to Participants and
Beneficiaries.
Article III. Administration
3.01 Duties of the Employer: The Employer shall have the
authority to make al! discretionary decisions affecting the
02121 t cl 8120290 4
rights or benefits of Participants which may be required in
the administration of this Plan. The Employer's decisions
shall be afforded the maximum deference permitted by
applicable law.
3.02 Duties of Administrator: The Administrator, as agent
for the Employer, shall perform nondiscretionary
administrative functions in connection with the Plan,
including the. maintenance of Participants' Accounts, the
provision of periodic reports of the status of each
Account, and the disbursement of benefits on behalf of the
Employer in accordance with the provisions of this Plan.
Article IV. Participation in the Plan
4o01 Initial Participation: An Employee may become a
Participant by entering into a Joinder Agreement prior to
the beginning of the calendar month in which the Joinder
Agreement is to become effective to defer compensation not
yet earned, or such other date as may be permitted under
the Code.
4°02 Amendment of Joinder Agreement: A Participant may
amend an executed Joinder Agreement to change the amount of
Norma! Compensation not yet earned which is to be deferred
(including the reduction of such future deferrals to zero).
Such amendment shall become effective as of the beginning
of the calendar month commencing after the date the
amendment is executed, or such other date as may be
permitted under the Code. A Participant may at any time
amend his or her Joinder Agreement to change the designated
Beneficiary,and such amendment shall become effective
immediately.
Article Vo Limitations on Deferrals
5o01 Normal Limitation: Except as provided in Section 5.02,
the maximum amount of Deferred Compensation for any
Participant for any taxable year, shal! not exceed the
lesser of the Dollar Limitation or the Percentage
Limitation.
5°02 Catch-Up Limitations:
(a)Catch-up Contributions for Participants Age 50
and Over: A Participant who has attained the age
of 50 before the c!ose of the Plan Year, and with
021211 cl 8120290 5
respect to whom no other elective deferrals may
be made to the Plan for the Plan Year by reason
of the Normal Limitation of Section 5.01, may
enter into a Joinder Agreement to make elective
deferrals in addition to those permitted by the
Normal Limitation in an amount not to exceed the
lesser of (i) the applicable dollar amount as
defined in Section 4!4(v) (2) (B) of the Code, as
adjusted for the cost-of-living in accordance
with Section 414(v) (2) (C) of the Code, or (2) the
excess (if any) of (i) the Participant's
compensation (as defined in Section 415(c) (3) of
the Code) for the year, over (ii) any other
elective deferrals of the Participant for such
year which are made without regard to this
Section 5.02(a). An additiona! contribution made
pursuant to this Section 5.02(a) shal! not, with
respect to the year in which the contribution is
made, be subject to any otherwise applicable
limitation contained in Section 5.01 above, or be
taken into account in applying such limitation to
other contributions or benefits under the Plan or
any other plan.
(b)Last Three Years Catch-Up Contribution: For each
of the last three (3) taxable years for a
Participant ending before the taxable year of his
or her attainment of Normal Retirement Age, the
maximum amount of Deferred Compensation shal! be
the lesser of: (i) the 457 Catch-Up Dollar
Limitation, or (2) the sum of (i) the Normal
Limitation for the taxable year, and (ii) the
Norma! Limitation for each prior taxable year of
the Participant commencing after 1978 less the
amount of the Participant's Deferred Compensation
for such prior taxable years. A prior taxable
year shal! be taken into account under the
preceding sentence only if (x) the Participant
was eligible to participate in the Plan for such
year (or in any other eligible deferred
compensation plan established under Section
457(b) of the Code which is properly taken into
account pursuant to regulations under Section
457), and (y) compensation (if any) deferred
under the Plan (or such other plan) was subject
to the Normal Limitation.
021211 cl 8120290
If a Participant is eligible in a taxable year to
make Catch-up contributions under both Section
5.02(a) and 5.02(b) above, only the Catch-up that
results in the higher contribution shall apply.
5°03 Other Plans: Notwithstanding any provision of the Plan
to the contrary, the amount excludible from a Participant's
gross income under this Plan or any other eligible deferred
compensation plan under Section 457(b) of the Code shall
not exceed the limits set forth in Sections 457(b) and
414(v) of the Code.
Article VIo Trust and Investment of Accounts
6o01 Investment of Deferred Compensation: A Trust is hereby
created to hold all the assets of the Plan for the
exclusive benefit of Participants and Beneficiaries, except
that expenses and taxes may be paid from the Trust as
provided in Section 6.03. The trustee shall be the
Employer or such other person that agrees to act in that
capacity hereunder.
6°02 Investment Powers: The trustee or the Administrator,
acting as agent for the trustee, shall have the powers
listed in this Section with respect to investment of Trust
assets, except to the extent that the investment of Trust
assets is directed by Participants, pursuant to Section
6.05.
To invest and reinvest the Trust without
distinction between principal and income in
common or preferred stocks, shares of regulated
investment companies and other mutual funds,
bonds, loans, notes, debentures, certificates of
deposit, contracts with insurance companies
including but not limited to insurance,
individua!or group annuity,deposit
administration,guaranteed interest contracts,
and deposits at reasonable rates of interest at
banking institutions including but not limited to
savings accounts and certificates of deposit.
Assets of the Trust may be invested in securities
that involve a higher degree of risk than
investments that have demonstrated their
investment performance over an extended period of
time.
021211 cl 8120290 7
(b)To invest and reinvest all or any part of the
assets of the Trust in any common, collective or
commingled trust fund that is maintained by a
bank or other institution and that is available
to Employee plans described under Sections 457 or
401 of the Code, or any successor provisions
thereto, and during the period of time that an
investment through any such medium shall exist,
to the extent of participation of the Plans the
declaration of trust of such commonly collective,
or commingled trust fund shall constitute a part
of this Plan.
(c)To invest and reinvest all or any part of the
assets of the Trust in any group annuity, deposit
administration or guaranteed interest contract
issued by an insurance company or other financia!
institution on a commingled or collective basis
with the assets of any other 457 plan or trust
qualified under Section 40!(a) of the Code or any
other plan described in Section 401(a) (24) of the
Code, and such contract may be held or issued in
the name of the Administrator, or such custodian
as the Administrator may appoint, as agent and
nominee for the Employer. During the period that
an investment through any such contract sha!l
exist, to the extent of participation of the
Plan, the terms and conditions of such contract
shall constitute a part of the Plan.
(d)To hold cash awaiting investment and to keep such
portion of the Trust in cash or cash balances,
.without liability for interest, in such amounts
as may from time to time be deemed to be
reasonable and necessary to meet obligations
under the Plan or otherwise to be in the best
interests of the Plan.
(e)To hold, to authorize the holding of, and to
register any investment to the Trust in the name
of the Plan, the Employer, or any nominee or
agent of any of the foregoing, including the
Administrator, or in bearer form, to deposit or
arrange for the deposit of securities in a
qualified central depository even though, when so
deposited, such securities may be merged and held
in bulk in the name of the nominee of such
021211 ct 8120290 8
(f)
(g)
(h)
depository with other securities deposited
therein by any other person, and to organize
corporations or trusts under the laws of any
jurisdiction for the purpose of acquiring or
holding title to any property for the Trust, all
with or without the addition of- words or other
action to indicate that property for the Trust,
al! with or without the addition of words or
other action to indicate that property is held in
a fiduciary or representative capacity but the
books and records of the Plan shall at all times
show that all such investments are part of the
Trust.
Upon such terms as may be deemed advisable by the
Emp!oyer or the Administrator, as the case may
be, for the protection of the interests of the
Plan or for the preservation of the value of an
investment, to exercise and enforce by suit for
legal or equitable remedies or by other action,
or to waive any right or claim on behalf of the
Plan or any default in any obligation owing to
the Plan, to renew, extend the time for payment
of, agree to a reduction in the rate of interest
on, or agree to any other modification or change
in the terms of any obligation owing to the Plan,
to settle, compromise, adjust, or submit to
arbitration any claim or right in favor of or
against the Plans to exercise and enforce any and
all rights of foreclosure, bid for property in
foreclosure, and take a deed in lieu of
foreclosure with or without paying consideration
therefor, to commence or defend suits or other
legal proceedings whenever any interest of the
Plan requires it, and to represent the Plan in
all suits or legal proceedings in any court of
law or equity or before any body or tribuna!.
To employ suitable consultants, depositories
agents, and legal counse!, as necessary, on
behalf of the Plan.
To open and maintain any bank account or accounts
in the name of the Plan, the Employer, or any
nominee or agent of the foregoing, including the
Administrator, in any bank or banks.
021211 cl 8120290 9
(i)To do any and all other acts that may be deemed
necessary to carry out any of the powers set
forth herein.
6.03 Taxes and F~xpenses: All taxes of any and all kinds
whatsoever that may be levied or assessed under existing or
future laws upon the Plan, or in respect to the Trust, or
the income thereof, and all commissions or acquisitions or
dispositions of securities and similar expenses of
investment and reinvestment of the Trust, shal! be paid
from the Trust. Such reasonable compensation of the
Administrator, as may be agreed upon from time to time by
the Employer and the Administrator, and reimbursement for
reasonable and necessary expenses incurred by the
Administrator in performance of its duties hereunder
(including but not limited to fees for legal, accounting,
investment and custodia! services)-shall also be paid from
the Trust.
6.04 Payment of Benefits: The payment of benefits from the
Trust in accordance with the terms of the Plan may be made
by the Administrator, or by any custodian or other person
so authorized by the Employer to make such disbursement.
The Administrator, custodian or other person shal! not be
liable with respect to any distribution of Trust assets
made at the direction of the Employer.
6.05 Znvestment Funds: In accordance with uniform and
nondiscriminatory rules established by the Employer and the
Administrator, the Participant may direct his or her
Accounts to be invested in one (!) or more investment funds
available under the Plan; provided, however, that the
Participant's investment directions shall not violate any
investment restrictions established by the Employer.
Neither the Employer, the Administrator, nor any other
person shall be liable for any !osses incurred by virtue of
fol!owing such directions or with any reasonable
administrative delay in implementing such directions.
6.06 Valuation of Accounts: As of each Accounting Date, the
Plan assets held in each investment fund offered shal! be
valued at fair market value and the investment income and
gains or losses for each fund shall be determined. Such
investment income and gains or losses shal! be allocated
proportionately among al! Account balances on a fund-by-
fund basis. The allocation shal! be in the proportion that
each such Account balance as of the immediately preceding
021211 cl 8120290 i0
Accounting Date bears to the total of all such Account
balances as of that Accounting Date. For purposes of this
Article, al! Account balances include the Account balances
of all Participants and Beneficiaries.
6°07 Participant Loan Accounts: Participant Loan Accounts
shall be invested in accordance with Section 8.03 of the
Plan. Such Accounts shall not share in any investment
income and gains or losses of the investment funds
described in Sections 6.05 and 6.06.
6°08 Crediting of Accounts: The Participant's Account shall
reflect the amount and value of the investments or other
property held by the Plan through the investment of the
Participant's Deferred Compensation pursuant to Sections
6.05 and 6.06. It is anticipated that the Employer's
investments with respect to a Participant will conform to
the investment preference specified in the Participant's
Joinder Agreement, but nothing herein shal! be construed to
require the Employer to make any particular investment of a
Participant's Deferred Compensation. Each Participant
shall receive periodic reports, not less frequently than
annually, showing the then current value of his or her
Account.
6°09 Transfers:
(a)Incoming transfers: A transfer may be accepted
from an eligible deferred compensation plan
maintained by another eligible governmental
employer as defined under Section 457(e) (i) (A) of
the Code and credited to a Participant's Account
under the Plan if (i) the Participant has had a
Severance Event with that employer and become an
Employee of the Employer, and (ii) the other
employer's plan provides that such transfer wil!
be made. The Employer may require such
documentation from the predecessor plan as it
deems necessary to effectuate the transfer in
accordance with Section 457(e) (!0) of the Code,
to confirm that such plan is an eligible deferred
compensation plan within the meaning of Section
457(b) of the Code, and to assure that transfers
are provided for under such plan. The Employer
may refuse to accept a transfer in the form of
assets other than cash, unless the Employer and
02121 tcl 8120290
the Administrator agree to hold such other assets
under the Plan.
Any such transferred amount shall not be treated
as a deferral subject to the limitations of
Article V, except that, for purposes of applying
the limitations of Sections 5.01 and 5.02, an
amount deferred during any taxable year under the
plan from which the transfer is accepted shall be
treated as if it ~as been deferred under this
Plan during such taxable year and compensation
paid by the transferor emp!oyer shall be treated
as if it had been paid by the Employer
(b) Outgoing Transfers: An amount may be transferred to an
eligible deferred compensation plan maintained by another
eligible governmenta! employer as defined under Section
457(e) (i) (A) of the Code, and charged to a Participant's
Account under this~ Plan, if (i) the Participant has a
Severance Event with the Employer and becomes an employee
of the other employer, (ii) the other employer's plan
provides that such transfer wil! be accepted, and (iii) the
Participant and the employers have signed such agreements
as are necessary to assure that the Employer's liability to
pay benefits to the Participant has been discharged and
assumed by the other employer. The Employer may require
such documentation from the other plan as it deems
necessary to effectuate the transfer, to confirm that such
plan is an eligible deferred compensation plan within the
meaning of Section 457(b) of the Code, and to assure that
transfers are provided for under such plan. Such transfers
shall be made only under such circumstances as are
permitted under Section 457 of the Code and the regulations
thereunder..
6o10 Eligible Rollover Distributions:
(a)Incoming Rollovers: An eligible rollover
distribution may be accepted from an eligible
retirement plan maintained by another employer
and credited to a Participant's Account under the
Plan. The Emp!oyer may require such
documentation from the distributing plan as it
deems necessary to effectuate the roilover in
accordance with Section 402 of the Code and to
confirm that such plan is an eligible retirement
plan within the meaning of Section 402(c) (8) (B)
021211 cl 8120290 12
(c)
of the Code. The Plan shall separately account
for eligible roilover distributions from any
eligible retirement plan that is not an eligible
deferred compensation plan described in Section
457(b) of the Code maintained by an eligible
governmental employer described in Section
457(e) (!) (A) of Code.
Outgoing Rollovers: Notwithstanding any provision
of the Plan to the contrary that would otherwise
limit a distributee's election under this
Section, a distributee may elect, at the time and
in the manner prescribed by the Administrator, to
have any portion of any eligible rol!over
distribution paid directly to an eligible
retirement plan specified by the distributee in a
direct roilover.
Definitions:
(i)Eligible Roliover Distribution. An
eligible roilover distribution is any
distribution of all or any portion of
the balance to the credit of the
distributee, except that an eligible
rollover distribution does not include:
any distribution that is one of a
series of substantially equa! periodic
payments (not less frequently than
annually) made for the life (or life
expectancy) of the distributee or the
joint lives (or joint life
expectancies) of the distributee and
the distributee's designated
beneficiary, or for a specified period
of ten years or more;any distribution
to the extent such distribution is
required under Sections 401(a) (9) and
457(a) (2) of the Code; and any
distribution made as a result of an
unforeseeable emergency of the
employee.For purposes of
distributions from other eligible
retirement plans rolled over into this
Plan, the term eligible to!lover
distribution shall not include the
portion of any distribution that is not
021211 cl 8120290 13
includible in gross income (determined
without regard to the exclusion for net
unrealized appreciation with respect to
emp!oyer securities).
(2 Eligible Retirement Plan: An eligible
retirement plan is an individual
retirement account described in Section
408(a) of the Code, an individual
retirement annuity described in Section
408(b) of the Code, an annuity plan
described in Sections 403(a) or 403(b)
of the Code, a qualified trust
described in Section 401(a) of the
Code, or an eligible deferred
compensation plan described in Section
457(b) of the Code which is maintained
by an eligible governmental employer
described in Section 457(e) (!) (A) of
the Code,that accepts the
distributee's eligible rollover
distribution.
(3 Distributee: A distributee includes an
employee or former employee.In
addition, the employee's or former
employee's surviving spouse and the
emp!oyee's or former emp!oyee's spouse
or former spouse who is the alternate
payee under a qualified domestic
relations order, as defined in Section
414(p) of the Code, are distributees
with regard to the interest of the
spouse or form spouse.
(4 Direct Ro!lover. A direct rollover is
a payment by the plan to the eligible
retirement plan specified by the
distributee.
6oll Trustee-to-Trustee Transfers to Purchase Permissive
Service Credit: Al! or a portion of a Participant's Account
may be transferred directly to the trustee of a defined
benefit governmental plan (as defined in Section 414(d) of
the Code) if such transfer is (A) for the purchase of
permissive service credit (as defined in Section
4!5(n) (3) (A) of the Code) under such plan, or (B) a
021211 cl 8120290 14
repayment to which Section 415 of the Code does not apply
by reason of subsection (k) (3) thereof, within the meaning
of Section 457(e) (17) of the Code.
6012 Treatment of Distributions of Amounts Previously
Rolled Over From 401(a) and 403(b) Plans and IRAs. For
purposes of Section 72(t) of the Code, a distribution from
this Plan shall be treated as a distribution from a
qualified retirement plan described in Section 4974(c) (i)
of the Code to the extent that such distribution is
attributable to an amount transferred to an eligible
deferred compensation plan from a qualified retirement plan
(as defined in Section 4974(c) of the Code).
6o13 Deemed IRAs: Effective for Plan Years beginning after
December 31, 2002, the Employer may elect to al!ow
Employees to make voluntary employee contributions to a
separate account or annuity established under the Plan that
complies with the requirements of Code section 408(q) and
any regulations promulgated thereunder. Such accounts or
annuities shall meet the applicable requirements of Code
sections 408 or 408A and shal! be treated as an individual
retirement plan that is not part of the Plan.
6o14 Employer Liability: In no event shall the Employer's
liability to pay benefits to a Participant under this Plan
exceed the value of the amounts credited to the
Participant's Account;neither the Employer nor the
Administrator shall be liable for losses arising from
depreciation or shrinkage in the value of any investments
acquired under this Plan.
Article Vllo Benefits
7o01 Retirement Benefits and Election on Severance ~ent:
(a)The distribution of a Participant's Account shall
commence as of a Participant's Automatic
Distribution Date, and the distribution of such
benefits shall be made in accordance with one of
the payment options described in Section 7.02
provided, however, that the Participant may
elect, without limitation, following a Severance
Event to have the distribution of benefits
commence on any other date but not later than
Apri! ! of the year fol!owing the year of the
Participant's Retirement or attainment of age 70-
021211 cl 8120290 !5
1/2, whichever is later. Notwithstanding the
preceding sentence, the distribution of
contributions under the Plan to a Participant who
incurred a severance Event prior to July i, 2002,
shall be governed under the terms of the Plan as
in effect on June 30, 2002, unless such
Participants resubsequently reemployed as
Employees.
(b)Loans: Notwithstanding the foregoing provisions
of this Section 7.01, no election to defer the
commencement of benefits after a Severance Event
shal! operate to defer the distribution of any
amount in the Participant's Loan Account in the
event of a default of the Participant's loan.
7°02 Payment Options: As provided in Sections 7.01, 7.04
and 7.05, a Participant may elect to have value of the
Participant's Account distributed in accordance with one of
the following payment options, provided that such option is
consistent with the limitations set forth in Section 7.03.
(a)Equal monthly, quarterly, semi-annual or annual
payments in an amount chosen by the Participant,
continuing until his or her Account is exhausted;
(b)One lump- sum payment ;
(c)Approximately equal monthly, quarterly, semi-
annual or annua! payments, calculated to continue
for a period certain chosen by the Participant.
(d)Annual Payments equal to the minimum
distributions required under Section 401(a) (9) of
the Code, including the incidental death benefit
requirements of Section 401(a) (9) (G), over the
life expectancy of the Participant or over the
life expectancies of the Participant and his or
her Beneficiary.
(e)Payments equa! to payments made by the issuer of
a retirement annuity policy acquired by the
Employer.
(f)A split distribution under which payments under
options (a), (b), (c) or (e) commence or are made
at the same time, as elected by the Participant
021211 cl 8120290
(g)
under Section 7.01, provided that a!l payments
commence (or are made) by the latest benefit
commencement date under Section 7.01.
Any other payment option elected by the
Participant and agreed to by the Employer and
Administrator.
A Participant's selection of a payment option made after
December 31, 1995, under Subsections (a), (c), or (g) above
may include the selection of an automatic annual cost-of-
living increase. Such increase will be based on the rise
in the Consumer Price Index for All Urban Consumers (CPI-U)
from the third quarter of the last year in which a cost-of-
living increase was provided to the third quarter of the
current year. Any increase will be made in periodic
payment checks beginning the fol!owing January.
If, prior to January !, 2002, a Participant made a timely
election of a payment date but failed to specify a payment
option or failed to make a timely election of both payment
date and option, and as a result, was defaulted to benefit
commencement at age 65, or such other date as the
Participant may be specified, benefits shall be paid
annually in the amount of $!00 per year commencing at age
65 or the date specified by the Participant until the
Participant reaches age 70-1/2. When the Participant
reaches age 70-1/2, payment shall be made in accordance
with Code section 401(a) (9) and the regulations thereunder.
7°03 Limitation on Options: No payment option may be
selected by a Participant under subsections 7.02(a) or (c)
unless the amount of any installment is not less than $!00.
No payment option may be selected by a Participant under
Sections 7.02, 7.04, or 7.05 unless it satisfies the
requirements of Sections 401(a) (9) and 457(d) (2) of the
Code, including that payments commencing before the death
of the Participant shall satisfy the incidental death
benefit requirements under Section 401(a) (9) (G).
7°04 Post-Retirement Death Benefits:
(a)Should the Participant die after he/she has begun
to receive benefits under a payment option, the
remaining payments, if any, under the payment
option shall continue until the Administrator
receives notice of the Participant's death. Upon
021211 cl 8120290 17
notification of the Participant's death, benefits
shal! be payable to the Participant's Beneficiary
commencing not later than December 31 of the year
following the year of the Participant's death,
provided that the Beneficiary may elect to begin
benefits earlier than that date.
(b)If the Beneficiary has not attained age 80 at the
time payments commence, he or she may elect to
receive payments in a single lump-sum payment or
in equal or approximately equa! monthly,
quarterly, semi-annual or annual payments
continuing over a period not to exceed ten years
from the first payment. The Beneficiary also may
elect to receive a partia! lump-sum payment
followed by monthly, quarterly, semi-annual or
annual installments, provided that all payments
are made within a period of ten years from the
initia! payment. In the event that the
Beneficiary is age 80 or over, the remaining
balance in the Participant's account will be paid
to the Beneficiary in a single lump sum.
(c)In the event that the Beneficiary dies before the
payment of death benefits has commenced or been
completed, the remaining value of the
Participant's Account shall be paid to the estate
of the Beneficiary in a lump sum. In the event
that the Participant's estate is the Beneficiary,
payment shal! be made to the estate in a lump
sum.
7°06 Unforeseeable Emergencies:
(a)In the event an unforeseeable emergency occurs, a
Participant may apply to the Emp!oyer to receive
that part of the value of his or her Account that
is reasonably needed to satisfy the emergency
need. If such an application is approved by the
Employer, the Participant shal! be paid only such
amount as the Emp!oyer deems necessary to meet
the emergency need, but payment shall not be made
to the extent that the financial hardship may be
relieved through cessation of deferral under the
Plan, insurance or other reimbursement, or
liquidation of other assets to the extent such
021211 cl 8120290 i 8
liquidation would
financial hardship.
not itself cause severe
(b)An unforeseeable emergency shall be deemed to
involve only circumstances of severe financial
hardship to the Participant resulting from a
sudden unexpected illness, accident, or
disability of the Participant or of a dependent
(as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property
due to casualty, or other similar and
extraordinary unforeseeable circumstances arising
as a result of events beyond the contro! of the
Participant. The need to send a Participant's
child to college or to purchase a new home shall
not be considered unforeseeable.emergencies. The
determination as to whether such an unforeseeable
emergency exists shall be based on the merits of
each individual case.
7°07 De Minimis Accounts:
If the value of a Participant's Account is less than
$!,000, the Participant's Account sha!l be paid to the
Participant in a single lump sum distribution, provided
that (a) no amount has been deferred under the Plan with
respect to the Participant during the 2-year period ending
on the date of the distribution and (b) there has been no
prior distribution under the Plan to the Participant
pursuant to this Section 7.07. If the value of the
Participant's Account is at least $i,000 but not more than
the dollar limit under Code Section 4!l(a) (ii) (A) and (a)
no amount has been deferred under the Plan with respect to
the Participant during the 2-year period ending on the date
of the distribution and (b) there has been no prior
distribution under the Plan to the Participant pursuant to
this Section 7.07, the Participant may elect to receive his
or her entire Account. Such distribution shall be made in
a lump sum.
Article VIIIo Loans to Participants
8.01 Availability of Loans to Participants:
(a)The Employer may elect to make loans available to
Participants in this Plan. If the Emp!oyer has
elected to make loans available to Participants,
021211 cl 8120290 19
a Participant may apply for a loan from the Plan
subject to the limitations and other provisions
of this Article.
(b)The Employer shall establish written guidelines
governing the granting of loans, provided that
such guidelines are approved by the Administrator
and are not inconsistent with the provisions of
this Article, and that loans are made available
to al! Participants on a reasonably equivalent
basis.
8°02 Terms and Conditions of Loans to Participants:
Any loan by the Plan to a Participant under Section 8.01 of
the Plan shall satisfy the following requirements:
(a)Availability. Loans shall be made available to
all Participants on a reasonably equivalent
basis.
(b)interest Rate. Loans must be adequately secured
and bear a reasonable interest rate.
(c)Loan Limit. No Participant loan shall exceed the
present value of the Participant's Account.
(d)Foreclosure. In the event of default on any
installment payment, the outstanding balance of
the loan shall be a deemed distribution. In such
event, an actual distribution of a plan loan
offset amount will not occur until a
distributable event occurs in the Plan.
(e Reduction of Account. Notwithstanding any other
provision of this Plan, the portion of the
Participant's Account balance used as a security
interest held by the Plan by reason of a loan
outstanding to the Participant shall be taken
into account for purposes of determining the
amount of the Account balance payable at the time
of death or distribution, but only if the
reduction is used as repayment of the loan.
(f Amount of Loan. At the time the loan is made,
the principal amount of the loan plus the
outstanding balance (principa! plus accrued
021211 cl 8120290 2 0
(g)
(h)
interest) due on any other outstanding loans to
the Participant from the Plan and from all other
plans of the Employer that are qualified employer
plans under Section 72(p) (4) of the Code shall
not exceed the lesser of:
(i)$50,000, reduced by the excess' (if any) of
(a)The highest outstanding balance of
loans from the Plan during the one(l)
year period ending on the day before
the date on which the loan in made,
over
(b)The outstanding balance of loans from
the Plan on the date on which such loan
is made; or
(2)One-half of the value of the Participant's
interest in all of his or her Accounts under
this Plan.
Application for Loan. The Participant must give
the Emp!oyer adequate written notice, as
determined by the Employer, of the amount and
desired time for receiving a !oan. No more than
one (!) loan may be made by the Plan to a
Participant's in any calendar year. No loan
shall be approved if an existing loan from the
Plan to the Participant is in default to any
extent.
Length of Loan. Any loan issued shall require
the Participant to repay the !oan in
substantially equal installments of principal and
interest, at least monthly, over a period that
does not exceed five (5) years from the date of
the loan; provided, however, that if the proceeds
of the loan are applied by the Participant to
acquire any dwelling unit that is to be used
within a reasonable time (determined at the time
of the loan is made) after the loan is made as
the principal residence of the Participant, the
five (5) year limit shal! not apply. In this
event, the period of repayment shall not exceed a
reasonable period determined by the Employer.
Principal installments and interest payments
021211 cl 8120290
otherwise due may be suspended for up to one (i)
year during an authorized leave of absence, fi
the promissory note so provides, but not beyond
the original term permitted under this subsection
(h), with a revised payment schedule (within -such
term) instituted at the end of such period of
suspension.
i)Prepayment. The Participant sha!l be permitted
to repay the !oan in whole or in part at any time
prior to maturity, without penalty.
Promissory Note. The loan shall be evidenced by
a promissory note executed by the Participant and
delivered to the Employer, and shal! bear
interest at a reasonable rate determined by the
Employer.
k)Security. The loan sha!l be secured by an
assignment of the participant's right, title and
interest in and to his or her Account.
1)Assignment or Pledge. For the purposes of
paragraphs (f) and (g), assignment or pledge of
any portion of the Participant's interest in the
Plan and a loan, pledge, or assignment with
respect to any insurance contract purchased under
the Plan, will be treated as a loan.
(m)Other Terms and Conditions. The Employer shal!
fix such other terms and conditions of the loan
as it deems necessary to comply with legal
requirements, to maintain the qualification of
the Plan and Trust under Section 457 of the Code,
or to prevent the treatment of the loan for tax
purposes as a distribution to the Participant.
The Employer, in its discretion for any reason, may also
fix other terms and conditions of the !oan, including, but
not limited to, the provision of grace periods following an
event of default, not inconsistent with the provisions of
this Article and Section 72(p)of the Code, and any
applicable regulations thereunder.
021211 cl 8120290 22
8.03 Participant Loan Accounts:
(a Upon approval of a loan to a Participant by the
Employer, an amount not in excess of the loan
shall be transferred from the Participant's other
investment fund(s), described in Section 6.05 of
the Plan, to the Participant's Loan Account as of
the Accounting Date immediately preceding the
agreed upon date on which the loan is to be made.
(b)The assets of a Participant's Loan Account may be
invested and reinvested only in promissory notes
received by the Plan from the Participant as
consideration for a loan permitted by Section
S.01 of the Plan or in cash. Uninvested cash
balances in a Participant's Loan Account shall
not bear interest.Neither the Employer, the
Administrator, nor any other person shall be
liable for any loss,or by reason of any breach,
that results from the Participant's exercise of
such control.
(C Repayment of principal and payment of interest
shall be made by payroll deduction or, where
repayment cannot be made by payroll deduction, by
check, and shall be invested in one (i) or more
other investment funds, in accordance with
Section 6.05 of the Plan, as of the next
Accounting Date after payment thereof to the
Trust. The amount so invested shall be deducted
from the Participant's Loan Account.
(d)The Employer shall have the authority to
establish other reasonable rules, not
inconsistent with the provisions of the Plan,
governing the establishment and maintenance of
Participant Loan Accounts.
Article IXo Non-Assignability
9o01 In General: Except as provided in Article VIII and
Section 9.02, no Participant or Beneficiary shal! have any
right to commute, sel!, assign, pledge, transfer or
otherwise convey or encumber the right to receive any
payments hereunder, which payments and rights are expressly
declared to be non-assignable and non-transferable.
021211 cl 8120290 2 3
9°02 Domestic Relations Orders:
(a)Allowance of Transfers: To the extent required
under a final judgment,decree, or other
(including approva! of a property settlement
agreement) that (i) relates to the provision of
child support,alimony payments, or marita!
property rights,(ii) is made pursuant to a state
domestic relations law, and (iii) meets the
requirements of Section 4!4(e) of the Code, any
portion of a Participant's Account may be paid or
set aside for payment to a spouse, former spouse,
child, or other dependent of the Participant.
Where necessary to carry out the terms of such an
order, a separate Account shal! be established
with respect to the spouse, former spouse, or
child who shall be entitled to make investment
selections with respect thereto in the same
manner as the Participant; any amount so set
aside for a spouse, former spouse, or child shall
be paid out in a lump sum at the earliest date
that benefits may be paid to the Participant,
unless the order directs a different time or form
of payment. Nothing in this Section shall be
construed to authorize any amount to be
distributed under the Plan at a time or in a form
that is not permitted under Section 457(b) of the
Code. Any payment made to a person pursuant to
this Section shal! be reduced by any required
income tax withholding.
(b)Release from Liability to Participant: The
Employer's liability to pay benefits to a
Participant shall be reduced to the extent that
amounts have been paid or set aside for payment
to a spouse, former spouse, or child pursuant to
paragraph (a) of the Section. No such transfer
shall be effectuated unless the Employer or
Administrator has been provided with satisfactory
evidence that the Employer and the Administrator
are released from any further claim by the
Participant with respect to such amounts. The
Participant shall be deemed to have released the
Employer and the Administrator from any claim
with respect to such amounts, in any case in
which (i) the Employer or Administrator has been
served with legal process or otherwise joined in
021211 cl 8120290 2 4
a proceeding relating to such transfer, (ii) the
Participant has been notified of the pendency of
such proceeding in the manner prescribed by the
law of the jurisdiction in which the proceeding
is pending for service of process in such action
or by mai! from the Employer or Administrator to
the Participant's last known mailing address, and
(iii) the Participant fails to obtain an order of
the court in the proceeding re!ieving, the
Employer or Administrator from the obligation to
comply with the judgment, decree, or order.
(c)Participation in Legal Proceedings: The Employer
and Administrator shall not be obligated to
defend against or set aside any judgment, decree,
or order described in paragraph (a) or any legal
order relating to the garnishment of a
Participant's benefits, unless the ful! expense
of such lega! action is borne by the Participant.
In the event that the Participant's action (or
inaction) nonetheless causes the Employer or
Administrator to incur such expense, the amount
of the expense may be charged against the
Participant's Account and thereby reduce the
Employer's obligation to pay benefits to the
Participant. In the course of any proceeding
relating to divorce,separation, or child
support, the Employer and Administrator shall be
authorized to disclose information relating to
the Participant's Account to the Participant's
spouse, former spouse, dependent, or child
(including the legal representatives of the
spouse, former spouse, or child), or to a court.
Article Xo Relationship to other Plans and
Employment Agreements
This Plan serves in addition to any other retirement,
pension, or benefit plan or system presently in existence
or hereinafter established for the benefit of the
Employer's employees, and participation hereunder shall not
affect benefits receivable under any such plan or system.
Nothing contained in this Plan shal! be deemed to
constitute an employment contract or agreement between any
Participant and the Employer or to give any Participant the
right to be retained in the employ of the Employer. Nor
shall anything herein be construed to modify the terms of
021211 ct 8120290 25
any employment contract or agreement between a Participant
and the Emp!oyer.
Article XI. Amendment or Termination of Plan
The Emp!oyer may at any time amend this Plan provided that
it transmits such amendment in writing to the Administrator
at least 30 days prior to the effective date of the
amendment. The consent of the Administrator shall not be
required in order for such amendment to become effective,
but the Administrator shall be under no obligation to
continue acting as Administrator hereunder if it
disapproves of such amendment. The Employer may at any
time terminate this Plan.
The Administrator may at any time propose an amendment to
the Plan by an instrument in writing transmitted to the
Employer at least 60 days before the effective date of the
amendment. Such amendment shall become effective unless,
within such 60-day period, the Employer notifies the
A~ministrator in writing that it disapproves such
amendment, in which case such amendment shall not become
effective. In the event of such disapproval, the
Administrator shall be under no obligation to continue
acting as Administrator hereunder.
Except as may be required to maintain the status of the
Plan as an eligible deferred compensation plan under
Section 457(b) of the Code or to comply with other
applicable laws, no amendment or termination of the Plan
shal! divest any Participant of any rights with respect to
compensation deferred before the date of the amendment or
termination.
Article XIIo Applicable Law
This Plan and Trust shall be construed under the laws of
the state where the Emp!oyer is located and is established
with the intent that it meet the requirements of an
"eligible deferred compensation plan" under Section 457(b)
of the Code, as amended. The provisions of this Plan and
Trust shall be interpreted wherever possible in conformity
with the requirements of that Section of the Code.
In addition, notwithstanding any provision of the Plan to
the contrary, the Plan shall be administered in compliance
with the requirements of Code Section 4!4(u).
021211 cl 8120290 2 6
Article XIIIo Gender and Number
The masculine pronoun, whenever used herein, shall include
the feminine pronoun, and the singular shall include the
plural, except where the context requires otherwise°
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APPENDIX B
DECLARATION OF TRUST
This Declaration of Trust (the ~Group Trust Agreement") is
made as of the !9th of May, 2001, by VantageTrust Company,
which declares itself to be the sole Trustee of the trust
hereby created.
WHEREAS, the ICMA Retirement Trust was created as a vehicle
for the commingling of the assets of governmenta! plans and
governmental units described in Section 818(a) (6) of the
Internal Revenue Code of 1986, as amended, pursuant to a
Declaration of Trust dated October 4, 1982, as subsequently
amended, a copy of which is attached hereto and
incorporated by reference as set out below (the "ICMA
Declaration"); and
WHEREAS, the trust created hereunder (the ~Group Trust") is
intended to meet the requirements of Revenue Ruling 81-100,
1981-1 C.B. 326, and is established as a common trust fund
within the meaning of Section 391:! of Title 35 of the New
Hampshire Revised Statutes Annotated, to accept and hold
for investment purposes the assets of the Deferred
Compensation and Qualified Plans held by and through the
ICMA Retirement Trust.
NOW, THEREFORE, the Group Trust is created by the execution
of this Declaration of Trust by the Trustee and is
established with respect to each Deferred Compensation and
Qualified Plan by the transfer to the Trustee of such
Plan's assets in the ICMA Retirement Trust, by the Trustees
thereof, in accord with the following provisions:
Incorporation of ICMA Declaration by Reference;
ICMA By-Lawso Except as otherwise provided in
this Group Trust Agreement, and to the extent not
inconsistent herewith, al! provisions of the ICMA
Declaration are incorporated herein by reference
and made a part hereof, to be read by
substituting the Group Trust for the Retirement
Trust and the Trustee for the Board of Trustees
referenced therein. In this respect, unless the
context clearly indicates otherwise, al!
capitalized terms used herein and defined in the
ICMA Declaration have the meanings assigned to
021211 cl 8120290 2 8
them in the ICMA Declaration. In addition, the
By-Laws of the ICMA Retirement Trust, as the same
may be amended from time-to-time, are adopted as
the By-Laws of the Group Trust to the extent not
inconsistent with the terms of this Group Trust
Agreement.
Notwithstanding the foregoing, the terms of the
ICMA Declaration and By-Laws are further modified
with respect to the Group Trust created
hereunder, as follows:
(a)any reporting, distribution, or other
obligation of the Group Trust vis-a-vis
any Deferred Compensation Plan,
Qualified Plan, Public Employer, Public
Employer Trustee, or Employer Trust
shall be deemed satisfied to the extent
that such obligation is undertaken by
the ICMA Retirement Trust (in which
case the obligation of the Group Trust
shall run to the ICMA Retirement
Trust); and
(b)all provisions dealing with the number,
qualification, election, term and
nomination of Trustees shall not apply,
and all other provisions relating to
trustees (including, but not limited
to, resignation and removal) shall be
interpreted in a manner consistent with
the appointment of a single corporate
trustee.
Compliance with Revenue Procedure 81-100o The
requirements of Revenue Procedure 81-100 are
applicable to the Group Trust as follows:
(a)Pursuant to the terms of this Group
Trust Agreement and Article X of the
By-Laws, investment in the Group Trust
is limited to assets of Deferred
Compensation and Qualified Plans,
investing through the ICMA Retirement
Trust.
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(b)Pursuant to the By-Laws, the Group
Trust is adopted as a part of each
Qualified Plan that invests herein
through the ICMA Retirement Trust.
(c)In accord with the By-Laws, that part
of the Group Trust's corpus or income
which equitably belongs to any Deferred
Compensation and Qualified Plan may not
be used for or diverted to any purposes
other than for the exclusive benefit of
the Plan's employees or their
beneficiaries who are entitled to
benefits under such Plan.
(d)In accord with the By-Laws, no Deferred
Compensation Plan or Qualified Plan may
assign any or part of its equity or
interest in the Group Trust, and any
purported assignment of such equity or
interest shall be void.
(3)Governing Law. Except as otherwise required by
federal, state or local law, this Declaration of
Trust (including the ICMA Declaration to the
extent incorporated herein) and the Group Trust
created hereunder shall be construed and
determined in accordance with applicable laws of
the State of New Hampshire.
(4)Judicial Proceedings. The Trustee may at any
time initiate an action or proceeding in the
appropriate state or federal courts within or
outside the state of New Hampshire for the
settlement of its accounts or for the
determination of any question of construction
which may arise or for instructions.
IN WITNESS W~EREOF, the Trustee has executed this
Declaration of Trust as of the day and year first above
written.
VANTAGETRUST COMPANY
By:
Name: Paul F. Gallagher
Title: Assistant Secretary
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